Document:

EXHIBIT 10.1

Exhibit 10.1

LOAN AGREEMENT

DATED AS OF OCTOBER 31, 2000

among

Recoton Corporation,

InterAct Accessories, Inc.,

Recoton Audio Corporation,

AAMP of Florida, Inc.,

and

Recoton Home Audio, Inc.,

as Borrowers,

and

The Other Loan Parties Party Hereto

and

The Lenders Party Hereto,

HELLER FINANCIAL, INC.,

as Administrative Agent, Senior Agent and as a Lender

and

GENERAL ELECTRIC CAPITAL CORPORATION

as Collateral Agent, Syndication Agent and as a Lender

TABLE OF CONTENTS

Page

	SECTION 1.	DEFINITIONS AND ACCOUNTING TERMS	2

	 	1.1	Certain Defined Terms	2

	SECTION 2.	LOANS AND COLLATERAL	2

	 	2.1	Loans	2

	 	(A)(1)	Term Loan A	2

	 	(A)(2)	Term Loan B	2

	 	(A)(3)	Term Loan C	3

	 	(B)	Revolving Loan	4

	 	(C)	Eligible Collateral	5

	 	(D)	Borrowing Mechanics	9

	 	(E)	Notes	9

	 	(F)	Letters of Credit	10

	 	(G)	Other Letter of Credit Provisions	11

	 	(H)	Availability of a Lender's Pro Rata Share	13

	 	2.2	Interest	14

	 	(A)	Rate of Interest	14

	 	(B)	Computation and Payment of Interest	14

	 	(C)	Interest Laws	15

	 	(D)	Conversion or Continuation	15

	 	2.3	Fees	16

	 	(A)	Unused Line Fee	16

	 	(B)	Letter of Credit Fees	16

	 	(C)	Prepayment Fee	17

	 	(D)	Audit Fees	17

	 	(E)	Other Charges and Expenses	17

	 	(F)	Administrative Agent's Fee	18

	 	(G)	Collateral Agent's Fee	18

	 	2.4	Payments and Prepayments	18

	 	(A)	Manner and Time of Payment	18

	 	(B)	Mandatory Prepayments	18

	 	(C)	Voluntary Prepayments and Repayments	21

	 	(D)	Payments on Business Days	21

	 	2.5	Term of this Agreement	21

	 	2.6	Statements	22

	 	2.7	Yield Protection	22

	 	(A)	Capital Adequacy and Other Adjustments	22

	 	(B)	Increased LIBOR Funding Costs	22

	 	2.8	Taxes	23

	 	(A)	No Deductions	23

	 	(B)	Changes in Tax Laws	23

	 	(C)	Foreign Lenders	24

	 	2.9	Required Termination and Prepayment	24

	 	2.10	Optional Prepayment/Replacement of Lenders	25

	 	2.11	Compensation	26

	 	2.12	Booking of LIBOR Loans	26

	 	2.13	Assumptions Concerning Funding of LIBOR Loans	26

	 	2.14	Joint and Several Liability of Borrowers	26

	 	2.15	Recoton as Agent for Borrowers	29

	 	2.16	Currency	30

	SECTION 3.	CONDITIONS TO LOANS	30

	SECTION 4.	LOAN PARTIES' REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS	30

	 	4.1	Organization, Powers, Capitalization	30

	 	(A)	Organization and Powers	30

	 	(B)	Capitalization	31

	 	4.2	Authorization of Borrowing, No Conflict	31

	 	4.3	Financial Condition	32

	 	4.4	Indebtedness and Liabilities	32

	 	4.5	Title to Properties; Liens	32

	 	4.6	Litigation; Adverse Facts	32

	 	4.7	Payment of Taxes	33

	 	4.8	Performance of Agreements	33

	 	4.9	Employee Benefit Plans	33

	 	4.10	Broker's Fees	34

	 	4.11	Environmental Matters	34

	 	4.12	Solvency	35

	 	4.13	Disclosure	36

	 	4.14	Insurance	36

	 	4.15	Compliance with Laws	37

	 	4.16	Employee Matters	37

	 	4.17	Governmental Regulation	37

	 	4.18	Currency Controls	37

	 	4.19	Access to Accountants and Management	37

	 	4.20	Inspection	38

	 	4.21	Collateral Records	38

	 	4.22	Collection of Accounts and Payments	38

	 	4.23	Amendment of Schedules	39

	 	4.24	Customer and Trade Relations	39

	 	4.25	Subordinated Debt	39

	SECTION 5.	REPORTING AND OTHER AFFIRMATIVE COVENANTS	39

	 	5.1	Financial Statements and Other Reports	40

	 	5.2	Endorsement	40

	 	5.3	Maintenance of Properties	40

	 	5.4	Compliance with Laws	40

	 	5.5	Further Assurances	40

	 	5.6	Mortgages; Title Insurance; Surveys	41

	 	(A)	Title Insurance	41

	 	(B)	Surveys	41

	 	5.7	Use of Proceeds and Margin Security	41

	 	5.8	Bailee	41

	 	5.9	Year 2000	42

	 	5.10	Environmental Matters	42

	 	5.11	Required Minimum Excess Availability	43

	 	5.12	Recoton Germany	43

	SECTION 6.	FINANCIAL COVENANTS	43

	SECTION 7.	NEGATIVE COVENANTS	44

	 	7.1	Indebtedness and Liabilities	44

	 	7.2	Guaranties	45

	 	7.3	Transfers, Liens and Related Matters	46

	 	(A)	Transfers	46

	 	(B)	Liens	47

	 	(C)	No Negative Pledges	47

	 	(D)	No Restrictions on Subsidiary Distributions to Borrowers	47

	 	7.4	Investments and Loans	48

	 	7.5	Restricted Junior Payments	49

	 	7.6	Restriction on Fundamental Changes	50

	 	7.7	Changes Relating to Subordinated Debt	51

	 	7.8	Transactions with Affiliates	51

	 	7.9	Conduct of Business	51

	 	7.10	Tax Consolidations	51

	 	7.11	Subsidiaries	51

	 	7.12	Fiscal Year; Tax Designation	52

	 	7.13	Press Release; Public Offering Materials	52

	 	7.14	Bank Accounts	52

	 	7.15	Sale-Leasebacks	52

	 	7.16	Cancellation of Indebtedness	52

	 	7.17	Inactive Subsidiaries	52

	 	7.18	Parity with Senior Lender	52

	SECTION 8.	DEFAULT, RIGHTS AND REMEDIES	53

	 	8.1	Event of Default	53

	 			

	 	(A)	Payment	53

	 	(B)	Default in Other Agreements	53

	 	(C)	Breach of Certain Provisions	53

	 	(D)	Breach of Warranty	53

	 	(E)	Other Defaults Under Loan Documents	53

	 	(F)	Change in Control	53

	 	(G)	Involuntary Bankruptcy; Appointment of Receiver, etc.	54

	 	(H)	Voluntary Bankruptcy; Appointment of Receiver, etc.	54

	 	(I)	Liens	54

	 	(J)	Judgment and Attachments	55

	 	(K)	Dissolution	55

	 	(L)	Solvency	55

	 	(M)	Injunction	55

	 	(N)	Invalidity of Loan Documents	55

	 	(O)	Failure of Security	55

	 	(P)	Damage, Strike, Casualty	55

	 	(Q)	Licenses and Permits	56

	 	(R)	Forfeiture	56

	 	(S)	Currency Controls	56

	 	(T)	Environmental Matters	56

	 	(U)	Default Under German Facility	56

	 	(V)	Recoton Germany	56

	 	(W)	Employee Benefit Plans	57

	 	(X)	Foreign Exchange	57

	 	(Y)	Resignation of Borrowers' Accountants	57

	 	(Z)	Income Tax Act	57

	 	8.2	Suspension of Commitments	57

	 	8.3	Acceleration	57

	 	8.4	Remedies	58

	 	8.5	Appointment of Attorney-in-Fact	59

	 	8.6	Limitation on Duty of Agents with Respect to Collateral	60

	 	8.7	Application of Proceeds	60

	 	8.8	Waivers; Non-Exclusive Remedies	60

	SECTION 9.	AGENTS	61

	 	9.1	Agents	61

	 	(A)	Appointment	61

	 	(B)	Nature of Duties	61

	 	(C)	Rights, Exculpation, Etc.	62

	 	(D)	Reliance	62

	 	(E)	Indemnification	63

	 	(F)	Heller and GECC Individually	63

	 	(G)	Successor Agent	63

	 	(H)	Collateral Matters	64

	 	(I)	Agency for Perfection	65

	 	(J)	Exercise of Remedies	66

	 	9.2	Notice of Default	66

	 	9.3	Action by Administrative Agent and Senior Agent	66

	 	9.4	Amendments, Waivers and Consents	67

	 	9.5	Assignments and Participations in Loans	68

	 	9.6	Set Off and Sharing of Payments	70

	 	9.7	Disbursement of Funds	71

	 	9.8	Settlements, Payments and Information	71

	 	(A)	Revolving Advances and Payments; Fee Payments	71

	 	(B)	Term Loan Principal Payments	73

	 	(C)	Return of Payments	73

	 	9.9	Discretionary Advances	73

	SECTION 10.	MISCELLANEOUS	74

	 	10.1	Expenses and Attorneys' Fees	74

	 	10.2	Indemnity	74

	 	10.3	Notices	75

	 	10.4	Survival of Representations and Warranties and Certain Agreements	77

	 	10.5	Indulgence Not Waiver	77

	 	10.6	Marshaling; Payments Set Aside	77

	 	10.7	Entire Agreement	77

	 	10.8	Severability	77

	 	10.9	Lenders' Obligations Several; Independent Nature of Lenders' Rights	78

	 	10.10	Headings	78

	 	10.11	Applicable Law	78

	 	10.12	Successors and Assigns	78

	 	10.13	No Fiduciary Relationship; No Duty; Limitation of Liabilities	78

	 	10.14	Consent to Jurisdiction	79

	 	10.15	Waiver of Jury Trial	80

	 	10.16	Construction	80

	 	10.17	Counterparts; Effectiveness	80

	 	10.18	Confidentiality	80

	 	10.19	Judgment Currency	81

	SECTION 11.	DEFINITIONS AND ACCOUNTING TERMS	81

	 	11.1	Certain Defined Terms	81

	 	11.2	Accounting Terms	105

	 	11.3	Other Definitional Provisions	105

LOAN AGREEMENT

          
This LOAN AGREEMENT (“Agreement”) is dated as of October 31, 2000 and
entered into among RECOTON CORPORATION, a New York corporation
(“Recoton”), INTERACT ACCESSORIES, INC., a Delaware corporation
(“InterAct”), RECOTON AUDIO CORPORATION, a Delaware corporation
(“Audio”), AAMP OF FLORIDA, INC., a Florida corporation
(“AAMP”), 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”), the Guarantors (capitalized terms used in these Recitals
without definition shall have the respective meanings assigned in Section 11
hereof) listed on the signature pages hereof, the financial institution(s)
listed on the signature pages hereof, and their respective successors and
Eligible Assignees (each individually a “Lender” and collectively
“Lenders”) and HELLER FINANCIAL, INC., a Delaware corporation (in its
individual capacity, “Heller”), for itself as a Lender and as
Administrative Agent and GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation (in its individual capacity, “GECC”) for itself as a
Lender and as Collateral Agent and as Syndication Agent. The Administrative
Agent, Senior Agent and the Collateral Agent are sometimes referred to herein as
the “Agents”.

          
WHEREAS, Borrowers desire that Lenders extend certain credit facilities to the
Borrowers hereunder of up to $235,000,000, the proceeds of which will be used,
among other things, to (i) pay certain existing indebtedness and (ii) provide
financing for working capital and other general corporate purposes, all subject
to the terms and conditions contained herein; and

          
WHEREAS, the Borrowers and the Subordinated Creditors are entering into a Credit
Agreement dated as of the date hereof (the “Subordinated Credit
Agreement”) pursuant to which the Subordinated Creditors are extending
credit in the principal amount of $15,000,000, the proceeds of which will be
used to pay certain existing indebtedness;

          
WHEREAS, to secure each Borrower’s obligations under the Loan Documents and
the Subordinated Debt Documents, each Borrower is granting to the Senior Agent,
for benefit of the Benefitted Persons, a security interest in and lien upon
substantially all of each Borrower’s real and personal property; and

          
WHEREAS, the Guarantors are willing to guaranty all of the obligations of
Borrowers to Agents and Lenders under the Loan Documents and to grant to Senior
Agent, for benefit of the Benefitted Persons, a security interest in
substantially all of each Guarantor’s real and personal property as
provided herein to secure such guaranty;

          
NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, Borrowers, Agents and Lenders agree as
follows:

	 	SECTION 1.	DEFINITIONS AND ACCOUNTING TERMS

          
1.1 Certain Defined Terms. The capitalized terms and the accounting terms
used in this Agreement shall have the meanings set forth in Section 11 of
this Agreement.

	 	SECTION 2.	LOANS AND COLLATERAL

          
2.1 Loans.

                    
(A)(1) Term Loan A

          
“Scheduled Installment” of Term Loan A means, for each date set forth
below, the amount set forth opposite such date.

     Date                               Scheduled Installment
     ----                               ---------------------

     December 31, 2000                  $500,000
     March 31, 2001                     $500,000
     June 30, 2001                      $500,000
     September 30, 2001                 $500,000
     December 31, 2001                  $500,000
     March 31, 2002                     $500,000
     June 30, 2002                      $500,000
     September 30, 2002                 $500,000
     December 31, 2002                  $500,000
     March 31, 2003                     $500,000
     June 30, 2003                      $500,000
     October 31, 2003                   $14,500,000

          
In any event the final Scheduled Installment of Term Loan A shall be in an
amount sufficient to repay all amounts owing by Borrowers hereunder with respect
to Term Loan A.

                    
(A)(2) Term Loan B. Each Term Loan B Lender, severally, agrees to lend to
Borrowers on the Closing Date its Pro Rata Share of Term Loan B which is in the
aggregate amount of $15,000,000. Term Loan B shall be funded in one drawing.
Amounts borrowed under this subsection 2.1(A)(2) and repaid or prepaid
may not be reborrowed. Borrowers shall make principal payments in the amounts of
the applicable Scheduled Installments of Term Loan B (or such lesser principal
amount of Term Loan B as shall then be outstanding) on the dates set forth
below.

          
“Scheduled Installment” of Term Loan B means, for each date set forth
below, the amount set forth opposite such date.

     Date                               Scheduled Installment
     ----                               ---------------------

     December 31, 2000                  $1,875,000
     March 31, 2001                     $1,875,000
     June 30, 2001                      $1,875,000
     September 30, 2001                 $1,875,000
     December 31, 2001                  $1,875,000
     March 31, 2002                     $1,875,000
     June 30, 2002                      $1,875,000
     October 31, 2002                   $1,875,000

          
In any event the final Scheduled Installment of Term Loan B shall be in an
amount sufficient to repay all amounts owing by Borrowers hereunder with respect
to Term Loan B.

                    
(A)(3) Term Loan C. Each Term Loan C Lender, severally, agrees to lend to
Borrowers on the Closing Date its Pro Rata Share of Term Loan C which is in the
aggregate amount of $15,000,000. Term Loan C shall be funded in one drawing; it
being understood however, that as to each Term Loan C Lender that is also a
Subordinated Creditor such funding shall be made in an amount equal to such Term
Loan C Lender's Commitment by the satisfaction of an equivalent amount of the
existing debt owed by Recoton to such Term Loan C Lender. Amounts borrowed under
this subsection 2.1(A)(3) and repaid or prepaid may not be reborrowed.
Borrowers shall make principal payments in the amounts of the applicable
Scheduled Installments of Term Loan C (or such lesser principal amount of Term
Loan C as shall then be outstanding) on the dates set forth below.

          
On the second anniversary of the Closing Date, Borrowers shall repay the
principal amount of Term Loan C, in the amount by which the Maximum Revolving
Loan Amount exceeds the Revolving Loan by more than $45,000,000; provided
that in calculating such repayment the accounts payables have been paid in the
ordinary course of business consistent with historical customary payment
practices (the foregoing calculation being “Term Loan C Repayment
Restriction”). The Administrative Borrower shall deliver to the
Administrative Agent a written statement (the “Repayment
Certification”) certified by the chief financial officer of the
Administrative Borrower five Business Days prior to making such Scheduled
Installment, (i) setting forth in reasonable detail the basis for calculating
the amounts by which the Maximum Revolving Loan Amount exceeds the Revolving
Loan on the date of payment of the Scheduled Installment and (ii) stating that
the accounts payables have been paid in the ordinary course of business
consistent with historical customary payment practices, which written statement
shall be in form and substance satisfactory to the Administrative Agent. If
Borrowers can not repay the full principal amount of the Term Loan C on the
second anniversary of the Closing Date as a result of the application of the
Term Loan C Repayment Restriction, then Borrowers shall repay the remaining
outstanding principal amount of Term Loan C, if any, in twelve equal monthly
installments until paid in full commencing on the last day of the first month
after the second anniversary of the Closing Date; provided,
however, that to the extent that the Borrowers cannot repay the full
amount of an installment when due as a result of the application of the Term
Loan C Repayment Restriction (the amount not able to be paid being referred to
as the “Shortfall”) then the Shortfall shall be carried forward and
added to the immediately succeeding Scheduled Installment. Each Scheduled
Installment (other than the final installment) shall be subject to the Term Loan
C Repayment Restriction and to the delivery of a Repayment Certification. The
final Scheduled Installment shall be due and payable on October 31, 2003.

          
“Scheduled Installment” of Term Loan C means (i) the principal amounts
of Term Loan C payable on the second anniversary of the Closing Date pursuant to
the previous paragraph and, if applicable, (ii) the twelve equal installments
described in the last sentence of the previous paragraph. In any event the final
installment of Term Loan C shall be in an amount sufficient to repay all amounts
owing by Borrowers hereunder with respect to Term Loan C.

                    
(B) Revolving Loan. Each Revolving Loan Lender, severally, agrees to lend
to Borrowers from time to time its Pro Rata Share of each Revolving Advance. The
aggregate amount of all Revolving Loan Commitments shall not exceed at any time
$185,000,000 as reduced by subsections 2.4(B)(5), 2.4(B)(6) and 2.4(C).
Amounts borrowed under this subsection 2.1(B) may be repaid and reborrowed at
any time prior to the earlier of (i) the termination of the Revolving Loan
Commitment pursuant to subsection 8.3 or (ii) the Termination Date.
Except as provided in subsections 2.4(A) and 9.9, no Revolving Loan
Lender shall have any obligation to make a Revolving Advance to the extent such
Revolving Advance would cause the Revolving Loan (after giving effect to any
immediate application of the proceeds thereof) to exceed the Maximum Revolving
Loan Amount.

                              
(1) "Maximum Revolving Loan Amount" means, as of any date of determination, the
lesser of (a) the Revolving Loan Commitment(s) of all Revolving Loan Lenders
less the Letter of Credit Reserve and (b) the Borrowing Base less
the Letter of Credit Reserve.

                              
(2) "Borrowing Base" means, as of any date of determination, an amount equal to
the sum of, in each case, less reserves, such reserves including, but not
limited to, those set forth in Exhibit B-2, as Administrative Agent, in
its reasonable credit judgment elects to establish unless otherwise directed by
the Requisite Lenders: (a) up to 80% of Eligible Accounts, (b) up to 65% of
Eligible Inventory; (c) up to 65% of Letter of Credit Inventory (as defined
below), (d) up to an additional 5% of each of Eligible Inventory and Letter of
Credit Inventory during the “In-Season Period” (as defined below) and
(e) 100% of the letter of credit, if any, provided by Recoton Germany as set
forth in subsection 5.12; provided that Administrative Agent, in
its reasonable credit judgment, can decrease the advance rates from time to
time, and provided further that notwithstanding the foregoing, in
no event shall, at any time (i) the aggregate borrowing availability against
(b), (c) and (d) in this subsection 2.1B(2) exceed $130,000,000 and (ii)
the borrowing availability against (d) in this subsection 2.1B(2), exceed
$10,000,000.

                    
"Letter of Credit Inventory" means Eligible Inventory ordered but not received,
the payment for which is to be made under documentary Lender Letters of Credit
less duty and freight due with respect to the Letter of Credit Inventory.

                    
"In-Season Period" means a period of up to five consecutive months during any
calendar year period, provided that (i) there can only be one In-Season
Period during any calendar year period, (ii) an In-Season Period shall
automatically end on December 31 of such calendar year if it has not all ready
ended, (iii) 120 days must elapse subsequent to the end of an In-Season Period
before a new In- Season Period may commence and (iv) Administrative Borrower
shall give the Administrative Agent at least five Business Days' prior written
notice of the commencement of any such In-Season Period.

                    
(C) Eligible Collateral.

                    
"Eligible Accounts" means, as at any date of determination, the aggregate of all
Accounts of Borrowers, Recoton Canada and Recone that Administrative Agent, in
its reasonable credit judgment, deems to be eligible for borrowing purposes.
Without limiting the generality of the foregoing, the Administrative Agent may
determine that the following Accounts are not Eligible Accounts:

                              
(1) Accounts which, at the date of issuance of the respective invoice therefor,
were payable more than 61 days after the date of issuance; provided, that
up to $15,000,000 of Accounts shall not be excluded pursuant to this clause (1)
to the extent such Accounts were payable more than 61 days after the date of
issuance but no longer than120 days after the date of issuance;

                              
(2) Accounts which remain unpaid for more than 60 days after the due date
specified in the original invoice or for more than 90 days after invoice date if
no due date was specified;

                              
(3) In addition to the Accounts excluded under clause (2) above, Accounts
(including invoices, credits, charge-backs and on account payments) which remain
unpaid for more than 60 days after the due date specified in the original
invoice or for more than 90 days after invoice date if no due date was specified
with respect to which the account debtor’s account balance is a credit
balance but only to the extent of such credit balance;

                              
(4) Accounts due from an account debtor whose principal place of business is
located outside the United States of America or Canada unless such Account is
(a) covered by credit insurance in form and substance acceptable to the Senior
Agent and which insurance names the Senior Agent, on behalf of the Benefitted
Persons, as loss payee and additional insured or (b) backed by a letter of
credit, in form and substance acceptable to Senior Agent and issued or confirmed
by a bank that is organized under the laws of the United States of America or a
State thereof or a Schedule I Canadian bank, that is acceptable to Senior Agent;
provided that such letter of credit has been delivered to Senior Agent as
additional Collateral; provided that, notwithstanding the foregoing, any
Accounts under this clause (4) that do not comply with the provisions of clauses
(a) or (b) herein shall be considered Eligible Accounts to the extent they
comply with the other provisions of this definition of Eligible Accounts and
provided that they do not exceed, in the aggregate, $1,000,000;

                              
(5) Accounts due from an account debtor which Administrative Agent has notified
Borrowers does not have a satisfactory credit standing;

                              
(6) Accounts in excess of an aggregate face amount of $3,000,000 with respect to
which the account debtor is (i) the United States of America, any state or any
municipality, or any department, agency or instrumentality thereof, unless
Borrowers and Recone have, with respect to such Accounts, complied with the
Federal Assignment of Claims Act of 1940 as amended (31 U.S.C. Section 3727 et
seq) or any applicable statute or municipal ordinance of similar purpose and
effect or (ii) Canada, unless Borrowers and Recoton Canada have complied with
the Financial Administration Act (Canada) or any applicable provincial or
territorial statute or municipal ordinance of similar purpose and effect;

                              
(7) Accounts with respect to which the account debtor is an Affiliate of a
Borrower or a director, officer, agent, stockholder (other than a stockholder of
not more than 10% of the capital stock of Recoton) or employee of any Borrower
or any of its Affiliates;

                              
(8) Accounts due from an account debtor if more than 50% of the aggregate Dollar
amount of invoices of such account debtor have at the time remained unpaid for
more than 60 days after due date or 90 days after the invoice date if no due
date was specified;

                              
(9) Accounts which are less than 60 days past due or less than 90 days from the
invoice date if no due date was specified with respect to which there is any
unresolved dispute (including, but not limited to, charge-backs) net of any
credits for returned merchandise less than 60 days past due or less than 90 days
from the invoice date if no due date was specified;

                              
(10) Accounts evidenced by an "instrument" or "chattel paper" (as defined in the
UCC or the PPSA, as applicable) not in the possession of Senior Agent, or its
agents, on behalf of the Benefitted Persons;

                              
(11) subject to the Accounts permitted under clauses (4) and (6), Accounts with
respect to which Senior Agent or its trustee or its agents, on behalf of the
Benefitted Persons, does not have a valid, first priority and fully perfected
security interest;

                              
(12) Accounts subject to any Lien except those in favor of Senior Agent, on
behalf of the Benefitted Persons and except for prior claims that are
unregistered and that secure amounts not yet due and payable;

                              
(13) Accounts with respect to which the account debtor is the subject of any
bankruptcy or insolvency proceeding;

                              
(14) Accounts due from an account debtor to the extent that the Dollar amount of
such Accounts exceed in the aggregate an amount equal to 10% of the aggregate of
all Accounts at said date (the “Concentration Limitation”);
provided that, notwithstanding the foregoing, the Account debtors listed
on Schedule 2.1(C)(i) shall have the Concentration Limitations set forth in such
Schedule.

                              
(15) Accounts with respect to which the account debtor's obligation to pay is
conditional or subject to a repurchase obligation or right to return or with
respect to which the goods or services giving rise to such Account have not been
delivered (or performed, as applicable) and accepted by such account debtor,
including progress billings, bill and hold sales, guarantied sales, sale or
return transactions, sales on approval or consignment sales;

                              
(16) Accounts with respect to which the account debtor is located in any state
or province denying creditors access to its courts in the absence of a Notice of
Business Activities Report or other similar filing, unless the applicable
Borrower has either qualified as a foreign corporation authorized to transact
business in such state or province or has filed a Notice of Business Activities
Report or similar filing with the applicable state or provincial agency or is
otherwise qualified to carry on business therein for the then current year;

                              
(17) Accounts with respect to which the account debtor is a creditor
(represented as a liability on Borrowers’, Recoton Canada’s or
Recone’s, as applicable, financial statements) of any Borrower, Recoton
Canada or Recone, provided, however, that any such Account shall
only be ineligible as to that portion of such Account which is less than or
equal to the amount owed by any Borrower, Recoton Canada or Recone to such
Person; and

                              
(18) Accounts not owned by a Borrower, Recoton Canada or Recone.

                    
"Eligible Inventory" means, as at any date of determination, the value
(determined at the lower of cost or market on an average cost basis) of all
Inventory owned by Borrowers or Recoton Canada and located in the United States
of America and Canada and Inventory in transit to Borrowers or Recoton Canada
that the Administrative Agent in its reasonable credit judgment deems to be
eligible for borrowing purposes. With respect to Inventory in transit to
Borrowers or Recoton Canada, only such Inventory for which (a) the
Administrative Agent or the customs house broker, as agent for the
Administrative Agent or the freight forwarders, as agent for the Administrative
Agent, as the case may be, are in possession of a complete set of negotiable
bills of lading endorsed "to the order of" (i) Senior Agent, for the benefit of
the Benefitted Persons or (ii) Recoton, as the case may be, (b) such Inventory
is covered by marine cargo insurance on terms and amounts satisfactory to
Administrative Agent and to which the Administrative Agent has been named
additional insured and loss payee, (c) procedures for the clearance at customs
satisfactory to the Administrative Agent have been put in place and (d) such
Inventory is in transit to a location owned by a Borrower or Recoton Canada or
subject to a Collateral Access Agreement and such location is set forth in
Schedule 2.1(C)(ii) or otherwise acceptable to the Senior Agent, shall qualify
in any case as "Eligible Inventory". Without limiting the generality of the
foregoing, the Administrative Agent may determine that the following are not
Eligible Inventory: (a) work-in-process (other than unpackaged finished goods);
(b) finished goods which do not meet the specifications of the Borrowers' or
Recoton Canada's customers' purchase order for such goods; (c) Inventory which
Administrative Agent determines is unacceptable for borrowing purposes due to
age, quality, type and/or category; (d) packaging, shipping materials or
supplies consumed in Borrowers' or Recoton Canada's business; (e) Inventory with
respect to which Senior Agent, on behalf of the Benefitted Persons, does not
have a valid, first priority and fully perfected security interest except for
claims that are unregistered and that secure amounts which are not yet due and
payable; (f) Inventory with respect to which there exists any Lien in favor of
any Person other than Senior Agent, on behalf of the Benefitted Persons; (g)
Inventory produced in violation of the Fair Labor Standards Act and subject to
the so-called "hot goods" provisions contained in Title 29 U.S.C. 215 (a)(i) or
any replacement statute; (h) Inventory located at any location other than those
identified pursuant to Section 5.8 of each Security Agreement; (i) repossessed
goods or goods which have been returned as defective by the buyer; (j) Inventory
of a type not held for sale in the ordinary course of Borrowers' or Recoton
Canada's business; (k) Inventory which breaches any of the representations or
warranties pertaining to Inventory set forth herein and in the Security
Agreements; (l) goods placed on consignment; (m) Inventory covered by a
negotiable document of title, unless such document has been delivered to
Administrative Agent or its trustee or agent with all necessary endorsements,
free and clear of all Liens except those in favor of Senior Agent on behalf of
the Benefitted Persons; and (n) Inventory located in locations not owned by
Borrowers or Recoton Canada and for which Senior Agent does not have an executed
Collateral Access Agreement. For purposes of the definition of Eligible
Inventory, Letter of Credit Inventory shall be excluded to avoid duplication.

                    
All Eligible Accounts and Eligible Inventory valued or carried in Canadian
dollars shall be converted to US Dollars at the rate quoted on Page BOFC on
Reuters Monitor Screen at 12:00 p.m. on the Business Day immediately prior to
that on which a Borrowing Base Certificate is required to be delivered to
Administrative Agent or as more frequently requested or determined by
Administrative Agent based on the volatility of exchange rates.

                    
(D) Borrowing Mechanics. (1) LIBOR Loans made on any Funding Date shall
be in an aggregate minimum amount of $1,000,000 and integral multiples of
$500,000 in excess of such amount. (2) On any day when any Borrower desires a
Revolving Advance under this subsection 2.1, Administrative Borrower
shall give Administrative Agent telephonic notice of the proposed borrowing by
12:00 p.m. Chicago time on the Funding Date of a Base Rate Loan and three
Business Days in advance of the Funding Date of a LIBOR Loan, which notice shall
specify the proposed Funding Date (which shall be a Business Day), whether such
Loans shall consist of Base Rate Loans or LIBOR Loans, and, for LIBOR Loans, the
Interest Period applicable thereto. Loans made on the Closing Date initially
shall be made as Base Rate Loans. Any such telephonic notice shall be confirmed
with a Notice of Borrowing on the same day. Neither Administrative Agent nor
Lenders shall incur any liability to any Borrower for acting upon any telephonic
notice or Notice of Borrowing Administrative Agent believes in good faith to
have been given by a duly authorized officer or other person authorized to
borrow on behalf of a Borrower or for otherwise acting in good faith under this
subsection 2.1(D). Neither Administrative Agent nor Revolving Loan
Lenders will be required to make any Revolving Advance pursuant to any
telephonic notice unless Administrative Agent has also received the most recent
Monthly Borrowing Base Certificate and Semi-Monthly Borrowing Base Certificate
and all other documents required under Section 3 and the Reporting Rider
hereof by 12:00 p.m. Chicago time. Each Revolving Advance shall be deposited by
wire transfer in immediately available funds in such account as Borrowers may
from time to time designate to Administrative Agent in writing. The becoming due
of any amount required to be paid under this Agreement or any of the other Loan
Documents as principal, Lender Letter of Credit reimbursement obligation,
accrued interest and fees shall be deemed irrevocably to be an automatic request
by Borrowers for a Revolving Advance, which shall be a Base Rate Loan on the due
date of, and in the amount required to pay (as set forth on Administrative
Agent's books and records), such principal, Lender Letter of Credit
reimbursement obligation, accrued interest and fees.

                    
(E) Notes. The Borrowers shall execute and deliver on the Closing Date to
each Lender (or to the Administrative Agent for that Lender) (i) a Term Loan A
Note substantially in the form of Exhibit N-I, to evidence that Lender's
Pro Rata Share of the principal amount of Term Loan A and with other appropriate
insertions, and each Lender's Term Loan A Notes shall evidence such Lender's Pro
Rata Share of such respective amounts, (ii) a Term Loan B Note substantially in
the form of Exhibit N-II, to evidence that Lender's Pro Rata Share in the
principal amount of Term Loan B and with other appropriate insertions, and each
Lender's Term Loan B Notes shall evidence such Lender's Pro Rata Share of such
respective amounts, (iii) a Term Loan C Note substantially in the form of
Exhibit N-III, to evidence that Lender's Pro Rata Share in the principal
amount of Term Loan C and with other appropriate insertions, and each Lender's
Term Loan C Notes shall evidence such Lender's Pro Rata Share of such respective
amounts and (iv) a Revolving Loan Note substantially in the form of Exhibit
M to evidence that Lender's Pro Rata Share, in the principal amount of
Revolving Loan Commitment and with other appropriate insertions. The Notes and
the Obligations evidenced thereby shall be governed by, subject to and benefit
from all of the terms and conditions of this Agreement and the other Loan
Documents and shall be secured by the Collateral.

                    
(F) Letters of Credit. The Revolving Loan Commitments may, in addition to
Revolving Advances, be utilized, upon the request of Borrowers, for (i) the
issuance of letters of credit by Administrative Agent; or with Administrative
Agent's consent any Lender, or (ii) the issuance by Administrative Agent of risk
participations to banks to induce such banks to issue Bank Letters of Credit for
the account of Borrowers (each of (i) and (ii) above a "Lender Letter of
Credit"). Each Revolving Loan Lender shall be deemed to have purchased a
participation in each Lender Letter of Credit issued on behalf of Borrowers in
an amount equal to its Pro Rata Share of the Revolving Loan Commitment. In no
event shall any Lender Letter of Credit be issued to the extent that the
issuance of such Lender Letter of Credit would cause the sum of the Letter of
Credit Reserve (after giving effect to such issuance) plus the Revolving Loan to
exceed the lesser of the (x) Borrowing Base and (y) Revolving Loan Commitment.

                              
(1) Maximum Amount. The aggregate amount of Letter of Credit Liability
with respect to all Lender Letters of Credit outstanding at any time shall not
exceed $30,000,000.

                              
(2) Reimbursement. Each Borrower shall, jointly and severally, be
irrevocably and unconditionally obligated forthwith without presentment, demand,
protest or other formalities of any kind, to reimburse Administrative Agent or
the issuer for any amounts paid with respect to a Lender Letter of Credit
including all fees, costs and expenses paid to any bank that issues a Bank
Letter of Credit. Each Borrower hereby authorizes and directs Administrative
Agent, at Administrative Agent’s option, to debit Borrowers’ account
(by increasing the Revolving Loan) in the amount of any payment made with
respect to any Lender Letter of Credit. In the event that Administrative Agent
elects not to debit Borrowers’ account and Borrowers fail to reimburse
Administrative Agent in full on the date of any payment under a Lender Letter of
Credit, Administrative Agent shall promptly notify each Revolving Loan Lender of
the unreimbursed amount of such payment together with accrued interest thereon
and each Revolving Loan Lender, on the next Business Day, shall deliver to
Administrative Agent an amount equal to its respective participation in same day
funds. The obligation of each Revolving Loan Lender to deliver to Administrative
Agent an amount equal to its respective participation pursuant to the foregoing
sentence shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in Section 3. In the
event any Revolving Loan Lender fails to make available to Administrative Agent
the amount of such Revolving Loan Lender’s participation in such Lender
Letter of Credit, Administrative Agent shall be entitled to recover such amount
on demand from such Revolving Loan Lender together with interest at the Base
Rate.

                              
(3) Request for Letters of Credit. Borrowers shall give Administrative
Agent at least two Business Days prior notice specifying the date a Lender
Letter of Credit is to be issued, identifying the beneficiary and describing the
nature of the transactions proposed to be supported thereby. The notice shall be
accompanied by the form of the letter of credit being requested. Any letter of
credit which Borrowers request must be in such form, be for such amount, contain
such terms and support such transactions as are reasonably satisfactory to
Administrative Agent. The expiration date of each Lender Letter of Credit shall
be on a date which is at least 15 days prior to the Termination Date.

                    
(G) Other Letter of Credit Provisions.

                              
(1) Reimbursement Obligations. The obligation of Borrowers to reimburse
Administrative Agent or any Revolving Loan Lender for payments made under, and
other amounts payable in connection with, any Lender Letter of Credit shall be
unconditional and irrevocable and shall be paid under all circumstances strictly
in accordance with the terms of this Agreement including, without limitation,
the following circumstances:

                                        
(a) any lack of validity or enforceability of any Lender Letter of Credit, or
any other agreement;

                                        
(b) the existence of any claim, set-off, defense or other right which a
Borrower, any of its Affiliates, any Agent or Revolving Loan Lender, on the one
hand, may at any time have against any beneficiary or transferee of any Lender
Letter of Credit (or any Persons for whom any such transferee may be acting),
any Agent or Revolving Loan Lender or any other Person, on the other hand,
whether in connection with this Agreement, the transactions contemplated herein
or any unrelated transaction (including any underlying transaction between a
Borrower or any of its Affiliates and the beneficiary of the Lender Letter of
Credit);

                                        
(c) any draft, demand, certificate or any other document presented under any
Lender Letter of Credit is alleged to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;

                                        
(d) any adverse change in the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Loan Parties or any of their
Subsidiaries;

                                        
(e) any breach of this Agreement or any other Loan Document by any party
thereto;

                                        
(f) any other circumstance or happening whatsoever, whether or not similar to any of the
foregoing; the fact that a Default or an Event of Default shall have occurred
and be continuing; or

                                        
(g) payment under any Lender Letter of Credit against presentation of a demand,
draft or certificate or other document which does not comply with the terms of
such Lender Letter of Credit; provided that, in the case of any payment
by Administrative Agent or a Revolving Loan Lender under any Lender Letter of
Credit, Administrative Agent or such Revolving Loan Lender has not acted with
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction) in determining that the demand for payment under such Lender
Letter of Credit complies on its face with any applicable requirements for a
demand for payment under such Lender Letter of Credit.

                              
(2) Nature of Lender's Duties. As between any Revolving Loan Lender that
issues a Lender Letter of Credit (an “Issuing Lender”), on the one
hand, and Borrowers on the other hand, Borrowers assume all risks of the acts
and omissions of, or misuse of any Lender Letter of Credit by the beneficiary
thereof. In furtherance and not in limitation of the foregoing, neither
Administrative Agent nor any Lender shall be responsible: (a) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document by
any party in connection with the application for and issuance of any Lender
Letter of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (b) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Lender Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (c) for failure of the beneficiary of any
Lender Letter of Credit to comply fully with conditions required in order to
demand payment thereunder; provided that, in the case of any payment
under any such Lender Letter of Credit, any Issuing Lender has not acted with
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction) in determining that the demand for payment under any such Lender
Letter of Credit complies on its face with any applicable requirements for a
demand for payment thereunder; (d) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (e) for errors in
interpretation of technical terms; (f) for any loss or delay in the transmission
or otherwise of any document required in order to make a payment under any such
Lender Letter of Credit; (g) for the credit of the proceeds of any drawing under
any such Lender Letter of Credit; and (h) for any consequences arising from
causes beyond the control of Administrative Agent or any Revolving Loan Lender
as the case may be.

                              
(3) Liability. In furtherance and extension of and not in limitation of,
the specific provisions herein above set forth, any action taken or omitted by
Administrative Agent or any Revolving Loan Lender under or in connection with
any Lender Letter of Credit, if taken or omitted in good faith, shall not put
Administrative Agent or any Revolving Loan Lender under any resulting liability
to any Borrower or any other Revolving Loan Lender.

                    
(H) Availability of a Lender's Pro Rata Share.

                              
(1) Unless Administrative Agent receives written notice from a Revolving Loan
Lender on or prior to any Funding Date that such Revolving Loan Lender will not
make available to Administrative Agent as and when required such Revolving Loan
Lender’s Pro Rata Share of any requested Loan or Revolving Advance,
Administrative Agent may assume that each Revolving Loan Lender will make such
amount available to Administrative Agent in immediately available funds on the
Funding Date and Administrative Agent may (but shall not be so required), in
reliance upon such assumption, make available to Borrowers on such date a
corresponding amount.

                              
(2) A Defaulting Lender shall pay interest at the Federal Funds Effective Rate
on the Defaulted Amount from the Business Day following the applicable Funding
Date of such Defaulted Amount until the date such Defaulted Amount is paid to
Administrative Agent. A notice of Administrative Agent submitted to any
Revolving Loan Lender with respect to amounts owing under this subsection
2.1(H) shall be conclusive, absent manifest error. If such amount is not
paid when due to Administrative Agent, Administrative Agent, at its option, may
notify Borrowers of such failure to fund and, upon demand by Administrative
Agent, Borrowers shall pay the unpaid amount to Administrative Agent for
Administrative Agent’s account, together with interest thereon for each day
elapsed since the date of such borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loan made by the other Revolving
Loan Lenders on such Funding Date. The failure of any Revolving Loan Lender to
make available any portion of its Commitment on any Funding Date or to fund its
participation in a Lender Letter of Credit shall not relieve any other Revolving
Loan Lender of any obligation hereunder to fund such Revolving Loan
Lender’s Commitment on such Funding Date or to fund any such participation,
but no Revolving Loan Lender shall be responsible for the failure of any other
Revolving Loan Lender to honor its Commitment on any Funding Date or to fund any
participation to be funded by any other Revolving Loan Lender.

                              
(3) Administrative Agent shall not be obligated to transfer to a Defaulting
Lender any payment made by any Borrower to Administrative Agent or any amount
otherwise received by Administrative Agent for application to the Obligations
nor shall a Defaulting Lender be entitled to the sharing of any interest, fees
or payments hereunder.

                              
(4) For purposes of voting or consenting to matters with respect to (i) the Loan
Documents or (ii) any other matter concerning the Loans, a Defaulting Lender
shall be deemed not to be a “Lender” and such Lender’s
Commitments and outstanding Loans and Revolving Advances shall be deemed to be
zero; provided, however, that a Defaulting Lender’s
commitment shall not be increased without the consent of the Defaulting
Lender.

          
2.2 Interest.

                    
(A) Rate of Interest. The Loans and all other Obligations shall bear
interest from the date such Loans are made or such other Obligations become due
to the date paid at a rate per annum set forth in the chart below (the "Interest
Rate").

      Loan Type                  Base Rate Plus             LIBOR Plus

      Revolver                        0.75%                    2.50%

      Term Loan A                     1.00%                    2.75%

      Term Loan B                     3.25%                    5.00%

      Term Loan C                     3.00%                     N/A

Subject to the provisions of subsection 2.1(D), Administrative
Borrower shall designate to Administrative Agent whether a Loan shall be a Base
Rate Loan or LIBOR Loan at the time a Notice of Borrowing is given pursuant to
subsection 2.1(D). Such designation by Administrative Borrower may be
changed from time to time pursuant to subsection 2.2(D). If on any day a
Loan or a portion of any Loan is outstanding with respect to which notice has
not been delivered to Administrative Agent in accordance with the terms of this
Agreement specifying the basis for determining the rate of interest or if LIBOR
has been specified and no LIBOR quote is available, then for that day that Loan
or portion thereof shall bear interest determined by reference to the Base
Rate.

          
After the occurrence and during the continuance of an Event of Default (i)(a)
the Loans and all other Obligations shall bear interest at a rate per annum
equal to 2% plus the applicable Interest Rate (the “Default Rate”) and
(b) the fees with respect to the Letters of Credit set forth in subsection
2.3(B) shall be increased by two percentage points (the “Letter of
Credit Default Rate”), (ii) each LIBOR Loan shall automatically convert to
a Base Rate Loan at the end of any applicable Interest Period and (iii) no Loans
may be converted to LIBOR Loans. Interest and fees which accrue at the Default
Rate and the Letter of Credit Default Rate shall be payable on demand.

                    
(B) Computation and Payment of Interest. Interest on the Loans and all
other Obligations shall be computed on the daily principal balance on the basis
of a 360 day year for the actual number of days elapsed. In computing interest
on any Loan, the date of funding of the Loan or the first day of an Interest
Period applicable to such Loan or, with respect to a Base Rate Loan being
converted from a LIBOR Loan, the date of conversion of such LIBOR Loan to such
Base Rate Loan, shall be included; and the date of payment of such Loan or the
expiration date of an Interest Period applicable to such Loan, or with respect
to a Base Rate Loan being converted to a LIBOR Loan, the date of conversion of
such Base Rate Loan to such LIBOR Loan, shall be excluded; provided that if a
Loan is repaid on the same day on which it is made, one day's interest shall be
paid on that Loan. Interest on Base Rate Loans and all other Obligations other
than LIBOR Loans shall be payable to Administrative Agent for benefit of Lenders
monthly in arrears on the first day of each month, on the date of any prepayment
of Loans, and at maturity, whether by acceleration or otherwise. Interest on
LIBOR Loans shall be payable to Administrative Agent for benefit of Lenders on
the last day of the applicable Interest Period for such Loan, on the date of any
prepayment of the Loans, and at maturity, whether by acceleration or otherwise.
In addition, for each LIBOR Loan having an Interest Period longer than three
months, interest accrued on such Loan shall also be payable on the last day of
each three month interval during such Interest Period.

                    
(C) Interest Laws. Notwithstanding any provision to the contrary
contained in this Agreement or any other Loan Document, Borrowers shall not be
required to pay, and neither Administrative Agent nor any Lender shall be
permitted to collect, any amount of interest in excess of the maximum amount of
interest permitted by applicable law ("Excess Interest"). If any Excess Interest
is provided for or determined by a court of competent jurisdiction to have been
provided for in this Agreement or in any other Loan Document, then in such
event: (1) the provisions of this subsection shall govern and control; (2)
Borrowers or any other Loan Party shall not be obligated to pay any Excess
Interest; (3) any Excess Interest that Administrative Agent or any Lender may
have received hereunder shall be, at such Lender's option, (a) applied as a
credit against the outstanding principal balance of the Obligations or accrued
and unpaid interest (not to exceed the maximum amount permitted by law), (b)
refunded to the payor thereof, or (c) any combination of the foregoing; (4) the
interest rate(s) provided for herein shall be automatically reduced to the
maximum lawful rate allowed from time to time under applicable law (the "Maximum
Rate"), and this Agreement and the other Loan Documents shall be deemed to have
been and shall be, reformed and modified to reflect such reduction; and (5)
Borrower or any Loan Party shall not have any action against Administrative
Agent or any Lender for any damages arising out of the payment or collection of
any Excess Interest. Notwithstanding the foregoing, if for any period of time
interest on any Obligations is calculated at the Maximum Rate rather than the
applicable rate under this Agreement, and thereafter such applicable rate
becomes less than the Maximum Rate, the rate of interest payable on such
Obligations shall remain at the Maximum Rate until each Lender shall have
received the amount of interest which such Lender would have received during
such period on such Obligations had the rate of interest not been limited to the
Maximum Rate during such period.

                    
(D) Conversion or Continuation. Subject to the provisions of this
subsection 2.2, Borrowers shall have the option to (1) convert at any
time all or any part of outstanding Loans equal to $1,000,000 and integral
multiples of $500,000 in excess of that amount from Base Rate Loans to LIBOR
Loans or (2) upon the expiration of any Interest Period applicable to a LIBOR
Loan, to (a) continue all or any portion of such LIBOR Loan equal to $1,000,000
and integral multiples of $500,000 in excess of that amount as a LIBOR Loan or
(b) convert all or any portion of such LIBOR Loan to a Base Rate Loan. The
succeeding Interest Period(s) of such continued or converted Loan commence on
the last day of the Interest Period of the Loan to be continued or converted;
provided that no outstanding Loan may be continued as, or be converted into, a
LIBOR Loan, when any Event of Default or Default has occurred and is
continuing.

                    
Administrative Borrower shall deliver a Notice of Borrowing with respect to such
conversion/continuation to Administrative Agent no later than 12:00 p.m. Chicago
time at least 3 Business Days in advance of the proposed conversion/
continuation date. The Notice of Borrowing with respect to such
conversion/continuation shall certify: (1) the proposed conversion/continuation
date (which shall be a Business Day); (2) the amount of the Loan to be
converted/continued; (3) the nature of the proposed conversion/continuation; (4)
in the case of conversion to, or a continuation of, a LIBOR Loan, the requested
Interest Period; and (5) that no Default or Event of Default has occurred and is
continuing or would result from the proposed conversion/continuation.

                    
In lieu of delivering the Notice of Borrowing with respect to such
conversion/continuation, Administrative Borrower may give Administrative Agent
telephonic notice by the required time of any proposed conversion/continuation
under this subsection 2.2(D); provided that such notice shall be promptly
confirmed in writing by delivery of a Notice of Borrowing with respect to such
conversion/continuation to Administrative Agent on or before the proposed
conversion/continuation date.

                    
Neither Administrative Agent nor any Lender shall incur any liability to
Borrowers in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by an officer or
other person authorized to act on behalf of Borrowers or for otherwise acting in
good faith under this subsection 2.2(D).

          
2.3 Fees.

                    
(A) Unused Line Fee. Borrowers shall pay to Administrative Agent, for the
benefit of Agents and Revolving Loan Lenders, a fee (the "Unused Line Fee") in
an amount equal to the Revolving Loan Commitment less the sum of (i) the average
daily balance of each Revolving Loan, plus (ii) the average daily face amount of
the Letter of Credit Reserve during the preceding month, multiplied by 0.50% per
annum, such fee to be calculated on the basis of a 360 day year for the actual
number of days elapsed and to be payable monthly in arrears on the first day of
each month following the Closing Date.

                    
(B) Letter of Credit Fees. Borrowers shall pay to Administrative Agent a
fee with respect to the Lender Letters of Credit for the benefit of Revolving
Loan Lenders in the amount of the average daily amount of Letter of Credit
Liability outstanding during such month multiplied by 2.0% per annum. Such fee
will be calculated on the basis of a 360 day year for the actual number of days
elapsed and will be payable monthly in arrears on the first day of each month.
Borrowers shall also reimburse Administrative Agent for any and all fees and
expenses, if any, paid by Administrative Agent or any Revolving Loan Lender to
the issuer of any Bank Letter of Credit.

                    
(C) Prepayment Fee. If Borrowers reduce the Revolving Loan Commitment in
whole or in part, Borrowers, at the time of such reduction, shall pay to
Administrative Agent for the benefit of Revolving Loan Lenders, as compensation
for the costs of being prepared to make funds available to Borrowers under this
Agreement, and not as a penalty, an amount determined by multiplying the
percentage set forth below by the amount of the Revolving Loan Commitment so
reduced (the "Prepayment Fee"): 2.0% upon a reduction during the first Loan
Year; 1.0% upon a reduction during the second Loan Year; and 0.50% upon a
reduction during the third Loan Year; provided, that no Prepayment Fee
shall be due and owing if the Revolving Loan Commitment is reduced in whole or
in part after the first Loan Year with funds raised from (a) unsecured
borrowings; provided that Heller and GECC have the first right of refusal
to match such borrowing and that Administrative Borrower shall have given Heller
and GECC 30 days' prior written notice of such unsecured borrowing, (b) the
issuance of capital stock, commercial paper or other debt or equity securities
of Recoton in a public offering or private placement, provided, that the
Net Securities Proceeds from such public offering or private placement shall be
used to pay down the Obligations as set forth in subsection 2.4(B)(2)
(with any repayment of the Revolving Loan constituting a permanent reduction of
the Revolving Loan Commitment by such amount) or (c) the proceeds of the
InterAct International IPO; provided, that all the terms and conditions
set forth in subsection 7.6 have been satisfied. Notwithstanding anything
to the contrary contained herein, the Prepayment Fee shall apply only to
reductions and prepayments which reduce, in whole or in part, the Revolving Loan
Commitment. Term Loan A, Term Loan B and Term Loan C may be prepaid at any time
without a Prepayment Fee.

                    
(D) Audit Fees. Borrowers agree to pay all fees and expenses of the firms
or individual(s) engaged by Collateral Agent to perform audits of Borrowers',
Recoton Canada's and Recone's operations; provided such audits shall not
be conducted more than quarterly unless there is a Default or an Event of
Default has occurred and is continuing. Notwithstanding the foregoing, if
Collateral Agent uses its internal auditors to perform any such audit, Borrowers
agree to pay to Collateral Agent, for its own account, an audit fee with respect
to each such audit equal to $850 per internal auditor per day (pro-rated for
portions thereof), together with all out of pocket expenses.

                    
(E) Other Charges and Expenses. Borrowers shall pay to Administrative
Agent, for its own account, all charges for returned items and all other bank
charges incurred by Administrative Agent, as well as Administrative Agent's
standard wire transfer charges for each wire transfer made under this
Agreement.

                    
(F) Administrative Agent's Fee. Borrowers agree to pay to the
Administrative Agent, for its own account, a non-refundable fee of $75,000 due
on the Closing Date and on each anniversary thereof.

                    
(G) Collateral Agent's Fee. Borrowers agree to pay to the Collateral
Agent, for its own account, a non-refundable fee of $75,000 due on the Closing
Date and on each anniversary thereof.

          
2.4 Payments and Prepayments.

                    
(A) Manner and Time of Payment. In its sole discretion, Administrative
Agent may elect to honor the automatic requests by Borrowers for Revolving
Advances for all principal, interest, fees and any other amounts due hereunder
on their applicable due dates pursuant to subsection 2.1(D) up to the
Revolving Loan Commitment of all Revolving Loan Lenders, and the proceeds of
each such Revolving Advance, if made, shall be applied as a direct payment of
the relevant Obligation. To the extent such amounts exceed the Revolving Loan
Commitment of all Revolving Loan Lenders, or if Administrative Agent elects to
bill Borrowers for any amount due hereunder, such amount shall be immediately
due and payable with interest thereon as provided herein. All payments made by
Borrowers (or Recoton Canada with respect to its Guaranty) with respect to the
Obligations shall be made without deduction, defense, setoff or counterclaim.
All payments to Administrative Agent hereunder shall, unless otherwise directed
by Administrative Agent, be made to Agent's Account or in accordance with
subsection 4.22. Proceeds remitted to Agent's Account shall be credited
to the Obligations on the Business Day of Administrative Agent's receipt of
readily available federal funds. For the purpose of calculating interest on the
Obligations, funds shall be deemed received on the Business Day of
Administrative Agent's receipt of readily available federal funds.

                    
(B)      Mandatory Prepayments.

                              
(1) Overadvance. At any time that the Revolving Loan exceeds the Maximum
Revolving Loan Amount, Borrowers shall, immediately repay the Revolving Loan to
the extent necessary to reduce the aggregate principal balance to an amount
equal to or less than the Maximum Revolving Loan Amount.

                              
(2) Proceeds of Asset Dispositions. Immediately upon receipt by
Borrowers, Recoton Canada or any of their respective Subsidiaries of proceeds of
any Asset Disposition (in one or a series of related transactions or events),
Borrowers shall prepay the Obligations in an amount equal to the Net Proceeds
therefrom which Net Proceeds exceed $250,000 (it being understood that if the
Net Proceeds exceed $250,000, the entire amount and not just the portion above
$250,000 shall be subject to this subsection 2.4(B)(2)). Except as
otherwise set forth in this subsection 2.4(B)(2) or in subsection
4.14, all such prepayments shall first be applied in payment of Scheduled
Installments of the Term Loan B, then be applied in payment of Scheduled
Installments of Term Loan A, then be applied in payment of Scheduled
Installments of Term Loan C, each in inverse order of maturity, and then be
applied in payment of the Revolver Loan without reducing the Revolving Loan
Commitment; provided however, that in the case of (i) any such Net
Proceeds consisting of insurance proceeds not to exceed $2,000,000 in the
aggregate during the term of this Agreement (other than with respect to the
portion of the insurance proceeds resulting from any casualty with respect to
real estate) and for which the casualty giving rise thereto could not reasonably
be expected to have a Material Adverse Effect, and (ii) any such Net Proceeds
consisting of proceeds of an Asset Disposition permitted pursuant to
subsection 7.3(A)(v), if Borrowers reasonably expect any Net Proceeds
under clauses (i) any (ii) to be reinvested within 180 days to repair or replace
the assets subject to such Asset Dispositions with like assets, Borrowers shall
deliver such Net Proceeds to Administrative Agent to be applied to the Revolving
Loan and Administrative Agent shall establish a reserve against available funds
for borrowing purposes under the Revolving Loan for such amount of net proceeds,
until such time as such proceeds have been re-borrowed or applied to other
Obligations as set forth herein. Borrowers and Recoton Canada may, so long as no
Default or Event of Default shall have occurred and be continuing or would be
caused thereby, re-borrow such proceeds only for such repair or replacement. If
Borrowers fail to reinvest such proceeds within 180 days, Borrowers and Recoton
Canada hereby authorize Administrative Agent to make a Revolving Advance to
repay the Obligations in the manner set forth in this subsection
2.4(B)(2). With respect to insurance proceeds resulting from the damage or
destruction of any building or real estate (and such casualty could not
reasonably be expected to have a Material Adverse Effect), the Borrowers shall
have 360 days to reinvest such proceeds to repair or replace the assets subject
to such casualty with like assets. Borrowers shall deliver such proceeds to
Administrative Agent to be applied to the Revolving Loan and Administrative
Agent shall establish a reserve against available funds for borrowing purposes
under the Revolving Loan for such amount of net proceeds, until such time as
such proceeds have been re-borrowed or applied to other Obligations as set forth
herein. Borrowers may, so long as no Default or Event of Default shall have
occurred and be continuing or would be caused thereby, re-borrow such proceeds
only for such repair or replacement. If Borrowers fail to reinvest such proceeds
within 360 days, Borrowers hereby authorize Administrative Agent to make a
Revolving Advance to repay the Obligations in the manner set forth in this
subsection 2.4(B)(2). Notwithstanding anything to the contrary contained
herein, the proceeds resulting solely from the damage, destruction or
condemnation of inventory or loss of Accounts shall be applied to repay the
Revolving Loan without reducing the Revolving Loan Commitment. For the purposes
of this subsection 2.4(B)(2), the events described in subsections
2.4(B)(5) and 2.4(B)(6) shall not be deemed Asset Dispositions.

                              
(3) Prepayments from Excess Cash Flow. Within 95 days after the end of each
Fiscal Year Borrowers shall prepay the Obligations in an amount equal to 50% of
Excess Cash Flow for such Fiscal Year calculated on the basis of the audited
financial statements for such Fiscal Year delivered to Administrative Agent and
Lenders pursuant to the Reporting Rider. Such required payment of Excess Cash
Flow will be calculated and required to be paid based on receipt of the audited
financial statements for Fiscal Year 2001 and each Fiscal Year thereafter. All
such prepayments from Excess Cash Flow shall first be applied in payment of
Scheduled Installments of the Term Loan B, then be applied in payment of
Scheduled Installments of Term Loan A, then be applied in payment of Scheduled
Installments of Term Loan C, each in inverse order of maturity, and then be
applied in payment of the Revolver Loan without reducing the Revolving Loan
Commitment. Concurrently with the making of any such payment, Administrative
Borrower shall deliver to Administrative Agent and Lenders a certificate of its
chief executive officer or chief financial officer demonstrating its calculation
of the amount required to be paid.

                              
(4) Prepayments from Tax Refunds. Immediately upon receipt by Loan Parties of
proceeds of any tax refunds, Borrowers shall prepay the Obligations in an amount
equal to such proceeds. All such prepayments from tax refunds shall be applied
to the Revolving Loans without reducing the Revolving Loan Commitment.

                              
(5) Prepayments and Reductions from Proceeds of Debt or Equity Offering. (a)
Immediately upon receipt by Borrowers or any of their respective Subsidiaries of
any proceeds of any Indebtedness for borrowed money (other than the Loans and
any other Indebtedness permitted by this Agreement), the Borrowers shall prepay
the Obligations in an amount equal to such proceeds; provided that
payment or acceptance of the amounts provided for in this subsection
2.4(B)(5) shall not constitute a waiver of any Event of Default resulting
from the incurrence of such Indebtedness or otherwise prejudice any rights or
remedies of the Administrative Agent or any Lender.

                    
(b) Except as set forth in clause (6), immediately upon receipt by Borrowers or
any of their respective Subsidiaries of any Equity Proceeds, the Borrower shall
prepay the Obligations in an amount equal to such Equity Proceeds.

          
All such prepayments in this subsection 2.4(B)(5) shall first be applied
in payment of Scheduled Installments of the Term Loan B, then be applied in
payment of Scheduled Installments of Term Loan A, then be applied in payment of
Scheduled Installments of Term Loan C, each in inverse order of maturity, and
then be applied in payment of the Revolver Loan and reducing the Revolving Loan
Commitment.

                              
(6) Prepayments from Proceeds of InterAct International IPO. Immediately upon
receipt by Borrowers of the Net Securities Proceeds of the InterAct
International IPO, such Net Securities Proceeds shall be applied only to the
extent necessary to pay (i) the Revolving Loan (and reducing the Revolving Loan
Commitment) by an amount equal to the value of Eligible Collateral set forth in
the most recently delivered Monthly Borrowing Base Certificate and Semi-Monthly
Borrowing Base Certificate pursuant to clause F of the Reporting Rider with
respect to InterAct International, multiplied by the advance rates for such
Collateral pursuant to such Monthly Borrowing Base Certificate and Semi-Monthly
Borrowing Base Certificate and (ii) the outstanding principal and interest of
the Term Loan A and Term Loan B.

                    
(C) Voluntary Prepayments and Repayments. Administrative Borrower may, at any
time upon not less than three Business Days prior notice to Administrative
Agent, prepay the Term Loans or reduce the Revolving Loan Commitment;
provided, however, the Revolving Loan Commitment may not be terminated by
Borrowers until all Loans are paid in full; provided, however,
that with respect to the Term Loan C prepayments, the Term Loan C Repayment
Restriction has been satisfied (including the delivery of the Repayment
Certification). Administrative Borrower shall provide Administrative Agent with
three days' prior notice of a prepayment of a LIBOR Loan. Notwithstanding
anything to the contrary contained herein, as long as any amounts of principal
under Term Loans remain outstanding, Borrowers may reduce, in part but not in
whole, the Revolving Loan Commitment. All such voluntary prepayments and
repayments of the Term Loans shall be applied to the Scheduled Installments of
the Term Loans in the same manner set forth in subsection 2.4(B)(2). Upon
termination of the Revolving Loan Commitment, Borrowers shall cause
Administrative Agent and each Revolving Loan Lender to be released from all
liability under any Lender Letters of Credit or, at Agent's option, Borrowers
will deposit cash collateral with Administrative Agent in an amount equal to
105% of the Letter of Credit Liability that will remain outstanding after such
termination.

                    
(D) Payments on Business Days. Whenever any payment to be made hereunder
shall be stated to be due on a day that is not a Business Day, the payment may
be made on the next succeeding Business Day and such extension of time shall be
included in the computation of the amount of interest or fees due hereunder.

          
2.5 Term of this Agreement. The Commitments shall terminate (unless
earlier terminated pursuant to the terms hereunder) and all Obligations shall
become immediately due and payable without notice or demand on the earlier of
(such date, the “Termination Date”) (a) October 31 , 2003 and (b) the
acceleration of all Obligations pursuant to subsection 8.3.
Notwithstanding any termination, until all Obligations (excluding unasserted
indemnity claims) have been indefeasibly paid in full in cash, Senior Agent, on
behalf of the Benefitted Persons, shall be entitled to retain security interests
in and liens upon all Collateral. Even after payment of all Obligations
hereunder, Borrowers’ and the other Loan Parties’ obligation to
indemnify each Agent and each Lender in accordance with the terms hereof shall
continue.

          
2.6 Statements. Administrative Agent shall render a monthly statement of
account to Borrowers within 20 days after the end of each month. Such statement
of account shall constitute an account stated unless Borrowers make written
objection thereto within 30 days from the date such statement is mailed to
Borrowers. Administrative Agent shall record in its books and records, including
computer records, the principal amount of the Loans owing to each Lender from
time to time. Administrative Agent’s books and records including computer
records, shall constitute presumptive evidence, absent manifest error, of the
accuracy of the information contained therein. Failure by Administrative Agent
to make any such notation or record shall not affect the obligations of
Borrowers to Lenders with respect to the Loans.

          
2.7 Yield Protection.

                    
(A) Capital Adequacy and Other Adjustments. In the event any Lender shall
have determined that the adoption after the date hereof of any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) from any central bank or governmental
agency or body having jurisdiction does or shall have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by such
Lender or any corporation controlling such Lender and thereby reducing the rate
of return on such Lender's or such corporation's capital as a consequence of its
obligations hereunder, then Borrowers shall within 15 days after notice and
demand from such Lender (together with the certificate referred to in the next
sentence and with a copy to Administrative Agent) pay to Administrative Agent,
for the account of such Lender, additional amounts sufficient to compensate such
Lender for such reduction. A certificate as to the amount of such cost and
showing the basis of the computation of such cost submitted by such Lender to
Borrowers shall, absent manifest error, be final, conclusive and binding for all
purposes.

                    
(B) Increased LIBOR Funding Costs. If, after the date hereof, the
introduction of, change in or interpretation of any law, rule, regulation,
treaty or directive would impose or increase reserve requirements (other than as
taken into account in the definition of LIBOR) or otherwise increase the cost to
any Lender of making or maintaining a LIBOR Loan, then Borrowers shall from time
to time within 15 days after notice and demand from Administrative Agent
(together with the certificate referred to in the next sentence) pay to
Administrative Agent, for the account of all such affected Lenders, additional
amounts sufficient to compensate such Lenders for such increased cost. A
certificate as to the amount of such cost and showing the basis of the
computation of such cost submitted by Administrative Agent on behalf of all such
affected Lenders to Borrowers shall, absent manifest error, be final, conclusive
and binding for all purposes.

          
2.8 Taxes.

                    
(A) No Deductions. Any and all payments or reimbursements made hereunder
shall be made free and clear of and without deduction for any and all taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto; excluding, however, the following: taxes imposed on the net
income of any Lender or Agent by the jurisdiction under the laws of which such
Agent or Lender is organized, resident or doing business or any political
subdivision thereof and taxes imposed on its net income by the jurisdiction of
such Agent's or Lender's applicable lending office or any political subdivision
thereof (all such taxes, levies, imposts, deductions, charges or withholdings
and all liabilities with respect thereto excluding such taxes imposed on net
income, herein "Tax Liabilities"). If any Loan Party shall be required by law to
deduct any such Tax Liabilities from or in respect of any sum payable hereunder
or under any other Loan Document to any Agent or Lender, then the sum payable
hereunder or under any other Loan Document shall be increased as may be
necessary so that, after making all required withholdings and deductions
(including withholdings and deductions applicable to additional sums payable
under this Section 2.8), such Agent or Lender receives an amount equal to the
sum it would have received had no such deductions or withholdings been made,
(ii) Borrowers shall make such deductions and (iii) Borrowers shall pay the full
amount deducted to the relevant taxing or other authority in accordance with
applicable law.

                    
(B) Changes in Tax Laws. In the event that, subsequent to the Closing
Date, (i) any changes in any existing law, regulation, treaty or directive or in
the interpretation or application thereof, (ii) any new law, regulation, treaty
or directive enacted or any interpretation or application thereof, or (iii)
compliance by Lender with any request or directive (whether or not having the
force of law) from any Governmental Authority:

                              
(1) does or shall subject any Agent or Lender to any tax of any kind whatsoever
or causes the withdrawal or termination of a previously granted tax exemption
with respect to this Agreement, the other Loan Documents or any Loans made or
Lender Letters of Credit issued hereunder, or change the basis of taxation of
payments to such Agent or Lender of principal, fees, interest or any other
amount payable hereunder (except for net income taxes, capital taxes, or
franchise taxes imposed in lieu of net income taxes, imposed generally by
federal, provincial, state or local taxing authorities with respect to interest
or commitment or other fees payable hereunder or changes in the rate of tax on
the overall net income of such Agent or Lender); or

                              
(2) does or shall impose on any Agent or Lender any other condition or increased
cost in connection with the transactions contemplated hereby or participations
herein; and the result of any of the foregoing is to increase the cost to
Administrative Agent or such Lender of issuing any Lender Letter of Credit or
making or continuing any Loan hereunder, as the case may be, or to reduce any
amount receivable hereunder; then, in any such case, Borrowers shall promptly
pay to Administrative Agent or such Lender, upon its demand, any additional
amounts necessary to compensate Administrative Agent or such Lender, on an
after-tax basis, for such additional cost or reduced amount receivable, as
determined by Administrative Agent or such Lender with respect to this Agreement
or the other Loan Documents. If Administrative Agent or any Lender becomes
entitled to claim any additional amounts pursuant to this subsection, it shall
promptly notify Borrowers of the event by reason of which Administrative Agent
or such Lender has become so entitled (with any such Lender concurrently
notifying Administrative Agent). A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Administrative Agent or
any Lender to Borrowers shall, absent manifest error, be final, conclusive and
binding for all purposes.

             
       (C) Foreign Lenders. Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") shall provide to Borrowers and
Administrative Agent (i) a properly completed and executed Internal Revenue
Service Form W-8 BEN or Form W-8 ECI or other applicable form, certificate or
document prescribed by the Internal Revenue Service of the United States
certifying as to such Foreign Lender's entitlement to a complete exemption from
withholding with respect to payments to be made to such Foreign Lender under
this Agreement, (a "Certificate of Exemption"), or (ii) a letter from any such
Foreign Lender stating that it is not entitled to any such exemption or reduced
rate of withholding (a "Letter of Non-Exemption"). Prior to becoming a Lender
under this Agreement and within 15 days after a reasonable written request of
Borrowers or Administrative Agent from time to time thereafter, each Foreign
Lender that becomes a Lender under this Agreement shall provide a Certificate of
Exemption or a Letter of Non-Exemption to Borrowers and Administrative
Agent.

                    
If a Foreign Lender is entitled to an exemption with respect to payments to be
made to such Foreign Lender under this Agreement (or to a reduced rate of
withholding) and does not provide a Certificate of Exemption to Borrowers and
Administrative Agent within the time periods set forth in the preceding
paragraph, Borrowers shall withhold taxes from payments to such Foreign Lender
at the applicable statutory rates and Borrowers shall not be required to pay any
additional amounts as a result of such withholding; provided,
however, that all such withholding shall cease upon delivery by such
Foreign Lender of a Certificate of Exemption to Borrowers and Administrative
Agent.

          
2.9 Required Termination and Prepayment. If on any date any Lender shall
have reasonably determined (which determination shall be final and conclusive
and binding upon all parties) that the making or continuation of its LIBOR Loans
has become unlawful or impossible by compliance by such Lender in good faith
with any law, governmental rule, regulation or order (whether or not having the
force of law and whether or not failure to comply therewith would be unlawful),
then, and in any such event, that Lender shall promptly give notice (by
telephone confirmed in writing) to Borrowers and Administrative Agent of that
determination. Subject to prior withdrawal of a Notice of Borrowing or a Notice
of Borrowing with respect to such conversion/continuation or prepayment of LIBOR
Loans as contemplated by subsection 2.10, the obligation of such Lender
to make or maintain its LIBOR Loans during any such period shall be terminated
at the earlier of the termination of the Interest Period then in effect or when
required by law and Borrowers shall no later than the termination of the
Interest Period in effect at the time any such determination pursuant to this
subsection 2.9 is made or, earlier when required by law, repay or prepay
LIBOR Loans together with all interest accrued thereon or convert LIBOR Loans to
Base Rate Loans.

          
2.10 Optional Prepayment/Replacement of Lenders. Within 15 days after
receipt by Borrowers of written notice and demand from any Lender for payment of
additional costs as provided in subsection 2.7 or subsection 2.8
or, as provided in subsection 9.4(C) in als by any Lender to consent to
certain proposed amendments, modifications, terminations or waivers with respect
to this Agreement that have been approved by Requisite Lenders or if any Lender
is unable to make or maintain or continue LIBOR Loans or if any Lender defaults
in its obligation to make a Loan in accordance with the terms of this Agreement
(any such Lender demanding such payment or refusing to so consent or agree being
referred to herein as an “Affected Lender”), Borrowers may, at their
option, notify Administrative Agent and such Affected Lender of its intention to
do one of the following:

                    
(a) Borrowers may obtain, at Borrowers' expense, a replacement Lender
("Replacement Lender") for such Affected Lender, which Replacement Lender shall
be reasonably satisfactory to Administrative Agent. In the event Borrowers
obtain a Replacement Lender that will purchase all outstanding Obligations owed
to such Affected Lender and assume its Commitments hereunder within 90 days
following notice of Borrowers’ intention to do so, the Affected Lender
shall sell and assign its Loans and Commitments to such Replacement Lender in
accordance with the provisions of subsection 9.5; provided, that
Borrowers have (i) reimbursed such Affected Lender for any administrative fee
payable pursuant to subsection 9.5 and, (ii) in any case where such
replacement occurs as the result of a demand for payment pursuant to
subsection 2.7 or subsection 2.8, paid all increased costs for
which such Affected Lender is entitled to under subsection 2.7 or
subsection 2.8 through the date of such sale and assignment; or

                    
(b) Borrowers may prepay in full all outstanding Obligations owed to such
Affected Lender and terminate such Affected Lender’s Commitments. Borrowers
shall, within 90 days following notice of its intention to do so, prepay in full
all outstanding Obligations owed to such Affected Lender, including such
Affected Lender’s increased costs for which it is entitled to reimbursement
under this Agreement through the date of such prepayment, but excluding any
Prepayment Fee referenced in subsection 2.3(C) and terminate such
Affected Lender’s Commitments.

          
2.11 Compensation. Borrowers shall compensate each Lender, upon written
request by such Lender (which request shall set forth in reasonable detail the
basis for requesting such amounts and which shall, absent manifest error, be
conclusive and binding upon all parties hereto), for all reasonable losses,
expenses and liabilities including, without limitation, any loss sustained by
such Lender in connection with the re-employment of such funds: (i) if for any
reason (other than a default by such Lender) a borrowing of any LIBOR Loan does
not occur on a date specified therefor in a Notice of Borrowing, a Notice of
Borrowing with respect to such conversion/continuation or a telephonic request
for borrowing or conversion/continuation; (ii) if any repayment or prepayment of
any LIBOR Loans occurs on a date that is not the last day of an Interest Period
applicable to that Loan, whether by acceleration, repayment, prepayment or
otherwise; (iii) if any prepayment of any of its LIBOR Loans is not made on any
date specified in a notice of prepayment given by Borrowers; or (iv) as a
consequence of any other default by Borrowers to repay the LIBOR Loans when
required by the terms of this Agreement; provided that during the period while
any such amounts have not been paid, such Lender shall reserve an equal amount
from amounts otherwise available to be borrowed under the Revolving Loan.

          
2.12 Booking of LIBOR Loans. Each Lender may make, carry or transfer
LIBOR Loans at, to, or for the account of, any of its branch offices or the
office of an affiliate of such Lender.

          
2.13 Assumptions Concerning Funding of LIBOR Loans. Calculation of all
amounts payable to each Lender under subsection 2.11 shall be made as
though each Lender had actually funded its relevant LIBOR Loan through the
purchase of a LIBOR deposit bearing interest at LIBOR in an amount equal to the
amount of that LIBOR Loan and having maturity comparable to the relevant
Interest Period and through the transfer of such LIBOR deposit from an offshore
office to a domestic office in the United States of America; provided,
however, that each Lender may fund each of its LIBOR Loans in any manner
it sees fit and the foregoing assumption shall be utilized only for the
calculation of amounts payable under subsection 2.11.

          
2.14 Joint and Several Liability of Borrowers.

                    
Each of Borrowers is accepting joint and several liability hereunder and under
the other Loan Documents in consideration of the financial accommodations to be
provided by Agents and the Lenders under this Agreement, for the mutual benefit,
directly and indirectly, of each of Borrowers and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations.

                    
Each of Borrowers, jointly and severally, hereby, irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this subsection 2.14), it being the intention
of the parties hereto that all the Obligations shall be the joint and several
obligations of each Person comprising Borrowers without preferences or
distinction among them.

                    
Each Borrower expects to derive substantial benefit, directly or indirectly,
from the making of the Loans and the issuance of the Letters of Credit.

                    
If and to the extent that any of Borrowers shall fail to make any payment with
respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event the
other Persons comprising Borrowers will make such payment with respect to, or
perform, such Obligation.

                    
The Obligations of each Borrower under the provisions of this subsection
2.14 constitute the absolute and unconditional, full recourse Obligations of
such Borrower enforceable against such Borrower to the full extent of its
properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.

                    
Except as otherwise expressly provided in this Agreement, each Borrower hereby
waives notice of acceptance of its joint and several liability, notice of any
Revolving Advances or Letters of Credit issued under or pursuant to this
Agreement, notice of the occurrence of any Default, Event of Default, or of any
demand for any payment under this Agreement, notice of any action at any time
taken or omitted by the Administrative Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Borrower hereby assents to, and
waives notice of, any extension or postponement of the time for the payment of
any of the Obligations, the acceptance of any payment of any of the Obligations,
the acceptance of any partial payment thereon, any waiver, consent or other
action or acquiescence by Agents or Lenders at any time or times in respect of
any default by any Borrower in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agents or Lenders in respect of any of the
Obligations, and the taking, addition, substitution or release, in whole or in
part, at any time or times, of any security for any of the Obligations or the
addition, substitution or release, in whole or in part, of any Borrower. Without
limiting the generality of the foregoing, each of Borrowers assents to any other
action or delay in acting or failure to act on the part of the Administrative
Agent or any Lender with respect to the failure by any Borrower to comply with
any of its respective Obligations, including, without limitation, any failure
strictly or diligently to assert any right or to pursue any remedy or to comply
fully with applicable laws or regulations thereunder, which might, but for the
provisions of this subsection 2.14 afford grounds for terminating,
discharging or relieving any Borrower, in whole or in part, from any of its
Obligations under this subsection 2.14, it being the intention of each
Borrower that, so long as any of the Obligations hereunder remain unsatisfied,
the Obligations of such Borrower under this subsection 2.14 shall not be
discharged except by performance and then only to the extent of such
performance. The Obligations of each Borrower under this subsection 2.14
shall not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar proceeding
with respect to any Borrower or the Administrative Agent or any Lender. The
joint and several liability of Borrowers hereunder shall continue in full force
and effect notwithstanding any absorption, merger, amalgamation or any other
change whatsoever in the name, constitution or place of formation of any
Borrower or Agent or any Lender.

                    
The provisions of this subsection 2.14 are made for the benefit of the
Agents, the Lenders and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all of Borrowers as
often as occasion therefor may arise and without requirement on the part of the
Agents, any Lender, or any successor or assign to first marshal any of its or
their claims or to exercise any of its or their rights against any of other
Borrowers or to exhaust any remedies, available to it or them against any of the
other Borrowers or to resort to any other source or means of obtaining payment
of any of the Obligations hereunder or to elect any other remedy. The provisions
of this subsection 2.14 shall remain in effect until all of the
Obligations shall have been indefeasibly paid in full in cash or otherwise fully
satisfied to the satisfaction of the Agents and the Lenders. If at any time, any
payment, or any part thereof, made in respect of any of the Obligations, is
rescinded or must otherwise be restored or returned by the Agents or any Lender
upon the insolvency, bankruptcy or reorganization of any of Borrowers, or
otherwise, the provisions of this subsection 2.14 will forthwith be
reinstated in effect, as though such payment had not been made.

                    
Each Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against the other Borrowers with respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments made by it to Administrative Agent or the Lenders with respect to any
of the Obligations or any collateral security therefor until such time as all of
the Obligations have been indefeasibly paid in full in cash. Any claim which any
Borrower may have against any other Borrower with respect to any payments to
Administrative Agent or any Lender hereunder or under any other Loan Documents
are hereby expressly made subordinate and junior in right of payment, without
limitation as to any increases in the Obligations arising hereunder or
thereunder, to the prior indefeasible payment in full, in cash, of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be indefeasibly paid in
full, in cash, before any payment or distribution of any character, whether in
cash, securities or other property, shall be made to any other Borrower
therefor.

                    
Each Borrower hereby agrees that, after the occurrence and during the
continuance of any Default or Event of Default, the payment of any amounts due
with respect to the Indebtedness owing by any Borrower to any other Borrower is
hereby subordinated to the prior payment in full, in cash, of the Obligations.
Each Borrower hereby agrees that after the occurrence and during the continuance
of any Default or Event of Default, such Borrower will not demand, sue for or
otherwise attempt to collect any Indebtedness of any other Borrower owing to
such Borrower until the Obligations shall have been indefeasibly paid in full in
cash. If, notwithstanding the foregoing sentence, such Borrower shall collect,
enforce or receive any amounts in respect of such Indebtedness, such amounts
shall be collected, enforced and received by such Borrower as trustee for
Administrative Agent, and such Borrower shall deliver any such amounts to
Administrative Agent for application to the Obligations in accordance with
subsection 8.7.

                    
Each Borrower hereby agrees that to the extent that a Borrower shall have paid
more than its proportionate share of any payment made hereunder, such Borrower
shall be entitled to seek and receive contribution from and against any other
Borrower hereunder in accordance with the terms and provisions of Section 2.5 of
the Guaranty. Each Borrower's right of contribution shall be subject to the
terms and conditions of this subsection 2.14. The provisions of this
subsection 2.14(J) shall in no respect limit the obligations and
liabilities of any Borrower or Guarantor to the Agents and Lenders, and each
Borrower and Guarantor shall remain liable to the Agents or Lenders for the full
amount of the Obligations.

          
2.15  Recoton as Agent for Borrowers. Each Borrower hereby irrevocably appoints
Recoton as the borrowing agent and attorney-in-fact for all Borrowers
(“Administrative Borrower”) which appointment shall remain in
full force and effect unless and until Administrative Agent shall have received
prior written notice signed by each Borrower that such appointment has been
revoked and that another Borrower has been appointed Administrative Borrower.
Each Borrower hereby irrevocably appoints and authorizes the Administrative
Borrower to (i) provide Administrative Agent with all notices with respect to
Revolving Advances and Letters of Credit obtained for the benefit of any
Borrower and all other notices and instructions under this Agreement, (ii) take
such action as the Administrative Borrower deems appropriate on its behalf to
obtain Revolving Advances and Letters of Credit and to exercise such other
powers as are reasonably incidental thereto to carry out the purposes of this
Agreement and (iii) receive and distribute accordingly the proceeds from the
Loans. It is understood that the handling of the Agent’s Account and
Collateral of Borrowers in a combined fashion, as more fully set forth herein,
is done solely as an accommodation to Borrowers in order to utilize the
collective borrowing powers of Borrowers in the most efficient and economical
manner and at their request, and that Lenders and Agents shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Agent’s Account
and the Collateral in a combined fashion since the successful operation of each
Borrower is dependent on the continued successful performance of the integrated
group. To induce the Lenders and Agents to do so, and in consideration thereof,
each Borrower hereby jointly and severally agrees to indemnify each Lender and
Agent and hold each Lender and Agent harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lenders and Agents
by any Borrower or by any third party whosoever, arising from or incurred by
reason of (a) the handling of the Agent’s Account and Collateral of
Borrowers as herein provided, (b) the Lenders’ and Agents’ relying on
any instructions of the Administrative Borrower, or (c) any other action taken
by the Lenders and Agents hereunder or under the other Loan Documents, except
that Borrowers will have no liability to the relevant Agent-Related Person or
Lender-Related Person under this subsection 2.15 with respect to any
liability that has been finally determined by final non-appealable judgment by a
court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Agent-Related Person or Lender-Related
Person, as the case may be.

          
2.16  Currency. All Loans hereunder shall be made in Dollars and all payments of the
Obligations hereunder shall be made in Dollars.

	 	SECTION 3.	CONDITIONS TO LOANS

          
The obligations of Administrative Agent and each Lender to make Loans and the
obligation of Administrative Agent or any Lender to issue Lender Letters of
Credit on the Closing Date and on each Funding Date are subject to satisfaction
of all of the terms and conditions set forth in this Agreement and in the
Conditions Rider, attached hereto, and the accuracy of all the representations
and warranties of Borrowers and the other Loan Parties set forth herein and in
the other Loan Documents.

	 	SECTION 4.	LOAN PARTIES' REPRESENTATIONS, WARRANTIES AND CERTAIN
COVENANTS

          
To induce Agents and each Lender to enter into the Loan Documents, to make and
to continue to make Loans and to issue and to continue to issue Lender Letters
of Credit, each Loan Party represents, warrants and covenants to each Agent and
each Lender that the following statements are and will be true, correct and
complete and, unless specifically limited, shall remain so for so long as any of
the Commitments hereunder shall be in effect and until payment in full of all
Obligations:

          
4.1 Organization, Powers, Capitalization.

                    
(A) Organization and Powers. Each of the Loan Parties is a corporation duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation (which jurisdiction is set forth on
Schedule 4.1(A)) and qualified to do business in all jurisdictions where such
qualification is required except where failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect. Each of the Loan
Parties (i) has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and proposed to be
conducted and to enter into each Loan Document and Related Agreements to which
it is a party, (ii) subject to specific representations regarding Environmental
Laws, has all material licenses, permits, consents or approvals from or by, and
has made all material filings with, and has given all material notices to, all
national, federal, state, provincial, municipal or other governmental
authorities having jurisdiction, to the extent required for such ownership,
operation and conduct and (iii) is in compliance with its charter and bylaws or
partnership, operating agreement or other organizational and governing
documents, as applicable.

                    
(B) Capitalization. The authorized and issued capital stock or other equity
interest of each of the Loan Parties and its respective Subsidiaries is as set
forth on Schedule 4.1(A), including all preemptive or other outstanding rights,
options, warrants, conversion rights or similar agreements or understandings for
the purchase or acquisition from any Loan Party (other than Recoton) of any
shares of capital stock or other equity interest or other securities of any such
entity. All issued and outstanding shares of capital stock or other equity
interest of each of the Loan Parties are duly authorized and validly issued,
fully paid, nonassessable, free and clear of all Liens other than those in favor
of Senior Agent for the benefit of the Benefitted Persons, and such shares were
issued in compliance with all applicable state, provincial, federal and foreign
laws concerning the issuance of securities. Each Loan Party (other than Recoton)
will promptly notify Agents of any change in its ownership or corporate
structure.

          
4.2 Authorization of Borrowing, No Conflict. Each Loan Party has the
power and authority to incur the Obligations and to grant liens on or security
interests in, the Collateral. On the Closing Date, the execution, delivery and
performance of the Loan Documents and each Related Agreement by each Loan Party
signatory thereto will have been duly authorized by all necessary corporate and
shareholder or equivalent action. The execution, delivery and performance by
each Loan Party of each Loan Document to which it is a party and the
consummation of the transactions contemplated by the Loan Documents and each
Related Agreement by each Loan Party (i) do not contravene any applicable law,
the corporate charter or bylaws (or equivalent governing and organizational
documents) of any Loan Party or any material agreement or any order by which any
Loan Party or any Loan Party’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 such Loan Party is a party or by which such Loan Party 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 such Loan Party other than those in favor of
Administrative or Senior Agent on behalf of the Benefitted Persons, pursuant to
the Loan Documents and Related Agreements; 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 are the legally valid and binding obligations of the
applicable Loan Parties respectively, each enforceable against the Loan Parties
party thereto, as applicable, in accordance with their respective terms.

          
4.3 Financial Condition. All financial statements concerning each
Borrower and its Subsidiaries furnished by or on behalf of each Borrower or its
Subsidiaries to Agents pursuant to this Agreement have been prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as disclosed therein) and present fairly, in all material respects, the
financial condition of the Persons covered thereby as at the dates thereof and
the results of their operations and cash flows for the periods then ended. The
Projections delivered by Recoton will be prepared in light of the past
operations of the business of each Borrower and its Subsidiaries, and such
Projections will represent the good faith estimate of each Borrower and its
senior management concerning the most probable course of its business as of the
date such Projections are delivered.

          
4.4 Indebtedness and Liabilities. As of the Closing Date, no Borrower nor
any of its Subsidiaries has (a) any Indebtedness over $100,000 in the aggregate
except as reflected on the most recent consolidating financial statements
delivered to Administrative Agent and Lenders; or (b) any Liabilities over
$100,000 in the aggregate other than as reflected on the most recent
consolidating financial statements delivered to Administrative Agent and Lenders
or as incurred in the ordinary course of business following the date of the most
recent financial statements delivered to Administrative Agent and Lenders.
Borrowers shall promptly deliver to Administrative Agent copies of all notices
given or received by Borrowers and any of their Subsidiaries with respect to
noncompliance with any term or condition related to any Subordinated Debt or
other Indebtedness, and shall promptly notify Administrative Agent of any
potential or actual Event of Default with respect to any Subordinated Debt or
other Indebtedness.

          
4.5 Title to Properties; Liens. Each Loan Party and each of its
Subsidiaries has good, sufficient and legal title to or valid leasehold
interests in, all of its respective material properties (including, without
limitation, the Collateral) and assets, in each case, free and clear of all
Liens except Permitted Encumbrances. As of the Closing Date, the real estate
(“Real Estate”) listed on Schedule 4.5 constitutes all of the real
property owned, leased, subleased, or used by any Loan Party. Each Loan Party
owns good and marketable fee simple title to all of its owned Real Estate, and
valid and subsisting leasehold interests in all of its leased Real Estate, all
as described on Schedule 4.5, and copies of all such leases or a summary of
terms thereof reasonably satisfactory to Agents have been delivered to Agents.
Schedule 4.5 further describes any Real Estate with respect to which any Loan
Party is a lessor, sublessor or assignee as of the Closing Date.

          
4.6 Litigation; Adverse Facts. As of the Closing Date, there are no judgments
outstanding against any Loan Party or affecting any property of any Loan Party
nor is there any action, charge, claim, demand, suit, proceeding, petition,
governmental investigation or arbitration now pending or, to the best knowledge
of the Loan Parties after due inquiry, threatened against or affecting any Loan
Party or any property of any Loan Party which could reasonably be expected to
result in any Material Adverse Effect. Promptly upon any executive officer of
the Administrative Borrower obtaining knowledge of (a) the institution of any
action, suit, proceeding, governmental investigation or arbitration against or
affecting any Loan Party or any property of any Loan Party not previously
disclosed by Borrowers to Administrative Agent or (b) any material development
in any action, suit, proceeding, governmental investigation or arbitration at
any time pending against or affecting any Loan Party or any property of any Loan
Party, in each case which could reasonably be expected to have a Material
Adverse Effect, Borrowers will promptly give notice thereof to Administrative
Agent and provide such other information as may be reasonably available to
enable Administrative Agent and its counsel to evaluate such matter.

          
4.7 Payment of Taxes. All material tax returns and reports of each Loan
Party and each of its Subsidiaries required to be filed by any of them have been
timely filed and are complete and accurate in all material respects. All taxes,
assessments, fees and other governmental charges which are due and payable by
each Loan Party and each of its Subsidiaries have been paid when due; provided
that no such tax need be paid if a Loan Party or one of its Subsidiaries is
contesting same in good faith by appropriate proceedings promptly instituted and
diligently conducted and if such Loan Party or such Subsidiary has established
appropriate reserves as shall be required in conformity with GAAP. As of the
Closing Date, except as set forth in Schedule 4.7, none of the income tax
returns of any Loan Party or any of their Subsidiaries are under audit and each
Loan Party shall promptly notify Administrative Agent in the event that any of
such Loan Party’s or any of its Subsidiaries’ income tax returns
become the subject of an audit. No tax liens have been filed against a Loan
Party or any of its Subsidiaries. The charges, accruals and reserves on the
books of each Loan Party and its Subsidiaries in respect of any taxes or other
governmental charges are in accordance with GAAP. The federal tax identification
number of Recoton and each Domestic Subsidiary is set forth below its signature
hereto.

          
4.8 Performance of Agreements. None of the Loan Parties and none of their
respective Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
material contractual obligation of any such Person, and no condition exists
that, with the giving of notice or the lapse of time or both, would constitute
such a default.

          
4.9 Employee Benefit Plans. With respect to Employee Benefit Plans, each
Loan Party, each of its respective Subsidiaries and each ERISA Affiliate (other
than Recoton Canada) are in compliance, and will continue to remain in
compliance, in all material respects with all applicable provisions of ERISA,
the IRC and all other applicable laws and the regulations and interpretations
thereof with respect to all Employee Benefit Plans and with the terms of such
Employee Benefit Plans. No material liability has been incurred by any Loan
Party, any Subsidiaries or any ERISA Affiliate which remains unsatisfied for any
funding obligation, taxes or penalties with respect to any Employee Benefit
Plan. No ERISA Event has occurred or is reasonably likely to occur. No Loan
Party or its ERISA Affiliates contribute to or have any liability with respect
to any Multiemployer Plan. With respect to Canadian Pension Plans, each Loan
Party and each of its respective Subsidiaries represent and warrant that as to
any Canadian Pension Plans of Borrowers or the other Loan Parties: (1) the
Canadian Pension Plans are duly registered under all applicable provincial
pension benefits legislation; (2) all obligations of Borrowers or the other Loan
Parties (including fiduciary, funding, investment and administrative
obligations) required to be performed in connection with the Canadian Pension
Plans or the funding agreements therefor have been performed in a timely fashion
and there are no outstanding disputes concerning the assets held pursuant to any
such funding agreement; (3) all contributions or premiums required to be
made by Borrowers or the other Loan Parties to the Canadian Pension Plans have
been made in a timely fashion in accordance with the terms of the Canadian
Pension Plans and applicable laws and regulations; (4) all employee
contributions to the Canadian Pension Plans required to be made by way of
authorized payroll deduction have been properly withheld by Borrowers or the
other Loan Parties, as applicable, and fully paid into the Canadian Pension
Plans in a timely fashion; (5) all reports and disclosures relating to the
Canadian Pension Plans required by any applicable laws or regulations have been
filed or distributed in a timely fashion; (6) there have been no improper
withdrawals, or applications of, the assets of any of the Canadian Pension
Plans; (7) no amount is owing by any of the Canadian Pension Plans under the
Income Tax Act (Canada) or any provincial taxation statute; (8) the
Canadian Pension Plans are fully funded both on an ongoing basis and on a
solvency basis (using actuarial assumptions and methods which are consistent
with the valuations last filed with the applicable governmental authorities and
which are consistent with generally accepted actuarial principles); and (9)
Borrowers, after diligent enquiry, have neither any knowledge, nor any grounds
for believing, that any of the Canadian Pension Plans is the subject of an
investigation, any other proceeding, an action or a claim. There exists no state
of facts which after notice or lapse of time or both could reasonably be
expected to give rise to any such proceeding, action or claim. The Loan Parties
or any of their Subsidiaries shall not establish any new Employee Benefit Plan
or Canadian Pension Plan or amend any existing Employee Benefit Plan or Canadian
Pension Plan if the liability or increased liability resulting from such
establishment or amendment is material. Schedule 4.9 lists all the Employee
Benefit Plans and Canadian Pension Plans of the Loan Parties.

          
4.10 Broker's Fees. No broker's or finder's fee or commission will be
payable with respect to any of the transactions contemplated hereby.

          
4.11 Environmental Matters. (a) Each Loan Party (including without
limitation, all operations and conditions at or in the real estate presently
owned and operated by such Loan Party) is in compliance with all applicable
Environmental Laws (which compliance includes, but is not limited to, the
possession by such Loan Party of all permits and other governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof), except where failure to be in compliance
could not reasonably be expected to have a Material Adverse Effect. Each Loan
Party has not received any written communication, whether from a Governmental
Authority, citizens group, employee or otherwise, alleging that such Loan Party
is not in such compliance, and there are no past or present actions, activities,
circumstances conditions, events or incidents that may prevent or interfere with
such compliance in the future.

                    
(b) There is no Environmental Claim pending or threatened against any Loan Party
or, to the best knowledge of such Loan Party, against any Person whose liability
for any Environmental Claim such Loan Party has or may have retained or assumed
either contractually or by operation of law, in each such case which,
individually or in the aggregate, would have a Material Adverse Effect.

                    
(c) There are no past or present actions, activities, circumstances, conditions,
events or incidents, including, without limitation, the Release, threatened
Release or presence of any Hazardous Material, which could reasonably be
expected to form the basis of any Environmental Claim against any Loan Party, or
to the best knowledge of such Loan Party, against any Person whose liability for
any Environmental Claim such Loan Party has or may have retained or assumed
either contractually or by operation of law, in each such case which would have
a Material Adverse Effect.

                    
(d) Each Loan Party has not, and to the best knowledge of such Loan Party, no
other Person has placed, stored, deposited, discharged, buried, dumped or
disposed of Hazardous Materials or any other wastes produced by, or resulting
from, any business, commercial or industrial activities, operations or
processes, on, beneath or adjacent to any property currently or formerly owned,
operated or leased by such Loan Party, except for inventories of such substances
to be used, and wastes generated therefrom, in the ordinary course of business
of such Loan Party (which inventories and wastes, if any, were and are stored or
disposed of in accordance with applicable Environmental Laws and in a manner
such that there has been no Release of any such substances), in each case,
which, individually or in the aggregate, would have a Material Adverse
Effect.

                    
(e) No Lien in favor of any Person relating to or in connection with any
Environmental Claim has been filed or has been attached to any real estate owned
or leased by a Loan Party.

          
4.12 Solvency. From and after the date of this Agreement, the Loan
Parties are and will be Solvent.

          
4.13 Disclosure. No representation or warranty of a Loan Party or any of
its Subsidiaries contained in this Agreement, the financial statements, the
other Loan Documents, the Related Agreements, or any other document, certificate
or written statement furnished to any Agent or Lender by or on behalf of a Loan
Party for use in connection with the Loan Documents or any Related Agreements
contains any untrue statement of a material fact or omitted, omits or will omit
to state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances in which the same
were made. There is no material fact known to any Loan Party that has had or
could have a Material Adverse Effect and that has not been disclosed herein or
in such other documents, certificates and statements furnished to Administrative
Agent or any Lender for use in connection with the transactions contemplated
hereby.

          
4.14 Insurance. Each Loan Party and its Subsidiaries maintains adequate
insurance policies for public liability, property damage, product liability, and
business interruption with respect to its business and properties and the
business and properties of its Subsidiaries against loss or damage of the kinds
customarily carried or maintained by corporations of established reputation
engaged in similar businesses and in amounts acceptable to Senior Agent.
Schedule 4.14 lists all insurance policies of any nature maintained, as of the
Closing Date, for current occurrences by each Loan Party. The Loan Parties shall
cause Senior Agent, for itself and on behalf of the Benefitted Persons, to be
named as loss payee on all insurance policies relating to any Collateral and
shall cause Senior Agent, for itself and on behalf of the Benefitted Persons, to
be named as additional insured under all liability policies, in each case
pursuant to appropriate endorsements in form and substance satisfactory to
Senior Agent and shall collaterally assign to Senior Agent, on behalf of the
Benefitted Persons, as security for the payment of the Obligations all business
interruption insurance of the Loan Parties. No notice of cancellation has been
received with respect to such policies and each Loan Party and its respective
Subsidiaries are in compliance with all conditions contained in such policies.
Borrowers shall apply any proceeds received from any policies of insurance
relating to any Collateral (other than Inventory and Accounts) to the
Obligations as set forth in subsection 2.4(B)(2). Borrowers shall apply
any proceeds received from any policies of insurance relating to Inventory and
Accounts to prepay the Revolving Loan without reducing the Revolving Loan
Commitment. In the event the Loan Parties fail to provide Administrative Agent
with evidence of the insurance coverage required by this Agreement, Senior Agent
may, but is not required to, purchase insurance at the Loan Parties’
expense to protect Senior Agent’s and the Lender’s interests in the
Collateral. This insurance may, but need not, protect Loan Parties’
interests. The coverage purchased by Senior Agent may not pay any claim made by
a Loan Party or any claim that is made against a Loan Party in connection with
the Collateral. A Loan Party may later cancel any insurance purchased by Senior
Agent, but only after providing Senior Agent with evidence that such Loan Party
has obtained insurance as required by this Agreement. If Senior Agent purchases
insurance for the Collateral, the Loan Parties will be responsible for the costs
of that insurance, including interest thereon and other charges imposed on
Senior Agent in connection with the placement of the insurance, until the
effective date of the cancellation or expiration of the insurance, and such
costs may be added to the Obligations. The costs of the insurance may be more
than the cost of insurance the Loan Parties are able to obtain on their own.

          
4.15 Compliance with Laws. Each Loan Party and its Subsidiaries are not
in violation of any law, ordinance, rule, regulation, order, policy, guideline
or other requirement of any domestic or foreign government or any
instrumentality or agency thereof, having jurisdiction over the conduct of its
business or the ownership of its properties, including, without limitation, any
Environmental Law, which violation would subject such Loan Party or its
Subsidiaries, or any of their respective officers to criminal liability or have
a Material Adverse Effect and no such violation has been alleged.

          
4.16 Employee Matters. Except as set forth on Schedule 4.16, (a) no Loan
Party nor any of such Loan Party’s employees is subject to any collective
bargaining agreement, (b) no petition for certification or union election is
pending with respect to the employees of any Loan Party and no union or
collective bargaining unit has sought such certification or recognition with
respect to the employees of any Loan Party and (c) there are no strikes,
slowdowns, work stoppages or controversies pending or, to the best knowledge of
Borrowers after due inquiry, threatened between any Loan Party and its
respective employees, other than employee grievances arising in the ordinary
course of business, which could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. Except as set forth
on Schedule 4.16, Borrowers and their respective Subsidiaries are not subject to
any written employment contract.

          
4.17 Governmental Regulation. None of the Loan Parties is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940 or to any federal, state or
foreign statute or regulation limiting its ability to incur indebtedness for
borrowed money.

          
4.18 Currency Controls. There are no controls on payments by any Governmental
Authority which could interfere with payments of obligations under the Loan
Documents.

          
4.19 Access to Accountants and Management. Borrowers authorize Agents to
discuss the financial condition and financial statements of Borrowers and their
respective Subsidiaries with Administrative Borrower’s Accountants upon
reasonable notice to Administrative Borrower of its intention to do so, and
authorizes Borrower’s Accountants to respond to all of Agents’
inquiries. Each Agent and Lender may, with the consent of Administrative
Borrower, which will not be unreasonably denied or withheld, confer with any
executive management of Recoton directly regarding such Borrower’s
business, operations and financial condition.

          
4.20 Inspection. Borrowers shall permit Agents and any authorized
representatives designated by Agents to visit and inspect any of the properties
of Borrowers and their 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. Each Lender may with the consent of
Administrative Agent, which will not be unreasonably denied, and with prior
notice to the Administrative Borrower, accompany Agents on any such visit or
inspection.

          
4.21 Collateral Records. Each Loan Party shall keep full and accurate
books and records relating to the Collateral. Upon the reasonable request of
Senior Agent, Borrowers shall mark such negotiable instruments, invoices and
other instruments or documents relating to the Collateral, to indicate Senior
Agent’s security interests in the Collateral, for the benefit of the
Benefitted Persons.

          
4.22 Collection of Accounts and Payments. Loan Parties shall establish
lockboxes and blocked accounts (collectively, “Blocked Accounts”) in
each Loan Party’s name with such banks (“Collecting Banks”) as
are acceptable to Administrative Agent (subject to irrevocable instructions
acceptable to Administrative Agent as hereinafter set forth) to which all
account debtors shall directly remit all payments on Accounts and in which each
Loan Party 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 check. The
Collecting Banks shall acknowledge and agree, in a manner satisfactory to
Administrative Agent, that all payments made to the Blocked Accounts are the
sole and exclusive property of Senior Agent, for the benefit of Benefitted
Persons, 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 Agent’s Account, subject to the exception referred to
below with respect to Recoton Canada. Loan Parties hereby agree that all
payments made to such Blocked Accounts or otherwise received by Senior Agent,
Administrative Agent and whether on the Accounts or as proceeds of other
Collateral or otherwise will be the sole and exclusive property of Senior Agent,
for the benefit of Benefitted Persons. Loan Parties shall irrevocably instruct
each Collecting Bank to promptly transfer all payments or deposits to the
Blocked Accounts into the Agent’s Account, except in the case of Recoton
Canada in which case all such payments shall be transferred to Recoton’s
concentration account at The Chase Manhattan Bank (or other account acceptable
to Administrative Agent) which is swept to the Agent’s Account. If Loan
Parties, or any if their Affiliates, employees, agents or other Person acting
for or in concert with Loan Parties, shall receive any monies, checks, notes,
drafts or any other payments relating to and/or proceeds of Accounts or other
Collateral, Loan Parties or such Person shall hold such instrument or funds in
trust for Senior Agent, for the benefit of Benefitted Persons, and, immediately
upon receipt thereof, shall remit the same or cause the same to be remitted, in
kind, to the Blocked Accounts or to Administrative Agent at its address set
forth in subsection 10.3 below. For the purpose of calculating interest
on the Obligations, all proceeds received in the Agent’s Account shall be
credited to the Obligations on the Business Day of Administrative Agent’s
receipt of immediately available federal funds.

          
4.23 Amendment of Schedules. Borrowers may amend any one or more of the
Schedules referred in this Section 4 (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.

          
4.24 Customer and Trade Relations. As of the Closing Date, there exists no
actual or, to the knowledge of any Loan Party, threatened termination or
cancellation of, or any material adverse modification or change in the business
relationship of any Loan Party with any of the material customers or the
business relationship of any Loan Party with any supplier material to its
operations.

          
4.25 Subordinated Debt. As of the Closing Date, Borrowers have delivered
to Agents a complete and correct copy of the Subordinated Debt Documents
(including all schedules, exhibits, amendments, supplements, modifications,
assignments and all other documents delivered pursuant thereto or in connection
therewith). Borrowers have the power and authority to incur the Subordinated
Debt. The subordination provisions of the Securities Purchase Agreement and the
Subordination Agreement are enforceable against the holders of the Subordinated
Debt by Agents and Lenders. All Obligations, including the Letter of Credit
Liabilities, constitute senior Indebtedness entitled to the benefits of the
subordination provisions contained in the Securities Purchase Agreement and the
Subordination Agreement. Borrowers acknowledge that each Agent and each Lender
is entering into this Agreement and is extending the Commitments in the case of
the Lenders in reliance upon the subordination provisions of the Securities
Purchase Agreement and the Subordination Agreement and this subsection
4.25.

	 	SECTION 5.	REPORTING AND OTHER AFFIRMATIVE COVENANTS

          
Borrowers covenant and agree that, so long as any of the Commitments hereunder
shall be in effect and until payment in full of all Obligations, Borrowers shall
perform, and shall cause each of their Subsidiaries to perform, all covenants in
this Section 5.

          
5.1 Financial Statements and Other Reports. Recoton will deliver to
Administrative Agent the financial statements and other reports contained in the
Reporting Rider attached hereto.

          
5.2 Endorsement. Each Borrower hereby constitutes and appoints Senior
Agent and Administrative Agent and all Persons designated by Senior Agent or
Administrative Agent for that purpose as such Borrower’s true and lawful
attorney-in-fact, with power to endorse such Borrower’s name to any of the
items of payment or proceeds described in subsection 4.22 above and all
proceeds of Collateral that come into Senior Agent’s or Administrative
Agent’s possession or under Senior Agent’s or Administrative
Agent’s control. Both the appointment of Senior Agent and Administrative
Agent as such Borrower’s attorney and Administrative Agent’s rights
and powers are coupled with an interest and are irrevocable until payment in
full and complete performance of all of the Obligations.

          
5.3 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.

          
5.4 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.

          
5.5 Further Assurances. Each Loan Party shall, and shall cause each of
its Subsidiaries to, from time to time, execute such guaranties, financing or
continuation statements, financing change statements, documents, security
agreements, reports and other documents or deliver to Administrative Agent such
instruments, certificates of title, mortgages, deeds of trust or hypothecs,
(including with respect to real property acquired by a Loan Party after the date
hereof) or other documents as Administrative Agent at any time may reasonably
request to evidence, perfect or otherwise implement the guaranties and security
for repayment of the Obligations provided for in the Loan Documents. It is
understood and agreed that in making such request with respect to any Foreign
Subsidiary or ownership interest therein, Administrative Agent shall take into
account the effect the laws, rules and regulations of the United States and
foreign countries may have on the granting of security, pledging of assets and
entering into guaranties and that Administrative Agent would not knowingly
request any of the foregoing which would cause a Material Adverse Effect arising
in connection with such Foreign Subsidiary (or ownership thereof).

          
5.6 Mortgages; Title Insurance; Surveys.

                    
(A) Title Insurance. On the Closing Date, each Loan Party shall deliver
or cause to be delivered to Administrative Agent ALTA lender's title insurance
policies issued by title insurers reasonably satisfactory to Administrative
Agent (the "Mortgage Policies") in form and substance and in amounts reasonably
satisfactory to Administrative Agent assuring Administrative Agent that the
Mortgages are valid and enforceable first priority mortgage liens on the
respective Mortgaged Property, free and clear of all defects and encumbrances
except Permitted Encumbrances. The Mortgage Policies shall be in form and
substance reasonably satisfactory to Administrative Agent and shall include such
endorsements insuring against the effect of future advances under this
Agreement, for mechanics' liens and for such other matters that Administrative
Agent may request. In the case of each leasehold constituting Mortgaged
Property, Administrative Agent shall have received such estoppel letters,
consents and waivers from the landlords and non-disturbance agreements from any
holders of mortgages or deeds of trust on such real estate as may have been
requested by Administrative Agent, which letters shall be in form and substance
satisfactory to Administrative Agent.

                    
(B) Surveys. On or before the Closing Date, each Loan Party shall deliver or
cause to be delivered to Administrative Agent current surveys, certified by a
licensed surveyor, for all real property that is the subject of the Mortgage
Policies. All such surveys shall be sufficient to allow the issuer of the
mortgage policy to issue an ALTA lender's policy.

          
5.7 Use of Proceeds and Margin Security. Borrowers shall use the proceeds
of all Loans for ordinary working capital and general corporate purposes (and as
described in the recitals to this Agreement) consistent with all applicable
laws, statutes, rules and regulations. No portion of the proceeds of any Loan
shall be used by Borrowers or any of their 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.

          
5.8 Bailee. If any Collateral is at any time in the possession or control
of any warehouseman, bailee or any of the Loan Parties’ agents or
processors, the Loan Parties shall, upon the request of Administrative Agent,
notify such warehouseman, bailee, agent or processor of the security interests
in favor of Senior Agent, for the benefit of the Benefitted Persons, created
hereby and shall instruct such Person to hold all such Collateral for Senior
Agent’s account subject to Administrative Agent’s instructions.

          
5.9 Year 2000. Each Borrower 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”. Borrowers have 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 Borrowers are not aware of any circumstances that would be
reasonably likely to result in a material adverse change in the business or
financial condition of any Borrower or any of their Subsidiaries as a result of
the failure of Borrowers or any of their 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, each Borrower 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.

          
5.10 Environmental Matters.

          
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, provincial, 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.

          
Each Loan Party shall promptly advise the Administrative Agent in writing and in
reasonable detail of (i) 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, (ii)
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; (iii) 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.

          
Each Loan Party shall promptly notify the Administrative Agent of (i) any
proposed acquisition of stock, assets, or property by such Loan Party that could
reasonably be expected to expose such Loan Party and (ii) 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.

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

          
5.11 Required Minimum Excess Availability. Unless otherwise agreed to by
the Requisite Lenders, Borrowers, on a consolidated basis shall maintain the
Required Minimum Excess Availability.

          
5.12 Recoton Germany. Recoton shall cause Recoton German Holdings
GmbH to provide one or more letters of credit (together with any replacements or
extensions thereof, collectively, the “Recoton Germany L/Cs”) to the
Administrative Agent on the Closing Date (which shall remain in effect for the
duration of this Agreement) which designate Administrative Agent, as
beneficiary, on behalf Agents and Lenders, in form and substance and amounts
satisfactory to the Administrative Agent, in its sole discretion, each such
Recoton Germany L/C to be used in the determination of the Borrowing Base;
provided, however that if any such Recoton Germany L/C expires
before the Termination Date, then prior to the date which is 30 days prior to
such expiry date, Recoton shall either extend such Recoton Germany L/C or
deliver a replacement letter of credit, in each case on terms substantially
similar to the Recoton Germany L/C delivered on the Closing Date. Any failure to
extend or replace any Recoton Germany L/C pursuant to this subsection 5.12 shall
constitute an Event of Default under this Agreement and upon any such failure,
Administrative Agent shall be entitled to draw (and upon the request of Required
Lenders shall draw) all or a portion of all of the amounts available under such
Recoton Germany L/C which amounts shall be applied to the repayment of the
Revolving Loans and the other Obligations as Administrative Agent shall
determine.

	 	SECTION 6.	FINANCIAL COVENANTS

          
Borrowers covenant and agree that so long as any of the Commitments remain in
effect and until indefeasible payment in full of all Obligations and termination
of all Lender Letters of Credit, each Borrower shall comply with and shall cause
each of its Subsidiaries to comply with all covenants contained in the Financial
Covenant Rider.

	 	SECTION 7.	NEGATIVE COVENANTS

          
Borrowers covenant and agree that so long as any of the Commitments remain in
effect and until indefeasible payment in full of all Obligations and termination
of all Lender Letters of Credit, each Borrower shall not and will not permit any
of its Subsidiaries to:

          
7.1 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:

          
(a) the Obligations;

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

          
(c) 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;

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

          
(e) (i) Indebtedness of any Loan Party to any other Loan Party; (ii) Indebtedness of
any Foreign Subsidiary to any Loan Party to the extent permitted under
subsection 7.4(f); (iii) Indebtedness of any Foreign Subsidiary to any
other Foreign Subsidiary; (iv) Indebtedness of any Loan Party to any Foreign
Subsidiary; provided, however, that (1) any intercompany
Indebtedness of any Loan Party permitted under this subsection 7.1(e)
shall be subordinated in right of payment to the Obligations on terms
satisfactory to the Administrative Agent and evidenced by intercompany notes in
form and substance satisfactory to the Administrative Agent, (2) all such
intercompany notes shall be endorsed in blank or accompanied by note powers
endorsed in blank and accompanied by note powers endorsed in blank and pledged
and delivered to the Administrative Agent, for the benefit of the Benefitted
Persons, (3) at the time any intercompany Indebtedness is incurred by any Loan
Party pursuant to this subsection 7.1(e), 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 intercompany Indebtedness pursuant to this subsection
7.1(e).

          
(f) 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;

          
(g) the Subordinated Debt;

          
(h) Indebtedness under the German Facility provided, that the terms of the
Indebtedness permitted under this subsection 7.1(h) can not be amended,
replaced or terminated without the prior written consent of the Requisite
Lenders;

          
(i) Indebtedness existing on the Closing Date and identified on Schedule 7.1;

          
(j) Indebtedness of the type described in subsection 2.3(C) 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
Obligations as set forth in subsection 2.4(B)(2), (2) shall be
subordinate to the Obligations; (3) the terms and conditions shall be
satisfactory to the Agents and the Requisite Lenders and (4) the documentation
shall be satisfactory to the Agents and the Requisite Lenders;

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

          
(l) Indebtedness with respect to the obligations of Recoton Italy and Recoton UK
referred to in subsection 7.2(e) and (f); and

          
(m) Indebtedness of Recoton Italy with respect to letters of credit that are cash
collateralized.

          
(n) Borrowers will not, and will not permit any of their 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.

          
7.2 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:

          
(a) endorsements of instruments or items of payment for collection in the ordinary
course of business;

          
(b) guaranties in existence on the date hereof and listed on Schedule 7.2;
provided that any such guaranty of the Senior Subordinated Notes is
subordinate to the Obligations on terms satisfactory to the Agents.

          
(c) guaranties pursuant to this Agreement;

          
(d) guaranties of the Indebtedness permitted under subsections 7.1 (b), (c) and
(d);

          
(e) 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 Loan Parties;

          
(f) 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 Loan Parties;

          
(g) guaranties made in the ordinary course of business by (i) a Loan Party with
respect to obligations of another Loan Party and (ii) 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

          
(h) the guaranty made by Recoton of the obligations incurred by Recoton Germany
under the German Facility.

          
7.3 Transfers, Liens and Related Matters.

                    
(A) Transfers. Sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the Collateral
or the assets of such Person, except that Borrowers and their Subsidiaries may
(i) sell or otherwise dispose of Inventory in the ordinary course of business;
(ii) sell, transfer or discount without recourse, in the ordinary course of
business, accounts receivables arising in the ordinary course of business in
connection with the compromise or collection thereof or in connection with the
receipt of proceeds under credit insurance; provided, that such proceeds
are applied to prepay the Revolving Loans; (iii) sell or otherwise dispose of
worn out, obsolete or surplus equipment and fixtures so long as the Net Proceeds
are applied to the prepayment of the Obligations as provided in subsection
2.4(B); (iv) subject to the provisions of the Collateral Documents,
transfer, sell or assign Collateral or other assets to another Loan Party
(including in connection with the dissolution, liquidation or winding up of any
Subsidiary set forth on Schedule 7.6); (v) make other Asset Dispositions if all
of the following conditions are met: (1) the market value of assets sold or
otherwise disposed of in one or a series of related transactions does not exceed
$250,000 and the aggregate market value of assets sold or otherwise disposed of
in any Fiscal Year does not exceed $1,000,000; (2) the consideration received is
at least equal to the fair market value of such assets; (3) the sole
consideration received is cash; provided, that trade-ins for which the
cash value of such trade-in is applied against the purchase price of new
equipment so purchased shall be deemed to be cash; (4) the Net Proceeds of such
Asset Disposition are applied as required by subsection 2.4(B); (5) after
giving effect to the sale or other disposition of the assets included within the
Asset Disposition and the repayment of the Obligations with the proceeds
thereof, each Borrower is in compliance on a pro forma basis with the covenants
set forth in the Financial Covenant Rider recomputed for the most recently ended
month for which information is available and showing it will be in compliance as
of the date thereof and in the future, and is in compliance with all other terms
and conditions contained in this Agreement; and (6) no Default or Event of
Default shall then exist or result from such sale or other disposition; and
(vii) 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 Revolving
Loan without reducing the Revolving Loan Commitment); and grant options in
accordance with its existing stock option plans and warrants in its reasonable
business judgment, (y) InterAct International shall be permitted to sell its
stock in accordance with subsection 2.4(B)(6); 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), and (z) subject to the provisions of the Security
Documents any Subsidiary can sell stock to its parent to the extent permitted by
7.4(c), (g), (h) and (i).

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

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

                    
(D) No Restrictions on Subsidiary Distributions to Borrowers. Except as
provided herein (or in the Subordinated Credit Agreement or the Senior
Subordinated Notes), 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 a Borrower or any Subsidiary of a Borrower; (2) pay any
indebtedness owed to a Borrower or any other Subsidiary; (3) make loans or
advances to a Borrower or any other Subsidiary; or (4) transfer any of its
property or assets to a Borrower or any other Subsidiary.

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

                    
(a) Borrowers 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 Administrative Agent;

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

                    
(c) (i) Borrowers and their Subsidiaries may continue loans made to employees and
former employees as set forth in Schedule 7.4(c) which loans, after the Closing
Date, may not be increased or reborrowed; (ii) 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); and (iii) Borrowers and their 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;

                    
(d) Borrowers and their Subsidiaries may make and maintain extensions of trade
credit in the ordinary course of business;

                    
(e) Borrowers and their Subsidiaries may make and maintain Investments existing as
of the Closing Date in their respective Subsidiaries as set forth in Schedule
7.4(e);

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

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

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

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

                    
(g) each Loan Party may make and maintain additional equity Investments in their
respective Subsidiaries which are Loan Parties;

                    
(h) Borrowers and their Subsidiaries may make additional equity Investments in
existing and new Subsidiaries in connection with the STD Restructuring to the
extent permitted under subsection 7.11;

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

                    
(j) Borrowers and their Subsidiaries may make intercompany loans to the extent
permitted pursuant to subsection 7.1(e);

                    
(k) Borrowers and their 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 than180 days; and

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

          
7.5 Restricted Junior Payments. (A) Directly or indirectly declare,
order, pay, make or set apart any sum for any Restricted Junior Payment, except
that: (a) Subsidiaries of any Borrower 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 Obligations 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 (i) 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 and (ii)
Borrowers may make Permitted Subordinated Debt Payments as defined in and in
accordance with the Subordination Agreement and regularly scheduled interest
payments on the Senior Subordinated Notes. 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.

          
(B) 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.

          
7.6 Restriction on Fundamental Changes. (a) Enter into any transaction of
merger, amalgamation or consolidation (other than a merger, amalgamation or
consolidation among Loan Parties); (b) other than the Subsidiaries set forth in
Schedule 7.6, liquidate, wind-up or dissolve itself (or suffer any liquidation
or dissolution); (c) convey, sell, lease, sublease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its business or assets, 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 or the liquidation, winding up or dissolution of the Subsidiaries
set forth on Schedule 7.6 (provided that, in connection with the transfer
of assets or creation of Subsidiaries in connection with the transactions
described on Schedule 7.11, Agents shall have received (a) such amendments and
counterparts to the Security Documents, Guaranties and the other Loan Documents
as may be requested by Agents to bind newly created Subsidiaries or existing
Subsidiaries to the terms of this Agreement and the Related Agreements and the
other applicable Loan Documents, (b) copies of organizational documents,
resolutions and incumbency certificates of any Persons executing any of the
foregoing amendments or counterparts, and such other documents and instruments
in connection therewith as may be reasonably requested by Senior Agent, and (c)
a favorable opinion of counsel to Loan Parties as to due authorization,
execution, and delivery of such amendments or counterparts, the enforceability
thereof and such other matters as may be reasonably requested by Agents
(including as to the creation and perfection of Liens pursuant to the Security
Documents), all of the foregoing in form and substance reasonably satisfactory
to Agents); or (d) acquire by purchase or otherwise all or any substantial part
of the business or assets of, or stock or other beneficial ownership of, any
Person; provided, however, that any Subsidiary may be merged,
amalgamated or consolidated with or into a Borrower (provided that such
Borrower shall be the continuing or surviving corporation) or with or into any
one or more wholly owned Subsidiaries of the Borrowers that are Guarantors
(provided that the wholly owned Subsidiary or Subsidiaries that are
Guarantors shall be the continuing or surviving corporations). It is understood
and agreed that the InterAct International IPO shall be permitted if the
following conditions are met:

                    
(i) the Net Securities Proceeds of the InterAct International IPO shall be
applied in payment of the Loans pursuant to and, to the extent required by and
in accordance with subsection 2.4(B)(6);

                    
(ii) Borrowers shall deliver a certificate showing pro forma
compliance with the financial covenants and Minimum Excess Availability after
giving effect to the InterAct International IPO; and

                    
(iii) upon the indefeasible payment in full in cash of the Obligations in
accordance with subsection 2.4(B)(6), InterAct International will no
longer be a Loan Party and the Collateral with respect to InterAct International
shall be released.

          
7.7 Changes Relating to Subordinated Debt. Change or amend the terms of
the Subordinated Debt (including any guaranties thereof) if the effect of such
amendment is an attempt to: (a) increase the interest rate on such Indebtedness;
(b) change the dates upon which payments of principal or interest are due on
such Indebtedness; (c) change any event of default or add any covenant with
respect to such Indebtedness; (d) change the payment or amendment and
modification provisions of such Indebtedness; (e) change the subordination
provisions thereof; or (f) 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 Borrowers, any of their Subsidiaries, Agents or any Lender.

          
7.8 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 a Borrower’s business and upon fair and reasonable terms
and except for the transactions set forth in subsections 7.4(c) on terms
which are no less favorable to such Borrower than it would obtain in a
comparable arm’s length transaction with an unaffiliated Person.

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

          
7.10 Tax Consolidations. File or consent to the filing of any
consolidated income tax return with any Person other than any other Borrowers or
any of their Subsidiaries, or any Guarantor, provided that in the event a
Borrower files a consolidated return with any such Person, such Borrower’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 such Borrower not filed a consolidated return with
such Person.

          
7.11 Subsidiaries. Other than the Subsidiaries set forth on Schedule 7.11,
establish, create or acquire any new Subsidiaries.

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

          
7.13 Press Release; Public Offering Materials. Without the prior written
consent of the applicable party, such consent not to be unreasonably withheld or
delayed, disclose the name of Agents or any Lender in any press release or in
any prospectus, proxy statement or other materials filed with any governmental
entity relating to a public offering of the capital stock or other equity
interest of any Loan Party except as may be required by law or regulators of
applicable self regulatory organizations.

          
7.14 Bank Accounts. With respect to any Loan Party, establish any new
bank accounts (other than disbursement accounts for which deposits thereto shall
be made from the Revolving Loans; provided, that such Loan Party gives
Administrative Agent notice of the establishment of any such disbursement
account), or attempt to amend or terminate any Blocked Account or lockbox
agreement without Administrative Agent’s prior written consent.

          
7.15 Sale-Leasebacks. No Loan Party shall engage in any sale-leaseback,
synthetic lease or similar transaction involving any of its assets.

          
7.16 Cancellation of Indebtedness. No Loan Party shall cancel any claim or
debt owing to it by a third-party, except for reasonable consideration
negotiated on an arm’s length basis and in the ordinary course of its
business consistent with past practices.

          
7.17 Inactive Subsidiaries. Each of the Inactive Subsidiaries shall not
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.

          
7.18 Parity with Senior Lender. No Loan Party shall grant any security
interest in property or deliver a guarantee to any holder of the Senior
Subordinated Notes or the Subordinated Agent, on behalf of the Subordinated
Creditors, or any Subordinated Creditor to secure payment and performance of the
obligations incurred under the Securities Purchase Agreement or the Subordinated
Credit Agreement, as the case may be, that is not also granted to the Senior
Agent on behalf of the Lenders to secure payment and performance of the
Obligations hereunder and in each case subject to the Subordination Agreement
and the subordination provisions of the Securities Purchase Agreement.

	 	SECTION 8.	DEFAULT, RIGHTS AND REMEDIES

          
8.1 Event of Default. "Event of Default" means the occurrence or
existence of any one or more of the following:

                    
(A) Payment. Failure to make payment of the principal of or interest on
any Loan, or failure to pay any other Obligation pursuant to this Agreement not
charged to the Revolving Loan within five days after such amount becomes due in
accordance with this Agreement; or

                    
(B) Default in Other Agreements. (1) Failure of Borrowers or any of their
Subsidiaries to pay when due any principal or interest on any Indebtedness
(other than the Obligations) or (2) breach or default of Borrowers or any of
their Subsidiaries with respect to any Indebtedness (other than the
Obligations); 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

                    
(C) Breach of Certain Provisions. Failure of any Borrower to perform or
comply with any term or condition contained in paragraphs (A), (B), (C) and (K)
of the Reporting Rider, subsections 5.3, 5.5, 5.6, 5.11 or 5.12,
Section 4, Section 6, Section 7 or the Financial Covenants
Rider; or

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

                    
(E) Other Defaults Under Loan Documents. Any Loan Party defaults in the
performance of or compliance with any term contained in this Agreement or the
other Loan Documents and such default is not remedied or waived within 15 days
after receipt by such Loan Party of notice from Administrative Agent, or
Requisite Lenders, of such default (other than occurrences described in other
provisions of this subsection 8.1, 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

                    
(F) Change in Control. (i) 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, (ii) the Board of directors of Recoton shall not consist of a
majority of Continuing Directors ("Continuing Directors" means the directors of
Recoton on the date of this Agreement 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), (iii) Recoton ceases to
own, directly or indirectly, 100% of the other Borrowers, Recone or Recoton
Canada other than with respect to options to acquire InterAct International
stock and (iv) Robert L. Borchardt or any trust established by him shall cease
to beneficially own and control 4% of the outstanding capital stock of
Recoton.

                    
(G) 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

                    
(H) 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; (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 8.1(H); 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

                    
(I) Liens. Any lien, levy or assessment is filed or recorded with respect
to or otherwise imposed upon all or any part of the Collateral or the 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

                    
(J) 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

                    
(K) 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

                    
(L) 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

                    
(M) 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
Borrowers' and their Subsidiaries, on a consolidated basis, and such order
continues for 30 days or more; or

                    
(N) Invalidity of Loan Documents. Any of the Loan Documents 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 under any Loan
Documents to which it is party, or gives notice to such effect; or

                    
(O) Failure of Security. Senior Agent, on behalf of the Benefitted
Persons, does not have or ceases to have a valid and perfected first priority
security interest in the Collateral (other than in de minimis
amounts and subject to Permitted Encumbrances), in each case, for any reason
other than the failure of Senior Agent or any Lender to take any action within
its control; or

                    
(P) Damage, Strike, Casualty. Any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or 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.

                    
(Q) Licenses and Permits. The loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by any
Borrower 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.

                    
(R) Forfeiture. There is filed against any Loan Party or any of its
Subsidiaries any civil or criminal action, suit or proceeding under any federal
or state racketeering statute (including, without limitation, the Racketeer
Influenced and Corrupt Organization Act of 1970), which action, suit or
proceeding (1) is not dismissed within 120 days; and (2) could reasonably be
expected to result in the confiscation or forfeiture of any material portion of
the Collateral; or.

                    
(S) Currency Controls. There are controls on payments imposed by a
Governmental Authority which interfere with the payment of obligations under the
Loan Documents; or

                    
(T) 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

                    
(U) Default Under German Facility. There shall occurred a default under the
loan documents evidencing the German Facility and to the extent a cure period is
provided under such documents with respect to such default, such default shall
continue unremedied for such period of time during which cure of such default is
permitted thereunder; or

                    
(V) Recoton Germany. Recoton Germany shall have failed to comply with the
terms of subsection 5.12; or

                    
(W) 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

                    
(X) Foreign Exchange. There occurs a fluctuation in the foreign exchange
affecting the Deutsche Mark which results in the sum of the aggregate amount of
commitments outstanding under the German Facility, the aggregate amounts
outstanding of Subordinated Debt and the aggregate amount of the Revolving
Commitment and the outstanding Term Loans to exceed $275,000,000; or

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

                    
(Z) Income Tax Act. A requirement from the Minister of National Revenue for
payment pursuant to Section 224 or any successor section of the Income Tax
Act (Canada) or Section 317, or any successor section of the Excise Tax
Act (Canada) or any comparable provision of similar legislation shall have
been received by any Agent or any Lender or any other Person in respect of any
Borrower or its Subsidiaries or otherwise issued in respect of any Borrower or
any of its Subsidiaries.

          
8.2 Suspension of Commitments. Upon the occurrence of any Default or
Event of Default, notwithstanding any grace period or right to cure,
Administrative Agent may or upon demand by Requisite Lenders shall, without
notice or demand, immediately cease making additional Loans and the Commitments
(other than the obligation of Lenders to purchase participations in Letters of
Credit) shall be suspended; provided that, in the case of a Default, if the
subject condition or event is waived or cured within any applicable grace or
cure period, the Commitments shall be reinstated.

          
8.3 Acceleration. Upon the occurrence of any Event of Default described
in the foregoing subsections 8.1(G) or 8.1(H), all Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by any Borrower, and the Commitments shall thereupon terminate. Upon the
occurrence and during the continuance of any other Event of Default,
Administrative Agent may, and upon the written request of the Requisite Lenders
shall, by written notice to Borrowers, (a) declare all or any portion of the
Obligations to be, and the same shall forthwith become, immediately due and
payable and the Commitments shall thereupon terminate and (b) demand that
Borrowers immediately deposit with Administrative Agent an amount equal to 105%
of the Letter of Credit Reserve to enable Administrative Agent or any Lender
that has issued any Lender Letter of Credit to make payments under the Lender
Letters of Credit when required and such amount shall become immediately due and
payable.

          
8.4 Remedies. If any Event of Default shall have occurred and be
continuing, in addition to and not in limitation of any other rights or remedies
available to any Agent and Lenders at law or in equity, Senior Agent may and
shall upon the request of Requisite Lenders exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it or any other Agent, all the rights and remedies of a
secured party on default under the UCC or PPSA, as applicable (whether or not
the UCC or the PPSA, as applicable, applies to the affected Collateral) and may
also (a) require the Loan Parties to, and the Loan Parties hereby agree that
they will, at their 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 a place to be designated by Senior Agent which is reasonably
convenient to both parties; (b) withdraw all cash in the Blocked Accounts and
apply such monies in payment of the Obligations in the manner provided in
subsection 8.7, (c) without notice or demand or legal process, enter upon
any premises of any Loan Party and take possession of the Collateral, (d) sell,
assign, lease, license (on an exclusive or non-exclusive basis), give an option
or options to purchase or otherwise dispose of the Collateral (or contract to do
any of the foregoing) under one or more contracts or as an entirety. The Loan
Parties agree that, to the extent notice of sale of the Collateral or any part
thereof shall be required by law, at least 10 days notice to the Loan Parties 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 (whether public or private), if permitted by law, any Agent or any
Lender 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 such Agent or such Lender. Senior Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Borrowers shall remain liable for any deficiency. 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,
each Loan Party hereby specifically waives all rights of redemption, stay or
appraisal which it has or may have under any law now existing or hereafter
enacted. Senior Agent shall not be required to proceed against any Collateral
but Senior Agent or Administrative Agent may proceed against the Loan Parties
directly.

          
8.5 Appointment of Attorney-in-Fact. Each Loan Party hereby constitutes
and appoints Senior Agent as such Loan Party’s attorney-in-fact with full
authority in the place and stead of such Loan Party and in the name of such Loan
Party, Senior Agent or otherwise, from time to time in Senior Agent’s
discretion while an Event of Default is continuing (except that the Senior Agent
shall at all times be able to file under the Uniform Commercial Code and the
Personal Property Security Act financing statements and financing change
statements in the name of each Loan Party as debtor, and record in any
intellectual property registry, appropriate evidence of the lien and security
interest granted herein in the Intellectual Property (as defined in the Security
Agreements) in the name of each Loan Party as assignor) 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: (a) 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;
(b) to adjust, settle or compromise the amount or payment of any Account, or
release wholly or partly any customer or obligor thereunder or allow any credit
or discount thereon; (c) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a) 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 or to
preserve the value of any of the Collateral or otherwise to enforce the rights
of Agents and Lenders with respect to any of the Collateral; and (e) to sign and
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts or any other documents of title, assignments, verifications
and notices in connection with Accounts and other documents relating to the
Collateral, (f) to commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect of any
Collateral; (g) to defend any suit, action or proceeding brought against any
Loan Party with respect to any Collateral; (h) to settle, compromise or adjust
any suit, action or proceeding described in the preceding clause and, in
connection therewith, to give such discharges or releases as the Senior Agent
may deem appropriate; (i) generally, to sell or transfer and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Senior Agent were the absolute owner thereof for all
purposes, and to do, at the Senior Agent’s option and the Loan Party’s
expense, at any time, or from time to time, all acts and things which the Senior
Agent deems necessary to protect, preserve or realize upon the Collateral and
the Liens of the Senior Agent thereon and to effect the intent of this Agreement
all as fully and effectively as any Loan Party might do; and (j) execute, in
connection with any foreclosure, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral. The
appointment of Senior Agent as each Loan Party’s attorney and Senior
Agent’s rights and powers are coupled with an interest and are irrevocable
until indefeasible payment in full and complete performance of all of the
Obligations and the termination of the Commitments.

          
8.6 Limitation on Duty of Agents with Respect to Collateral. Beyond the
safe custody thereof, each Agent and each Lender 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. Each 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 such Agent accords its
own property. Neither any Agent nor any Lender shall 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, broker or other agent or bailee selected by
Borrowers or selected by any Agent in good faith.

          
8.7 Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, (a) each Borrower irrevocably waives the
right to direct the application of any and all payments at any time or times
thereafter received by Senior Agent or Administrative Agent from or on behalf of
such Borrower, and each Borrower hereby irrevocably agrees that Senior Agent and
Administrative Agent shall have the continuing exclusive right to apply and to
reapply any and all payments received at any time or times after the occurrence
and during the continuance of an Event of Default against the Obligations in
such manner as Administrative Agent may deem advisable notwithstanding any
previous entry by Administrative Agent upon any books and records and (b) the
proceeds of any sale of, or other realization upon, all or any part of the
Collateral shall be applied: first, to all fees, costs and expenses incurred by
or owing to Agents with respect to this Agreement, the other Loan Documents or
the Collateral; second, to all fees, costs and expenses incurred by or owing to
any Lender with respect to this Agreement, the other Loan Documents or the
Collateral; third, to accrued and unpaid interest on the Obligations; and
fourth, to the principal amounts of the Obligations outstanding. Notwithstanding
anything to the contrary contained herein, upon the occurrence and during the
continuance of an Event of Default, the outstanding principal and interest on
the Term Loan C shall be paid after all the other Obligations have been paid in
full in cash.

          
8.8 Waivers; Non-Exclusive Remedies. No failure on the part of
Administrative Agent or any Lender to exercise, and no delay in exercising and
no course of dealing with respect to, any right under this Agreement or the
other Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise by Administrative Agent or any Lender of any right under this
Agreement or any other Loan Document preclude any other or further exercise
thereof or the exercise of any other right. The rights in this Agreement and the
other Loan Documents are cumulative and shall in no way limit any other remedies
provided by law.

	 	SECTION 9.	AGENTS

          
9.1 Agents.

                    
(A) Appointment. Each Lender hereto and, upon obtaining an interest in
any Loan, any participant, transferee or other assignee of any Lender
irrevocably appoints, designates and authorizes Heller, as Administrative Agent,
and GECC, as Collateral Agent and Syndication Agent, to take such actions or
refrain from taking such action as its agents on its behalf and to exercise such
powers hereunder and under the other Loan Documents as are delegated by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto. In addition, each Lender hereto and, upon obtaining an interest in any
Loan, any participant, transferee or other assignee of any Lender irrevocably
appoints, designates and authorizes Heller, as Senior Agent, to take such
actions or refrain from taking such action as its agent on its behalf and to
exercise such powers under the Subordination Agreement as are delegated by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto. Neither the Agents nor any of its directors, officers, employees or
agents shall be liable for any action so taken. The provisions of this
subsection 9.1 are solely for the benefit of Agents and Lenders and
neither Borrowers nor any other Loan Party shall have any rights as a third
party beneficiary of any of the provisions hereof. In performing its functions
and duties under this Agreement and the other Loan Documents, each Agent shall
act solely as agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or
for any Borrower or any other Loan Party, except that the Senior Agent shall
also act as agent for the Subordinated Creditors in accordance with the terms of
the Subordination Agreement. Each Agent may perform any of its duties hereunder,
or under the Loan Documents, by or through its agents or employees.

                    
(B) Nature of Duties. Agents shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of each Agent shall be mechanical and administrative
in nature. Agents shall not have by reason of this Agreement a fiduciary, trust
or agency relationship with or in respect of any Lender, any Borrower or any
other Loan Party. Nothing in this Agreement or any of the Loan Documents,
express or implied, is intended to or shall be construed to impose upon any
Agent any obligations in respect of this Agreement or any of the Loan Documents
except as expressly set forth herein or therein. Each Lender shall make its own
appraisal of the creditworthiness of each Borrower, and shall have independently
taken whatever steps it considers necessary to evaluate the financial condition
and affairs of each Borrower, and Agents shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit
or other information with respect thereto (other than as expressly required
herein), whether coming into its possession before the Closing Date or at any
time or times thereafter. If an Agent seeks the consent or approval of any
Lenders to the taking or refraining from taking any action hereunder, then such
Agent shall send notice thereof to each Lender. Agents shall promptly notify
each Lender any time that the Requisite Lenders have instructed Agents to act or
refrain from acting pursuant hereto.

                    
(C) Rights, Exculpation, Etc. Neither Agents nor any of their officers,
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by them hereunder or under any of the Loan Documents, or in
connection herewith or therewith, except that an Agent shall be liable to the
extent of its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction. Administrative Agent shall not be liable for
any apportionment or distribution of payments made by it in good faith and if
any such apportionment or distribution is subsequently determined to have been
made in error, the sole recourse of any Lender to whom payment was due but not
made, shall be to recover from other Lenders any payment in excess of the amount
to which they are determined to be entitled (and such other Lenders hereby agree
to return to such Lender any such erroneous payments received by them). In
performing its functions and duties hereunder, Agents shall exercise the same
care which it would in dealing with loans for its own account, but neither
Agents nor any of their agents or representatives shall be responsible to any
Lender for any recitals, statements, representations or warranties herein or for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the Loan Documents or
the transactions contemplated thereby, or for the financial condition of any
Loan Party. Agents shall not be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
this Agreement or any of the Loan Documents or the financial condition of any
Loan Party, or the existence or possible existence of any Default or Event of
Default. Agents may at any time request instructions from Lenders with respect
to any actions or approvals which by the terms of this Agreement or of any of
the Loan Documents Agents are permitted or required to take or to grant, and if
such instructions are promptly requested, Agents shall be absolutely entitled to
refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until they shall have
received such instructions from Requisite Lenders or all or such other portion
of the Lenders as shall be prescribed by this Agreement. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against any Agent
as a result of Agent acting or refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of Requisite
Lenders in the absence of an express requirement for a greater percentage of
Lender approval hereunder for such action.

                    
(D) Reliance. Agents shall be under no duty to examine, inquire into, or
pass upon the validity, effectiveness or genuineness of this Agreement, any
other Loan Document, or any instrument, document or communication furnished
pursuant hereto or in connection herewith. Agents shall be entitled to rely, and
shall be fully protected in relying, upon any written or oral notices,
statements, certificates, orders or other documents or any telephone message or
other communication (including any writing, fax, telecopy or telegram) believed
by it in good faith to be genuine and correct and to have been signed, sent or
made by the proper Person, and with respect to all matters pertaining to this
Agreement or any of the Loan Documents and their duties hereunder or thereunder.
Each Agent shall be entitled to rely upon the advice of legal counsel,
independent accountants, and other experts selected by such Agent in its sole
discretion.

                    
(E) Indemnification. Lenders will reimburse and indemnify Agents for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation, legal
and attorneys' fees and expenses), advances or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agents in any way relating to or arising out of this Agreement or any of the
Loan Documents or any action taken or omitted by Agents under this Agreement or
any of the Loan Documents, in proportion to each Lender's Pro Rata Share, but
only to the extent that any of the foregoing is not promptly reimbursed by Loan
Parties; provided, however, that Agents shall provide written
notice to the Lenders of any claim made against the Agents and provided,
further, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements resulting from Agents' gross
negligence or willful misconduct as determined by a final non-appealable
judgment by a court of competent jurisdiction. If any indemnity furnished to
Agents for any purpose shall, in the opinion of Agents, be insufficient or
become impaired, Agents may call for additional indemnity and cease, or not
commence, to do the acts indemnified against, even if so directed by Lenders or
Requisite Lenders, until such additional indemnity is furnished. The obligations
of Lenders under this subsection 9.1(E) shall survive the payment in full
of the Obligations and the termination of this Agreement.

                    
(F) Heller and GECC Individually. With respect to its Commitments and the
Loans made by it, each of Heller and GECC shall have and may exercise the same
rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
terms "Lenders" or "Requisite Lenders" or any similar terms shall, unless the
context clearly otherwise indicates, include each of Heller and GECC in their
individual capacity as a Lender or one of the Requisite Lenders. Each of Heller
and GECC may lend money to, acquire equity or other ownership interests in, and
generally engage in any kind of banking, trust or other business with any Loan
Party as if it were not acting as Agent pursuant hereto.

                    
(G) Successor Agent.

                              
(1) Resignation. An Agent may resign from the performance of all its
agency functions and duties hereunder at any time by giving at least 30 Business
Days’ prior written notice to the Loan Parties and the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment as provided below.

                              
(2) Appointment of Successor. Upon any such notice of resignation
pursuant to clause (G)(1) above, Requisite Lenders shall appoint a successor
Agent (which successor Agent shall also be a Lender) which, unless an Event of
Default has occurred and is continuing, shall be reasonably acceptable to
Borrowers. If a successor Agent shall not have been so appointed within said 30
Business Day period, the retiring Agent, upon notice to Borrowers, shall then
appoint a successor Agent who shall serve as Agent until such time, if any, as
Requisite Lenders appoint a successor Agent as provided above.

                              
(3) Successor Agent. Upon the acceptance of any appointment as Agent
under the Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent’s resignation as Agent, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent.

                    
(H) Collateral Matters.

                              
(1) Release of Collateral. Lenders hereby irrevocably authorize Senior
Agent, at its option and in its discretion, to release any Lien granted to or
held by Senior Agent upon any Collateral (i) upon termination of the Commitments
and upon payment and satisfaction of all Obligations (other than contingent
indemnification obligations to the extent no claims giving rise thereto have
been asserted); or (ii) constituting property being sold or disposed of if
Borrowers certify to Senior Agent that the sale or disposition is made in
compliance with the provisions of this Agreement (and Senior Agent may rely in
good faith conclusively on any such certificate, without further inquiry). In
addition, Lenders hereby irrevocably authorize Senior Agent, at its option and
in its discretion, to release any Lien granted to or held by Senior Agent upon
any Collateral having an aggregate book value of less than 10% of the total book
value of all Collateral provided, that Senior Agent shall deliver written
notice of such release with respect to Collateral having an aggregate book value
of greater than $1,000,000; provided, however, that only with the
consent of Requisite Lenders, may Senior Agent release Liens granted to or held
by Senior Agent upon any Collateral having an aggregate book value of greater
than 10% of the total book value of all Collateral, as determined by Senior
Agent, either in a single transaction or in a series of related transactions;
provided, further, in no event will Senior Agent, acting under the
authority granted to it pursuant to this sentence, release during any calendar
year Liens granted to or held by Senior Agent upon any Collateral having a total
book value in excess of 20% of the total book value of all Collateral, as
determined by Senior Agent. The Lenders hereby authorize Senior Agent to release
any Collateral owned by InterAct International for purposes of the consummation
of the InterAct International IPO in accordance with the terms and conditions
under this Agreement.

                              
(2) Confirmation of Authority; Execution of Releases. Without in any
manner limiting Senior Agent's authority to act without any specific or further
authorization or consent by Lenders (as set forth in subsection 9.2(H)(1)
above), each Lender agrees to confirm in writing, upon request by Administrative
Agent or Borrowers, the authority to release any Collateral conferred upon
Senior Agent under clauses (i) and (ii) of subsection 9.2(H)(1). Upon
receipt by Senior Agent of confirmation from the requisite percentage of Lenders
(as set forth in subsection 9.1(H)(1) above), if any, of Senior
Agent’s authority to release any Liens upon any Collateral, and upon at
least 10 Business Days prior written request by Borrowers, Agent shall, and is
hereby irrevocably authorized by Lenders to, execute such documents as may be
necessary to evidence the release of the Liens granted to Senior Agent, for the
benefit of the Benefitted Persons upon such Collateral; provided,
however, that (i) Senior Agent shall not be required to execute any such
document on terms which, in Senior Agent’s opinion, would expose Senior
Agent to liability or create any obligation or entail any consequence other than
the release of such Liens without recourse or warranty, and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any Liens
granted to Senior Agent on behalf of the Benefitted Persons upon (or obligations
of any Loan Party, in respect of), all interests retained by any Loan Party,
including, without limitation, the proceeds of any sale, all of which shall
continue to constitute part of the property covered by this Agreement or the
Loan Documents.

                              
(3) Absence of Duty. Agents shall have no obligation whatsoever to any
Lender or any other Person to assure that the property covered by this Agreement
or the Loan Documents exists or is owned by Borrowers or is cared for, protected
or insured or has been encumbered or that the Liens granted to Senior Agent on
behalf of the Benefitted Persons herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
Administrative Agent in this Agreement or in any of the Loan Documents, it being
understood and agreed that in respect of the property covered by this Agreement
or the Loan Documents or any act, omission or event related thereto,
Administrative Agent may act in any manner it may deem appropriate, in its
discretion, given Agent’s own interest in property covered by this
Agreement or the Loan Documents as one of the Lenders and that Administrative
Agent shall have no duty or liability whatsoever to any of the other Lenders;
provided, however, that Administrative Agent shall exercise the same care
which it would in dealing with loans for its own account.

                    
(I) Agency for Perfection. Each Agent and each Lender hereby appoint each
other Lender as agent for the purpose of perfecting Agent's security interest in
assets which, in accordance with the Uniform Commercial Code or Personal
Property Security Act in any applicable jurisdiction, can be perfected only by
possession. Should any Lender (other than Administrative Agent or Senior Agent)
obtain possession of any such assets, such Lender shall notify Administrative
Agent thereof, and, promptly upon Administrative Agent's request therefor, shall
deliver such assets to Administrative Agent or in accordance with Administrative
Agent's instructions. The Administrative Agent may file such proofs of claim or
documents as may be necessary or advisable in order to have the claims of the
Administrative Agent and the Lenders (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Administrative Agent
and the Lenders, their respective agents, financial advisors and counsel),
allowed in any judicial proceedings relative to any Borrower and/or its
Subsidiaries, or any of their respective creditors or property, and shall be
entitled and empowered to collect, receive and distribute any monies, securities
or other property payable or deliverable on any such claims. Any custodian in
any judicial proceedings relative to any Borrower and/or its Subsidiaries is
hereby authorized by each Lender to make payments to the Administrative Agent
and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders, to pay to the Administrative Agent any
amount due for the reasonable compensation, expenses, disbursements and advances
of the Administrative Agent, its agents, financial advisors and counsel, and any
other amounts due the Administrative Agent. Nothing contained in this Agreement
or the other Loan Documents shall be deemed to authorize the Administrative
Agent to authorize or consent to or accept or adopt on behalf of any Agent or
Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Loans, or the rights of any holder thereof, or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding, except as specifically permitted herein.

                    
(J) Exercise of Remedies. Each Lender agrees that it will not have any
right individually to enforce or seek to enforce this Agreement or any Loan
Document or to realize upon any collateral security for the Loans, unless
instructed to do so by Senior Agent, it being understood and agreed that such
rights and remedies may be exercised only by Senior Agent.

          
9.2 Notice of Default.

                    
Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default except with respect to defaults in
the payment of principal, interest and fees required to be paid to Agent for the
account of Lenders, unless Administrative Agent shall have received written
notice from a Lender or Borrowers referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". Administrative Agent will notify each Lender of its receipt of any
such notice.

          
9.3 Action by Administrative Agent and Senior Agent.

                    
Administrative Agent and Senior Agent shall take such action with respect to any
Default or Event of Default as may be requested by Requisite Lenders in
accordance with Section 8. Unless and until Administrative Agent or
Senior Agent has received any such request, Administrative Agent or Senior Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to any Default or Event of Default as it shall deem
advisable or in the best interests of Lenders.

          
9.4 Amendments, Waivers and Consents.

                    
(A) Except as otherwise provided herein or in any of the other Loan Documents,
no amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or consent to any departure by any Loan
Party therefrom, shall in any event be effective unless the same shall be in
writing and signed by Requisite Lenders (or, Administrative Agent, if expressly
set forth herein or in any of the other Loan Documents) and the applicable Loan
Party; provided however, no amendment, modification, termination, waiver or
consent shall be effective, unless in writing and signed by all Lenders, to do
any of the following: (i) increase any of the Commitments; (ii) reduce the
principal of or the rate of interest on any Loan or reduce the fees payable with
respect to any Loan or Letter of Credit; (iii) extend the Termination Date or
the scheduled due date for all or any portion of principal of the Loans or any
interest or fees due hereunder; (iv) amend the definition of the term "Requisite
Lenders" or the percentage of Lenders which shall be required for Lenders to
take any action hereunder; (v) amend or waive this subsection 9.4 or the
definitions of the terms used in this subsection 9.4 insofar as the
definitions affect the substance of this subsection 9.4; (vi) amend the
definition of Borrowing Base; (vii) release Collateral (except if the sale,
disposition or release of such Collateral is permitted under subsection
7.3 or subsection 9.1 or under any other Loan Document); or (viii)
consent to the assignment, delegation or other transfer by any Loan Party of any
of its rights and obligations under any Loan Document; provided, further, that
no amendment, modification, termination, waiver or consent affecting the rights
or duties of Agents under this Section 9 or under any Loan Document shall
in any event be effective, unless in writing and signed by Agents, in addition
to the Lenders required to take such action. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 9
shall be binding upon each Lender or future Lender and, if signed by a Loan
Party, on such Loan Party. Notwithstanding anything to the contrary contained
herein, the Term Loan C Lenders shall not have any voting rights under this
Agreement or any other Loan Document except as follows: no amendment,
modification, termination, waiver or consent with respect to any Loan Document
shall be effective to do any of the following unless such amendment,
modification, termination, waiver or consent is in writing and signed by all
Term Loan C Lenders: (i) increase the Term Loan C Commitments, (ii) reduce the
principal of or the rate of interest or fees on Term Loan C, (iii) extend the
Termination Date or the scheduled due date for payment of all or any portion of
principal, interest or fees on Term Loan C, (iv) amend or waive this last
sentence of this subsection 9.4 or the definitions of the terms used in this
last sentence of this subsection 9.4, (v) amend or waive subsection 2.1A(3) or
the definitions of the terms used in subsection 2.1A(3) in respect of Term Loan
C in an way adverse to the Term Loan C Lenders, including, without limitation,
the definition of "Scheduled Installment" or (vi) amend or waive subsection
9.5(A)(a) or 9.5(A)(c)(i) or any of the definitions of the terms used in
subsection 9.5(A)(a) or 9.5(A)(b)(ii) in respect of Term Loan C in any way
adverse to the Term Loan C Lenders.

                    
(B) Each amendment, modification, termination, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination, waiver or consent shall
be required for Senior Agent to take additional Collateral.

                    
(C) In the event Administrative Agent requests the consent of a Lender and does
not receive a written consent or denial thereof within 10 Business Days after
such Lender's receipt of such request, then such Lender will be deemed to have
denied the giving of such consent. If, in connection with any proposed
amendment, modification, termination or waiver of any of the provisions of this
Agreement requiring the consent or approval of all Lenders under this
subsection 9.4, the consent of Requisite Lenders is obtained but the
consent of one or more other Lenders whose consent is required is not obtained,
then Borrowers shall have the right, so long as all such non-consenting Lenders
are either replaced or prepaid as described in clauses (A) or (B) below, to
either (A) replace the non-consenting Lenders with one or more Replacement
Lenders pursuant to clause (a) of subsection 2.10 so long as each such
Replacement Lender consents to the proposed amendment, modification, termination
or waiver or (B) prepay in full the Obligations of the non-consenting Lenders
and terminate the non-consenting Lenders' Commitments in accordance with clause
(b) of subsection 2.10.

Notwithstanding anything in this subsection 9.4, Administrative Agent
and Borrowers, without the consent of either Requisite Lenders or all Lenders,
may execute amendments to this Agreement and the Loan Documents, which consist
solely of the making of typographical corrections so long as such corrections do
not change the meaning or intent in a manner which adversely affects the
Lenders.

          
9.5 Assignments and Participations in Loans.

                    
(A) Each Lender may assign its rights and delegate its obligations under this
Agreement to an Eligible Assignee; provided, that (a) such Lender shall first
obtain the written consent of Administrative Agent (except that no such consent
shall be required in connection with assignments by Term Loan C Lenders which
are insurance companies), which shall not be unreasonably withheld, and the
Administrative Agent shall deliver prior written notice to the Borrowers, (b)
the amount of Commitments and Loans of the assigning Lender being assigned shall
in no event be less than the lesser of (i) $5,000,000 or (ii) the entire amount
of the Commitments and Loans of such assigning Lender and (c)(i) unless
consented to by the Administrative Agent (except that no such consent shall be
required in connection with assignments by Term Loan C Lenders which are
insurance companies), which consent shall not be unreasonably withheld or
delayed, each such assignment shall be of a pro rata portion (except in the case
of Term Loan C) of all such assigning Lender's Loans and Commitments hereunder,
and (ii) the parties to such assignment shall execute and deliver to
Administrative Agent for acceptance and recording an Assignment and Acceptance
Agreement together with (x) a processing and recording fee of $3,500 payable to
Administrative Agent and (y) each of the Notes, if any, originally delivered to
the assigning Lender. The administrative fee referred to in clause (c) of the
preceding sentence shall not apply to an assignment described in paragraph (D)
below. Upon receipt of all of the foregoing, Administrative Agent shall notify
Borrowers of such assignment and Borrowers shall comply with their obligations
under the last sentence of subsection 2.1(F). In the case of an
assignment authorized under this subsection 9.5, the assignee shall be
considered to be a "Lender" hereunder and Borrowers hereby acknowledge and agree
that any assignment will give rise to a direct obligation of Borrowers to the
assignee. The assigning Lender shall be relieved of its obligations hereunder
with respect to the assigned portion of its Commitment.

                    
(B) Each Lender may sell participations in all or any part of any Loans or
Commitments made by it to another Person, and any such participation shall be in
a minimum amount of $5,000,000. All amounts payable by Borrowers hereunder shall
be determined as if that Lender had not sold such participation and the holder
of any such participation shall not be entitled to require such Lender to take
or omit to take any action hereunder except action directly effecting (a) any
reduction in the principal amount or an interest rate on any Loan in which such
holder participates; (b) any extension of the Termination Date or the date fixed
for any payment of interest or principal payable with respect to any Loan in
which such holder participates; and (c) any release of substantially all of the
Collateral. Borrowers hereby acknowledge and agree that the participant under
each participation shall for purposes of subsections 2.8, 2.9, 2.10, 9.6 and
10.2 be considered to be a "Lender".

                    
(C) Except as otherwise provided in subsection 9.5(A) no Lender shall, as
between Borrowers and that Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of participation in, all or any part of the Loans or other Obligations
owed to such Lender. Each Lender may furnish any information concerning each
Borrower and its Subsidiaries in the possession of that Lender from time to time
to Eligible Assignees and participants (including prospective assignees and
participants) provided that the Persons obtaining such information agrees to
maintain the confidentiality of such information to the extent required by
subsection 10.18. Each Borrower agrees that it will use its best efforts
to assist and cooperate with Administrative Agent and any Lender in any manner
reasonably requested by Administrative Agent or such Lender to effect the sale
of a participation or an assignment described above, including without
limitation assistance in the preparation of appropriate disclosure documents or
placement memoranda. Notwithstanding anything contained in this Agreement to the
contrary, so long as the Requisite Lenders shall remain capable of making LIBOR
Loans, no Person shall become a Lender hereunder unless such Person shall also
be capable of making LIBOR Loans.

                    
(D) Notwithstanding any other provision set forth in this Agreement, any Lender
may at any time (a) following written notice to Administrative Agent, create a
security interest in all or any portion of its rights under this Agreement or
the other Loan Documents in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System and (b)
subject to complying with the provisions of subsection 9.5 (A) (other
than the payment of the administrative fee referred to in clause (c) of
subsection 9.5 (A)), assign all or any portion of its funded loans to an
Eligible Assignee which is a Subsidiary of such Lender or its parent company, to
one or more other Lenders, or to a Related Fund. For purposes of this paragraph,
a "Related Fund" means, with respect to any Lender, a fund or other investment
vehicle that invests in commercial loans and is managed by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.

                    
(E) Administrative Agent shall maintain at its office in Chicago, Illinois a
copy of each Assignment and Acceptance Agreement delivered to it and a register
for the recordation of the names and addresses of Lenders, and the commitments
of, and principal amount of the Loans owing to each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
presumptive evidence of the amounts due and owing to Lender in the absence of
manifest error. Borrowers, Administrative Agent and each Lender may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Borrowers and any Lender, at any reasonable time
upon reasonable prior notice.

          
9.6 Set Off and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender is hereby authorized by each Borrower at any time or from time to
time, with reasonably prompt subsequent notice to such Borrower (any prior or
contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (a) balances held by such Lender at any of
its offices for the account of such Borrower or any of its Subsidiaries
(regardless of whether such balances are then due to such Borrower or its
Subsidiaries), and (b) other property at any time held or owing by such Lender
to or for the credit or for the account of such Borrower or any of its
Subsidiaries, against and on account of any of the Obligations; except that no
Lender shall exercise any such right without the prior written consent of
Administrative Agent. Any Lender exercising its right to set off shall purchase
for cash (and the other Lenders shall sell) interests in each of such other
Lender’s Pro Rata Share of the Obligations as would be necessary to cause
all Lenders to share the amount so set off with each other Lender in accordance
with their respective Pro Rata Shares. Borrowers agree, to the fullest extent
permitted by law, that any Lender may exercise its right to set off with respect
to amounts in excess of its Pro Rata Share of the Obligations and upon doing so
shall deliver such amount so set off to Administrative Agent for the benefit of
all Lenders in accordance with their Pro Rata Shares.

          
9.7 Disbursement of Funds. Administrative Agent may, on behalf of the
Benefitted Persons, disburse funds to Borrowers for Loans requested. Each Lender
shall reimburse Administrative Agent on demand for all funds disbursed on its
behalf by Administrative Agent, or if Administrative Agent so requests, each
Lender will remit to Administrative Agent its Pro Rata Share of any Loan or
Revolving Advance before Administrative Agent disburses same to Borrowers. If
Administrative Agent elects to require that each Lender make funds available to
Administrative Agent prior to a disbursement by Administrative Agent to
Borrowers, Administrative Agent shall advise each Lender by telephone, telex,
fax or telecopy of the amount of such Lender’s Pro Rata Share of the Loan
requested by Borrowers no later than 1:00 p.m. Chicago time on the Funding Date
applicable thereto, and each such Lender shall pay Administrative Agent such
Lender’s Pro Rata Share of such requested Loan, in same day funds, by wire
transfer to Administrative Agent’s account on such Funding Date.

          
9.8 Settlements, Payments and Information.

                    
(A) Revolving Advances and Payments; Fee Payments.

                              
(1) The Revolving Loan balance may fluctuate from day to day through
Administrative Agent's disbursement of funds to, and receipt of funds from,
Borrowers. In order to minimize the frequency of transfers of funds between
Administrative Agent and each Revolving Loan Lender notwithstanding terms to the
contrary set forth in Section 2 and subsection 9.7, Revolving
Advances and repayments (except as set forth in subsection 2.1(D)) will
be settled according to the procedures described in this subsection 9.8.
Notwithstanding these procedures, each Revolving Loan Lender’s obligation
to fund its portion of any advances made by Administrative Agent to Borrowers
will commence on the date such advances are made by Administrative Agent. Such
payments will be made by such Revolving Loan Lender without set-off,
counterclaim or reduction of any kind.

                              
(2) Once each week for the Revolving Loan or more frequently (including daily),
if Administrative Agent so elects (each such day being a “Settlement
Date”), Administrative Agent will advise each Revolving Loan Lender by
telephone, fax or telecopy of the amount of each such Revolving Loan
Lender’s Pro Rata Share of the Revolving Loan. In the event payments are
necessary to adjust the amount of such Revolving Loan Lender’s required Pro
Rata Share of the Revolving Loan balance to such Revolving Loan Lender’s
actual Pro Rata Share of the Revolving Loan balance as of any Settlement Date,
the party from which such payment is due will pay the other, in same day funds,
by wire transfer to the other’s account not later than 3:00 p.m. Chicago
time on the Business Day following the Settlement Date.

                              
(3) For purposes of this subsection 9.8(A), the following terms and
conditions will have the meanings indicated:

                                        
(a) "Daily Loan Balance" means an amount calculated as of the end of each
calendar day by subtracting (i) the cumulative principal amount paid by
Administrative Agent to a Revolving Loan Lender on a Loan from the Closing Date
through and including such calendar day, from (ii) the cumulative principal
amount on a Loan advanced by such Revolving Loan Lender to Administrative Agent
on that Loan from the Closing Date through and including such calendar day.

                                        
(b) "Daily Interest Rate" means an amount calculated by dividing the interest
rate payable to a Revolving Loan Lender on a Loan (as set forth in subsection
2.2) as of each calendar day by three hundred sixty (360).

                                        
(c) "Daily Interest Amount" means an amount calculated by multiplying the Daily
Loan Balance of a Loan by the associated Daily Interest Rate on that Loan.

                                        
(d) "Interest Ratio" means a number calculated by dividing the total amount of
the interest on a Loan received by Administrative Agent with respect to the
immediately preceding month by the total amount of interest on that Loan due
from Borrowers during the immediately preceding month.

                              
(4) On the first Business Day of each month ("Interest Settlement Date"),
Administrative Agent will advise each Revolving Loan Lender by telephone, fax or
telecopy of the amount of such Revolving Loan Lender’s Pro Rata Share of
interest and fees on each of the Loans as of the end of the last day of the
immediately preceding month. Provided that such Revolving Loan Lender has made
all payments required to be made by it under this Agreement, Administrative
Agent will pay to such Revolving Loan Lender, by wire transfer to such Revolving
Loan Lender’s account (as specified by such Revolving Loan Lender on the
signature page of this Agreement or the applicable Assignment and Acceptance
Agreement, as amended by such Revolving Loan Lender from time to time after the
date hereof or in the applicable Assignment and Acceptance Agreement) not later
than 3:00 p.m. Chicago time on the next Business Day following the Interest
Settlement Date, such Revolving Loan Lender’s Pro Rata Share of interest
and fees on each of the Loans. Such Revolving Loan Lender’s Pro Rata Share
of interest on each Loan will be calculated for that Loan by adding together the
Daily Interest Amounts for each calendar day of the prior month for that Loan
and multiplying the total thereof by the Interest Ratio for that Loan. Such
Revolving Loan Lender’s Pro Rata Share of the fees described in
subsection 2.3 paid to Administrative Agent for the benefit of Agents and
Revolving Loan Lenders shall be paid and calculated in a manner consistent with
the payment and calculation of interest as described in this subsection
9.8(A).

                    
(B) Term Loan Principal Payments. Payments of principal in respect of
each of the Term Loans will be settled in accordance with each Lender's Pro Rata
Share on the date of receipt if received by Administrative Agent on the first
Business Day of a month and on the Business Day immediately following the date
of receipt if received on any day other than the first Business Day of a
month.

                    
(C) Return of Payments.

                              
(1) If Administrative Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Administrative Agent from Borrowers and such related payment is not received by
Administrative Agent, then Administrative Agent will be entitled to recover such
amount from such Lender without set-off, counterclaim or deduction of any kind
together with interest thereon, for each day from and including the date such
amount is made available by Administrative Agent to such Lender to but excluding
the date of repayment to Administrative Agent, at the greater of the Federal
Funds Effective Rate and a rate determined by Administrative Agent in accordance
with banking industry rules on interbank compensation.

                              
(2) If Administrative Agent determines at any time that any amount received by
Administrative Agent under this Agreement must be returned to Borrowers or paid to
any other Person pursuant to any requirement of law, court order or otherwise,
then, notwithstanding any other term or condition of this Agreement,
Administrative Agent will not be required to distribute any portion thereof to
any Lender. In addition, each Lender will repay to Administrative Agent on
demand any portion of such amount that Administrative Agent has distributed to
such Lender, together with interest at such rate, if any, as Administrative
Agent is required to pay to Borrowers or such other Person, without set-off,
counterclaim or deduction of any kind.

          
9.9 Discretionary Advances. Notwithstanding anything contained herein to
the contrary, Administrative Agent may, in its sole discretion during the
continuance of an Event of Default and for a period not to exceed fifteen (15)
days, make Revolving Advances in an aggregate amount of not more than
$10,000,000 in excess of the limitations set forth in the Borrowing Base for the
purpose of preserving or protecting the Collateral or for incurring any costs
associated with collection or enforcing rights or remedies against the
Collateral, or incurred in any action to enforce this Agreement or any other
Loan Document; provided that such Revolving Advances shall become immediately
due and payable on the fifteenth day after the making such Revolving
Advances.

	 	SECTION 10.	MISCELLANEOUS

          
10.1 Expenses and Attorneys’ Fees. Whether or not the transactions
contemplated hereby shall be consummated, Borrowers agree to promptly pay all
fees, costs and expenses incurred in connection with any matters contemplated by
or arising out of this Agreement or the other Loan Documents including the
following, and all such fees, costs and expenses shall be part of the
Obligations, payable on demand and secured by the Collateral: (a) fees, costs
and expenses incurred by Agents (including reasonable legal and attorneys’
fees, allocated costs of internal counsel and reasonable fees of environmental
consultants, accountants and other professionals retained by Agents) incurred in
connection with the examination, review, due diligence investigation,
documentation and closing of the financing arrangements evidenced by the Loan
Documents; (b) fees, costs and expenses incurred by Agents (including reasonable
legal and attorneys’ fees, allocated costs of internal counsel and
reasonable fees of environmental consultants, accountants and other
professionals retained by Agents) incurred in connection with the review,
negotiation, preparation, documentation, execution, syndication, and
administration of the Loan Documents, the Loans, and any amendments, waivers,
consents, forbearances and other modifications relating thereto or any
subordination or intercreditor agreements; (c) fees, costs and expenses incurred
by Agents or any Lender in creating, perfecting and maintaining perfection of
Liens in favor of Senior Agent, on behalf of the Benefitted Persons; (d) fees,
costs and expenses incurred by Administrative Agent in connection with
forwarding to Borrowers the proceeds of Loans including Administrative
Agent’s or any Lenders’ standard wire transfer fee; (e) fees, costs,
expenses and bank charges, including bank charges for returned checks, incurred
by Administrative Agent or any Lender in establishing, maintaining and handling
lock box accounts, blocked accounts or other accounts for collection of the
Collateral; (f) fees, costs, expenses (including reasonable legal and
attorneys’ fees and allocated costs of internal counsel) of Administrative
Agent or any Lender and costs of settlement incurred in collecting upon or
enforcing rights against the Collateral or incurred in any action to enforce
this Agreement or the other Loan Documents or to collect any payments due from
Borrowers or any other Loan Party under this Agreement or any other Loan
Document or incurred in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement, whether in the nature of a
“workout” or in connection with any insolvency, winding up or
bankruptcy proceedings or otherwise.

          
10.2 Indemnity. In addition to the payment of expenses pursuant to
subsection 10.1, whether or not the transactions contemplated hereby
shall be consummated, each Loan Party agrees to indemnify, pay and hold each
Agent, Syndication Agent and each Lender, and the officers, directors,
employees, agents, consultants, auditors, persons engaged by any Agent,
Syndication Agent or Lender, to evaluate or monitor the Collateral, affiliates
and attorneys and solicitors and barristers of Agents, Syndication Agent,
Lenders and such holders (collectively called the “Indemnitees”)
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may be
imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of (A) this Agreement or the other Loan Documents,
(B) the consummation of the transactions contemplated by this Agreement, (C) the
issuance of any Letter of Credit or guaranty thereof, (D) the failure of any
Agent or any Lender seeking indemnification or of any issuer to honor a demand
for payment under any Letter of Credit or guaranty thereof as a result of any
act or omission, whether rightful or wrongful, of any present or future de jure
or de facto government or Governmental Authority, (E) the statements contained
in the commitment letters, if any, delivered by Agents, Syndication Agent or any
Lender, each Agent’s and each Lender’s agreement to make the Loans and
Letters of Credit hereunder, (F) the use or intended use of the proceeds of any
of the Loans or Letters of Credit or the exercise of any right or remedy
hereunder or under the other Loan Documents (the “Indemnified
Liabilities”); provided that Loan Parties shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of that Indemnitee as determined by a
final non-appealable judgment by a court of competent jurisdiction.

          
10.3 Notices. Unless otherwise specifically provided herein, all notices
shall be in writing addressed to the respective party as set forth below and may
be personally served, faxed, telecopied or sent by overnight courier service or
United States mail and shall be deemed to have been given: (a) if delivered in
person, when delivered; (b) if delivered by fax or telecopy, on the date of
transmission if transmitted on a Business Day before 4:00 p.m. Chicago time or,
if not, on the next succeeding Business Day; (c) if delivered by overnight
courier, two days after delivery to such courier properly addressed; or (d) if
by U.S. Mail or Canada Post, four Business Days after depositing in the United
States mail, with postage prepaid and properly addressed.

	 	If to Borrowers or any Loan Party:	
Recoton Corporation

2950 Lake Emma Road

Lake Mary, FL 32746

Attn.: Arnold Kezsbom

Fax/Telecopy No.: (407) 333-8903

	 	With a copy to:	
Stroock & Stroock & Lavan LLP

180 Maiden Lane

New York, NY 10038

Attn.: Theodore S. Lynn

Fax/Telecopy No.: (212) 806-6006

	 	
If to Administrative Agent

or Heller:
	

HELLER FINANCIAL, INC.

500 West Monroe

Chicago, Illinois, 60661

Attn: Account Manager - Heller Corporate

Finance - Recoton Corporation

Fax/Telecopy No.: (312) 441-7367

	 	With a copy to:	
HELLER FINANCIAL, INC.

500 West Monroe

Chicago, Illinois 60661

Attn:  Legal Services/HCF- Recoton Corporation

Fax/Telecopy No.: (312) 441-6876

	 	
If to Collateral Agent

or GE:
	

GENERAL ELECTRIC CAPITAL

  CORPORATION

GE Capital Commercial Finance

Northeast Region

800 Connecticut Avenue, Two North

Attn:  Account Manager - GE Capital Corporation

Telephone: (203) 852-3600

Fax/Telecopy No.: (203) 852-3640

With a copy to:

GENERAL ELECTRIC CAPITAL

  CORPORATION

201 High Ridge Road

Stamford, Connecticut 06927

Attn: Corporate Counsel - Commercial Finance

Telephone: (203) 316-7552

Fax/Telecopy No.: (203) 316-7889

          
If to any Lender: Its address indicated on the signature page hereto, in an
Assignment and Acceptance Agreement or in a notice to Administrative Agent and
Borrowers or to such other address as the party addressed shall have previously
designated by written notice to the serving party, given in accordance with this
subsection 10.3.

          
10.4 Survival of Representations and Warranties and Certain Agreements. All
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement and the making of the Loans hereunder.
Notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of each Borrower and Lender set forth in subsections 10.1, 10.2,
10.6, 10.11, 10.14, and 10.15 (Borrowers’ agreement to pay fees, agreement
to indemnify Lender, the reinstatement of Obligations, agreement as to choice of
law and jurisdiction and Borrowers’ and Lender’s waiver of a jury
trial) shall survive the payment of the Loans and the termination of this
Agreement.

          
10.5 Indulgence Not Waiver. No failure or delay on the part of any Agent,
Lender or holder of any Note in the exercise of any power, right or privilege
hereunder or under any Note 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 of any other right, power or privilege.

          
10.6 Marshaling; Payments Set Aside. Neither Administrative Agent nor any
Lender shall be under any obligation to marshal any assets in favor of any Loan
Party or any other party or against or in payment of any or all of the
Obligations. To the extent that any Loan Party makes a payment or payments to
Agent and/or any Lender or Administrative Agent and/or any Lender enforces its
security interests or exercise its rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy or insolvency law, state, provincial, foreign or federal law, common
law or equitable cause, then to the extent of such recovery, the Obligations or
part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor, shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not
occurred.

          
10.7 Entire Agreement. This Agreement and the other Loan Documents embody
the entire agreement among the parties hereto and supersede all prior
commitments, agreements, representations, and understandings, whether written or
oral, relating to the subject matter hereof, and may not be contradicted or
varied by evidence of prior, contemporaneous, or subsequent oral agreements or
discussions of the parties hereto.

          
10.8 Severability. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Agreement or the other
Loan Documents shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement,
or the other Loan Documents.

          
10.9 Lenders' Obligations Several; Independent Nature of Lenders'
Rights. The obligation of each Lender hereunder is several and not joint and
neither Agents nor Lenders shall be responsible for the obligation or Commitment
of any other Lender hereunder. In the event that any Lender at any time should
fail to make a Loan as herein provided, the Lenders, or any of them, at their
sole option, may make the Loan that was to have been made by the Lender so
failing to make such Loan. Nothing contained in any Loan Document and no action
taken by any Agent or Lender pursuant hereto or thereto shall be deemed to
constitute Lenders to be a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and, provided Administrative Agent
fails or refuses to exercise any remedies against Borrowers after receiving the
direction of the Requisite Lenders, each Lender shall be entitled to protect and
enforce its rights arising out of this Agreement and it shall not be necessary
for any other Lender to be joined as an additional party in any proceeding for
such purpose.

          
10.10 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.

          
10.11 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

          
10.12 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, provided, however, a Loan Party may not assign its rights
or obligations hereunder without the written consent of Lenders.

          
10.13 No Fiduciary Relationship; No Duty; Limitation of Liabilities.

                    
(A) No provision in this Agreement or in any of the other Loan Documents and no
course of dealing between the parties shall be deemed to create any fiduciary
duty by any Agent or Lender to the Loan Parties.

                    
(B) All attorneys, legal counsel, accountants, appraisers, and other
professional Persons and consultants retained by any Agent or Lender shall have
the right to act exclusively in the interest of such Agent or Lender and shall
have no duty of disclosure, duty of loyalty, duty of care, or other duty or
obligation of any type or nature whatsoever to Borrowers or any of Borrowers'
shareholders or any other Person.

                    
(C) Neither Agents nor Lenders, nor any affiliate, officer, director,
shareholder, employee, attorney, legal counsel or agent of any Agent or Lender
shall have any liability with respect to, and each Loan Party hereby waives,
releases, and agrees not to sue any of them upon, any claim for any special,
indirect, incidental, or consequential damages suffered or incurred by such Loan
Party in connection with, arising out of, or in any way related to, this
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement or any of the other Loan Documents. Each Loan
Party hereby waives, releases, and agrees not to sue any Agent or Lender or any
of any Agent's or Lender's affiliates, officers, directors, employees,
attorneys, legal counsel or agents for punitive damages in respect of any claim
in connection with, arising out of, or in any way related to, this Agreement or
any of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the transactions contemplated hereby.

          
10.14 CONSENT TO JURISDICTION. EACH LOAN PARTY HEREBY CONSENTS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREE THAT, SUBJECT TO
ADMINISTRATIVE 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 COURTS. EACH LOAN PARTY EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION
OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH
LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT
ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON A LOAN PARTY BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH LOAN PARTY, 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 EACH LOAN
PARTY OR OF ITS AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING AGENTS OF
SUCH LOAN PARTY 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). EACH BORROWER AGREES THAT ANY AGENT’S OR LENDER’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.
THE LOAN PARTIES 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 OR LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE,
ELECTRONIC OR OTHER FORM) OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE
DISPUTE.

          
10.15 WAIVER OF JURY TRIAL. EACH LOAN PARTY, AGENT AND LENDER 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
LOAN PARTY, AGENT AND LENDER 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
LOAN PARTY, AGENT AND LENDER 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.

          
10.16 Construction. Each Loan Party, Agent and Lender acknowledges that
it has had the benefit of legal counsel of its own choice and has been afforded
an opportunity to review this Agreement and the other Loan Documents with its
legal counsel and that this Agreement and the other Loan Documents shall be
construed as if jointly drafted by each Loan Party, Agent and Lender.

          
10.17 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents, or supplements may be executed via telecopier or facsimile
transmission in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute one
and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.

          
10.18 Confidentiality. Agents and Lenders shall hold all nonpublic
information obtained pursuant to the requirements hereof and identified as such
by Borrowers in accordance with such Person’s customary procedures for
handling confidential information of this nature and in accordance with safe and
sound business practices but, in any event may make disclosure to such of its
respective affiliates, officers, directors, employees, agents and
representatives as need to know such information in connection with the Loans
subject to such confidentiality limitation. If any Lender or its respective
affiliates is otherwise a creditor of a Borrower, such Lender may use the
information in connection with its other credits. Agents and Lenders may also
make disclosure reasonably required by a bona fide offeree or
assignee (or participant), or as required or requested by any Governmental
Authority or representative thereof, or pursuant to legal process, or to its
accountants, lawyers and other advisors, and shall require any such offeree or
assignee (or participant) to agree (and require any of its offerees, assignees
or participants to agree) to comply with this subsection 10.18. In no
event shall any Agent or Lender be obligated or required to return any materials
furnished by any Borrower provided, however, each offeree shall be
required to agree that if it does not become an assignee (or participant) it
shall return all materials furnished to it by any Borrower or Agent in
connection therewith.

          
10.19 Judgment Currency. Each Loan Party, each Agent and each Lender hereby
agree that if, in the event that a judgment is given in relation to any sum due
to any Agent or Lender, such judgment is given in a currency other than that in
which such sum was originally denominated (the “Original Currency”),
each Loan Party agrees to indemnify the Agents and Lenders, as the case may be,
to the extent that the amount of the Original Currency which could have been
purchased thereby in accordance with normal banking procedures on the Business
Day following receipt of such sum is less than the sum which could have been so
purchased thereby had such purchase been made on the day on which such judgment
was given or, if such day is not a Business Day, on the Business Day immediately
preceding the giving of such judgment, and if the amount so purchased exceeds
the amount which could have been so purchased thereby had such purchase been
made on the day on which such judgment was given or, if such day is not a
Business Day, on the Business Day immediately preceding the giving of such
judgment, each Agent and Lender agrees to remit such excess to such Loan Party.
The agreements in this subsection 10.19 shall
survive payment of any such judgment.

	 	SECTION 11.	DEFINITIONS AND ACCOUNTING TERMS

          
11.1 Certain Defined Terms. The following terms used in this
Agreement shall have the following meanings:

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

        
“Administrative Agent” has the meaning assigned to that term in the
preamble and any successor in such capacity appointed pursuant to subsection
9.1(G).

        
“Administrative Borrower” has the meaning assigned to that term in
subsection 2.15. 

          
“Affiliate” means any Person (other than any Agent or Lender): (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 any Borrower; (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 any Borrower; or (d) which has a senior officer who is also a senior
officer of any Borrower. 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.

          
“Agents” has the meaning set forth for that term in the preamble and
any successor to any Agent in such capacity appointed pursuant to subsection
9.1(G).

          
“Agent's Account” means ABA No. 0710-0001-3, Account No. 52-98695 at
Bank One, NA, 1 Bank One Plaza, Chicago, IL 60670, Reference: Heller Corporate
Finance for the benefit of Recoton Corporation.

          
“Agent-Related Person” means, with respect to any Agent, such Agent
together with its affiliates, officers, directors, employees, and agents.

          
“Agreement” means this Loan Agreement as it may be amended, restated,
supplemented or otherwise modified from time to time.

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

          
“Assignment and Acceptance Agreement” means an Assignment and
Acceptance Agreement substantially in the form of Exhibit A.

          
“Bank Letter of Credit” means each letter of credit issued by a bank
acceptable to and approved by Agent for the account of Borrowers and supported
by a risk participation agreement issued by Administrative Agent.

          
“Base Rate” means a variable rate of interest per annum equal to the
higher of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the “Bank Prime Loan” rate
in Federal Reserve Statistical Release H.15(519) entitled “Selected
Interest Rates” or any successor publication of the Federal Reserve System
reporting the Bank Prime Loan rate or its equivalent, or (b) the Federal Funds
Effective Rate plus 50 basis points. The statistical release generally sets
forth a Bank prime loan rate for each business day. The applicable Bank Prime
Loan Rate for any date not set forth shall be the rate set forth for the last
preceding date. In the event the Board of Governors of the Federal Reserve
System ceases to publish a Bank Prime Loan rate or its equivalent, the term
“Base Rate” means a variable rate of interest per annum equal to the
highest of the “prime rate”, “reference rate”, “base
rate”, or other similar rate announced from time to time by any of the
three largest banks (based on combined capital and surplus) headquartered in New
York, New York (with the understanding that any such rate may merely be a
reference rate and may not necessarily represent the lowest or best rate
actually charged to any customer by any such bank).

          
“Base Rate Loans” means Loans bearing interest at rates determined by
reference to the Base Rate.

          
“Benefitted Persons” means collectively the Agents, Lenders,
Subordinated Creditors and Subordinated Agent.

          
“Borrowers’ Accountants” means the independent certified public
accountants selected by a Borrower and its Subsidiaries as its auditors and
reasonably acceptable to Administrative Agent, which selection shall not be
modified during the term of this Agreement without Administrative 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.

          
“Borrowing Base” has the meaning assigned to that term in subsection
2.1(B)(2).

          
“Business Day” means (i) 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, or is a day on which banking institutions located in any such state
are closed and (ii) if such day relates to a borrowing of, a payment or
prepayment of principal of or interest on, or a continuation of or conversion
into, a LIBOR Loan, or a notice by Borrowers with respect to any such borrowing,
payment, prepayment, continuation or conversion, any day which is a Business Day
described in clause (i) and which is also a day on which commercial banks are
open for dealings in Dollar deposits in the London, England (U.K.) market.

          
“Canada Guaranty” means the Canada Guaranty substantially in the form of
Exhibit K-2.

          
“Canada Security Agreement” means the Canada Security Agreement
substantially in the form of Exhibit L-2.

          
“Canadian Pension Plans” means each of the pension plans, if any,
registered in accordance with the Income Tax Act (Canada) which any Borrower or
any other Loan Party sponsors or administers or into which any Borrower or Loan
Party makes contributions.

          
“Capital Expenditures” means 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” means any lease of any property (whether real,
personal or mixed) that, in conformity with GAAP, should be accounted for as a
capital lease.

          
“Cash Equivalents” means: (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within six months from the date of acquisition thereof; (b)
commercial paper maturing no more than six months from the date issued and, at
the time of acquisition, having a rating of at least A-1 from Standard &
Poor’s Corporation or at least P-1 from Moody’s Investors Service,
Inc.; (c) money market funds that have at least 95% of their assets continuously
invested in investments of the type listed in clause (a) above; and (d)
certificates of deposit or bankers’ acceptances maturing within six months
from the date of issuance thereof issued by, or overnight reverse repurchase
agreements from any commercial bank organized under the laws of the United
States of America or any Schedule I bank organized under the laws of Canada, or
any state thereof or the District of Columbia,having combined capital
and surplus of not less than $250,000,000 and not subject to setoff rights in
favor of such bank.

          
“Cleanup” means 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” the collective reference to any and all property upon which
a Lien is purported to be created by any Security Documents.

          
“Collateral Agent” has the meaning set forth for that term in the
preamble and any successor in such capacity appointed pursuant to subsection
9.1(G).

          
“Collateral Access Agreement” means a Landlord’s Consent,
Warehouseman’s Waiver or any other agreement which grants the Senior Agent
and the Lenders access to Borrowers’ Inventory and which agreement shall be
in form and substance satisfactory to the Administrative Agent.

          
“Collecting Banks” has the meaning assigned to that term in subsection
4.22.

          
“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.

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

          
“Compliance Certificate” means a certificate duly executed by the
chief executive officer, chief operating officer or chief financial officer of
Recoton appropriately completed and in substantially the form of Exhibit
C.

          
“Consolidated Intangibles” means as of any date of determination, all
assets of the Borrowers and their 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” means as of any date of determination, all
amounts which would be included under shareholders equity on a balance sheet of
the Borrowers and their Subsidiaries determined on a consolidated basis at such
date in accordance with GAAP.

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

          
“Continuing Directors” has the meaning assigned to that terms in subsection
8.1(F).

          
“Copyright Security Agreement” means the Copyright Security Agreement
dated as of even date herewith among the Loan Parties and the Senior Agent.

          
“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.

          
“Defaulted Amount” means, with respect to any Lender at any time, any
amount required to be paid by such Lender to the Administrative Agent or any
other Lender hereunder or under any other Loan Document which has not been so
paid.

          
“Defaulting Lender” means, at any time, any Lender that owes a Defaulted
Amount.

          
“Default Rate” has the meaning assigned to that term in subsection
2.2(A).

          
“Dollars” or “$” means the lawful currency of the United States
of America.

          
“Domestic Subsidiary” means any Subsidiary other than a Foreign
Subsidiary.

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

          
“Eligible Accounts” has the meaning assigned to that term in subsection
2.1(C).

          
“Eligible Assignee” means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100,000,000 (or $250,000,000 in the case of an
assignment of a Revolving Loan Commitment); (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the “OECD”), or a political
subdivision of any such country, and having a combined capital and surplus of at
least $100,000,000 (or $250,000,000 in the case of an assignment of a Revolving
Loan Commitment), provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of the OECD; (c) any other entity which is an “accredited
investor” (as defined in Regulation D under the Securities Act) which
extends credit or buys loans as one of its businesses, including but not limited
to, insurance companies, mutual funds and lease financing companies, (d) a
Related Fund (as such term is defined in subsection 9.5(D)), and (e) a
Person that is primarily engaged in the business of lending that is (i) a
Subsidiary of a Lender, (ii) a Subsidiary of a Person of which a Lender is a
Subsidiary, or (iii) a Person of which a Lender is a Subsidiary; provided
however, that no Affiliate of a Borrower shall be an Eligible Assignee.

          
“Eligible Collateral” means Eligible Accounts, Letter of Credit
Inventory and Eligible Inventory.

          
“Eligible Inventory” has the meaning assigned to that term in subsection
2.1(C).

          
“Employee Benefit Plan” means 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” means 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 Loan Party or any of
its Subsidiaries, or (b) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.

          
“Environmental Law” means 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 recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials and laws relating to the management
or use of natural resources.

          
“Equity Proceeds” means the cash proceeds from the issuance of any
capital stock or other equity securities of, or the making of any capital
contribution to the Borrowers or any of their Subsidiaries after the Closing
Date (net of underwriting discounts and commissions and other reasonable costs
associated therewith). It is understood and agreed that cash received from any
one individual with respect to stock options equal to or less than $1,000,000 in
the aggregate in any year shall not be deemed Equity Proceeds.

          
“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.

          
“ERISA Affiliate”, as applied to any Loan Party, means 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 IRC. 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 IRC or ERISA.

          
“ERISA Event” means (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.

          
“Excess Cash Flow” means, for any period, the greater of (A) zero (0);
or (B) without duplication, the total of the following for Borrowers and their
Subsidiaries on a consolidated basis, each calculated for such period: (1)
EBITDA; less (2) Capital Expenditures (to the extent actually made in cash
and/or due to be made in cash within such period but in no event more than the
amount permitted in paragraph E of the Financial Covenants Rider); less (3)
income and franchise taxes paid or accrued excluding any provision for deferred
taxes included in the determination of net income; less (4) decreases in
deferred income taxes resulting from payments of deferred taxes accrued in prior
periods; less (5) Interest Expense; less (6) scheduled amortization of
Indebtedness actually paid in cash and/or due to be paid in cash within such
period and permitted under subsection 7.5; and less (7) voluntary
prepayments of Term Loans made under subsection 2.4(C).

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

          
“Federal Funds Effective Rate” means, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
immediately following Business Day by the Board of Governors of the Federal
Reserve System as the Federal Funds Rate or Federal Reserve Statistical Release
H.15(519) entitled “Selected Interest Rates” or any successor
publication of the Federal Reserve System reporting the Federal Funds Effective
Rate or its equivalent or, if such rate is not published for any Business Day,
the average of the quotations for the day of the requested Loan received by
Administrative Agent from three Federal funds brokers of recognized standing
selected by Administrative Agent.

          
“Fiscal Year” means each twelve month period ending on the last day of
December in each year.

          
“Fiscal Year-To-Date” means as of any date of determination, all
completed Fiscal Quarters within the then current Fiscal Year.

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

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

          
“Foreign Subsidiary” means 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.

          
“Funding Date” means the date of each funding of a Loan or issuance of a
Lender Letter of Credit.

          
“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.

          
“GECC” has the meaning assigned to such term in the preamble.

          
“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.

          
“German Pledge Agreement” means the pledge agreement executed and
delivered in connection with the Loan Agreement and in form and substance
satisfactory to the Senior Agent among Recoton European Holdings, Inc. and the
Senior Agent regarding the stock of Recoton Germany.

          
“Governmental Authority” means any nation or government, any state,
province, 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” means any Person (other than Senior Agent) party to the
Guaranties.

          
“Guaranties” means the Guaranty substantially in the form of Exhibit
K-1 and the Canada Guaranty.

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

          
“Hedge Agreements” means all interest rate swaps, caps or collar
agreements or similar arrangements entered into by the Borrowers or any of their
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.

          
“Heller” has the meaning assigned to such term in the preamble.

          
“Hong Kong Pledge Agreement” means the pledge agreements executed and
delivered in connection with the Loan Agreement and in form and substance
satisfactory to the Senior Agent, among Recoton and the Senior Agent regarding
the stock of Recoton (Far East) Limited.

          
“Inactive Subsidiaries” means those Subsidiaries set forth in Schedule
7.6.

          
“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. 

          
“In-Season Period” has the meaning assigned to that term in subsection
2.1(B)(2).

          
“InterAct International” means InterAct International Inc., a Delaware
corporation, and its Subsidiaries.

          
“InterAct International IPO” means 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” means, without duplication, for any period, the
following on a consolidated basis, for Borrowers and their 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 which
have been capitalized as transaction costs in accordance with the provisions of
subsection 11.2; and (ii) interest paid in kind). 

          
“Interest Period” means, in connection with each LIBOR Loan, an
interest period Borrowers shall elect (each an “Interest Period”) to
be applicable to such Loan, which Interest Period shall be either a one, two,
three, or six month period; provided that: 

         
           
(1)     the initial Interest Period for any LIBOR Loan shall commence on the Funding
Date of such Loan;

          
          
(2)     in the case of successive Interest Periods, each successive Interest Period
shall commence on the day on which the immediately preceding Interest Period
expires; 

          
          
(3)     if an Interest Period expiration date is not a Business Day, such Interest
Period shall expire on the next succeeding Business Day; provided that if any
Interest Period expiration date is not a Business Day but is a day of the month
after which no further Business Day occurs in such month, such Interest Period
shall expire on the immediately preceding Business Day; 

          
          
(4)     any Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject to part (5) below, end
on the last Business Day of a calendar month; 

          
          
(5)     no Interest Period shall extend beyond the Termination Date;

          
          
(6)     no Interest Period for any portion of the Term Loans shall extend beyond the
date of the final Scheduled Installment thereof;

          
          
(7)     no Interest Period may extend beyond a scheduled principal payment date of
any Loan unless the aggregate principal amount of such Loan that is a Base Rate
Loan or that has Interest Periods expiring on or before such date equals or
exceeds the principal amount required to be repaid on such Loan on such date;
and 

          
          
(8)     there shall be no more than seven Interest Periods relating to LIBOR Loans
outstanding at any time.

          
“Interest Rate” has the meaning assigned to that term in subsection
2.2(A).

          
“Inventory” means “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 the United States
and its territorial waters. 

          
“Investment” means (i) any direct or indirect purchase or other
acquisition by a Borrower or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (including any Subsidiary of a
Borrower), (ii) any direct or indirect redemption, retirement, purchase or
other acquisition for value, by any Subsidiary of a Borrower from any Person
other than a Borrower or any of its Subsidiaries, of any equity Securities of
such Subsidiary, (iii) any direct or indirect loan, advance or capital
contribution by a Borrower or any of its Subsidiaries to any other Person,
including all indebtedness and accounts receivable from that other Person that
are not current assets or did not arise from sales to that other Person in the
ordinary course of business, or (iv) any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement, foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap or
other similar agreement or arrangement which is not designed to hedge against
fluctuations in interest rates or currency values, respectively. The amount of
any Investment shall be the original cost of such Investment plus the
cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment. 

          
“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. 

          
“Issuing Lender” has the meaning assigned to that term in subsection
2.1(G)(2).

          
“Italy Pledge Agreement” means the pledge agreement executed and
delivered in connection with the Loan Agreement and in form and substance
satisfactory to the Senior Agent among Recoton European Holdings, Inc. and the
Senior Agent regarding the stock of Recoton Italy. 

          
“Landlord's Consent” means a Landlord's Consent substantially in the
form of Exhibit I.

          
“Lender Letter of Credit” has the meaning assigned to that term in
subsection 2.1(F).

          
“Lender-Related Person” means, with respect to any Lender, such
Lender, together with such Lender’s affiliates, and the officers,
directors, employees, and agents of such Lender. 

          
“Letter of Credit Liability” means, all reimbursement and other
liabilities of a Borrower or any of its Subsidiaries with respect to each Lender
Letter of Credit, whether contingent or otherwise, including: (a) the amount
available to be drawn or which may become available to be drawn; (b) all amounts
which have been paid or made available by any Lender issuing a Lender Letter of
Credit or any bank issuing a Bank Letter of Credit to the extent not reimbursed;
and (c) all unpaid interest, fees and expenses related thereto. 

          
“Letter of Credit Default Rate” has the meaning assigned to that term in
subsection 2.2(A).

          
“Letter of Credit Reserve” means, at any time, an amount equal to (a)
the aggregate amount of Letter of Credit Liability with respect to all Lender
Letters of Credit outstanding at such time plus, without duplication, (b) the
aggregate amount theretofore paid by Administrative Agent or any Lender under
Lender Letters of Credit and not debited to the Loan Account pursuant to
subsection 2.1(F)(2) or otherwise reimbursed by Borrowers. 

          
“Liabilities” shall have the meaning given that term in accordance with
GAAP and shall include Indebtedness.

          
“LIBOR” means, for each Interest Period, a rate per annum equal to:

          
          
(a)     the offered rate for deposits in U.S. dollars in an amount comparable to the
amount of the applicable Loan in the London interbank market for the relevant
Interest Period which is published by the British Bankers’ Association and
currently appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the
day which is two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided,
however, that if such a rate ceases to be available to Administrative
Agent on that or any other source from the British Bankers’ Association,
LIBOR shall be equal to a rate per annum equal to the average rate (rounded
upwards, if necessary, to the nearest 1/100 of 1%) at which Administrative Agent
determines that U.S. dollars in an amount comparable to the amount of the
applicable Loans are being offered to prime banks at approximately 11:00 a.m.
(London time) on the day which is two (2) Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period for
settlement in immediately available funds by leading banks in the London
interbank market selected by Administrative Agent; divided by

          
          
(b)     a number equal to 1.0 minus the aggregate (but without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements in effect on the
day which is two (2) Business Days prior to the beginning of such Interest
Period (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) which are required to be maintained by a member bank of the Federal
Reserve System; such rate to be rounded upward to the next whole multiple of
one-sixteenth of one percent (.0625%).

          
“LIBOR Loans” means at any time that portion of the Loans bearing
interest at rates determined by reference to LIBOR.

          
“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” or “Loans” means an advance or advances under the Term
Loan Commitment or the Revolving Loan Commitment.

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

          
“Loan Party” means each of the Borrowers, any Guarantor and any other
Person (other than Agent, any Lender, Subordinated Agent and any Subordinated
Creditor) which is or becomes a party to this Agreement or any other Loan
Documents. 

          
“Loan Year” means each period of 12 consecutive months commencing on the
Closing Date and on each anniversary thereof.

          
“London Banking Day” means any day on which dealings in deposits in U.S.
dollars are transacted in the London Interbank market.

          
“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 the Agents and
Lenders, or (iii) any material impairment of the Loan Parties’ ability to
perform their obligations under the Loan Documents. 

          
“Maximum Revolving Loan Amount” has the meaning assigned to that term in
subsection 2.1(B)(1).

          
“Monthly Borrowing Base Certificate” means a certificate and schedule
duly executed by an executive officer of the Administrative Borrower
appropriately completed and in substantially the form of Exhibit B-2.

          
“Mortgage” means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust or other similar real estate security
documents delivered by any Loan Party to Senior Agent, on behalf of the
Benefitted Persons, with respect to Mortgaged Property, substantially in the
form of Exhibit G.

          
“Mortgaged Property” means all of the real property owned by any
Borrower or its Subsidiaries, each as listed on Schedule 11.1(A).

          
“Multiemployer Plan” means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.

          
“Net Proceeds” means, (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 any
Agent 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 Borrowers or
any of their 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” means 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 a Borrower or its Subsidiaries.

          
“New Information System” means 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. 

          
“Notes” means the Revolving Notes and the Term Loan Notes.

          
“Notice of Borrowing” means a notice duly executed by an authorized
representative of a Borrower appropriately completed and in the form of Exhibit
D. 

          
“Obligations” means all obligations, liabilities and indebtedness of
every nature of each Loan Party from time to time owed to any Agent or Lender
(or any lender under a Hedge Agreement) under the Loan Documents (whether
incurred before or after the Termination Date) including the principal amount of
all debts, claims and indebtedness, accrued and unpaid interest and all fees,
costs and expenses, whether primary, secondary, direct, contingent, fixed or
otherwise, heretofore, now and/or from time to time hereafter owing, due or
payable including, without limitation, all interest, fees, cost and expenses
accrued or incurred after the filing of any petition under any bankruptcy or
insolvency law whether or not allowed in any resulting proceeding. 

          
“Original Currency” shall have the meaning assigned to that term in
subsection 10.19.

          
“Patent Security Agreement” means the Patent Security Agreement dated
as of even date herewith amount the Loan Parties and the Senior Agent. 

          
“Payoff Letter” means the letter agreement dated the date hereof
delivered, pursuant to subsection J of the Condition Rider by The Chase
Manhattan Bank and other existing creditors of Recoton signatory thereto and
pursuant to which the Master Restructuring Agreement dated as of September 8,
1999 is terminated. 

          
“Pension Plan” means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the IRC or Section 302 of
ERISA. 

          
“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 such Loan Party 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, 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, zoning restrictions,
licenses 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 any Loan Party 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, and (ii) such Lien encumbers
only the asset so purchased; (f) Liens in favor of Senior Agent, on behalf of
the Benefitted Persons; (g) Liens on deposits on other property of the Borrower
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 this Agreement; and
(j) Liens set forth on Schedule 11.1(B); 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” means and includes 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. 

          
“Pledge Agreement” means the Pledge Agreement substantially in the form
of Exhibit M.

          
“PPSA” means the Personal Property Security Act (Ontario) and any
other applicable provincial or Canadian personal property security legislation
as 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. 

          
“Prepayment Fee” has the meaning assigned to that term in subsection
2.3(C).

          
“Priority Payable Reserves” means with respect to Recoton Canada or
the assets located in Canada of any Borrower or ReCone, as the case may be, at
any time, the full amount of the liabilities at such time which have a trust
imposed to provide for payment or that are secured by a Lien ranking or capable
of ranking senior to or pari passu with security interests, liens or charges
securing the Obligations on any of the Collateral under federal, provincial,
county, municipal, common or local law including, but not limited, to claims for
unremitted and accelerated rents, taxes, wages, workers’ compensation
obligations, government royalties and pension fund obligations, together with
the aggregate value, determined in accordance with GAAP, of all Eligible
Inventory which Administrative Agent, acting reasonably, considers may be or may
become subject to a right of a supplier to recover possession thereof under any
federal or provincial law, where such supplier's right may have priority
over the security interests, liens or charges securing the Obligations
including, without limitation, Eligible Inventory subject to a right of a
supplier to repossess goods pursuant to Section 81.1 of the Bankruptcy and
Insolvency Act (Canada). Administrative Agent shall from time to time
determine in its reasonable discretion the amount of Priority Payables Reserves
and shall deliver written notice of such determination to Administrative
Borrower and Lenders. 

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

          
“Pro Rata Share” means (a) with respect to a particular Commitment,
the percentage obtained by dividing (i) such Commitment of that Lender by (ii)
all such Commitments of all Lenders; (b) with respect to all other matters, the
percentage obtained by dividing (i) the Total Loan Commitment of a Lender (other
than a Term Loan C Lender) by (ii) the Total Loan Commitments of all Lenders
(other than Term Loan C Lenders); and (c) with respect to matters affecting the
Term Loan C, the percentage obtained by dividing (i) the Total Loan Commitment
of a Term Loan C Lender by (ii) the Total Loan Commitments of all Term Loan C
Lenders; in each case as such percentage may be adjusted by assignments
permitted pursuant to subsection 9.5; provided, however, if
any Commitment is terminated pursuant to the terms hereof, then “Pro Rata
Share” means the percentage obtained by dividing (x) the aggregate amount
of such Lender’s outstanding Loans and Letters of Credit Liabilities, as
applicable, related to such Commitment by (y) the aggregate amount of all
outstanding Loans and Letters of Credit Liabilities, as applicable, related to
such Commitment. 

          
“Real Estate” has the meaning assigned to that term in subsection
4.5.

          
“Recone” means Recone, Inc., a Delaware corporation.

          
“Recoton” has the meaning assigned to that term in the preamble.

          
“Recoton Canada” means Recoton Canada Ltd., an Ontario corporation.

          
“Recoton Germany” means Recoton German Holdings GmbH, a corporation
organized under the laws of the Federal Republic of Germany.

          
“Recoton Italy” means Recoton Italia s.r.l., a corporation incorporated
under the laws of Italy. "Recoton UK" means Recoton (UK) Limited, a corporation
incorporated under the laws of England and Wales.

          
“Related Agreements” means the Subordinated Credit Agreement, the
Senior Subordinated Notes, the Securities Purchase Agreement, the Payoff Letter,
and documents and agreements evidencing the German Facility and all other
documents, agreements and instruments in connection with the foregoing. 

          
“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. 

          
“Repayment Certification” has the meaning assigned to such term in
subsection 2.1(A)(3).

          
“Required Minimum Excess Availability” means, after the Closing Date,
$10,000,000, which sum represents the minimum amount by which the Maximum
Revolving Loan Amount shall exceed the Revolving Loan at each month’s end
as measured on the Monthly Borrowing Base Certificate. Notwithstanding the
foregoing, if the sum of the Borrowing Base less the Letter of Credit Reserves
exceeds the Revolving Loan Commitment, the amount by which the Borrowing Base
less the Letter of Credit Reserves exceeds the Revolving Loan Commitment shall
count towards the Required Minimum Excess Availability. 

          
Notwithstanding the foregoing, on the date of delivery of the audited financial
statements for the Fiscal Year ended December 31, 2001 pursuant to Section (C)
of the Reporting Rider, the Required Minimum Excess Availability shall be
reduced to the level set forth in the column captioned “Required Minimum
Excess Availability” if the Fixed Charge Coverage for such Fiscal Year for
Recoton and its Subsidiaries, on a consolidated basis and as set forth in the
Compliance Certificate delivered pursuant to Section (E) of the Reporting Rider
in connection with such financial statements, meets the stated ratio set forth
below in the column captioned “Ratio”. Such Fixed Charge Coverage
shall be calculated based on the financial statements dated as of December 31,
2001 to be delivered to the Agents pursuant to subsection (C) of the
Reporting Rider: 

Required Minimum Excess Availability Ratio

$5,000,000                       =  1.20:1.00,    =  1.33:1.0

Zero.                            =  1.33:1.00

          
“Requisite Lenders” means Lenders (other than a Defaulting Lender)
holding or being responsible for 51% or more of the sum of (a) outstanding
Loans, (b) outstanding Letter of Credit Liability and (c) unutilized Commitments
of all Lenders which are not Defaulting Lenders. It is understood that for
purposes of this definition the Term Loan C Lenders shall not be deemed to be
“Lenders” except solely with respect to matters set forth in
subsection 9.4(A). 

          
“Restricted Junior Payment” means: (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
or other equity interest of any Borrower 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 any Borrower 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 a Borrower or any of its Subsidiaries now or hereafter outstanding;
and (d) any payment by a Borrower 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). 

          
“Revolving Advance” means each advance made by Lender(s) pursuant to
subsection 2.1(B).

          
“Revolving Loan” means the outstanding balance of all Revolving
Advances and any amounts added to the principal balance of the Revolving Loan
pursuant to this Agreement. 

          
“Revolving Loan Commitment” means (a) as to any Lender, the commitment
of such Lender to make Revolving Advances pursuant to subsection 2.1(B),
and to purchase participations in Lender Letters of Credit pursuant to
subsection 2.1(F) in the aggregate amount set forth on the signature page
of this Agreement opposite such Lender’s signature or in the most recent
Assignment and Acceptance Agreement, if any, executed by such Lender and (b) as
to all Lenders, the aggregate commitment of all Lenders to make Revolving
Advances and to purchase participations in Lender Letters of Credit. 

          
“Revolving Loan Lender” means any Lender that has a Revolving Loan
Commitment or has made a Revolving Loan or has become a Revolving Loan Lender
pursuant to subsection 9.5. 

          
“Revolving Note” means (i) the promissory notes of the Borrowers
issued pursuant to subsection 2.1(E)(iv) on the Closing Date and (ii) any
promissory notes issued by the Borrowers in connection with assignments under
subsection 9.5 of the Revolving Loan of any Lender, in each case
substantially in the form of Exhibit O. 

          
“Scheduled Installment” has the meaning assigned to that term in
subsection 2.1(A).

          
“Securities” means any 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. 

          
“Security Agreement” means the Security Agreement substantially in the
form of Exhibit L-1 and the Canada Security Agreement.

          
“Security Documents” means, collectively, the Guaranties, the Security
Agreements, the Mortgages, the Pledge Agreement, the Copyright Security
Agreement, the Patent Security Agreement, the Trademark Security Agreement, the
Italy Pledge Agreement, the Hong Kong Pledge Agreement, the UK Pledge Agreement,
the German Pledge Agreement and all other security documents, including
financing statements now or hereafter delivered to the Senior Agent purporting
to grant a Lien on any assets of any Person to secure the obligations and
liabilities of any Loan Party hereunder or under any other Loan Document. 

          
“Semi-Monthly Borrowing Base Certificate” means a certificate and
schedule duly executed by an executive officer of the Administrative Borrower
appropriately completed and in substantially the form of Exhibit B-1. 

          
“Senior Agent” means Heller and any successor in such capacity
appointed pursuant to subsection 9.1(G).

          
“Senior Subordinated Notes” means the $35,000,000 Senior Subordinated
Notes issued pursuant to the Securities Purchase Agreement dated as of February
4, 1999, as amended by the First Amendment to Securities Purchase Agreement
dated as of the date hereof. 

          
“Solvent” means, 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” means STD Holdings Limited, a corporation organized under the
laws of Hong Kong.

          
“STD Restructuring” means the restructuring of InterAct International
and the Subsidiaries of STD as set forth in Schedule 11.1(C).

          
“Subordinated Agent” means The Chase Manhattan Bank acting as agent on
behalf of the Subordinated Creditors and its successors and its assigns. 

          
“Subordinated Credit Agreement” has the meaning assigned to such term
in the recitals.

          
“Subordinated Creditors” means The Chase Manhattan Bank, First Union
National Bank, HSBC Bank U.S.A., Harris Trust and Savings Bank, Sun Trust Bank,
The Prudential Life Insurance Company of America, John Hancock Life Insurance
Company, John Hancock Variable Life Insurance Company, Investors Partner Life
Insurance Company, Mellon Bank, N.A., as Trustee for Long-Term Investment Trust,
solely in its capacity as Trustee and not in its individual capacity (as
directed by John Hancock Life Insurance Company), Mellon Bank, N.A., as Trustee
for Bell Atlantic Master Pension Trust, solely in its capacity as Trustee and
not in its individual capacity (as directed by John Hancock Life Insurance
Company), The Northern Trust Company, as Trustee of the Lucent Technologies,
Inc. Master Pension Trust and their successors and permitted assigns, each of
the foregoing solely in its capacity as lender under the Subordinated Credit
Agreement. 

          
“Subordinated Debt” means (i) the $15,000,000 owing by Borrowers to
the Subordinated Creditors pursuant to the Subordinated Credit Agreement and
(ii) the $35,000,000 Senior Subordinated Notes due February 4, 2004. 

          
“Subordination Agreement” means that certain Subordination and
Intercreditor Agreement, dated as of the date hereof, among the Loan Parties,
Senior Agent, Administrative Agent, on behalf of Agents and Lenders, and the
Subordinated Creditors, in a form and substance acceptable to Administrative
Agent. 

          
“Subordination Debt Documents” means the Subordinated Credit
Agreement, any guaranty with respect to the incurred thereunder, any security
agreement or other collateral document securing the debt incurred thereunder and
any other document, instrument or agreement executed by or on behalf of
Borrowers in connection with the transactions contemplated thereby. 

          
“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. 

          
“Syndication Agent” has the meaning set forth for that term in the
preamble, it being understood and agreed that the Syndication Agent shall have
no obligations or duties as agent for or on behalf of any party to this
Agreement or any other Loan Document. 

          
“Term Loans” mean(s) the unpaid balance of the term loans made
pursuant to subsection 2.1(A).

          
“Term Loan A” means the advances made pursuant to subsection
2.1(A)(1).

          
“Term Loan B” means the advances made pursuant to subsection
2.1(A)(2).

          
“Term Loan C” means the advances made pursuant to subsection
2.1(A)(3).

          
“Term Loan Commitment” means (a) as to any Lender, the commitment of
such Lender to make its Pro Rata Share of the Term Loans in the maximum
aggregate amount set forth on the signature page of this Agreement opposite such
Lender’s signature or in the most recent Assignment and Acceptance
Agreements, if any, executed by such Lender and (b) as to all Lenders, the
aggregate commitment of all Lenders to make the Term Loans. 

          
“Term Loan A Lender” means any Lender that has Term Loan Commitment
with respect to the Term Loan A or has made a Term Loan A or has become a Term
Loan A Lender pursuant to subsection 9.5. 

          
“Term Loan A Notes” means (i) the promissory notes of the Borrowers
issued pursuant to subsection 2.1(E)(1) on the Closing Date and (ii) any
promissory notes issued by the Borrowers in connection with assignments under
subsection 9.5 of the Term Loan A of any Lender, in each case
substantially in the form of Exhibit N-I. 

          
“Term Loan B Lender” means any Lender that has Term Loan Commitment
with respect to the Term Loan B or has made a Term Loan B or has become a Term
Loan B Lender pursuant to subsection 9.5. 

          
“Term Loan B Notes” means (i) the promissory notes of the Borrowers
issued pursuant to subsection 2.1(E)(2) on the Closing Date and (ii) any
promissory notes issued by the Borrowers in connection with assignments under
subsection 9.5 of the Term Loan B of any Lender, in each case
substantially in the form of Exhibit N-II. 

          
“Term Loan C Lender” means any Lender that has Term Loan Commitment
with respect to the Term Loan C or has made a Term Loan C or has become a Term
Loan C Lender pursuant to subsection 9.5. 

          
“Term Loan C Notes” means (i) the promissory notes of the Borrowers
issued pursuant to subsection 2.1(E)(3) on the Closing Date and (ii) any
promissory notes issued by the Borrowers in connection with assignments under
subsection 9.5 of the Term Loan C of any Lender, in each case
substantially in the form of Exhibit N-III. 

          
“Term Loan Note” or “Term Loan Notes” means the Term Loan A
Notes, Term Loan B Notes and Term Loan C Notes.

          
“Termination Date” means the date set forth in subsection
2.5.

          
“Term Loan C Repayment Restriction” has the meaning assigned to such
term in subsection 2.1(A)(3).

          
“Trademark Security Agreement” means the Trademark Security Agreement
dated as of even date herewith among the Loan Parties and the Senior Agent. 

          
“Total Loan Commitment” means as to any Lender the aggregate
commitments of such Lender with respect to its Revolving Loan Commitment and
Term Loan Commitment. 

          
“UCC” means the Uniform Commercial Code as in effect on the date
hereof in the State of New York, as amended from time to time, and any successor
statute. 

          
“UK Pledge Agreement” means the pledge agreement executed and
delivered in connection with the Loan Agreement and in form and substance
satisfactory to the Senior Agent, among Recoton European Holdings, Inc. and the
Senior Agent, regarding the stock of Recoton UK. 

          
“Unused Line Fee” has the meaning assigned to that term in subsection
2.3(A).

          
“Warehouseman's Waiver” means a Warehouseman's Waiver substantially in
the form of Exhibit H.

          
11.2 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 Agent or any Lender pursuant to subsection 5.1 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 Borrowers and Lenders agree 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 Borrowers 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 Borrowers and Requisite Lenders, (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) Borrowers shall prepare footnotes
to each Compliance Certificate and 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 Borrowers and (b) changes in accounting
principles recommended by Borrowers’ Accountants. 

          
11.3 Other Definitional Provisions. References to “Sections”,
“subsections”, “Riders”, “Exhibits”,
“Schedules” and “Addendums” shall be to Sections,
subsections, Riders, Exhibits, Schedules and Addendums, respectively, of this
Agreement unless otherwise specifically provided. Any of the terms defined in
subsection 11.1 may, unless the context otherwise requires, be used in
the singular or the plural depending on the reference. In this Agreement, words
importing any gender include the other genders; the words “including,”
“includes” and “include” shall be deemed to be followed by
the words “without limitation”; references to agreements and other
contractual instruments shall be deemed to include subsequent amendments,
assignments, and other modifications thereto, but only to the extent such
amendments, assignments and other modifications are not prohibited by the terms
of this Agreement or any other Loan Document; references to Persons include
their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations. 

[Remainder of page intentionally left blank]

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

	BORROWERS:
	RECOTON CORPORATION (FEIN: 11-1771737)

By: /s/ Arnold Kezsbom    
            
            
            
            

Name:  Arnold Kezsbom

Title:  Senior Vice President - Finance

INTERACT ACCESSORIES, INC. (FEIN: 52-1941363)

RECOTON AUDIO CORPORATION (FEIN: 13-3346656)

AAMP OF FLORIDA, INC. (FEIN: 59-2901317)

RECOTON HOME AUDIO, INC. (FEIN: 36-3718266)

By: /s/ Arnold Kezsbom     
            
            
            
            

Name:  Arnold Kezsbom

Title:  Vice President

	GUARANTORS:
	CHRISTIE DESIGN CORPORATION (FEIN: 59-3308472)

RECOTON INTERNATIONAL HOLDINGS, INC.

     (FEIN: 36-3718240)

RECOTON EUROPEAN HOLDINGS, INC.

     (FEIN: 36-3764914)

RECOTON JAPAN, INC. (FEIN: 36-3718238)

RECONE, INC. (FEIN: 36-3095337)

RECOTON CANADA LTD (FEIN: N/A)

By: /s/ Arnold Kezsbom    
            
            
            
            

Name:  Arnold Kezsbom

Title:  Vice President

	LENDERS:
	HELLER FINANCIAL, INC., individually and

as Senior Agent and Administrative Agent

By: /s/ Dwayne L. Coker     
            
            
            
            

Name:  Dwayne L. Coker

Title:  Vice President

Revolving Loan Commitment:

Revolving Loan Commitment:$ 25,227.272.73

Term Loan A Commitment:$ 2,727,272.73

Term Loan B Commitment:$ 2,045,454.55

Term Loan C Commitment:$5,000,000.00

GENERAL ELECTRIC CAPITAL CORPORATION,

individually and as Collateral Agent and Syndication Agent

By: /s/ James F. Hogan     
            
            
            
            

Name:  James F. Hogan

Title:  Duly Authorized Signatory

Revolving Loan Commitment: $25,227,272.73

Term Loan A Commitment: $2,727,272.73

Term Loan B Commitment: $2,045.454.55

Term Loan C Commitment: $5,000,000.00

THE CHASE MANHATTAN BANK

By: /s/ Roger A. Odell    
            
            
            
            

Name:  Roger A. Odell

Title: Managing Director

Revolving Loan Commitment: $ 0.00

Term Loan A Commitment: $ 0.00

Term Loan B Commitment: $ 0.00

Term Loan C Commitment:$ 761,255.35

HARRIS TRUST AND SAVINGS BANK

By: /s/ Janet Maxwell-Wickett     
            
            
            
            

Name: Janet Maxwell-Wickett

Title: Vice President

Revolving Loan Commitment: $ 0.00

Term Loan A Commitment: $ 0.00

Term Loan B Commitment: $ 0.00

Term Loan C Commitment:$ 304,870.40

HSBC BANK U.S.A.

(formerly known as MARINE MIDLAND BANK)

By: /s/ Joseph E. Salonia    
            
            
            
            

Name:  Joseph E. Salonia

Title: Vice President

Revolving Loan Commitment: $ 0.00

Term Loan A Commitment: $ 0.00

Term Loan B Commitment: $ 0.00

Term Loan C Commitment:$ 439,862.05

FIRST UNION NATIONAL BANK

By: /s/ James R. Connors    
            
            
            
            

Name:  James R. Connors

Title: Senior Vice President

Revolving Loan Commitment: $ 0.00

Term Loan A Commitment: $ 0.00

Term Loan B Commitment: $ 0.00

Term Loan C Commitment:$ 440,343,70.00

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By: /s/ Scott S. Hartz    
            
            
            
            

Name:  Scott S. Hartz

Title: Managing Director

Revolving Loan Commitment: $ 0.00

Term Loan A Commitment: $ 0.00

Term Loan B Commitment: $ 0.00

Term Loan C Commitment:$ 1,641,998.64

JOHN HANCOCK MUTUAL LIFE

INSURANCE COMPANY

By: /s/ Marlene J. DeLeon    
            
            
            
            

Name:  Marlene J. DeLeon

Title: Authorized Signatory

Revolving Loan Commitment: $ 0.00

Term Loan A Commitment: $ 0.00

Term Loan B Commitment: $ 0.00

Term Loan C Commitment:$ 751,531.35

JOHN HANCOCK VARIABLE LIFE

INSURANCE COMPANY

By: /s/ Marlene J. DeLeon    
            
            
            
            

Name:  Marlene J. DeLeon

Title: Authorized Signatory

Revolving Loan Commitment: $ 0.00

Term Loan A Commitment: $ 0.00

Term Loan B Commitment: $ 0.00

Term Loan C Commitment:$ 751,531.35

BANK OF AMERICA

By: /s/ E. Middleton Thorne, III    
            
            
            

Name:  E. Middleton Thorne, III

Title: Vice President

Revolving Loan Commitment: $21,022,727.27

Term Loan A Commitment: $2,272,727.27

Term Loan B Commitment: $1,704,545.45

Term Loan C Commitment: $ 0.00

THE CITI GROUP / BUSINESS CREDIT, INC.

By: /s/ Allison Friedman    
            
            
            
            

Name:  Allison Friedman

Title: Assistant Vice President

Revolving Loan Commitment: $25,227,272.73

Term Loan A Commitment:$2,727.272.73

Term Loan B Commitment:$2,045.454.55

Term Loan C Commitment:$ 0.00

GUARANTY BUSINESS CREDIT CORPORATION

By: /s/ Michael Haddad    
            
            
            
            

Name:   Michael Haddad

Title:  President and CEO

Revolving Loan Commitment: $ 12,613,636.36

Term Loan A Commitment: $ 1,363,636.36

Term Loan B Commitment: $ 1,022,727.27

Term Loan C Commitment:$ 0.00

DAIMLER CHRYSLER CAPITAL

By: /s/ James M. Vandervalk     
            
            
            
            

Name:  James M. Vandervalk

Title: President, Asset Based Lending Director

Revolving Loan Commitment: $12,613,636.36

Term Loan A Commitment: $1,363,636.36

Term Loan B Commitment: $1,022,727.27

Term Loan C Commitment: $ 0.00

FOOTHILL CAPITAL

By: /s/ Martin S. Chin     
            
            
            
            

Name:  Martin S. Chin

Title: Assistant Vice President

Revolving Loan Commitment: $ 12,613,636.36

Term Loan A Commitment: $ 1,363,636.36

Term Loan B Commitment: $ 1,022,727.27

Term Loan C Commitment:$ 0.00

CITIZENS BUSINESS CREDIT

By: /s/ Vincent P. O'Leary    
            
            
            
            

Name:  Vincent P. O'Leary

Title: Senior Vice President

Revolving Loan Commitment: $12,613,636.36

Term Loan A Commitment: $1,363,636.36

Term Loan B Commitment: $1,022,727.27

Term Loan C Commitment: $0.00

FIRSTAR BANK

By: /s/ Dirk Davidson    
            
            
            
            

Name:  Dirk Davidson

Title: Vice President

Revolving Loan Commitment: $  12,613,636.36

Term Loan A Commitment: $ 1,363,636.36

Term Loan B Commitment: $ 1,022,727.27

Term Loan C Commitment: $ 0.00

WASHINGTON MUTUAL BANK

By: /s/ Kenneth A. Slavitt    
            
            
            
            

Name:  Kenneth A. Slavitt

Title: Senior Vice President

Revolving Loan Commitment: $ 8,409,090.91

Term Loan A Commitment: $ 909,090.91

Term Loan B Commitment: $ 681,818.18

Term Loan C Commitment:$ 0.00

SIEMENS FINANCIAL SERVICES, INC.

By: /s/ Frank Amodio     
            
            
            
            

Name:  Frank Amodio

Title: Vice President - Credit

Revolving Loan Commitment: $ 8,409,090.91

Term Loan A Commitment: $ 909,090.91

Term Loan B Commitment: $ 681,818.18

Term Loan C Commitment:$ 0.00

MELLON BANK N.A., AS TRUSTEE FOR THE

LONG-TERM INVESTMENT TRUST, solely in

its capacity as Trustee and not in its individual 

capacity as Trustee and not in its individual

capacity (as directed by John Hancock Mutual 

Life Insurance Company)

By: /s/ Bernadette T. Rist   
            
            
            
            

Name:  Bernadette T. Rist

Title: Authorized Signatory

Revolving Loan Commitment: $ 0.00

Term Loan A Commitment: $ 0.00

Term Loan B Commitment: $ 0.00

Term Loan C Commitment:$ 16,585.75

MELLON BANK N.A., AS TRUSTEE FOR BELL

ATLANTIC MASTER TRUST, solely in

its capacity as Trustee and not in its individual 

capacity as Trustee and not in its individual

capacity (as directed by John Hancock Mutual 

Life Insurance Company)

By: /s/ Bernadette T. Rist   
            
            
            
            

Name:  Bernadette T. Rist

Title: Authorized Signatory

Revolving Loan Commitment: $ 0.00

Term Loan A Commitment: $ 0.00

Term Loan B Commitment: $ 0.00

Term Loan C Commitment:$ 38,872.15

THE NORTHERN TRUST COMPANY, AS TRUSTEE OF

THE LUCENT TECHNOLOGIES INC. MASTER PENSION

TRUST

By:  John Hancock Mutual Life Insurance

Company, as Investment Manager

By: /s/ Scott A. Hartz    
            
            
            
            

Name:  Scott A. Hartz

Title: Managing Director

Revolving Loan Commitment: $ 0.00

Term Loan A Commitment: $ 0.00

Term Loan B Commitment: $ 0.00

Term Loan C Commitment:$ 35,244.25

INVESTORS PARTNER LIFE INSURANCE COMPANY

By: /s/ Marlene J. DeLeon    
            
            
            
            

Name:  Marlene J. DeLeon

Title: Authorized Signatory

Revolving Loan Commitment: $ 0.00

Term Loan A Commitment: $ 0.00

Term Loan B Commitment: $ 0.00

Term Loan C Commitment:$ 25,914.85

SUNTRUST BANK, CENTRAL FLORIDA

NATIONAL ASSOCIATION

By: /s/ Byron P. Kurtgis    
            
            
            
            

Name:  Byron P. Kurtgis

Title: Director

Revolving Loan Commitment: $ 0.00

Term Loan A Commitment: $ 0.00

Term Loan B Commitment: $ 0.00

Term Loan C Commitment:$ 439,862.05

GMAC BUSINESS CREDIT LLC

By: /s/ William J. Stewart    
            
            
            
            

Name:  William J. Stewart

Title: Director

Revolving Loan Commitment: $ 21,022,727.27

Term Loan A Commitment: $ 2,272,727.27

Term Loan B Commitment: $ 1,704,545.45

Term Loan C Commitment:$ 0.00

EXHIBITS

	A.
	Assignment and Acceptance Agreement

	B-1.
	Semi-Monthly Borrowing Base Certificate

	B-2.
	Monthly Borrowing Base Certificate

	C.
	Compliance Certificate

	D.
	Notice of Borrowing

	E.
	Inventory Report

	F.
	Reconciliation Report

	G.
	Form of Mortgage or Deed of Trust

	H.
	Form of Warehouseman's Waiver

	I.
	Form of Landlord's Consent

	J.
	List of Opinion Topics

	K-1.
	Form of Guaranty

	K-2.
	Form of Canada Guaranty

	L-1.
	Form of Security Agreement

	L-2.
	Form of Canada Security Agreement

	M.
	Form of Pledge Agreement

	N-1.
	Form of Term Loan A Note

	N-II.
	Form of Loan B Note

	N-III.
	Form of Term Loan C Note

	O.
	Form of Revolving Loan Note

SCHEDULES

	2.1(C)(i)
	Concentration Limitation

	2.1(C)(ii)
	Locations of Inventory in Transit

	3
	List of Closing Documents

	4.1(A)
	Capitalization of Loan Parties and
Subsidiaries' Jurisdictions

	4.5
	Real Estate

	4.7
	Taxes

	4.9
	Employee Benefit Plans

	4.14
	Insurance Policies

	4.16
	Employee Matters

	7.1
	Indebtedness

	7.2
	Guaranties

	7.4(c)
	Closing Date Employee Loans

	7.4(e)
	Investments

	7.6
	Inactive Subsidiaries

	7.11
	Subsidiaries

	11.1(A)
	Mortgaged Property

	11.1(B)
	Other Liens

	11.1(C)
	STD Restructuring

RIDERS

	A	Conditions Rider

	B	Reporting Rider

	C
	Financial Covenants Rider

CONDITIONS RIDER

          
This Conditions Rider is attached to and made a part of that certain Loan
Agreement dated as of October 31, 2000 (the “Loan Agreement”) and
entered into among Recoton Corporation, a New York corporation, 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 other Loan Parties party thereto and
Agents and Lenders party thereto. Capitalized terms used herein but not
otherwise defined herein have the meaning assigned to those terms in the Loan
Agreement. 

          
(A) Closing Deliveries. Administrative Agent shall have received, in form and
substance satisfactory to Administrative Agent and Lenders, all documents,
instruments and information identified on Schedule 3 and all other agreements,
notes, certificates, orders, authorizations, financing statements, mortgages and
other documents which Agent may at any time reasonably request.

          
(B) Security Interests. Administrative Agent and Lenders shall have
received satisfactory evidence that all security interests and liens granted to
Senior Agent for the benefit of the Benefitted Persons pursuant to the Loan
Agreement or the other Loan Documents have been duly perfected and constitute
first priority liens on the Collateral (other than in de minimis
amounts and subject only to Permitted Encumbrances). The Loan Parties shall have
pledged 100% of their equity interest in all Domestic Subsidiaries and Recoton
Canada and 65% of their equity interest in all "first-tier" Foreign
Subsidiaries.

          
(C) Required Minimum Excess Availability. After giving effect to the
consummation of the transactions contemplated under the Loan Agreement on the
Closing Date and the payment by Borrowers of all costs, fees and expenses
relating thereto, the Maximum Revolving Loan Amount on the Closing Date shall
exceed the Revolving Loan by at least $25,000,000. Following the Closing Date,
at each month's end based on the Monthly Borrowing Base Certificate submitted
pursuant to clause (P) of the Reporting Rider, the Maximum Revolving Loan Amount
shall exceed the Revolving Loan by at least the Required Minimum Excess
Availability.

          
(D) Representations and Warranties. The representations and warranties
contained herein and in the Loan Documents shall be true, correct and complete
in all material respects on and as of that Funding Date to the same extent as
though made on and as of that date, except for any representation or warranty
limited by its terms to a specific date and taking into account any amendments
to the Schedules or Exhibits as a result of any disclosures made by Borrowers to
Administrative Agent after the Closing Date and approved by Administrative
Agent.

          
(E) No Default. No event shall have occurred and be continuing or would
result from funding a Loan or issuing a Lender Letter of Credit requested by
Borrowers that would constitute an Event of Default or a Default.

          

(F) Performance of Agreements. Each Loan Party shall have performed in
all material respects all agreements and satisfied all conditions which any Loan
Document provides shall be performed by it on or before that Funding Date.

          
(G) No Prohibition. No order, judgment or decree of any court, arbitrator
or governmental authority shall purport to enjoin or restrain Administrative
Agent or any Lender from making any Loans or issuing any Lender Letters of
Credit.

          
(H) No Litigation. There shall not be pending or, to the knowledge of any
executive officer of the Administrative Borrower, threatened, any action,
charge, claim, demand, suit, proceeding, petition, governmental investigation or
arbitration by, against or affecting any Loan Party or any of its Subsidiaries
or any property of any Loan Party or any of its Subsidiaries that has not been
disclosed to Administrative Agent by Borrowers in writing, nor shall there have
occurred any material development in any such action, charge, claim, demand,
suit, proceeding, petition, governmental investigation or arbitration, in each
case which could reasonably be expected to have a Material Adverse Effect.

          
(I) No Material Adverse Effect. There shall have been no event or occurrence
which could reasonably be expected to result in a Material Adverse Effect.

          
(J) Repayment of Existing Indebtedness/Permitted Indebtedness. After giving
effect to the consummation of the transactions contemplated under the Loan
Agreement, no Loan Party shall have outstanding any Indebtedness (including
guarantied Indebtedness or preferred stock) other than the Obligations under the
Loan Documents, the Subordinated Debt referred to in item (Q) hereof and other
than those items set forth in subsection 7.1 or Schedule 7.1.

          
(K) Unaudited Financial Statements. Administrative Agent shall have received
a copy of the consolidated unaudited financial statements of Recoton for the
fiscal quarters ended March 30, 2000 and June 30, 2000.

          
(L) Audit. Agents shall be satisfied, with the results of an audit by Agents
or their representatives of Borrowers' business, operations, financial condition
and assets (including, but not limited to, an update of the inventory appraisal
performed by the Ozer Group or an appraiser satisfactory to the Agents),
including, without limitation, the opportunity to meet with Borrowers'
management. Such audit shall be at Borrowers' expense and shall include an
analysis of Borrowers' financial and collateral reporting capabilities the
results of which must (i) be satisfactory to the Agents and (ii) confirm that
Borrowers have a minimum of $25,000,000 in excess availability under the
Revolving Loan Commitments as of Closing Date.

          
(M) Management Letters. Agents shall have received copies of the management
letters generated by Borrowers' audit firm for the fiscal years ending December
31, 1998 and December 31, 1999 in form and substance acceptable to the Agents.

          
(N) Business Plan. Agents shall have received copies of Borrowers' business
plan, including, without limitations, financial Projections in form and
substance satisfactory to the Agents and that accurately reflects the
transaction contemplated herein. Agents shall have had the opportunity to
discuss the business plan with Recoton's operating management and be satisfied
as to the likelihood of its successful implementation.

          
(O) Insurance. Agents shall have received copies of the insurance policies or
binders in types and amounts, under terms and conditions satisfactory to the
Agents and with appropriate endorsements naming the Administrative Agent as loss
payee, mortgagee and additional insured.

          
(P) Environmental Matters. The Agents shall have received an environmental
audit report for all properties in which the Lenders will be taking a security
interest, in scope and substance satisfactory to the Agents and Agents'
environmental legal counsel and which has been prepared by a nationally
recognized environmental engineering firm acceptable to the Agents. Agents shall
be satisfied that there are no existing environmental liabilities that could
have a material adverse impact on the financial condition or prospects of
Borrowers and their Subsidiaries, taken as a whole.

          
(Q) Subordinated Debt. Any indebtedness of Borrowers that is not refinanced with the
proceeds of the Term Loans or the Revolving Loans or which is incurred in order
to satisfy the requirements of item (C) hereof shall have terms and conditions
that are acceptable to the Agents in their sole discretion and shall, unless
otherwise agreed to by the Agents, be subordinated to the Obligations under the
Loan Documents pursuant to subordination agreements containing terms and
conditions, including, without limitation, payment blockage rights, remedies and
standstill provisions, satisfactory to the Agents in their sole discretion. The
amount of subordinated indebtedness evidenced by the Subordinated Credit
Agreement shall equal $15,000,000, pursuant to and subject to the terms and
conditions of the Subordination Agreement. Agents shall have received fully
executed copies of the documents related to the Subordinated Debt, each of which
shall be in form and substance satisfactory to Agents in their sole discretion.

          
(R) German Facility. On or before the Closing Date, Recoton German Holdings
GmbH shall have entered into a financing arrangement with Heller Bank A.G. for
an aggregate committed amount of DM 50,000,000 which shall have terms and
conditions acceptable to the Agents in their sole discretion. Agents shall have
received fully executed copies of the documents related to the German Facility,
each of which shall be in form and substance satisfactory to Agents in their
sole discretion. On the Closing Date, Recoton German Holdings GmbH shall provide
cash or collateral (such collateral to be acceptable to the Agents) to Borrowers
in amounts sufficient in order to satisfy the requirements under item (C)
hereof.

          
(S) Capital Organization/Legal Structure/Taxes. (i) The ownership, capital,
corporate, tax, organizational and legal structure of Borrowers and their
Subsidiaries shall be acceptable to the Agents and Lenders and shall optimize
the rights of the Lenders as secured creditors of Borrowers and their
Subsidiaries to enforce their claims against Borrowers and their Subsidiaries
and the collateral securing the Obligations under the Loan Documents.

          
          
(ii) Agents shall have received a copy of Recoton's organizational chart clearly
demonstrating all legal entities affiliated with or owned directly or indirectly
by Borrowers, which chart shall be certified to be true and correct by the chief
operating officer or secretary of Recoton.

          
          
(iii) Borrower's shall adopt such amendments to the by-laws and other governing
documents of the foreign subsidiaries as the Agents may reasonably request.

          
          
(iv) The following shall be acceptable to the Agents: other debt instruments,
tax laws, fraudulent conveyance laws, thin capitalization laws (in the United
States, Canada, the United Kingdom, or elsewhere, as appropriate, as such tax
and fraudulent conveyance laws relate to the transaction contemplated under the
Loan Documents, including, but not limited to, the tax and fraudulent conveyance
implications of the movement of funds from Canada, the United Kingdom or
elsewhere to the United States) and the governing documents of Borrowers and
their Subsidiaries.

          
(T) Consents. Agent shall have received (i) satisfactory evidence that the
Loan Parties have obtained all required consents and approvals of all Persons,
including all requisite Governmental Authorities, to the execution, delivery and
performance of this Agreement and the other Loan Documents and the consummation
of the transactions contemplated hereby or (ii) an officer's certificate in form
and substance reasonably satisfactory to Agent affirming that no such consents
or approvals are required.

          
(U) Fees. Borrowers shall have paid the fees required to be paid on the
Closing Date in the respective amounts specified in subsection 2.3, and shall
have reimbursed Agents for all fees (including legal fees), costs and expenses
of closing presented as of the Closing Date.

          
(V) Transaction Costs. Prior to the Closing Date, Administrative Borrower
shall have delivered to Administrative Agent (with copies for each Lender) a
schedule, in form satisfactory to Administrative Agent, setting forth Borrowers
reasonable best estimate of the fees, costs and expenses payable by Borrowers in
connection with the transactions contemplated hereby (other than fees payable to
any of the Agents) and such estimate shall not exceed $7,200,000.

          
(W) Use of Proceeds. Administrative Borrower shall deliver a written
statement to the Administrative Agent, certified by the chief financial officer
of the Administrative Borrower, setting forth the debt being paid on the Closing
Date and stating that the proceeds of the Loans are being used only to pay such
debt and the fees and expenses associated with the transactions contemplated
hereby.

REPORTING RIDER

        This Reporting
Rider is attached and made a part of that certain Loan Agreement dated as of
October 31, 2000 (the “Loan Agreement”) entered into among Recoton
Corporation, a New York corporation, 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 other Loan Parties party thereto and Agents and Lenders party
thereto. Capitalized terms used herein but not otherwise defined herein have the
meaning assigned to those terms in the Loan Agreement. 

           
  (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, Administrative Borrower will deliver to
Administrative Agent (1) the consolidated and consolidating balance sheet of
Borrowers and their 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 Borrowers and their 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, Administrative Borrower
will deliver to Administrative Agent (1) the consolidated and consolidating
balance sheet of Borrowers and their 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 Borrowers and their 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,
Administrative Borrower will deliver to Administrative Agent 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 Administrative Agent 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, Administrative Borrower will
deliver to Administrative Agent (1) the consolidated and consolidating balance
sheet of Borrowers and their 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 Borrowers and their 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, Administrative Borrower will deliver to Administrative Agent the
consolidated and consolidating balance sheet of Borrowers and their 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 Borrowers and their 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), Administrative Borrower 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 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, Administrative
Borrower will deliver to Agents: (1) the consolidated balance sheet of Borrowers
and their 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 Borrowers and
their 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 Borrowers and their
Subsidiaries and shall state that (a) such consolidated financial statements
present fairly the consolidated financial position of Borrowers and their
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 Borrowers
and their Subsidiaries, including (a) consolidating balance sheets of Borrowers
and their Subsidiaries as at the end of such Fiscal Year showing intercompany
eliminations and (b) related consolidating statements of income of Borrowers and
their Subsidiaries showing intercompany eliminations.

           
  (D)  Accountants' Certification and Reports.
Together with each delivery of consolidated financial statements of Borrowers
and their Subsidiaries pursuant to paragraph (C) above, Administrative Borrower
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, Administrative Borrower
will deliver to Agents copies of all significant reports submitted to Borrowers
by Borrowers' Accountants in connection with each annual, interim or special
audit of the financial statements of Borrowers 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, Administrative Borrower will deliver to Agents a Compliance
Certificate, including copies of the calculations and work-up employed to
determine Borrowers' 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,
Administrative Borrower 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 Borrowers are in compliance with all other covenants in
the Loan Agreement.

           
  (F)  Borrowing Base Certificates, Registers and
Journals. (i) On each Wednesday of each week Administrative Borrower will
submit to Agents an accounts receivable roll forward substantially in the form
of Exhibit B, indicating therein the accounts receivable balances as of the
immediately preceding week. If Wednesday is not a Business Day, Administrative
Borrower shall submit such accounts receivable roll forward on the next Business
Day. Such accounts receivable roll forward shall be used as the bases for
updating the Accounts per the Administrative Agent's loan system.

          
          
  (ii) As soon as available, and in any event no later than
fifteen (15) days after the end of each month, an executive officer of
Administrative Borrower shall deliver to Agents a Consolidating Borrowing Base
Certificate (“Semi-Monthly Borrowing Base Certificate”) substantially
in the form of Exhibit B-1 and update the Monthly Borrowing Base Certificate (as
defined below). Such updates to the Monthly Borrowing Base Certificate shall
reflect: (1) the sales and collections of Borrowers per the Borrowers’ aged
trial balance of all then existing Accounts for such month, (2) the Inventory on
hand as of the last day of such month based on the Borrowers’ Inventory
perpetual report, (3) the calculation of both the Eligible Accounts per the aged
trial balance of all then existing Accounts and Eligible Inventory per the
Inventory perpetual report and (4) if Administrative Agent so requests, (a)
copies of invoices evidencing such sales and proofs of delivery relating thereto
an invoice register or sales journal describing all sales of such Borrower, in
form and substance satisfactory to Administrative Agent, (b) a cash receipts
journal, (c) a credit memo journal, and (d) an adjustment journal, setting forth
all adjustments to such Borrower’s accounts receivable. The Semi-Monthly
Borrowing Base Certificate shall also state that to best knowledge of the
undersigned the information supplied to the Agents is true, complete and correct
with respect to Account, Inventory, Letters of Credit and Loan balances.

          
          
  (iii) As soon as available, and in any event no later than
thirty (30) days after the end of each month, an executive officer of
Administrative Borrower shall deliver to Agents a Consolidating Borrowing Base
Certificate (“Monthly Borrowing Base Certificate”) substantially in
the form of Exhibit B-2, setting forth (x)(1) the calculation of both the
Eligible Accounts per the aged trial balance of all then existing Accounts and
Eligible Inventory per the Inventory Report which shall be substantially in the
form of Exhibit E to the Loan Agreement and (2) all Borrowing Base reserves as
Administrative Agent in its reasonable credit judgement elects to establish
unless otherwise directed by the Requisite Lenders; and (y) as of the last day
of the immediately preceding month updated to reflect (1) the sales and
collections of Borrowers per the Borrowers’ aged trial balance of all then
existing Accounts, (2) Inventory on hand based on the Borrowers’ Inventory
perpetual report, (3) Inventory in transit as set forth in the Inventory In
Transit Report which report shall be substantially in the form of Exhibit E,
and (4) Eligible Letter of Credit Inventory. 

           
   (G)   Reconciliation Reports, Inventory Reports and
Listings and Agings. (i) As soon as available, and in any event no later
than fifteen (15) days after the end of each month, Administrative Borrower
shall deliver to Agents in conjunction with the submission of the Semi-Monthly
Borrowing Base: (1) a summary aged trial balance of all then existing Accounts;
and (2) a summary Inventory perpetual report.

          
          
  (ii) As soon as available, and in any event no later than
thirty-five (35) days after the end of each month, Administrative Borrower shall
deliver to Agents: (1) a Reconciliation Report duly executed by the chief
executive officer, chief operating officer or chief financial officer of
Administrative Borrower and substantially in the form of Exhibit F as at the
last day of such period reconciling the reports submitted in clause G(i)(1) and
in this clause G(i)(2) to the Accounts and Inventory balances reflected on the
corresponding Monthly Financials and (2) if Administrative Agent so requests, a
detailed inventory listing and cover summary report. All such reports shall be
in form and substance satisfactory to Agent. 

           
 (H)  Management Report. Together with each delivery of
financial statements of Borrowers and their Subsidiaries pursuant to paragraphs
(B) and (C) above, Administrative Borrower will deliver to Agents the
corresponding form 10-Q or 10-K, as the case may be, which forms will include
management's analysis of the Borrowers' 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 Lenders 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 Administrative Borrower 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 Agents, Administrative Borrower will provide a
detailed comparison of the foregoing information within thirty (30) days of such
request.

           
  (I)   Appraisals. From time to time, upon the
request of Administrative Agent, Administrative Borrower will obtain and deliver
to Administrative Agent, at Borrowers' expense, appraisal reports in form and
substance and from appraisers satisfactory to Agents, stating the then current
fair market and orderly liquidation values of all or any portion of the
Collateral; provided, however, so long as no Default or Event of Default is
continuing, Administrative Agent shall not request an appraisal as to any
particular category of Collateral, except for Inventory, to be performed more
than once every Loan Year at Borrowers' expense. A quarterly Inventory appraisal
(conducted by an appraiser satisfactory to the Agents) shall be required under
this Agreement.

           
   (J)   Government Notices. Promptly after the
receipt thereof, Administrative Borrower will deliver to Agents 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 Borrowers' payment 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 Borrowers' assets.

           
  (K)   Events of Default, etc. Promptly upon an
executive officer of Administrative Borrower obtaining knowledge of any of the
following events or conditions, Administrative Borrower shall deliver to Agents
a certificate of Administrative Borrower'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 such Borrower 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)   Projections. As soon as available and in any
event no later than the end of each Fiscal Year of any Borrower, Administrative
Borrower will deliver to Agents Projections for each Borrower 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 any Borrower, Administrative
Borrower will deliver to Agents Projections for the remaining Fiscal Years
through the maturity of the Loans which Projections shall be on consolidated,
annual, and year by year bases.

           
  (M)   Subordinated Debt and Equity Notices. As soon
as practicable, Administrative Borrower will deliver to Agents copies of all
material written notices given or received by any Loan Party with respect to any
Subordinated 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 Subordinated Debt, notice of
such event of default.

           
  (N)   Litigation. Promptly upon learning thereof,
Administrative Borrower will deliver to Agents 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)   Lease Default Notices. Within two Business
Days after receipt thereof, Administrative Borrower will deliver to Agents
copies of (i) any and all default notices received under or with respect to any
leased location or public warehouse where Collateral is located, and (ii) such
other notices or documents as Agents may reasonably request.

           
  (P)   SEC Filings and Press Releases. Promptly upon
their becoming available, Administrative Borrower will deliver to Agents 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,
Administrative Borrower will deliver to Agents such other information and data
as Agents or Lenders may reasonably request from time to time.

           
  (R) Casualty. Administrative Borrower shall promptly notify
Agents of any loss, damage, or destruction to the Collateral in the amount of
$250,000 or more, whether or not covered by insurance.

           
  (S) ERISA Matters. Promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, Administrative
Borrower will deliver to Agents 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.

FINANCIAL COVENANTS RIDER

        This Financial
Covenants Rider is attached and made a part of that certain Loan Agreement dated
as of October 31, 2000 (the “Loan Agreement”) entered into among
Recoton Corporation, a New York corporation, 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 other Loan Parties party thereto and Agents and Lenders party
thereto. Capitalized terms used herein but not otherwise defined herein have the
meaning assigned to those terms in the Loan Agreement. 

        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 Borrowers will remain in compliance with respect
to the column headed “Amount For Fiscal Quarter”. Under no
circumstance, however, shall Recoton and its Subsidiaries, on a consolidated
basis, fail to attain a minimum EBITDA of $21,000,000 for Fiscal Quarter ending
December 31, 2000, $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 Borrowers and their 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 Borrowers’ 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

SCHEDULES TO LOAN AGREEMENT

Schedule 2.1(C)(i)

Concentration Limitation

	Wal-Mart
Best Buy
Target
	25%
15%
15%
	

Schedule 2.1(C)(ii)

Locations of Inventory in Transit

Inventory is in transit to the following locations: 

1.  Company Locations

Company                             Address/City/State/Zip               County
-------                             ----------------------               ------

Recoton Corporation                 2950 Lake Emma Road                  Seminole
                                    Lake Mary, FL 32746

                                    531 Stone Road                       Solano
                                    Benicia, CA 94519

                                    c/o Bridge Terminal Transport        Duval County
                                    5100 Gordon Street
                                    Jacksonville, FL  32216

InterAct Accessories, Inc.          2950 Lake Emma Road                  Seminole
                                    Lake Mary, FL 32746

                                    1090 Emma Oaks Trail                 Seminole
                                    Lake Mary, FL 32746

                                    c/o Bridge Terminal Transport        Duval
                                    5100 Gordon Street
                                    Jacksonville, FL  32216

                                    2000-2002 E. Lake Mary Blvd          Seminole
                                    Sanford, FL 32773

AAMP of Florida, Inc.               13160 56th Court, Suite 508          Pinellas
                                    Clearwater, FL 33760

                                    3041 E. Cherry Street                Greene
                                    Springfield, MO 65802

                                    750 Freeport Blvd                    Washoe
                                    Units 105 & 106
                                    Sparks, NV 89431

                                    7630 Miramar Road                    San Diego
                                    San Diego, CA 92121

Recoton Audio Corporation           2950 Lake Emma Road                  Seminole
                                    Lake Mary, FL 32746

                                    1090 Emma Oaks Trail                 Seminole
                                    Lake Mary, FL 32746

                                    531 Stone Road                       Solano
                                    Benicia, CA 94510

ReCone, Inc.                        2950 Lake Emma Road                  Seminole
                                    Lake Mary, FL 32746

Recoton Home Audio, Inc.            2950 Lake Emma Road                  Seminole
                                    Lake Mary, FL 32746

                                    527 Stone Road                       Solano
                                    Benicia, CA 94510

                                    531 Stone Road                       Solano
                                    Benicia, CA 94510

                                    1090 Emma Oaks Trail                 Seminole
                                    Lake Mary, FL 32746

Recoton International Holdings,     2950 Lake Emma Road
Inc.                                Lake Mary, FL 32746                  Seminole

Recoton European Holdings, Inc.     2950 Lake Emma Road                  Seminole
                                    Lake Mary, FL 32746

Recoton Canada Ltd.                 680 Granite Court                    NA
                                    Pickering, Ontario L1W 3J5
                                    Canada

2.  Customs Brokers

    BDP International (for InterAct Accessories, Inc.)
    811 Cromwell Park Drive, Suite 100
    Glen Burnie, MD 21061
    (410) 762-5840

    DFW International (for Recoton Corporation)
    3025 Roy Orr Blvd
    Grand Prairie, TX  75050
    (972) 262-0539

    Emery Customs Brokers (for Recoton Audio Corporation/Recoton Mobile
          Electronics
          and Recoton Corporation)
    6940 C Engle Road
    Middleburg Heights, OH  44130
    (440) 816-3921

    Priority One International (for Recoton Audio Corporation/Recoton
          Mobile Electronics and Recoton Home Audio, Inc.)
    3419 Trentwood Blvd.
    Orlando, FL  32812
    (407) 855-0925

    Sims Waters & Associates, Inc. (for Recoton Audio
          Corporation/Recoton Mobile Electronics and Recoton
          Home Audio Corporation)
    4444 Talleyrand Avenue
    P.O. Box 13248
    Jacksonville, FL  32206
    (904) 356-4455

    Tower Group International (for Recoton Audio
          Corporation/Recoton Mobile Electronics
          and Recoton Home Audio, Inc.)
    150 Eastern Avenue
    Chelsea, MA  02150-3352
    (617) 887-8656

    377 Oyster Point Blvd., Unit 19
    South San Francisco, CA  94008
    650-829-3191

    Welke Customs Brokers LTD. (for Recoton Canada Ltd.)
    116 Skyway Avenue
    Toronto, Ontario, Canada M9W4Y9
    (416) 674-0592

    Eagle Air USA (for InterAct Accessories, Inc.)
    9449 Benford Rd.
    Orlando, FL  32821
    (407) 851-9070

    Comet Customs Brokers, Inc. (for InterAct Accessories, Inc.)
    420 W. Merrick Road
    Valley Stream, NY  11580
    (516) 861-2160

    Kuehne & Nagel (for Recoton Corporation)
    8870 Boggy Creek Rd. Suite 100
    Orlando, FL  32824
    (407) 240-7395

    UPS (for Recoton Corporation, Recoton Audio Corporation/Recoton
          Mobile Electronics, Recoton Home Audio, Inc., InterAct
          Accessories, Inc. and AAMP of Florida, Inc.)
    8500 Parkline Blvd. Suite 113
    Orlando, FL  32809
    (407) 856-3429

    Federal Express (for Recoton Corporation, Recoton Audio
          Corporation/Recoton Mobile Electronics, Recoton Home
          Audio, Inc., InterAct Accessories, Inc. and AAMP of
          Florida, Inc.)
    2600 Nonconnah Blvd. Suite 191
    Memphis, TN  38132
    (901) 922-3656

    Sack & Menendez Inc. (for AAMP of Florida, Inc.)
    8442 Tradeport Drive
    Suite 203
    Orlando, FL  32827
    (407) 859-6081

3.  Drayage Yards

    BTT Jacksonville (for Recoton Corporation, Recoton Audio  AB Trucking (for Recoton Corporation, Recoton Audio
      Corporation/Recoton Mobile Electronics, Recoton Home      Corporation/Recoton Mobile Electronics, Recoton
      Audio, Inc. and InterAct Accessories, Inc.)               Home Audio, Inc. and InterAct Accessories, Inc.)
    139 Eastport Rd.                                          1195 Middle Harbor Rd.
    Jacksonville, FL  32218                                   Oakland, CA  94607
    Ph: 800-888-7413                                          Ph: 510-835-0930

    BTT Savannah (for Recoton Corporation, Recoton Audio      PRTI (for Recoton Corporation, Recoton Audio
      Corporation/Recoton Mobile Electronics, Recoton Home      Corporation/Recoton Mobile Electronics, Recoton
      Audio, Inc. and InterAct Accessories, Inc.)               Home Audio, Inc. and InterAct Accessories)
    P.O. Box 959                                              1284 Caspian Way
    Hwy. 80 west of Hwy. 307                                  Long Beach, CA  90813
    Pooler, GA 31332                                          Ph: 510-835-0930
    Ph: 800-673-7359

    BTT Chicago (for Recoton Corporation)                     PRTI (for Recoton Corporation, Recoton Audio
    3759 W. 38th Street                                         Corporation/Recoton Mobile Electronics, Recoton
    Chicago, IL  60632                                          Home Audio, Inc. and InterAct Accessories)
                                                              445 9th Ave.
                                                              Oakland, CA  94606
                                                              Ph: 510-835-7784

    BTT Irving (for Recoton Corporation)                      Intermodal Trucking (for InterAct Accessories, Inc.)
    1812 Loop 12 North                                        9852 Boggy Creek
    Irving, TX  75061                                         Orlando, FL  32824-8408
    Ph: 972-579-7711                                          Ph: 407-888-2446

    Intermodal Trucking  (for InterAct Accessories, Inc.)     Hellman International (for AAMP of Florida, Inc.)
    1900 South 20th Street                                    5901 Benjamin Center Dr., Suite 103
    Tampa, FL  75061                                          Tampa, FL  33634
    Ph: 800-908-8333                                          813-866-5355
                                                              Jim Parker

    Wes-Flo Company (for AAMP of Florida, Inc.)
    5707 54th Street
    Tampa, FL  33610
    813-626-2171
    Jim Perry

4.  Ports

a.  For Recoton Corporation, Recoton Audio Corporation/Recoton Mobile
    Electronics, Recoton, Home Audio Corporation and InterAct Accessories

    Port of Oakland                                   Port of Long Beach
    530 Water Streett                                 952 Harbor Plaza
    Oakland, CA  94607                                P.O. Box 570
    Ph: 510-272-1305                                  Long Beach, CA  90801
                                                      Ph: 310-732-3508

    Port of Miami                                     Port of Savannah
    1015 North American Way                           Hwy 17 North
    Miami, FL  33132                                  Garden City, GA  31418
    Ph: 305-371-7678                                  Ph: 912-966-7842

b.  For AAMP of Florida, Inc.

    Port of Los Angeles                               Port of Orlando
    Los Angeles, CA                                   Orlando, FL

    Port of Tampa                                     Port of Miami
    Tampa, FL                                         1015 North American Way
                                                      Miami,FL 33132
                                                      Ph: 305-371-7678

c.  For Recoton Canada Ltd.

    Port of Vancouver
    343 Lower River Road
    P.O. Box 1180
    Vancouver, WA  98666
    Ph: (360) 693-3611

5.  Transload Distribution Facility

    HUDD Distribution (for Recoton Corporation, Recoton Audio
      Corporation/Recoton Mobile Electronics, Recoton
      Home Audio, Inc. and InterAct Accessories)
    9400 Hall Rd.
    Downey, CA  90241
    Ph. 562-803-4685

    Hellman International (for AAMP of Florida, Inc.)
    5901 Benjamin Center Dr., Suite 103
    Tampa, FL  33634
    813-886-5355
    Jim Parker

6.  Rail Yards

    Santa Fe Dallas (for Recoton Corporation)               CSX Orlando (for InterAct Accessories, Inc.)
    2400 Westport Pkwy West                                 8850 Atlantic Ave.
    Haslet, TX  76052                                       Orlando, FL  32824
    Ph: 817-224-7164                                        Ph: 817-224-7164

    CSX Jacksonville (for Recoton Corporation,              FEC (Florida Coast East) Jacksonville
      Recoton Audio Corporation/Recoton Mobile                (for Recoton Corporation, Recoton Audio
      Electronics, Recoton Home Audio, Inc. and               Corporation/Recotton Mobile Electronics,
    InterAct Accessories)                                   Recoton Home Audio, Inc. and
    5902 Sportsman Club Rd.                                 InterAct Accessories)
    Jacksonville, FL  32219                                 6140 Phillips Hwy.
    Ph: 904-695-7000                                        Jacksonville, FL  32216
                                                            Ph: 904-773-4414

    CNR (Canadian National Rail) (for Recoton               CPR (Canadian Pacific Rail) (for Recoton
      Canada Ltd.)                                            Canada Ltd.)
    30 International Drive                                  6830 Rutherford Rd.
    Brampton, Ontario  L6T 5K1                              Vaughn, Ontario  L0J 1C0

7.  Forwarder’s Yards

    Panalpina CFS (for Recoton Canada Ltd.)                 Paltainer (for Recoton Canada Ltd.)
    7347 Kimbel Street                                      CN Brampton
    Mississauga, Ontario  L4T 3M6                           International Drive
                                                            Brampton, Ontario

    Paltainer (for Recoton Canada Ltd.)                     Paltainer (for Recoton Canada Ltd.)
    CO  OBICO                                               I.W.I.
    North Queen Street East                                 3380 Airway Dr.
    Etobicoke, Ontario                                      Mississagua, Ontario

Schedule 3

List of Closing Documents

          
            
             
          

          
(1)  A Mortgage for each Mortgaged Property duly executed by Recoton,
which shall secure the indebtedness of the Loans, together with executed copies
of financing statements (UCC-1) to be filed under the Uniform Commercial Code in
all jurisdictions necessary or, in the opinion of the Senior Agent, desirable to
perfect the security interest created by each of the respective Mortgages.

          
(2)  A Phase I Environmental Site Assessment, engineering report and
an MAI appraisal, each in form and content acceptable to the Agents, in its sole
discretion, with respect to each of the Mortgaged Properties listed on Schedule
11.1(A). 

          
(3)  A title insurance policy issued by a title company reasonably
satisfactory to the Agents for each of the Mortgaged Properties. 

          
(4)   A current survey for each of the Mortgaged
Properties.

          
(5)  A certificate of occupancy for each of the Mortgaged Properties
listed on Schedule 11.1(A). 

          
(6)  A zoning certificate, zoning endorsement or zoning opinion, in
form and content acceptable to the Agents, with respect to each of the Mortgaged
Properties listed on Schedule 11.1(A). 

          
(7)  Certificates of insurance evidencing the insurance required to be
carried by the Loan Parties pursuant to subsection 4.14.

          
(8)  A favorable opinion from special counsel and each local counsel
to Borrower, each dated as of the Closing Date, substantially in the form of
Exhibit J, and as to such other matters as the Agents may reasonably request.

          
(9)  A pay-off and release letter from all lenders, in form and
content reasonably acceptable to the Agents, for all obligations owed by
Borrowers to such lenders under any outstanding credit facilities, letters of
credit or other indebtedness along with executed releases of mortgages, in
recordable form, and termination statements (UCC-3) for filing in any
jurisdictions where The Chase Manhattan Bank has filed mortgages or financing
statements, with respect to: 

	 
	(21166)

(21167)

(21168)

(21169)

(21170)

	Existing Credit Agreement

1997 Notes

1998 Notes

MRA

LIFO Documents

	 	(21171)

(21172)

(21173)

(21174)

(21175)

(21176)

(21177)

(21178)

(21179)

(21180)

(21181)

(21182)

(21183)

(21184)

(21185)

(21186)

(21187)

(21188)

(21189)

(21190)

(21191)

(21192)

(21193)

(21194)	Warehouseman's Waivers

Landlord's Consents

Patent Security Agreement

Trademark Security Agreement

Copyright Security Agreement

Guaranty

Canada Guaranty

Bill of Lading/Goods in Transit Documentation

Pledge Agreement

Security Agreement

Canada Security Agreement

UK Pledge Agreement

German Pledge Agreement

Italy Pledge Agreement

Hong Kong Pledge Agreement

Notes

Organizational Documents

Good Standing Certificates

Blocked Accounts

Lockbox Accounts

Three Party Blocked Account Agreement

Stock certificates/stock powers

Intercompany Notes/allonges

UCC-1 Financing Statements

Schedule 4.1(A)

Capitalization

	1.
	Recoton Corporation

	 
	a)
	Authorized Shares:  40,000,000 Common Stock at
$0.20 par value; 10,000,000 Preferred Stock

	 
	b)
	Issued Shares:  12,970,854 (as of
12/31/99)

	 
	c)
	Treasury Shares: 1,238,330 (as of 12/31/99)

	 
	d)
	Jurisdiction of Incorporation:  New York

	2.
	Christie Design Corporation

	 
	a)
	Authorized Shares:  3,000 at $0.01 par value

	 
	b)
	Issued Shares (Shareholder):  10 (Recoton)

	 
	c)
	Treasury Shares:  None

	 
	d)
	Jurisdiction of Incorporation:  Delaware

	3.
	AAMP of Florida Inc., d/b/a AAMP of America, Inc.

	 
	a)
	Authorized Shares:  200 at $1.00 par value

	 
	b)
	Issued Shares (Shareholder):  10 (Recoton)

	 
	c)
	Treasury Shares:  None

	 
	d)
	Jurisdiction of Incorporation:  Florida

	4.
	Recoton Audio Corporation

	 
	a)
	Authorized Shares:  3,000 at $0.01 par value

	 
	b)
	Issued Shares (Shareholder):  10 (Recoton)

	 
	c)
	Treasury Shares:  None

	 
	d)
	Jurisdiction of Incorporation:  Delaware

	 
	e)
	Subsidiaries:

	  
	  
	i)       Recoton Home Audio, Inc.

	 
	 
	 
	a)  Authorized Shares: 1,000 at no par
value

	 
	 
	 
	b)  Issued Shares
(Shareholder):  100 (Recoton Audio Corporation)

	 
	 
	 
	c)   Treasury Shares:  None

	 
	 
	 
	d)  Jurisdiction of Incorporation:  California

	  
	  
	ii)      ReCone, Inc.

	 
	 
	 
	a)  Authorized Shares:  40,000 at
$1.00 par value

	 
	 
	 
	b)  Issued Shares
(Shareholder):  20,000 Series A (Recoton Audio Corporation)

	 
	 
	 
	c)  Treasury Shares:  None

	 
	 
	 
	d)  Jurisdiction of
Incorporation:  Delaware

	  
	  
	iii)     Recoton International Holdings, Inc.

	 
	 
	 
	a)  Authorized
Shares:  3,000

	 
	 
	 
	b)  Issued Shares
(Shareholder):  1,000 (Recoton Audio Corporation)  

	 
	 
	 
	c)  Treasury Shares:  None 

	 
	 
	 
	d)  Jurisdiction of Incorporation:  Delaware

	  
	  
	iv)     Recoton Japan, Inc.

	 
	 
	 
	a)  Authorized Shares: 1,000

	 
	 
	 
	b)  Issued Shares (Shareholder):  
100 (Recoton International Holdings, Inc.)

	 
	 
	 
	c)  Treasury Shares:  None

	 
	 
	 
	d)  Jurisdiction of Incorporation:  Illinois 

	  
	  
	v)      Recoton European Holdings, Inc

	 
	 
	 
	a)  Authorized Shares:  3,000 at
$1.00 par value

	 
	 
	 
	b)  Issued Shares
(Shareholder):  1,000 (Recoton International Holdings,
Inc.)

	 
	 
	 
	c)  Treasury Shares:  None: 

	 
	 
	 
	d)  Jurisdiction of
Incorporation:  Delaware 

	  
	  
	vi)      RECOTON German
Holdings GmbH

	 
	 
	 
	a)   Authorized Shares: 

	 
	 
	 
	b)  Issued Shares
(Shareholder):  200,000 DM divided into two share interests of
50,000 DM
           and 150,000 DM (Recoton European Holdings, Inc.)

	 
	 
	 
	c)  Treasury Shares:  NA

	 
	 
	 
	d)  Jurisdiction of
Incorporation:  Germany

	  
	  
	vii)     Magnat Audio-Produkte GmbH

	 
	 
	 
	a)  Authorized Shares: 

	 
	 
	 
	b)  Issued Shares
(Shareholder):  50,000 DM (RECOTON German Holdings GmbH)

	 
	 
	 
	c)  Treasury Shares:  NA

	 
	 
	 
	d)  Jurisdiction of
Incorporation:  Germany: 

	  
	  
	viii)    Mac Audio
Electronic GmbH

	 
	 
	 
	a)  Authorized Shares: 

	 
	 
	 
	b)  Issued Shares (Shareholder):  
199,000 DM, 20,000 DM, 12,000 DM and 1,000 DM
     
    (RECOTON German Holdings GmbH)

	 
	 
	 
	c)  Treasury Shares:  NA

	 
	 
	 
	d)  Jurisdiction of
Incorporation:  Germany 

	  
	  
	ix)      HECO
Audio-Produkte GmbH

	 
	 
	 
	a)  Authorized Shares: 

	 
	 
	 
	b)  Issued Shares
(Shareholder):  50,000 DM (RECOTON German Holdings GmbH)

	 
	 
	 
	c)  Treasury Shares:  NA

	 
	 
	 
	d)  Jurisdiction of Incorporation:  Germany

	  
	  
	x)       RECOTON Audio
Produkte GmbH

	 
	 
	 
	a)  Authorized Shares:

	 
	 
	 
	b)  Issued Shares (Shareholder):  
25,000 (RECOTON German Holdings, GmbH)

	 
	 
	 
	c)  Treasury Shares:  NA

	 
	 
	 
	d)  Jurisdiction of Incorporation:  Germany

	  
	  
	xi)      Recoton (UK) Limited

	 
	 
	 
	a)  Authorized shares:  35,569,714
ordinary shares at(pound)0.10 each

	 
	 
	 
	b)  Issued Shares (Shareholder):  
35,569,714 (23,120,314 in the name of The Chase
Manhattan
          Bank and 12,449,400 in the name of
Recoton European Holdings, Inc.)

	 
	 
	 
	c)  Treasury Shares:   None

	 
	 
	 
	d)  Jurisdiction of
Incorporation:  United Kingdom

	  
	  
	xii)      Tambalan Limited

	 
	 
	 
	a)  Authorized shares:  1,000
ordinary shares at(pound)1.00 each

	 
	 
	 
	b)  Issued Shares (Shareholder):  
2 (Recoton European Holdings, Inc.)

	 
	 
	 
	c)  Treasury Shares:  None

	 
	 
	 
	d)  Jurisdiction of
Incorporation:  United Kingdom: 

	  
	  
	xiii)    Ross Consumer Products (H.K.)

	 
	 
	 
	a)  Authorized shares: 

	 
	 
	 
	b)  Issued Shares (Shareholder):  
1000 (998 in name of Recoton (UK) Limited; 2 in name of

         nominee)

	 
	 
	 
	c)  Treasury
Shares:  None:  

	 
	 
	 
	d)  Jurisdiction of
Incorporation:  Hong Kong 

	  
	  
	xiv)     Recoton Italia
s.r.l.

	 
	 
	 
	a)  Authorized Shares: 

	 
	 
	 
	b)  Issued Shares (Shareholder):  Lt
3,934,813,000 (Recoton European Holdings, Inc.)

	 
	 
	 
	c)  Treasury Shares:  None

	 
	 
	 
	d)  Jursidiction of Incorporation:  Italy

	5.
	InterAct Accessories, Inc.

	 
	a)
	Authorized shares:  3,000 at $0.01 par
value

	 
	b)
	Issued Shares (Shareholder):  10 (Recoton
Corporation)

	 
	c)
	Treasury Shares:  None

	 
	d)
	State of Incorporation:  Delaware

	6.
	STD Technology Holding, Ltd.

	 
	a)
	Authorized shares:  10,000 shares of HK$1.00
each

	 
	b) 
	 Issued Shares (Shareholder):  100 (STD
Holding Limited owns of record 99 shares which are in the process of being
transferred into the name of Recoton Corporation and 1 share is registered in
the name of Stephen Chu Nin Yiu)

	 
	c)
	Treasury Shares:  None

	 
	d)
	Jurisdiction of Incorporation:  Hong
Kong

	 
	e)
	 Subsidiaries:

	  
	  
	i)       STD Technology
(Shenzhen) Limited (in formation)

	 
	 
	 
	a)  Authorized Shares:  registered
capital expected to be US$1,200,000

	 
	 
	 
	b)  Issued Shares
(Shareholder):  

	 
	 
	 
	c)  Treasury Shares:  

	 
	 
	 
	d)  Jurisdiction of
Incorporation:  People's Republic of China

	7.
	Recoton (Far East) Limited

	 
	a)
	Authorized shares:  1,000 at HK$10.00 per
share

	 
	b)
	Issued Shares (Shareholder):  1000 (349 owned
by and registered in the name of Recoton Corporation, 650 owned by Recoton
Corporation but still in the name of the prior legal share mortgagee, which are
in the process of being reissued in the name of Recoton Corporation, and 1 in
the name of Robert Borchardt as nominee for Recoton)

	 
	c)
	Treasury Shares:  None

	 
	d)
	Jurisdiction of Incorporation:  Hong Kong

	 
	e)
	Subsidiaries:

	  
	  
	i)       STD Holding
Limited

	 
	
	a)
	Authorized Shares:  
27,733,340 (7 ordinary shares and 27,733,333 non-voting deferred shares at
HK$1.00 per share)

	 
	 
	b) 
	Issued Shares:  27,733,340 (Recoton (Far East)
Limited owns 27,733,333 non-voting deferred shares and 6 ordinary shares and 1
ordinary share is owned by Stutterham Limited)

	 
	 
	c) 
	Treasury Shares:  None

	 
	 
	d) 
	Jurisdiction of Incorporation:  Hong
Kong

	 
	 
	e) 
	 Subsidiaries:

	 
	 
	
	(1)
	STD Electronic International Limited

	 
	 
	 
	(a)
	Authorized Shares:  1,750,000 at HK$1.00 per share

	 
	 
	 
	(b)
	Issued Shares (Shareholder):  1,750,000 (STD
Holding Limited owns of record 1,749,999 shares and 1 share is owned by Recoton
(Far East) Limited, as nominee for STD Holding Limited)

	 
	 
	 
	(c)
	Treasury Shares:  None

	 
	 
	 
	(d)
	Jurisdiction of Incorporation:  Hong Kong

	 
	 
	
	(2)
	STD Manufacturing Limited

	 
	 
	 
	(a)
	Authorized Shares:  40,000 at HK$100.00 per
share

	 
	 
	 
	(b)
	Issued Shares (Shareholder):  40,000 (STD
Holding Limited owns 39,999 shares and 1 share is owned by Recoton (Far East)
Limited, as nominee for STD Holding Limited)

	 
	 
	 
	(c)
	Treasury Shasres:  None

	 
	 
	 
	(d)
	Jurisdiction of Incorporation:  Hong Kong

	 
	 
	 
	(3)
	Eversmart Management Limited

	 
	 
	 
	(a)
	Authorized Shares:  10,000 at HK$1.00 per
share

	 
	 
	 
	(b)
	Issued Shares (Shareholder):  2 (STD Holding
Limited owns 1 share and 1 share is owned by Recoton (Far East) Limited, as
nominee for STD Holding Limited)

	 
	 
	 
	(c)
	Treasury Shares:  None

	 
	 
	 
	(d)
	Jurisdiction of Incorporation:  Hong
Kong

	 
	 
	 
	(4)
	STD Plastic Industrial Limited (in dissolution)

	 
	 
	 
	(a)
	Authorized Shares: 700,000 at HK$1.00 per share

	 
	 
	 
	(b)
	Issued Shares (Shareholder): 700,000 (STD Holding
Limited owns 699,999 shares and 1 share is owned by Recoton (Far East) Limited,
as nominee for STD Holding Limited)

	 
	 
	 
	(c)
	Treasury Shares:  None

	 
	 
	 
	(d)
	Jurisdiction of Incorporation:  Hong Kong

	 
	 
	 
	(5)
	STD Trading Limited(in dissolution)

	 
	 
	 
	(a)
	Authorized Shares:  2,320,000 at HK$1.00 per
share

	 
	 
	 
	(b)
	Issued Shares (Shareholder):  2,320,000 ( STD
Holding Limited owns 2,319,999 shares and 1 share is owned by Recoton (Far East)
Limited, as nominee for STD Holding Limited)

	 
	 
	 
	(c)
	Treasury Shares:  None

	 
	 
	 
	(d)
	Jurisdiction of Incorporation:  Hong Kong

	 
	 
	 
	(6)
	Peak Hero Limited (in dissolution)

	 
	 
	 
	(a)
	Authorized Shares:  500,000 at HK$1.00 per
share

	 
	 
	 
	(b)
	Issued Shares (Shareholder):  500,000 (STD
Holding Limited owns 499,999 share and 1 share is owned by Recoton (Far East)
Limited, as nominee for STD Holding Limited

	 
	 
	 
	(c)
	Treasury Shares:  None

	 
	 
	 
	(d)
	Jurisdiction of Incorporation:  Hong Kong

	 
	 
	 
	(7)
	STD Industrial (Shenzhen) Limited

	 
	 
	 
	(a)
	Total Investment Amount:  US$7,000,000

	 
	 
	 
	(b)
	Registered Capital:  US$5,000,000

	 
	 
	 
	(c)
	Treasury Shares:  NA

	 
	 
	 
	(d)
	Jurisdiction of Incorporation:  People's Republic of
China

	 
	 
	 
	(8)
	STD (Tianjin) International Trade Development Company
Limited (in dissolution)

	 
	 
	 
	(a)
	Authorized Shares:  HK$1,750,000

	 
	 
	 
	(b)
	Issued Shares (Shareholder):

	 
	 
	 
	(c)
	Treasury Shares:

	 
	 
	 
	(d)
	Jurisdiction of Incorporation: People's Republic of
China

	8.
	Recoton Canada Ltd.

	 
	a)
	Authorized Shares:  unrestricted

	 
	b)
	Issued Shares:  300,440 (Recoton)

	 
	c)
	Treasury Shares:  None

	 
	d)
	Jurisdiction of
Incorporation:  Ontario

Schedule 4.5

Real Estate

Entity                                      Address/City/State/Zip                      County
------                                      ----------------------                      ------

Unless otherwise noted, all locations are leased. If an asterisk appears after
an address, that indicates that the company is not an official lessee of such
space but merely uses space owned by another Recoton company (which allocates a
portion of its rental or other costs to the indicated company)

Recoton Corporation                         2950 Lake Emma Road                         Seminole
                                            Lake Mary, FL 32746 (owned)

                                            1090 Emma OaksTrail                         Seminole
                                            Lake Mary, FL 32746 (owned)

                                            451 Hampton Crest #305B                     Seminole
                                            Heathrow, FL  32746
                                            (condo - owned)

                                            450 Hampton Crest #305C                     Seminole
                                            Heathrow, FL  32746
                                            (condo - owned)

                                            451 Hampton Crest, # 307B                   Seminole
                                            Heathrow, FL 32746
                                            (condo - owned)

                                            451 Hampton Crest #303B                     Seminole
                                            Heathrow, FL  32746
                                            (condo)

                                            145 E. 57th Street, 10th Floor              New York
                                            New York, New York 10022

                                            840 Hinckley, Suite 111                     San Mateo
                                            Burlingame, CA 94010

                                            c/o Unlimited Supplies                      Nassau
                                            61 Tec Street
                                            Hicksville, NY 11801

                                            Recoton Electronics Outlet                  Maricopa
                                            Arizona Mills
                                            5000 Arizona Mills Circle
                                            Tempe, AZ 85203

                                            Greater Orlando Aviation Authority          Orange
                                            Orlando International Airport
                                            One Airport Blvd.
                                            Orlando, FL 32887
                                            (Foreign Trade Zone)

                                            531 Stone Road                              Solano
                                            Benecia, CA 94510

Christie Design Corporation                 774 Mays Blvd. #10                          Washoe
                                            Incline Village, NV 89481

InterAct Accessories, Inc.                  10999 McCormick Road                        Baltimore
                                            Hunt Valley, MD 21031

                                            335 Clubhouse Lane                          Baltimore
                                            Baltimore, MD 21031

                                            2950 Lake Emma Road                         Seminole
                                            Lake Mary, FL  32746*

                                            1090 Emma Oaks Trail                        Seminole
                                            Lake Mary, FL  32746*

                                            Emerald Park Office Center                  Broward
                                            Unit C403D
                                            2699 Stirling Road,
                                            Ft. Lauderdale, Florida 33312

                                            318 Clubhouse Lane                          Baltimore
                                            Hunt Valley, MD 21031

                                            Bank of North Texas Building                Tarrant
                                            8701 Bedford Euless Road
                                            Hurst, TX

                                            2000-2002 E. Lake Mary Blvd.                Seminole
                                            Sanford, FL 32773
                                            (Warehouse)

AAMP of Florida, Inc.                       13160 56th Court, Suite 508                 Pinellas
                                            Clearwater, FL 33760

                                            3041 E. Cherry Street                       Greene
                                            Springfield, MO 65802

                                            750 Freeport Blvd., Units 105 & 106         Washoe
                                            Sparks, NV 89431

                                            7616 Miramar Road                           San Diego
                                            San Diego, CA 92121

Recoton Audio Corporation                   2950 Lake Emma Road                         Seminole
                                            Lake Mary, FL 32746*

                                            1090 Emma Oaks Trail                        Seminole
                                            Lake Mary, FL 32746*

                                            43000 West Nine Mile Road
                                            Suite 212
                                            Novi, MI 48375

ReCone, Inc.                                2950 Lake Emma Road                         Seminole
                                            Lake Mary, FL 32746*

                                            c/o Griffin Corporate Services, Inc.        New Castle
                                            300 Delaware Avenue
                                            Wilmington, DE 19801

Recoton Home Audio, Inc.                    527 Stone Road                              Solano
                                            Benicia, CA 94510

                                            535 Getty Court                             Solano
                                            Benecia, CA 94510
                                            (subleased)

                                            Rain Tree Business Center                   Benton
                                            902A South Walton Blvd.
                                            Suite 8
                                            Bentonville, Arkansas  72712

                                            2950 Lake Emma Road                         Seminole
                                            Lake Mary, FL 32746*

                                            1090 Emma Oaks Trail                        Seminole
                                            Lake Mary, FL 32746*

Recoton International Holdings, Inc.        2950 Lake Emma Road                         Seminole
                                            Lake Mary, FL 32746*

Recoton Japan, Inc.                         Sunahara Bldg, 5th Floor                    NA
                                            No. 1-21-13 Takadanobaba
                                            Shinjuki-ku, Tokyo 169 JAPAN

                                            Dairoku Yamichi Bldg. - 1F                  NA
                                            2-5-2 Hibarigoaka-Kita Hoya
                                            Shi Tokyo, 2020 Japan

Recoton European Holdings, Inc.             2950 Lake Emma Road                         Seminole
                                            Lake Mary, FL 32746

Recoton Canada Ltd.                         680 Granite Court                           NA
                                            Pickering, Ontario L1W 3J5
                                            Canada
                                            Lake Mary, FL 32746*

Schedule 4.7

Taxes

The following tax audits are pending: 

	1.
	For Recoton Corporation, the federal corporate income tax
returns for 1994, 1995 and 1996 and the 1996-1998 New York corporate income tax
returns for 1996, 1997 and 1998 are being audited.

	2.
	For Recoton Canada Limited, the 1995, 1996 and 1997 income tax
returns are being audited.

Schedule 4.9

Employee Benefit Plans

	 
	1.
2.
3.
4.
5.
	1991 Stock Option Agreement
1998 Stock Option Agreement

Non-Qualified Option
Stock Bonus Plan
401(k) Profit Sharing Plan

	 
	Options for an aggregate of 18,500 shares of Recoton
Corporation were granted to certain full-time foreign consultants of the Company
in 1998 outside of the existing stock option plan since the then-operating plan
did not allow grants to non-employees. The terms of such options were
substantially similar to options which could have been granted under the 1991
Stock Option Plan.

Schedule 4.14

Insurance

	1.
	Open Cargo Policy issued by Continental Insurance company,
January 1, 2000

	2.
	Kidnap and Ransom Policy, issued by Chubb effective from December 31, 1999 to
December 31, 2000

	3.
	Travel Accident Policy, issued by Chubb from December 31, 1999
to December 31, 2000

	4.
	Workers Compensation and Employers Liability Insurance Policy,
issued by Zurich-American Insurance Group effective from June 23, 2000 to June
23, 2001

	5.
	Commercial Package Policy, issued by Chubb effective from
December 31, 1999 to December 31, 2000

	6.
	Employment Practices Liability Policy, issued by Chubb
effective from December 31, 1999 to December 31, 2000

	7. 
	Business Auto Policy, issued by Chubb effective from December
31, 1999 to December 31, 2000

	8.
	Credit insurance policy, issued by American Credit Indmenity
Company effective from January 1, 2000 through December 31, 2000

	9.
	Fiduciary Liability Policy issued by Chubb effective from
December 31, 1999 to December 31, 2000

	10.
	Commercial Umbrella Policy issued by Chubb effective from
December 31, 1999 to December 31, 2000

	11.
	World Network Policy issued by Chubb effective from April 1,
2000 to April 1, 2001

	12.
	Global Group Travel Accident, issued by AIG effective from October 7, 2000 to
October 7, 2001

	13.
	Umbrella/Excess Liability Policy issued by Great American
Insurance Co, effective from December 31, 1999 to December 31, 2000

	14.
	Crime Policy, issued by Chubb Group, effective from December 31, 1999 to
December 31, 2000

	15.
	$200,000 Customs Bond, issued by Vigilant Insurance Company,
effective from June 26, 2000 to June 26, 2001

	16.
	$400,000 Customs Bond, issued by Vigilant Insurance Company,
effective from June 26, 2000 to June 26, 2001

	17.
	$50,000 Customs Bond, issued by Vigilant Insurance Company,
effetive from November 4, 1991

	18.
	$140,000 Customs Bond issued by InterCargo Insurance Company, effective from
October 23, 1999

	19.
	Utility Bond issued by Reliance Insurance Company

	20.
	D&O Liability Insurance Policy with Chubb for $25 million
from 5/25/98 to 5/25/01

	21.
	Excess D&O Liability Insurance Policy with Great American
Insurance Company for $25 million from 6/18/98 to 5/25/01

	22.
	Title insurance policy on Florida property

Schedule 4.16

Employee Matters

Collective Bargaining Agreements:

	1.	
Contract and Working Agreement between Recoton Corporation and Glas, Molders,
Potery, Plastics & Allied Workers, International Union, AFL-CIO and Local
Union No. 184, expiring August 3, 2003

	2.	Collective Agreement between Recoton Canada Ltd. and National Automobile,
Aerospace, Transportation and General Workers Union of Canada, expiring August
10, 2002

Written Employment Contracts:

	1.	Employment Agreement with Robert Borchardt

	2.	Employment Agreements with (a) Stephen Chu,(b) Todd Hays, (c) David Chu, (d)
Patrick Ho, (e) John Leung and (f) Gary Lee

	3.	Employment Agreements with (a) Micah Ansley and (b) Diane Eberlein

	4.	Employment Agreement with Cary Christie

	5.	Deferred Compensation Agreements with (a) Robert Borchardt dated 7/1/82, amended
12/13/9, (b) Peter Wish dated 10/1/82 , amended 12/13/91and (c) George Calvi,
dated 10/1/91

	6.	Split-Dollar Life Insurance Agreements with

	 	a.	Trudi Borchardt, Marvin Schlacter and Robert Borchardt for $1,500,000 policy
issued by William Penn (Policy # NYU 99873) dated 2/24/89

	 	b.	Trudi Borchardt and Marvin Schlacter for policy issued by William Penn (Policy #
NYU 92035) dated 2/24/89

	 	c.	Robert Borchardt for $250,000 policy issued by Executive Life (Policy # C
11613111L) dated 2/24/89

	 	d.	Robert Borchardt for $6,500,000 principal amount insurance policy issued by John
Hancock Mutual Life Insurance Company on the joint lives of Robert and Trudi
Borchardt dated 12/17/93

	 	e.	Robert Borchardt for $3,500,000 policy issued by Chubb Life Insurance Company of
America on the joint lives of Robert and Trudi Borchardt dated 12/17/93

	 	f.	Robert Borchardt for $1,300,000 policy issued by Hartford Life and Accident
Insurance Company on the life of Robert Borchardt dated 12/17/93

	 	g.	Amendment dated 11/6/98

	 	h.	Robert and Trudi Borchardt for $2,250,000 by Travelers dated 11/6/98

	 	i.	Robert and Trudi Borchardt for $2,000,000 by Occidental Life dated 11/6/98

	7.	Employment Agreement with Mark Finger dated 8/27/93

	8.	Employment Agreement with John Rogus by AAMP of Florida dated 8/14/96

	9.	Employment letter with Russell Bruan by InterAct dated 8/1/00

Schedule 7.1

Indebtedness

	1.	Recoton owes $20,000,000 to Prudential Insurance Company pursuant to 1999
Subordinated Notes.

	2.	Recoton owes $15,000,000 to ING Barings, Inc. pursuant to 1999
Subordinated Notes.

	3.	See Indebtedness noted on Schedule 7.4(e).

Schedule 7.2

Guarantees

The following Recoton subsidiaries have guaranteed the indebtedness to the lenders
noted at Schedule 7.1, Items 1 and 2:

	 	
Christie Design Corporation

InterAct Accessories, Inc.

Recoton Audio Corporation

ReCone, Inc.

Recoton Home Audio, Inc.

Recoton International Holdings, Inc

Recoton Japan, Inc.

Recoton European Holdings, Inc

AAMP of Florida, Inc.

Recoton Canada Ltd.

Schedule 7.4(c)

Loans to Employees and Former Employees

Loans as of September 30, 2000:

Borrower                                        Amount
--------                                        ------
Dede Caruso                                $  3,225.00
Edward McGinty                                3,445.50
Harjit Singh                                  2,600.00
Matthew Spiro                                21,794.75
Paul Nicodemo                                 6,700.00
Sherry McGinty                                6,695.00
Jim McGail                                    3,604.07
Eric Wuestmann                                1,086.79
Stuart Mont                                 542,816.36
Jay Wessel                                  140,000.00
Robert Neiman                                 9,187.03
STD/InterAct Management                   1,955,500.00  advance against 1999 earned acquisition bonuses

Schedule 7.4(e)

Investment

	1.	
With respect to AAMP of Florida, Inc., Recoton Canada Ltd., Christie Design
Corporation, Recoton European Holdings, Inc., Recoton German Holdings GmbH,
InterAct International, Inc., Recoton Italia, s.r.l., Recoton Japan Inc.,
Recoton (Far East), Ltd., Recoton Corporation (d/b/a Recoton Mobile
Electronics), STD Holding Ltd., and Recoton (UK) Limited, see attached.

	2.	
Investments in other subsidiaries as they exist as of the date hereof cannot be
separately determined at this time.

Recoton Corporation and Subsidiaries
Intercompany Payable Balances and Net Worth
At 9/30/00                                                                     dr (cr)

Shaded lines are primarily intercompany loans.

                                                                                             Payable
-----------------------------------------------------------------------------------------------------
Payable                Receivable            G/L#       ACCOUNT DESCRIPTION                  Balance
-----------------------------------------------------------------------------------------------------
AAMP                   Recone                19066      I/C REC FROM RECONE, INC-ELIM         (20,095)
AAMP                   Recoton               29001      I/C PAYABLE TO RECOTON-ELIM        (3,553,286)
AAMP                   RME                   29012      I/C PAYABLE TO RAC-ELIM              (210,882)
AAMP                   UK                    19028      I/C REC FROM RECOTON UK-ELIM          (92,066)
-----------------------------------------------------------------------------------------------------
AAMP Total                                                                                 (3,876,330)
-----------------------------------------------------------------------------------------------------

Canada                 AAMP                  29054      I/C PAYABLE TO AAMP - ELIM           (233,608)
Canada                 Germany-Magnat        29038      I/CO PAYABLE TO MAGNAT-ELIM            (3,589)
Canada                 Recoton               29001      I/C PAYABLE TO RECOTON-ELIM          (908,210)
Canada                 RHA                   29018      I/C PAYABLE TO RHA-ELIM              (193,650)
Canada                 RME                   29012      I/C PAYABLE TO RAC-ELIM              (115,458)
Canada                 Shared Services       29002      I/C PAYABLE TO SHARED SERV.-ELIM     (281,127)
Canada                 Shared Services       29102      DUE TO RSS-LT                        (318,378)
Canada                 Shared Services       29302      I/CO NOTES PAY TO RSS-LT           (4,361,630)
Canada                 STD                   29016      I/CO PAYABLE TO STD-ELIM           (8,115,642)
Canada                 UK                    19028      I/C REC FROM RECOTON UK-ELIM          (16,059)
Canada                 UK                    29028      I/C PAYABLE TO REC UK-ELIM            (34,247)
Canada IAI             IAI PC                29014      I/C PAYABLE INTERACT PC                  (321)
Canada IAI             IAI Video             29011      I/C PAYABLE TO INTERACT-ELIM         (473,815)
Canada IAI             Recoton               29001      I/C PAYABLE TO RECOTON-ELIM          (500,430)
Canada IAI             Shared Services       29002      I/C PAYABLE TO SHARED SERV.-ELIM          (15)
Canada IAI             STD                   29016      I/CO PAYABLE TO STD-ELIM           (1,751,829)
------------------------------------------------------------------------------------------------------
Canada Total                                                                              (17,308,008)
-----------------------------------------------------------------------------------------------------
Christie Design        AAMP                  29054      I/C PAYABLE TO AAMP - ELIM            (74,123)
Christie Design        Shared Services       29002      I/C PAYABLE TO SHARED SERV.-ELIM     (203,933)
Christie Design        STD                   29051      I/C PAYABLE TO STD-ELIM               (18,337)

-----------------------------------------------------------------------------------------------------
Christie Design Total                                                                        (296,393)
-----------------------------------------------------------------------------------------------------

EH                     Germany-Magnat        19038      I/C REC FROM MAGNAT-ELIM             (754,865)
EH                     RME                   29012      I/C PAYABLE TO RAC-ELIM              (314,638)

-----------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------
EH Total                                                                                   (1,069,502)
-----------------------------------------------------------------------------------------------------
Germany-GH             EH                    25810      I/C PAYABLE TO EH                     (13,706)
Germany-GH             Recoton               29001      I/C PAYABLE TO RECOTON-ELIM       (11,597,062)
Germany-GH             RME                   26810      I/C PAYABLE TO RME                (12,373,472)
Germany-GH             Shared Services       29002      I/C PAYABLE TO SHARED SERV.-ELIM     (152,909)
Germany-Heco           Christie Design       29004      I/C PAYABLE TO CHRISTIE-ELIM         (109,476)
Germany-Heco           Recoton               29001      I/C PAYABLE TO RECOTON-ELIM            (2,909)
Germany-Magnat         Recoton               29001      I/C PAYABLE TO RECOTON-ELIM           (69,982)
Germany-Magnat         RHA                   25810      I/CO PAYABLE TO RHA                      (949)
Germany-RAP            EH                    25810      I/CO PAYABLE TO EH                 (3,687,880)
Germany-RAP            RHA                   25810      I/CO PAYABLE TO RHA                  (617,419)
Germany-RAP            RME                   29012      I/C PAYABLE TO RAC-ELIM               (83,676)
Germany-RAP            Shared Services       29002      I/C PAYABLE TO SHARED SERV.-ELIM       (1,888)
Germany-RAP            UK                    25810      I/CO PAYABLE TO UK                   (363,687)
-----------------------------------------------------------------------------------------------------
Germany Total                                                                             (29,075,014)
-----------------------------------------------------------------------------------------------------
IAI-PC                 Shared Services       29002      I/C PAYABLE TO SHARED SERV.-ELIM  (11,742,394)
IAI-PC                 STD                   29016      I/CO PAYABLE TO STD-ELIM          (15,580,851)
IAI-Video              Recoton               29001      I/C PAYABLE TO RECOTON-ELIM        (2,718,901)
IAI-Video              RME                   19012      I/C REC FROM RAC-ELIM                  (3,845)
IAI-Video              Shared Services       29002      I/C PAYABLE TO SHARED SERV.-ELIM  (11,897,088)
IAI-Video              STD                   29016      I/CO PAYABLE TO STD-ELIM          (24,301,287)
-----------------------------------------------------------------------------------------------------
IAI Total                                                                                 (66,244,367)
-----------------------------------------------------------------------------------------------------
Italy                  AAMP                  29054      I/C PAYABLE TO AAMP - ELIM            (14,711)
Italy                  Germany-Heco          25810      I/C PAYABLE TO GERMANY-HECO           (11,426)
Italy                  Germany-Mac Audio     25810      I/C PAYABLE TO GERMANY-MAC AUDIO       (5,774)
Italy                  Germany-Magnat        25810      I/C PAYABLE TO GERMANY-MAGNAT         (96,956)
Italy                  Germany-RAP           25810      I/C PAYABLE TO GERMANY-RAP            (59,862)
Italy                  RFE                   29005      I/C PAYABLE TO RFE ELIM            (4,624,410)
Italy                  RME                   25810      I/C PAYABLE TO RME                     (4,194)
Italy                  Shared Services       29002      I/C PAYABLE TO SHARED SERV.-ELIM      (25,276)
Italy                  STD                   29151      I/CO PAYABLE TO STD-LT               (133,896)
Italy                  UK                    25810      I/C PAYABLE TO UK                      (7,526)
-----------------------------------------------------------------------------------------------------
Italy Total                                                                                (4,984,031)
-----------------------------------------------------------------------------------------------------
Japan                  AAMP                  29054      I/C PAYABLE TO AAMP - ELIM            (42,151)
Japan                  Germany-RAP           25810      I/C PAYABLE TO GERMANY-RAP           (233,502)
Japan                  Recoton               29001      I/C PAYABLE TO RECOTON-ELIM           (15,784)
Japan                  Shared Services       29002      I/C PAYABLE TO SHARED SERV.-ELIM       (1,111)
-----------------------------------------------------------------------------------------------------
Japan Total                                                                                  (292,548)
-----------------------------------------------------------------------------------------------------
Recoton                Canada                19009      I/C REC FROM RECOTON CANADA-ELIM  (10,020,924)
Recoton                Canada IAI            19064      I/C REC FROM RCI-IAI-ELIM            (451,820)
Recoton                Christie              19004      I/C REC FROM CHRISTIE (RAM)-ELIM          (29)
Recoton                IAI PC                19014      I/CO REC FROM INTERACT PC          (5,136,825)
Recoton                Italy                 19029      I/C REC FROM RECOTON ITALIA           (14,983)
Recoton                RHA                   19018      I/C REC FROM RHA-ELIM                (229,790)
Recoton                STD                   29016      I/CO PAYABLE TO STD-ELIM           (3,591,411)
Recoton                UK                    29028      I/C PAYABLE TO REC UK-ELIM           (352,361)
-----------------------------------------------------------------------------------------------------
Recoton Total                                                                             (19,798,143)
-----------------------------------------------------------------------------------------------------
RFE                    Recoton               29101      LT PAYABLE TO RECOTON-I/C ELIM     (5,898,998)

-----------------------------------------------------------------------------------------------------
RFE Total                                                                                  (5,898,998)
-----------------------------------------------------------------------------------------------------
RHA                    IAI-Video             19011      I/C REC FROM INTERACT-ELIM               (485)
RHA                    RME                   19012      I/C REC FROM RAC-ELIM                  (3,735)
RHA                    Shared Services       29002      I/C PAYABLE TO SHARED SERV.-ELIM   (5,604,528)
-----------------------------------------------------------------------------------------------------
RHA Total                                                                                  (5,608,748)
-----------------------------------------------------------------------------------------------------

RME                    Italy                 19029      I/C REC FROM RECOTON ITALIA            (8,267)
RME                    Japan                 19025      I/C REC FROM RECOTON JAPAN-ELIM       (89,804)
RME                    Recoton               29001      I/C PAYABLE TO RECOTON-ELIM          (514,965)
RME                    RFE                   29005      I/C PAYABLE TO RFE ELIM                (2,368)
RME                    UK                    19028      I/C REC FROM RECOTON UK-ELIM           (1,015)
-----------------------------------------------------------------------------------------------------
RME Total                                                                                    (616,420)
-----------------------------------------------------------------------------------------------------

Shared Services        AAMP                  19054      I/C REC FROM AAMP                  (6,178,426)
Shared Services        RME                   19012      I/C REC FROM RAC-ELIM              (6,380,882)

-----------------------------------------------------------------------------------------------------
Shared Services Total                                                                     (12,559,308)
-----------------------------------------------------------------------------------------------------
STD                    Christie Design       29004      I/C PAYABLE TO CHRISTIE-ELIM          (35,470)
STD                    EH                    29027      I/C PAYABLE FROM EURO HOLDINGS
                                                            ELIM                             (155,371)
STD                    Italy                 19029      I/C REC FROM RECOTON ITALIA          (256,383)
STD                    RFE                   29005      I/C PAYABLE TO RFE ELIM              (892,599)
STD                    RHA                   29018      I/C PAYABLE TO RHA-ELIM               (18,838)
-----------------------------------------------------------------------------------------------------
STD Total                                                                                  (1,358,660)
-----------------------------------------------------------------------------------------------------
UK                     EH                    25810      I/C PAYABLE TO EH                  (1,459,058)
UK                     Germany-Heco          25810      I/C PAYABLE TO GERMANY-HECO            (2,262)
UK                     Germany-MacAudio      25810      I/C PAYABLE TO GERMANY-MAC AUDIO     (265,207)
UK                     Germany-Magnat        25810      I/C PAYABLE TO GERMANY-MAGNAT        (382,831)
UK                     IAI Video             29011      I/C PAYABLE TO INTERACT-ELIM           (4,045)
UK                     Recoton               29001      I/C PAYABLE TO RECOTON-ELIM        (6,745,523)
UK                     RFE                   29005      I/C PAYABLE TO RFE ELIM              (515,804)
UK                     RHA                   25810      I/C PAYABLE TO RHA                       (438)
UK                     STD                   29051      I/C PAYABLE TO STD-ELIM            (4,280,581)
------------------------------------------------------------------------------------------------------
UK Total                                                                                  (13,655,749)
------------------------------------------------------------------------------------------------------
Subtotal                                                                                 (182,642,219)
------------------------------------------------------------------------------------------------------

Intercompany Balances within Entities:
------------------------------------------------------------------------------------------------------

Canada IAI             Canada                29009      I/C PAYABLE FROM RECOTON CANADA   (14,094,552)
Shared Services        Recoton               19001      I/C REC FROM RECOTON-ELIM        (328,567,238)
IAI-Video              IAI PC                29014      I/C PAYABLE INTERACT PC           (11,102,915)
                                                                                         (353,764,705)
------------------------------------------------------------------------------------------------------
Grand Total                                                                              (536,406,923)
------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------
Payable                        Net Worth
-----------------------------------------------------------------------
AAMP                           Common Stock                 (2,000)
AAMP                           PIC                         511,515
AAMP                           Retained Earnings        (7,891,241)
AAMP                           CTA                          (2,400)
-----------------------------------------------------------------------
AAMP Total                     Total                    (7,384,126)
-----------------------------------------------------------------------
                               Common Stock             (1,999,428)
Canada                         PIC                               0
Canada                         Retained Earnings         2,418,613
Canada                         CTA                         293,875
                                                       ----------------
Canada                         Total                       713,060
Canada                                                 ================
Canada
Canada
Canada
Canada
Canada
Canada
Canada IAI
Canada IAI
Canada IAI
Canada IAI
Canada IAI
-----------------------------------------------------------------------
Canada Total
-----------------------------------------------------------------------
Christie Design                Common Stock                 (1,000)
Christie Design                PIC                      (6,513,385)
Christie Design                Retained Earnings         6,064,077
                               CTA                          (3,404)
-----------------------------------------------------------------------
Christie Design Total          Total                      (453,712)
                                                       ================
EH                             PIC                      (8,157,319)
EH                             Retained Earnings        (4,482,779)
                               CTA                         261,368
-----------------------------------------------------------------------
EH Total                       Total                   (12,378,730)
-----------------------------------------------------------------------
Germany-GH                     Common Stock                (56,000)
Germany-GH                     PIC                         (36,000)
Germany-GH                     Retained Earnings        (8,421,656)
Germany-GH                     CTA                         526,237
Germany-Heco                   Total                    (7,987,419)
Germany-Heco
Germany-Magnat
Germany-Magnat
Germany-RAP
Germany-RAP
Germany-RAP
Germany-RAP
Germany-RAP
-----------------------------------------------------------------------
Germany Total
-----------------------------------------------------------------------
IAI-PC                         Common Stock                 (1,000)
IAI-PC                         PIC                     (39,934,513)
IAI-Video                      Retained Earnings       (10,910,702)
IAI-Video                      CTA                          (3,616)
IAI-Video                      Total                   (50,849,831)
IAI-Video
-----------------------------------------------------------------------
IAI Total
-----------------------------------------------------------------------
Italy                          Common Stock             (2,427,780)
Italy                          Retained Earnings           218,895
Italy                          CTA                       1,536,538
                                                      -----------------
Italy                          Total                      (672,347)
                                                      =================
Italy
Italy
Italy
Italy
Italy
Italy
-----------------------------------------------------------------------
Italy Total
-----------------------------------------------------------------------
Japan                          PIC                      (2,215,679)
Japan                          Retained Earnings         1,056,656
Japan                          CTA                        (700,469)
                                                      -----------------
Japan                          Total                    (1,859,492)
                                                      =================
-----------------------------------------------------------------------
Japan Total
-----------------------------------------------------------------------
Recoton                        PIC                    (247,598,437)
Recoton                        Retained Earnings        (4,091,933)
Recoton                        CTA                        (899,587)
                                                     ------------------
Recoton                        Total                  (252,589,957)
                                                     ==================
Recoton
Recoton
Recoton
Recoton
-----------------------------------------------------------------------
Recoton Total
-----------------------------------------------------------------------
RFE                            Common Stock                 (1,293)
                               Retained Earnings       (63,569,225)
                               CTA                       1,910,960
-----------------------------------------------------------------------
RFE Total                      Total                   (61,659,558)
-----------------------------------------------------------------------
RHA                            PIC                     (26,205,675)
RHA                            Retained Earnings         8,571,588
RHA                            CTA                          18,412
-----------------------------------------------------------------------
RHA Total                      Total                   (17,615,675)
-----------------------------------------------------------------------

RME                            Common Stock                (58,592)
RME                            PIC                     (35,894,616)
RME                            Retained Earnings       (38,723,864)
RME                            CTA                       2,803,681
RME                            Treasury Stock              636,634
-----------------------------------------------------------------------
RME Total                      Total                   (71,236,757)
-----------------------------------------------------------------------

Shared Services                Common Stock             (2,598,344)
Shared Services                PIC                     155,700,096
                               Retained Earnings       (45,363,265)
                               CTA                       4,079,418
                               Treasury Stock            6,496,536
-----------------------------------------------------------------------
Shared Services Total          Total                   118,314,441
-----------------------------------------------------------------------
STD                            Common Stock             (3,577,600)
STD                            PIC                      (1,685,600)
STD                            Retained Earnings       (39,615,707)
STD                            CTA                         316,038
                                                      -----------------
STD                            Total                   (44,562,869)
-----------------------------------------------------------------------
STD Total
-----------------------------------------------------------------------
UK                             PIC                      (4,254,624)
UK                             Retained Earnings         6,605,570
UK                             CTA                       1,057,408
UK                             Total                     3,408,354
UK
UK
UK
UK
UK
-----------------------------------------------------------------------
UK Total
-----------------------------------------------------------------------
Subtotal
-----------------------------------------------------------------------

Intercompany Balances with Entities:
-----------------------------------------------------------------------

Canada IAI
Shared Services
IAI-Video

-----------------------------------------------------------------------
Grand Total
-----------------------------------------------------------------------

Schedule 7.6

Inactive Subsidiaries

	 	STD Plastic Industrial Limited	Hong Kong
	 	STD Trading Limited	Hong Kong
	 	Peak Hero Limited	Hong Kong
	 	Ever Smart Management Limited	Hong Kong
	 	STD (Tianjin) International Trade	 
	 	     Development Company Limited	P.R of China
	 	Tambalan Limited	United Kingdom
	 	Ross Consumer Products (HK) Ltd.	Hong Kong

Schedule 7.11

Subsidiaries to be Established

InterAct International, Inc., InterAct Holdings and InterAct Technology
Holding, Inc., each of which are currently existing Delaware corporations
without shareholders, directors or officers, a to-be-formed Canadian company
which will acquire the STD-related assets of Recoton Canada Limited, and a
Shenzhen company named STD Technology (Shenzhen) Limited which is currently in
the process of formation may become Subsidiaries pursuant to or in anticipation
of a restructuring of InterAct and STD as more thoroughly described on Schedule
11.1(C).

Schedule 11.1(A)

Mortgaged Property

	1.	
Land in Lake Mary, Florida, with the street address of 2950 Lake Emma Road, Lake
Mary, FL 32746, legally described as follows:

	 	
Parcel A, consisting of (1) the East 648.00 feet of the South 155.70 feet of the
Southwest 1⁄4 of the Southwest 1⁄4 of Section 18, Township 20 South,
Range 30 East, Seminole County, Florida, Less the East 83.00 feet thereof for
Lake Emma Road and (2) the East 648.00 feet of the North 480.42 feet of the
Northwest 1⁄4 of the Northwest 1⁄4 of Section 19, Township 20 South,
Range 30 East 83.00 feet there of for Lake Emma Road.

	2.	
Land in Lake Mary, Florida, with the street address of 1090 Emma Oaks Trail,
Lake Mary, FL 32746, legally described as follows:

	 	(A)	
The South 873.50 feet of the North 1076.70 feet of the East 498.00 feet of
Government Lot 2, Section 24, Township 20 South, Range 29 East, Seminole County,
Florida, AND;

	 	(B)	
The Northwest1/4of the Southwest1/4of Section 29, Township 20 South, Range 30
East, Seminole County, Florida, Less the South 460.00 feet thereof and less the
East 83.00 feet thereof.

Schedule 11.1(B)

Other Liens

	1.	
The following financing statements related to equipment leases or purchases:

Date           Jurisdiction in Which
Filed              Filed (Number)          Secured Party      Property Covered                  Comment
-----          ---------------------       -------------      ----------------                  -------

RECOTON CORPORATION

7/7/95         California SOS           Pitney Bowes         all equipment
               (9519461294)             Credit Corporation   manufactured, sold
                                                             or distributed by
                                                             Pitney Bowes,
                                                             Inc., Monarch
                                                             Marketing Systems,
                                                             Inc., Pitney Bowes
                                                             Credit Corp.,
                                                             Dictaphone Corp,
                                                             VIP and subject to
                                                             lease #8745416-001

5/4/98         Florida SOS              Ikon Office          Canon Color
               (980000095851)           Solutions            Copier; Colorbus
                                                             Cyclone Print
                                                             Server; Encad
                                                             Printer

CHRISTIE DESIGN CORPORATION

7/24/95        California SOS           Material Handing     Nissan electric
               (9520861126)             Supply, assigned     lift truck
                                        to NMAC

5/20/96        California SOS           Material Handing     Nissan RRTN-40
               (9614360040)             Supply, assigned
                                        to NMAC

1/21/97        California               International        all items
               SOS(9702360364)          Technology           purchased from the
                                        Resources, Inc.      secured party

4/10/97        California SOS           Nissan Motor         Nissan E-50
               (9710560379)             Acceptance Corp.

INTERACT ACCESSORIES, INC.

12/14/98       Maryland SOS             The Equipment        Phaser 480x Color
               (0039100000039214)       Leasing Company      Printer and
                                                             related supplies
                                                             noted in the Form
                                                             UCC-3

RECOTON AUDIO CORPORATION

4/22/96        North Carolina SOS       Ameritech Credit     all Computer         filed under the name International
               (1331780)                Corporation          Equipment leased     Jensen Incorporated, a former name
                                                             by Ameritech         for the company
                                                             Credit Corporation

RECOTON HOME AUDIO, INC.

4/28/95        California SOS           AT&T Capital         Toshiba 1710 Copier  filed under the name IJI Specialty
               (9512160535)             Leasing Services,                         Audio, Inc., a former name for
                                        Inc.                                      this company

	2.	
The following are liens or other encumbrances affecting the plant owned by
Recoton Corporation in Lake Mary, Florida:

	 	a.	
Restrictions, reservations, covenants and conditions pursuant to that certain
First Revised Declaration of Covenants and Restrictions recorded July 21, 1980,
in Official Records Book 1287, Page 1048.

	 	b.	
Customer Agreement to Reclaimed Water Rates between Recoton Realty Corporation
and Seminole County recorded in Official Records Book 2214, Page 595.

	 	c.	
Customer Reclaimed Water (Effluent) Flow, Distribution Delivery and Spray
Easement between Recoton Realty Corporation and Seminole County, recorded in
Official Records Book 2214, Page 599.

	 	d.	
Ingress/Egress and Utility Easement in favor of Greenwood Lakes Utility Company
filed January 7, 1985, and recorded in Official Records Book 1461, Page 389; and
assigned to Seminole County in Official Records Book 1605, Page 1721.

	 	e.	
Grant of Easement (for water, sewer and utility purposes) filed September 21,
1981 and recorded in Official Records Book 1357, page 311.

	 	f.	
Distribution Easement in favor of Florida Power Corporation filed February 14,
1979, and recorded in Official Records Book 1209, Page 1317.

	 	g.	
Ordinance in favor of Seminole County recorded in Official Records Book 2861,
Page 1095.

	 	h.	
Easement granted by Recoton Corporation to Boyd T. Marshall, Individually and as
Trustee, et al., filed December 11, 1997 and recorded in Official Records Book
3186, page 20.

	 	i.	
Ordinance filed December 20, 1994 and recorded in Official Records Book 2861,
page 1095.

	 	j.	
Agreement between Recoton Corporation and Seminole County filed April 21, 1997,
and recorded in Official Records Book 3228, Page 697.

	 	k.	
Agreement between Recoton Corporation and Seminole Company filed May 21, 1995
and recorded in Official Records Book 2910, page 293, filed December 18, 1985,
in Official Records Book 3006, Page 1385, filed April 18, 1997, in Official
Records Book 3225, Page 1968.

	 	l.	
Easement to Florida Power Corporation filed August 29, 1980, and recorded in
Official Records Book 1292, page 54.

	 	m.	
Easement from Recoton Corporation in favor of Florida Power Corporation filed
November 6, 1995, in Official Records Book 2989, Page 774.

	 	n.	
Easement recorded in Official Records Book 972, page 1495.

ALL OF THE ABOVE RECORDED IN THE PUBLIC RECORDS OF SEMINOLE
COUNTY, FLORIDA

Schedule 11.1(C)

STD Restructuring

	1.	
The following is a listing of certain new and existing Recoton subsidiaries as
they would exist following a proposed restructuring of the STD and InterAct
companies (and a spin- off from Recoton Canada Ltd. of its current
InterAct-related business in Canada):

	 	
InterAct International, Inc. ("III") - this is a Delaware corporation
currently existing without shareholders, officers or directors:

	 	a.	
Authorized Shares: currently 3,000 at $0.01 par value (to be increased to
enable the options described below to be issued and to accommodate the InterAct
IPO)

	 	b.	
Stockholder: to be held by Recoton Corporation with options to be issued
to certain employees of the subsidiary companies as described below and shares
to be issued in a possible InterAct IPO.

	 	c.	
Subsidiaries: III will own the following corporations

	 	i)	
InterAct Holdings, Inc. ("IHI"), which currently exists without
shareholders, officers or directors:

	 	a)	
Authorized shares: 3,000 at $0.01 par value (to be increased)

	 	b)	
Stockholder:  to be held by III

	 	c)	
Jurisdiction of Incorporation:

	 	ii)	
InterAct Technologies, Inc. ("ITI"), which currently exists without
shareholders, officers or directors:

	 	a)	
Authorized shares: 3,000 at $0.01 par value (to be increased)

	 	b)	
Stockholder: to be held by III

	 	c)	
Jurisdiction of Incorporation:

	 	iii)	
InterAct Accessories, Inc.

	 	a)	
Authorized shares: 3,000 at $0.01 par value

	 	b)	
Stockholder: currently Recoton Corporation; to be contributed by Recoton
Corporation to III and by III to IHI

	 	c)	
Jurisdiction of Incorporation: Delaware

	 	iv)	
STD Technology Holding, Ltd. which is currently a direct subsidiary of
Recoton Corporation:

	 	a)	
Authorized capital: 10,000 shares at HK$1.00 each

	 	b)	
Stockholders: Recoton Corporation (999 shares) and Stephen Chu as nominee
for Recoton Corporation (1 share); Recoton shares to be contributed to III and
by III to ITI (Stephen Chu share to be held in trust for ITI)

	 	c)	
Jurisdiction of Incorporation: Hong Kong

	 	v)	
STD Technology (Shenzhen) Limited (in formation)

	 	a)	
Authorized capital:

	 	b)	
Shareholder: STD Technology Holding, Ltd.

	 	c)	
Jurisdiction of Incorporation: People's Republic of China

	 	vi)	
InterAct Canada (to be formed to acquire the InterAct/STD business and
assets of Recoton Canada Ltd.)

	 	a)	
Authorized capital: to be determined

	 	b)	
Shareholders: to be held by IHI

	 	c)	
Jurisdiction of Incorporation: Ontario

	 	vii)	
Recoton (Far East) Limited

	 	a)	
Authorized shares: 1,000 at HK$10 per share

	 	b)	
Shareholders: currently Recoton (999 shares) and Robert Borchardt as
nominee for Recoton Corporation (1 share); Recoton shares to be contributed to
III and by III to IHI (Robert Borchardt share to be held in trust for IHI)

	 	c)	
Jurisdiction of Incorporation: Hong Kong

	 	viii)	
STD Holding Limited

	 	a)	
Authorized capital: HK$27,733,340 (divided into 7 ordinary shares and
27,733,333 non-voting deferred shares at HK$1.00 per share)

	 	b)	
Shareholders: RFE and a beneficial holder holding for RFE

	 	c)	
Jurisdiction of Incorporation: Hong Kong

	 	d)	
Subsidiaries:

	 	(1)	
STD Electronic International Limited

	 	(2)	
STD Manufacturing Limited

	 	(3)	
Eversmart Management Limited

	 	(4)	
STD Plastic Industrial Limited

	 	(5)	
STD Trading Limited

	 	(6)	
Peak Hero Limited

	 	(7)	
STD Industrial (Shenzhen) Limited

	 	(8)	
STD (Tianjin) International Trade Development Company Limited

	2.	
The following substantially describes the terms which would be agreed to with
certain members of existing senior management of STD and InterAct. Such
employees would receive in cancellation of certain bonus payments to which they
are currently entitled and in agreement for extensions of their current
employment agreements, options to acquire 7.2 million shares of InterAct
International, Inc. ("III") (10% of the 72 million shares which would have
previously been issued to Recoton Corporation). Such options would be
exerciseable at $1 per share (subject to standard adjustments), and vest 40% at
grant and 20% in each of 2002, 2003 and 2004. Such employees would also get
options on an additional 1.8 million shares (21/2% of Recoton's holdings), which
would vest in 2009 with such vesting accelerating to 2005 if certain
to-be-agreed-upon criteria are met.

The optionees would have under certain circumstances the right
to put shares acquired upon exercise of such options to Recoton six months after
exercise if III has not consummated a public offering of its stock by December
31, 2002. Such option would expire on the earlier of six months and one day
after exercising the options or June 30, 2003. The price which Recoton would pay
upon exercise of such put would be the lesser of the fair market value of such
shares based on book value at the time of the put or 15% of the cumulative net
after-tax profits of the STD/InterAct companies (as defined) for 2001 and 2002.
Recoton has the right to pay for such shares by issuing Recoton stock.
Recoton/III may lend money to the optionees to exercise the options in a
cashless transaction.EXHIBIT 10.2

CREDIT AGREEMENT
Exhibit 10.2

CREDIT AGREEMENT

among

RECOTON CORPORATION,

INTERACT ACCESSORIES, INC.

RECOTON AUDIO CORPORATION

AAMP OF FLORIDA, INC.

RECOTON HOME AUDIO, INC.

As Borrowers

and

The Other Loan Parties Party Hereto and

The Several Lenders

from Time to Time Parties Hereto

and

THE CHASE MANHATTAN BANK,
as Administrative Agent

Dated as of October 31, 2000

TABLE OF CONTENTS

Page

	SECTION 1.	SECTION 1. DEFINITIONS	1

	 	1.1 Defined Terms	1

	 	1.2 Other Definitional Provisions	14

	SECTION 2.	AMOUNT AND TERMS OF COMMITMENTS	15

	 	2.1 Term Loan Commitments	15

	 	2.2 Procedure for Borrowing	15

	 	2.3 Repayment of Loans; Evidence of Debt	15

	 	2.4 Optional Prepayments	16

	 	2.5 Mandatory Prepayments	16

	 	2.6 Interest Rates and Payment Dates	17

	 	2.7 Computation of Interest	17

	 	2.8 Pro Rata Treatment and Payments	17

	 	2.9 Taxes	18

	 	2.10 Change of Lending Office	19

	 	2.11 Joint and Several Liability of Borrowers	20

	 	2.12 Recoton as Agent for Borrowers	22

	SECTION 3.	REPRESENTATIONS AND WARRANTIES	23

	 	3.1 Organization, Powers, Capitalization	23

	 	3.2 Authorization of Borrowing, No Conflict	23

	 	3.3 Financial Condition	24

	 	3.4 Indebtedness and Liabilities	24

	 	3.5 Title to Properties; Liens	24

	 	3.6 Litigation; Adverse Facts	25

	 	3.7 Payment of Taxes	25

	 	3.8 Performance of Agreements	25

	 	3.9 Employee Benefit Plans	25

	 	3.10 Broker's Fees	26

	 	3.11 Environmental Matters	26

	 	3.12 Solvency	27

	 	3.13 Disclosure	27

	 	3.14 Insurance	28

	 	3.15 Compliance with Laws	28

	 	3.16 Employee Matters	28

	 	3.17 Governmental Regulation	28

	 	3.18 Currency Controls	28

	 	3.19 Customer and Trade Relations	28

	 	3.20 Subordinated Debt	29

	SECTION 4.	CONDITIONS PRECEDENT	29

	SECTION 5.	REPORTING AND OTHER AFFIRMATIVE COVENANTS; FINANCIAL
COVENANTS	30

	 	5.1 Financial Statements and Other Reports	30

	 	5.2 Maintenance of Properties	30

	 	5.3 Compliance with Laws	31

	 	5.4 Use of Proceeds and Margin Security	31

	 	5.5 Year 2000	31

	 	5.6 Environmental Matters	31

	 	5.7 Notices	32

	 	5.8 Collateral Inspection Rights	32

	 	5.9 Inspection of Property; Books and Records; Discussions	33

	 	5.10 Use of Proceeds	33

	SECTION 6.	NEGATIVE COVENANTS	33

	 	6.1 Indebtedness and Liabilities	33

	 	6.2 Guaranties	35

	 	6.3 Transfers, Liens and Related Matters	35

	 	6.4 Investments and Loans	37

	 	6.5 Restricted Junior Payments	38

	 	6.6 Restriction on Fundamental Changes	38

	 	6.7 Changes Relating to Subordinated Debt	39

	 	6.8 Transactions with Affiliates	40

	 	6.9 Conduct of Business	40

	 	6.10 Tax Consolidations	40

	 	6.11 Subsidiaries	40

	 	6.12 Fiscal Year; Tax Designation	40

	 	6.13 Press Release; Public Offering Materials	40

	 	6.14 Sale-leasebacks	40

	 	6.15 Inactive Subsidiaries	40

	 	6.16 Parity with Senior Lender	40

	SECTION 7.	DEFAULT, RIGHTS AND REMEDIES	41

	 	7.1 Event of Default	41

	 	7.2 Application of Payments and Proceeds	45

	SECTION 8.	THE ADMINISTRATIVE AGENT	45

	 	8.1 Appointment	45

	 	8.2 Delegation of Duties	46

	 	8.3 Exculpatory Provisions	46

	 	8.4 Reliance by Administrative Agent	46

	 	8.5 Notice of Default; Notices Under Subordination Agreement	47

	 	8.6 Non-reliance on Administrative Agent and Other Lenders	47

	 	8.7 Indemnification	48

	 	8.8 Administrative Agent in Its Individual Capacity	48

	 	8.9 Successor Administrative Agent	48

	SECTION 9.	MISCELLANEOUS	49

	 	9.1 Amendments and Waivers	49

	 	9.2 Notices	50

	 	9.3 No Waiver; Cumulative Remedies	51

	 	9.4 Survival of Representations and Warranties	51

	 	9.5 Payment of Expenses	51

	 	9.6 Successors and Assigns; Participations and Assignments	52

	 	9.7 Adjustments; Set-off	54

	 	9.8 Counterparts	55

	 	9.9 Severability	55

	 	9.10 Integration	55

	 	9.11 Governing Law	55

	 	9.12 Submission to Jurisdiction; Waivers	56

	 	9.13 Acknowledgements	56

	 	9.14 Waivers of Jury Trial	57

	 	9.15 Confidentiality	57

	 	9.16 Joint and Several Obligations	57

	 	9.17 Legend	57

SCHEDULES:

	1.1(A)	Tranche A Term Loan Commitments
	1.1(B)	Tranche B Term Loan Commitments
	1.1(C)	Mortgaged Property
	1.1(D)	Liens
	3.1(A)	Organization and Powers
	3.5	Real Estate
	3.8	Taxes
	3.9	Employee Benefit Plans
	3.14	Insurance
	3.16	Employee Matters
	5.1	Reporting Requirements
	6.1	Indebtedness
	6.2	Guaranties
	6.4(c)	Closing Date Employee Loans
	6.4(e)	Investments
	6.6	Inactive Subsidiaries
	6.11	Subsidiaries
	9.2	Addresses for Notice

EXHIBITS:

	A	Form of Assignment and Acceptance
	B-1	Form of Tranche A Term Note
	B-2	Form of Tranche B Term Note
	C	Form of Subordination and Intercreditor Agreement
	D	Form of Security Agreement
	E	Form of Mortgages
	F-1	Form of Guaranty
	F-2	Form of Canada Guaranty
	G	Form of Pledge Agreement

                    
CREDIT AGREEMENT, dated as of October 31, 2000, among RECOTON CORPORATION, a New
York corporation ("Recoton"), INTERACT ACCESSORIES, INC., a Delaware
corporation, RECOTON HOME AUDIO, INC., a California corporation, RECOTON AUDIO
CORPORATION, a Delaware corporation, and AAMP OF FLORIDA, Inc., a Florida
corporation (collectively with Recoton, the "Borrowers"), the several banks and
other financial institutions or entities from time to time parties to this
Agreement, and THE CHASE MANHATTAN BANK, as administrative agent (in such
capacity, the "Administrative Agent").

W I T N E S S
E T H :

                    
WHEREAS, the Lenders (as defined below) have previously extended loans and other
financial accommodations to or for the benefit of Recoton pursuant to the
Existing Credit Agreement, the 1997 Note Purchase Agreements and the 1998 Note
Purchase Agreement (each as defined below), which loans were guaranteed by
certain of Recoton's Subsidiaries and secured by liens upon substantially all of
the assets of Recoton and such Subsidiaries;

                    
WHEREAS, concurrently herewith the Borrowers and certain of their respective
Subsidiaries have entered into the Senior Loan Documents (as defined below)
pursuant to which the Borrowers shall borrow sufficient funds to repay a portion
of Recoton's outstanding obligations under the Existing Credit Agreement, the
1997 Note Purchase Agreements and the 1998 Note Purchase Agreement (such
obligations, collectively, the "Existing Lender Obligations"); and

                    
WHEREAS, the Borrowers have requested and the Lenders have agreed to extend
$15,000,000 of new credit to the Borrowers for the purpose of repaying the
remainder of the Existing Lender Obligations in full on the following terms and
conditions;

                    
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto agree as follows:

SECTION 1. DEFINITIONS

                    
1.1 Defined Terms. As used in this Agreement, the terms listed in this
Section 1.1 shall have the respective meanings set forth in this Section
1.1.

	 	          
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate
in effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus1/2of 1%. For purposes hereof: "Prime Rate" shall mean the rate
of interest per annum publicly announced from time to time by the Administrative
Agent as its prime rate in effect at its principal office in New York City (the
Prime Rate not being intended to be the lowest rate of interest charged by the
Administrative Agent in connection with extensions of credit to debtors); and
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the Agent from
three federal funds brokers of recognized standing selected by it. Any change in
the ABR due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective as of the opening of business on the effective day of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.

	 	          
"ABR Loans": Loans the rate of interest applicable to which is based upon
the ABR.

	 	          
"Administrative Agent": as defined in the introductory paragraph hereto.

	 	          
"Administrative Borrower": as defined in Section 2.12 hereto.

	 	          
"Affiliate": any Person (other than the Administrative Agent or Lender):
(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 any Borrower; (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 any Borrower; or (d) which has a senior officer who
is also a senior officer of any Borrower. 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.

	 	          
"Agreement": this Credit Agreement, as amended, supplemented or otherwise
modified from time to time.

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

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

	 	          
"Assignee": as defined in Section 9.6(c).

	 	          
"Assignor": as defined in Section 9.6(c).

	 	          
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).

	 	          
"Borrowers": as defined in the introductory paragraph hereto.

	 	          
"Borrowing Date": any Business Day specified by the Borrowers as a date
on which the Borrowers request the relevant Lenders to make Loans hereunder.

	 	          
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close.

	 	          
"Canada Guaranty": the Guaranty Agreement dated as of even date herewith
between Recoton Canada and the Senior Agent on behalf of the Agents, Senior
Lenders, the Administrative Agent and the Lenders, as the same may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with its terms attached as Exhibit F-2 hereto.

	 	          
"Canada Security Agreement": the Security Agreement dated as of even date
herewith between Recoton Canada and the Senior Agent on behalf of the Agents,
Senior Lenders, the Administrative Agent and the Lenders, as the same may be
amended, supplemented, restated or otherwise modified from time to time in
accordance with its terms.

	 	          
"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.

	 	          
"Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.

	 	          
"Chase":  The Chase Manhattan Bank.

	 	          
"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": the date upon which all conditions set forth in Section 4
hereof have been satisfied.

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

	 	          
"Collateral": the collective reference to any and all property upon which
a Lien is purported to be created by any Security Document.

	 	          
"Commitment": as to any Lender, the collective amounts of such Lender's
commitment hereunder set forth opposite such Lender's name on Schedule 1.1(A)
and Schedule 1.1(B).

	 	          
"Copyright Security Agreement": the Copyright Security Agreement dated as
of even date herewith among the Loan Parties and the Senior Agent on behalf of
the Agents, Senior Lenders, the Administrative Agent and the Lenders, as the
same may be amended, supplemented, restate or otherwise modified from time to
time in accordance with its terms.

	 	          
"Default": any of the events specified in Section 7, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

	 	          
"Disposition": with respect to any Property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof.

	 	          
"Dollars" and "$": dollars in lawful currency of the United States
of America.

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

	 	          
"Existing Credit Agreement": the Amended and Restated Credit Agreement,
dated as of June 18, 1998, among Recoton, the lenders party thereto and Chase,
as administrative agent.

	 	          
"Existing Lender Obligations": as defined in the recitals hereto.

	 	          
"Event of Default": any of the events specified in Section 7,
provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.

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

	 	          
"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.

	 	          
"Funding Office": the office of the Administrative Agent set forth in
Section 9.2.

	 	          
"GAAP": generally accepted accounting principles in the United States of
America as in effect from time to time.

	 	          
"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 Senior
Agent and the Requisite Lenders (as defined in the Senior Loan Agreement).

	 	          
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
(including, without limitation, the National Association of Insurance
Commissioners).

	 	          
"Guaranties": collectively the Guaranty and the Canada Guaranty.

	 	          
"Guarantors": the collective reference to the Loan Parties party to the
Guaranty.

	 	          
"Guaranty": the Guaranty dated as of October 31, 2000, made by the
Guarantors in favor of the Senior Agent on behalf of the Agents, the Senior
Lenders, the Administrative Agent and the Lenders, as attached as Exhibit F-1
hereto, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms.

	 	          
"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 Borrowers or any of their 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. Custom Service
pursuant to the outstanding note.

	 	          
"InterAct International IPO": an underwritten public offering of common
stock made by Inter Act International, Inc., a Delaware corporation, and its
Subsidiaries, pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission in accordance with the
Securities Act of 1933, as amended, and the rules and regulations promulgated by
the Securities and Exchange Commission thereunder.

	 	          
"Interest Payment Date": as to any Loan, the last day of each calendar
month, the Maturity Date and the date of any repayment or prepayment made in
respect thereof.

	 	          
"Inventory": means "inventory" (as defined in the 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 the United States and its territorial waters.

	 	          
"Lenders": collectively, the Tranche A Lenders and the Tranche B Lenders.

	 	          
"Lien": 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).

	 	          
"LIFO Loan Documents": the "LIFO Loan Documents" as defined in Appendix B
to the Master Restructuring Agreement.

	 	          
"Loan": as defined in Section 2.1.

	 	          
"Loan Documents": this Agreement, the Subordination Agreement, the
Security Documents and the Notes.

	 	          
"Loan Parties": the Borrowers and the Subsidiaries of the Borrowers party
to a Loan Document.

	 	          
"Master Restructuring Agreement": the Master Restructuring Agreement
dated as of September 8, 1999, among Recoton Corporation, certain of its
Subsidiaries, the financial institutions party thereto and The Chase Manhattan
Bank, as Collateral Agent.

	 	          
"Material Adverse Effect": (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 the Administrative Agent and Lenders, or
(iii) any material impairment of the Loan Parties' ability to perform their
obligations under the Loan Documents.

	 	          
"Maturity Date": October 31, 2003.

	 	          
"Mortgage": each of the mortgages, deeds of trust, leasehold mortgages,
leasehold deeds of trust or other similar real estate security documents
delivered by any Loan Party to the Senior Agent, on behalf of the Agents, the
Senior Lenders, the Administrative Agent and the Lenders, with respect to
Mortgaged Property, as attached as Exhibit E hereto.

	 	          
"Mortgaged Property": all of the real property owned by any Borrower or
its Subsidiaries, each as listed on Schedule 1.1(C).

	 	          
"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 any of the Agents
or (after the Obligations under the Senior Loan Agreement have been paid in cash
in full) the Administrative Agent 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 Borrowers or any of their 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 a Borrower 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.

	 	          
"Non-Excluded Taxes": as defined in Section 2.9.

	 	          
"Notes": the collective reference to any promissory note evidencing
Loans.

	 	          
"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.

	 	          
"1999 Securities Purchase Agreement": the Securities Purchase Agreement
dated as of February 4, 1999, between the Borrower and each of the purchasers
named in Annex 1 thereto as amended, supplemented or modified time to time.

	 	          
"Obligations": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
any Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of any Borrower to the Administrative Agent or to any Lender,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, any other Loan Document or any other document made,
delivered or given in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees, charges and disbursements of
counsel to the Administrative Agent or to any Lender that are required to be
paid by the Borrowers pursuant hereto) or otherwise.

	 	          
"Patent Security Agreement": the Patent Security Agreement dated as of
even date herewith among the Loan Parties and the Senior Agent on behalf of the
Agents, Senior Lenders, the Administrative Agent and the Lenders, as the same
way be amended, supplemented, restated or otherwise modified from time to time
in accordance with its terms.

	 	          
"Participant": as defined in Section 9.6(b).

	 	          
"Payment Office": the office of the Administrative Agent set forth in
Section 9.2.

	 	          
"Payoff Letter": The letter agreement dated the date hereof delivered
pursuant to the Senior Loan Agreement by The Chase Manhattan Bank and the other
existing creditors of Recoton signatory thereto and pursuant to which the Master
Restructuring Agreement dated as of September 8, 1999 is terminated.

	 	          
"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 such Loan Party 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,
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, zoning restrictions,
licenses 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 any Loan Party 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, and (ii) such Lien encumbers only
the asset so purchased; (f) Liens in favor of the Senior Agent, on behalf of the
Agents, the Senior Lenders, the Administrative Agent and Lenders; (g) Liens on
deposits on other property of the Borrower 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 this Agreement; (j) Liens set forth on Schedule
1.1(D); 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": includes 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.

	 	          
"Pledge Agreements": the collective reference to the Pledge Agreement
dated as of October 31, 2000 delivered by the Pledgors (as defined therein) in
favor of the Senior Agent on behalf of the Agents, the Senior Lenders, the
Administrative Agent and the Lenders, as the same may be amended, supplemented
or otherwise modified from time to time, as attached as Exhibit G hereto and any
other agreements pursuant to which some or all of the Capital Stock of a Foreign
Subsidiary is pledged by any Loan Party or Foreign Subsidiary to the Senior
Agent, on behalf of the Agents (as defined in the Senior Loan Agreement as of
the date hereof), the Senior Lenders, the Administrative Agent and the Lenders,
on or after the date hereof, (including, without limitation, the German Pledge
Agreement, the Hong Kong Pledge Agreement, the Italy Pledge Agreement and the UK
Pledge Agreement, each as defined in the Senior Loan Agreement) as amended,
supplemented or modified.

	 	          
"Real Estate": as defined in Section 3.5.

	 	          
"ReCone": Recone, Inc., a Delaware corporation.

	 	          
"Recoton" has the meaning assigned to that term in the preamble.

	 	          
"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.

	 	          
"Register": as defined in Section 9.6(d).

	 	          
"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.

	 	          
"Related Agreements": the Senior Loan Documents, the 1999 Securities
Purchase Agreement, the Payoff Letter, the documents and agreements evidencing
the German Facility and all other documents, agreements and instruments in
connection with the foregoing.

	 	          
"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.

	 	          
"Required Lenders": at any time prior to the funding of the Commitments
the holders of at least 51% of the Commitments and thereafter the holders of at
least 51% of the aggregate principal amount of Loans then outstanding.

	 	          
"Requirement of Law": as to any Person, the Certificate of Incorporation
and By-Laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its Property or to which such Person or any of its Property is
subject.

	 	          
"Responsible Officer": any president, vice president, chief financial
officer, treasurer or assistant treasurer of the Borrower, but in any event,
with respect to financial matters, the chief financial officer, treasurer or
assistant treasurer of the Borrower.

	 	          
"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 any Borrower 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 any Borrower 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 a Borrower or any of its Subsidiaries now or hereafter outstanding;
and (d) any payment by a Borrower 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..

	 	          
"Security Agreement": the Agreement, dated as of October 31, 2000 (as
amended, supplemented or modified from time to time), made by the Debtors (as
defined therein) in favor of the Senior Agent for the benefit of the Agents (as
defined in the Senior Loan Agreement), the Senior Lenders, the Administrative
Agent and the Lenders, as attached as Exhibit D hereto.

	 	          
"Security Documents": the collective reference to the Guaranties, the
Mortgages, the Security Agreement, the Pledge Agreements, Copyright Security
Agreement, Patent Security Agreement, Trademark Security Agreement, Canada
Security Agreement, and all other security documents including, without
limitation, any pledge of the stock of an Foreign Subsidiary and any financing
statements now or hereafter delivered to the Senior Agent purporting to grant a
Lien on any assets of any Person to secure the obligations and liabilities of
any Loan Party (as defined in the Senior Loan Agreement) under any Senior Loan
Document or any Loan Party under any Loan Document.

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

	 	          
"Senior Debt": subject to the Subordination Agreement, at any time the
outstanding extensions of credit under the Senior Loan Agreement.

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

	 	          
"Senior Loan Agreement": the Loan Agreement dated as of October 31, 2000,
among the Borrowers (as defined therein), Heller Financial, Inc., 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 on the date hereof.

	 	          
"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.

	 	          
"Subordinated Debt": (i) the $35,000,000 of Senior Subordinated Notes of
Recoton due February 4, 2004 issued pursuant to the 1999 Securities Purchase
Agreement and (ii) any other debt which by its terms is subordinate and junior
in right of payment to the Obligations.

	 	          
"Subordination Agreement": the Subordination and Intercreditor Agreement
dated as of the date hereof among the Administrative Agent and the Lenders (as
Subordinated Creditors), Heller Financial, Inc., in its capacity as
administrative agent on behalf of the Agents and all Senior Lenders, and the
Loan Parties, substantially in the form of Exhibit C, as the same may be
amended, supplemented or otherwise modified from time to time.

	 	          
"Subsidiary": 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.

	 	          
"Trademark Security Agreement": the Trademark Security Agreement dated as
of even date herewith among the Loan Parties and the Senior Agent on behalf of
the Agents, Senior Lenders, the Administrative Agent and the Lenders, as the
same may be amended, supplemented restated or otherwise modified from time to
time in accordance with its terms.

	 	          
"Tranche A Commitment": as to any Tranche A Lender, the amount of such
Lender's commitment hereunder set forth opposite such Lender's name on Schedule
1.1(A).

	 	          
"Tranche B Commitment": as to any Tranche B Lender, the amount of such
Lender's commitment hereunder set forth opposite such Lender's name on Schedule
1.1(B).

	 	          
"Tranche A Lender": each Lender listed on Schedule 1.1(A).

	 	          
"Tranche B Lender": each Lender listed on Schedule 1.1(B).

	 	          
"Tranche A Loans": as defined in Section 2.1.

	 	          
"Tranche B Loans": as defined in Section 2.1.

	 	          
"Tranche A Note": a promissory note substantially in the form attached as
Exhibit B-1 hereto.

	 	          
"Tranche B Note": a promissory note substantially in the form attached as
Exhibit B-2 hereto.

	 	          
"Transferee": as defined in Section 9.15.

                    
1.2 Other Definitional Provisions. Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
the other Loan Documents or any certificate or other document made or delivered
pursuant hereto or thereto.

                    
(a) As used herein and in the other Loan Documents, and any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms relating
to the Borrower and its Subsidiaries not defined in Section 1.1 and accounting
terms partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.

                    
(b) The words "hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section, Schedule and Exhibit
references are to this Agreement unless otherwise specified.

                    
(c) The words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation."

                    
(d) Unless the context otherwise requires, and except as otherwise provided
herein a reference to any document, instrument or agreement includes, except as
otherwise specified in a particular document, instrument or agreement, any
amendment or supplement to, or modification of, such document, instrument or
agreement, entered into from time to time in accordance with the terms of the
document, instrument or agreement.

                    
(e) Unless the context otherwise requires, a reference to any Person includes
its successors and permitted assigns.

                    
(f) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

                    
2.1 Term Loan Commitments. Subject to the terms and conditions hereof,
(a) each Tranche A Lender severally agrees to make a term loan (each a
"Tranche A Loan") to the Borrowers in an amount not to exceed the amount
of the Tranche A Commitment of such Tranche A Lender and (b) each Tranche B
Lender severally agrees to make a term loan (each a "Tranche B Loan" and
collectively with the Tranche A Loans, the "Loans") to the Borrowers in
an amount not to exceed the amount of the Tranche B Commitment of such Tranche B
Lender. The Loans shall be made without the exchange of any cash by setting off
the amount of the Loans to be made by each Lender against the amount owed by the
Borrowers to such Lenders on the Closing Date with respect to the Existing
Lender Obligations. The Loans shall at all times be ABR Loans. Any such Loans
that are repaid or prepaid hereunder shall not be reborrowed.

                    
2.2 Procedure for Borrowing. The Borrowers shall give the Administrative
Agent irrevocable telephonic notice (which notice shall be received prior to
2:00 p.m. on the Closing Date) requesting that the Lenders make the Loans on the
Closing Date. Upon receipt of such notice the Administrative Agent shall
promptly notify each Lender thereof.

                    
2.3 Repayment of Loans; Evidence of Debt. The Borrowers hereby
unconditionally promise to pay to the Administrative Agent (1) for the account
of the appropriate Tranche A Lender the principal amount of the Tranche A Loan
of such Tranche A Lender and (2) for the account of the appropriate Tranche B
Lender the principal amount of the Tranche B Loan of such Tranche B Lender on
the Maturity Date (or on such earlier date on which the Loans become due and
payable pursuant to Section 7); provided, however, that on the
Maturity Date (or such earlier date on which the Loans become due and payable
pursuant to Section 7) all principal and interest outstanding on all Tranche A
Loans shall be paid in full before any principal and interest outstanding on any
Tranche B Loans shall be paid. The Borrowers hereby further agree to pay
interest on the unpaid principal amount of the Loans from time to time
outstanding from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in Section 2.6. So long as the Loans have not
been accelerated pursuant to Section 7.1, prior to the Maturity Date, interest
payments may be made to Tranche B Lenders on the Tranche B Loans in accordance
with Section 2.6 prior to repayment in full of the Tranche A Loans.

                    
(a) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing indebtedness of the Borrowers to such Lender resulting
from each Loan of such Lender, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.

                    
(b) The Administrative Agent, on behalf of the Borrowers, shall maintain the
Register pursuant to Section 9.6(d), and a subaccount therein for each Lender,
in which shall be recorded (i) the amount of each Loan made hereunder and any
Note evidencing such Loan, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrowers and each Lender's share thereof.

                    
(c) The entries made in the Register and the accounts of each Lender maintained
pursuant to Sections 2.3(b) and 9.6(d) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Borrowers therein recorded; provided,
however, that the failure of any Lender or the Administrative Agent to
maintain the Register or any such account, or any error therein, shall not in
any manner affect the obligation of the Borrowers to repay (with applicable
interest) the Loans made to such Borrowers by such Lender in accordance with the
terms of this Agreement.

                    
The Borrowers agree that, upon the request to the Administrative Agent by any
Lender, the Borrowers will execute and deliver (1) to such Tranche A Lender a
promissory note of the Borrowers evidencing the Tranche A Loans of such Tranche
A Lender and (2) to such Tranche B Lender a promissory note of the Borrowers
evidencing the Tranche B Loans of such Tranche B Lender, substantially in the
forms of Exhibit B-1 and Exhibit B-2, respectively, with appropriate insertions
as to date and principal amount.

                    
2.4 Optional Prepayments. Subject to the terms of the Subordination
Agreement, the Borrowers may at any time and from time to time prepay the Loans,
in whole or in part, without premium or penalty, upon irrevocable notice
delivered to the Administrative Agent at least one Business Day prior thereto,
which notice shall specify the date and amount of prepayment; provided,
however, that the Tranche B Loans may not be prepaid pursuant hereto
until all outstanding principal and interest due on the Tranche A Loans has been
paid in full. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof. If any such notice is given, the
amount specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to such date on the amount prepaid.
Partial prepayments of Loans shall be in an aggregate principal amount of
$500,000 or a whole multiple thereof. Amounts so prepaid may not be
reborrowed.

                    
2.5 Mandatory Prepayments. (a) Subject to the terms of the Subordination
Agreement if on any date the Borrowers or any of their respective Subsidiaries
shall receive any Net Proceeds or Net Securities Proceeds, then 100% of such Net
Proceeds or Net Securities Proceeds shall be applied on such date toward the
prepayment in full of the outstanding Loans; provided, however,
that with respect to any Net Securities Proceeds generated by the InterAct
International IPO, such Net Securities Proceeds shall prepay the Obligations
only after the indefeasible repayment in full in cash of the Senior Debt and
only in an amount equal to the amounts that would have been applied to the
Senior Debt (had it been outstanding) under the terms of Sections 2.4(B)(6) of
the Senior Loan Agreement as in effect on the date hereof.

                    
(b) Without duplication of the amounts referred to in Section 2.5(a), subject to
the terms of the Subordination Agreement and after the indefeasible repayment in
full in cash of the Senior Debt, the Borrowers shall prepay the Obligations in
an amount equal to the amounts that would have been applied to the Senior Debt
(had it been outstanding) under the terms of Sections 2.4(B) (3) through (5) of
the Senior Loan Agreement as in effect on the date hereof.

                    
(c) Amounts prepaid under this Section 2.5 shall not be reborrowed.

                    
(d) All payments made pursuant to this Section 2.5 shall be applied in
accordance with the order of application of proceeds set forth in Section 7.2
hereof.

                    
2.6 Interest Rates and Payment Dates. Each Loan shall bear interest at a
rate per annum equal to the ABR plus 5.75%.

                    
(a) (i) If all or a portion of the principal amount of any Loan, (ii) any
interest payable thereon or (iii) any other amount payable hereunder shall not
be paid when due (whether at the stated maturity, by acceleration or otherwise),
all outstanding Loans (whether or not overdue) and any such overdue amounts
shall bear interest at a rate per annum which is equal to ABR plus 7.75%
from the date of such non-payment until such overdue amount is paid in full (as
well after as before judgment).

                    
(b) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (b) of this Section
2.6 shall be payable from time to time on demand.

                    
2.7 Computation of Interest. Interest payable pursuant hereto shall be
calculated on the basis of a 365- (or 366- as the case may be) day year for the
actual days elapsed. Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error.

                    
2.8 Pro Rata Treatment and Payments. The borrowing by the Borrowers from
the Tranche A Lenders hereunder shall be made pro rata according
to the respective Tranche A Commitment of the relevant Tranche A Lenders. The
borrowing by the Borrowers from the Tranche B Lenders hereunder shall be made
pro rata according to the respective Tranche B Commitment of the
relevant Tranche B Lenders.

                    
(a) Each payment (including each prepayment) by the Borrowers on account of
principal and interest on the Tranche A Loans shall be made pro
rata according to the respective outstanding principal amounts of the
Tranche A Loans then held by the Tranche A Lenders. Each payment (including each
prepayment) by the Borrowers on account of principal and interest on the Tranche
B Loans shall be made pro rata according to the respective
outstanding principal amounts of the Tranche B Loans then held by the Tranche B
Lenders. Amounts prepaid on account of the Loans may not be reborrowed.

                    
(b) All payments (including prepayments) to be made by the Borrower hereunder,
whether on account of principal, interest, fees or otherwise, shall be made
without setoff or counterclaim and shall be made prior to 12:00 Noon, New York
City time, on the due date thereof to the Administrative Agent, for the account
of the Lenders, at the Payment Office, in Dollars and in immediately available
funds. The Administrative Agent shall distribute such payments to the Lenders
promptly upon receipt in like funds as received. If any payment hereunder
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day. In the case of any extension of
any payment of principal pursuant to the preceding sentence, interest thereon
shall be payable at the then applicable rate during such extension.

                    
(c) Unless the Administrative Agent shall have been notified in writing by the
Borrower prior to the date of any payment being made hereunder that the Borrower
will not make such payment to the Administrative Agent, the Administrative Agent
may assume that the Borrower is making such payment, and the Administrative
Agent may, but shall not be required to, in reliance upon such assumption, make
available to the Lenders their respective pro rata shares of a
corresponding amount. If such payment is not made to the Administrative Agent by
the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.

                    
2.9 Taxes. All payments made by the Borrower under this Agreement and any
Notes shall be made free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding net income taxes and franchise taxes (imposed in lieu of net income
taxes) imposed on the Administrative Agent or any Lender as a result of a
present or former connection between the Administrative Agent or such Lender and
the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any Note). If any such non-excluded taxes,
levies, imposts, duties, charges, fees deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Administrative Agent or any Lender hereunder or under any Note,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrower shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof if
such Lender fails to comply with the requirements of paragraph (b) of this
subsection. Whenever any Non-Excluded Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Administrative
Agent for its own account or for the account of such Lender, as the case may be,
a certified copy of an original official receipt received by the Borrower
showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Administrative Agent and the Lenders
for any incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.

                    
(a) Each Lender that is not incorporated under the laws of the United States of
America or a state thereof shall:

	 	          
(i) deliver to the Borrower and the Administrative Agent (A) two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, and (B) an Internal Revenue Service Form
W-8 or W-9, or successor applicable form, as the case may be;

	 	          
(ii) deliver to the Borrower and the Administrative Agent two further copies of
any such form or certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrower; and

	 	          
(iii) obtain such extensions of time for filing and complete such forms or
certifications as may reasonably be requested by the Borrower or the
Administrative Agent; 

unless in any such case an event (including, without limitation, any change
in treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (ii) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax. Each Person that shall become a Lender pursuant
to subsection 9.6 shall, upon the effectiveness of the related transfer, be
required to provide all of the forms and statements required pursuant to this
subsection.

                    
2.10 Change of Lending Office. Each Lender agrees that if it makes any
demand for payment under subsection 2.9(a), it will use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, as determined in its
sole discretion) to designate a different lending office if the making of such a
designation would reduce or eliminate the need for the Borrower to make payments
under subsection 2.9(a).

                    
2.11 Joint and Several Liability of Borrowers. Each of Borrowers is
accepting joint and several liability hereunder and under the other Loan
Documents in consideration of the financial accommodations to be provided by the
Administrative Agent and the Lenders under this Agreement, for the mutual
benefit, directly and indirectly, of each of Borrowers and in consideration of
the undertakings of the other Borrowers to accept joint and several liability
for the Obligations.

                    
(a) Each of Borrowers, jointly and severally, hereby, irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this subsection 2.11), it being the intention of the
parties hereto that all the Obligations shall be the joint and several
obligations of each Person comprising Borrowers without preferences or
distinction among them.

                    
(b) Each Borrower expects to derive substantial benefit, directly or indirectly,
from the making of the Loans.

                    
(c) If and to the extent that any of Borrowers shall fail to make any payment
with respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event the
other Persons comprising Borrowers will make such payment with respect to, or
perform, such Obligation.

                    
(d) The Obligations of each Borrower under the provisions of this subsection
2.11 constitute the absolute and unconditional, full recourse Obligations of
such Borrower enforceable against such Borrower to the full extent of its
properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.

                    
(e) Except as otherwise expressly provided in this Agreement, each Borrower
hereby waives notice of acceptance of its joint and several liability, notice of
the occurrence of any Default, Event of Default, or of any demand for any
payment under this Agreement, notice of any action at any time taken or omitted
by the Administrative Agent or Lenders under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement). Each Borrower hereby assents to, and waives notice
of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by the Administrative Agent or Lenders at any time or times in
respect of any default by any Borrower in the performance or satisfaction of any
term, covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by the Administrative Agent or Lenders in respect of any
of the Obligations, and the taking, addition, substitution or release, in whole
or in part, at any time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of any Borrower.
Without limiting the generality of the foregoing, each of Borrowers assents to
any other action or delay in acting or failure to act on the part of the
Administrative Agent or any Lender with respect to the failure by any Borrower
to comply with any of its respective Obligations, including, without limitation,
any failure strictly or diligently to assert any right or to pursue any remedy
or to comply fully with applicable laws or regulations thereunder, which might,
but for the provisions of this subsection 2.11 afford grounds for terminating,
discharging or relieving any Borrower, in whole or in part, from any of its
Obligations under this subsection 2.11, it being the intention of each Borrower
that, so long as any of the Obligations hereunder remain unsatisfied, the
Obligations of such Borrower under this subsection 2.11 shall not be discharged
except by performance and then only to the extent of such performance. The
Obligations of each Borrower under this subsection 2.11 shall not be diminished
or rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Borrower
or the Administrative Agent or any Lender. The joint and several liability of
Borrowers hereunder shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in the name,
constitution or place of formation of any Borrower or Agent or any Lender.

                    
(f) The provisions of this subsection 2.11 are made for the benefit of the
Administrative Agent, the Lenders and their respective successors and assigns,
and may be enforced by it or them from time to time against any or all of
Borrowers as often as occasion therefor may arise and without requirement on the
part of the Administrative Agent, any Lender, or any successor or assign to
first marshal any of its or their claims or to exercise any of its or their
rights against any of other Borrowers or to exhaust any remedies, available to
it or them against any of the other Borrowers or to resort to any other source
or means of obtaining payment of any of the Obligations hereunder or to elect
any other remedy. The provisions of this subsection 2.11 shall remain in effect
until all of the Obligations shall have been indefeasibly paid in full in cash
or otherwise fully satisfied to the satisfaction of the Administrative Agent and
the Lenders. If at any time, any payment, or any part thereof, made in respect
of any of the Obligations, is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Lender upon the insolvency,
bankruptcy or reorganization of any of the Administrative Borrowers, or
otherwise, the provisions of this subsection 2.11 will forthwith be reinstated
in effect, as though such payment had not been made.

                    
(g) Each Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against the other Borrowers with respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments made by it to Administrative Agent or the Lenders with respect to any
of the Obligations or any collateral security therefor until such time as all of
the Obligations have been indefeasibly paid in full in cash. Any claim which any
Borrower may have against any other Borrower with respect to any payments to
Administrative Agent or any Lender hereunder or under any other Loan Documents
are hereby expressly made subordinate and junior in right of payment, without
limitation as to any increases in the Obligations arising hereunder or
thereunder, to the prior indefeasible payment in full, in cash, of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be indefeasibly paid in
full, in cash, before any payment or distribution of any character, whether in
cash, securities or other property, shall be made to any other Borrower
therefor.

                    
(h) Each Borrower hereby agrees that, after the occurrence and during the
continuance of any Default or Event of Default, the payment of any amounts due
with respect to the Indebtedness owing by any Borrower to any other Borrower is
hereby subordinated to the prior payment in full, in cash, of the Obligations.
Each Borrower hereby agrees that after the occurrence and during the continuance
of any Default or Event of Default, such Borrower will not demand, sue for or
otherwise attempt to collect any Indebtedness of any other Borrower owing to
such Borrower until the Obligations shall have been indefeasibly paid in full in
cash. If, notwithstanding the foregoing sentence, such Borrower shall collect,
enforce or receive any amounts in respect of such Indebtedness, such amounts
shall be collected, enforced and received by such Borrower as trustee for
Administrative Agent, and such Borrower shall at any time following the
indefeasible payment in full of the Senior Debt deliver any such amounts to
Administrative Agent for application to the Obligations in accordance with
subsection 7.1.

                    
(i) Each Borrower hereby agrees that to the extent that a Borrower shall have
paid more than its proportionate share of any payment made hereunder, such
Borrower shall be entitled to seek and receive contribution from and against any
other Borrower hereunder in accordance with the terms and provisions of Section
2.5 of the Guaranty. Each Borrower's right of contribution shall be subject to
the terms and conditions of this subsection 2.11. The provisions of this
subsection 2.11(j) shall in no respect limit the obligations and liabilities of
any Borrower or Guarantor to the Administrative Agent and the Lenders, and each
Borrower and Guarantor shall remain liable to the Administrative Agent or the
Lenders for the full amount of the Obligations.

                    
2.12 Recoton as Agent for Borrowers. Each Borrower hereby irrevocably
appoints Recoton as the borrowing agent and attorney-in-fact for all Borrowers
("Administrative Borrower") which appointment shall remain in full force and
effect unless and until Administrative Agent shall have received prior written
notice signed by each Borrower that such appointment has been revoked and that
another Borrower has been appointed Administrative Borrower. Each Borrower
hereby irrevocably appoints and authorizes the Administrative Borrower to (i)
provide all notices and instructions under this Agreement, (ii) take such action
as the Administrative Borrower deems appropriate on its behalf to obtain Loans
and to exercise such other powers as are reasonably incidental thereto to carry
out the purposes of this Agreement and (iii) receive and distribute accordingly
the proceeds from the Loans. Each Borrower hereby jointly and severally agrees
to indemnify each Lender and the Administrative Agent and hold each Lender and
the Administrative Agent harmless against any and all liability, expense, loss
or claim of damage or injury, made against the Lenders and the Administrative
Agent by any Borrower or by any third party whosoever, arising from or incurred
by reason of (a) the Lenders' or the Administrative Agent's relying on any
instructions of the Administrative Borrower, or (b) any other action taken by
the Lenders or the Administrative Agent hereunder or under the other Loan
Documents, except that Borrowers will have no liability under this subsection
2.12 with respect to any liability that has been finally determined by final
non-appealable judgment by a court of competent jurisdiction to have resulted
solely from the gross negligence or willful misconduct of such Lender or the
Administrative Agent.

SECTION 3. REPRESENTATIONS AND WARRANTIES

          
To induce the Administrative Agent and each Lender to enter into the Loan
Documents and to make the Loans on the Closing Date, each Loan Party represents,
warrants and covenants to the Administrative Agent and each Lender that the
following statements are and will be true, correct and complete and, unless
specifically limited, shall remain so for so long as any of the Commitments
hereunder shall be in effect and until payment in full of all Obligations:

                    
3.1 Organization, Powers, Capitalization.

                    
(a) Organization and Powers. Each of the Loan Parties is a corporation
duly incorporated or organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation (which jurisdiction is set forth on
Schedule 3.1(a)) and qualified to do business in all jurisdictions where such
qualification is required except where failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect. Each of the Loan
Parties (i) has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and proposed to be
conducted and to enter into each Loan Document and any Related Agreements to
which it is a party, (ii) subject to specific representations regarding
Environmental Laws, has all material licenses, permits, consents or approvals
from or by, and has made all material filings with, and has given all material
notices to, all national, federal, state, provincial, municipal or other
governmental authorities having jurisdiction, to the extent required for such
ownership, operation and conduct and (iii) is in compliance with its charter and
bylaws or partnership, operating agreement or other organizational and governing
documents, as applicable.

                    
(b) Capitalization. The authorized and issued capital stock or other
equity interest of each of the Loan Parties and its respective Subsidiaries is
as set forth on Schedule 3.1(a), including all preemptive or other outstanding
rights, options, warrants, conversion rights or similar agreements or
understandings for the purchase or acquisition from any Loan Party (other than
the Borrower) of any shares of capital stock or other equity interest or other
securities of any such entity. All issued and outstanding shares of capital
stock or other equity interest of each of the Loan Parties are duly authorized
and validly issued, fully paid, nonassessable, free and clear of all Liens other
than those in favor of the Senior Agent for the benefit of the Agents, the
Administrative Agent and Lenders, and such shares were issued in compliance with
all applicable state, provincial, federal and foreign laws concerning the
issuance of securities. Each Loan Party (other than the Borrower) will promptly
notify the Administrative Agent and the Senior Agent of any change in its
ownership or corporate structure.

                    
3.2 Authorization of Borrowing, No Conflict. Each Loan Party has the
power and authority to incur the Obligations and to grant liens or security
interests in the Collateral. On the Closing Date, the execution, delivery and
performance of the Loan Documents and each Related Agreement by each Loan Party
signatory thereto will have been duly authorized by all necessary corporate and
shareholder or equivalent action. The execution, delivery and performance by
each Loan Party of each Loan Document and each Related Agreement to which it is
a party and the consummation of the transactions contemplated by the Loan
Documents by each Loan Party (i) do not contravene any applicable law, the
corporate charter or bylaws (or equivalent governing and organizational
documents) of any Loan Party or any material agreement or any order by which any
Loan Party or any Loan Party'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 such Loan
Party is a party or by which such Loan Party 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 such Loan Party other than those in favor of the Senior Agent, on
behalf of the Agents, the Senior Lenders, the Administrative Agent and the
Lenders, pursuant to the Security Documents and any Related Agreements; 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 are the legally valid and
binding obligations of the applicable Loan Parties respectively, each
enforceable against the Loan Parties party thereto, as applicable, in accordance
with their respective terms.

                    
3.3 Financial Condition. All financial statements concerning the Borrower
and its Subsidiaries furnished by or on behalf of the Borrower or its
Subsidiaries to the Senior Agent pursuant to the Senior Loan Documents and the
Administrative Agent pursuant to this Agreement have been prepared in accordance
with GAAP consistently applied throughout the periods involved (except as
disclosed therein) and present fairly, in all material respects, the financial
condition of the Persons covered thereby as at the dates thereof and the results
of their operations and cash flows for the periods then ended. The Projections
(as defined in the Senior Loan Agreement on the date hereof) delivered by the
Borrower and certain of its Subsidiaries pursuant to the Senior Loan Agreement,
copies of which will be delivered to the Administrative Agent and the Lenders,
will be prepared in light of the past operations of the business of the Borrower
and its Subsidiaries, and such Projections will represent the good faith
estimate of each Borrower and its senior management concerning the most probable
course of its business as of the date such Projections are delivered.

                    
3.4 Indebtedness and Liabilities. As of the Closing Date, neither the
Borrower nor any of its Subsidiaries has (a) any Indebtedness over $100,000 in
the aggregate except as reflected on the most recent consolidating financial
statements delivered to Administrative Agent and Lenders; or (b) any Liabilities
over $100,000 in the aggregate other than as reflected on the most recent
consolidating financial statements delivered to Administrative Agent and Lenders
or as incurred in the ordinary course of business following the date of the most
recent financial statements delivered to Administrative Agent and Lenders. The
Borrower shall promptly deliver to the Senior Agent and the Administrative Agent
copies of all notices given or received by Borrowers and any of its Subsidiaries
with respect to noncompliance with any term or condition related to any Senior
Debt, any Subordinated Debt or other Indebtedness, and shall promptly notify
Administrative Agent of any potential or actual Event of Default with respect to
such Senior Debt, Subordinated Debt or other Indebtedness.

                    
3.5 Title to Properties; Liens. Each Loan Party and each of its
Subsidiaries has good, sufficient and legal title to or valid leasehold
interests in, all of its respective material properties (including, without
limitation, the Collateral) and assets, in each case, free and clear of all
Liens except Permitted Encumbrances. As of the Closing Date, the real estate
("Real Estate") listed on Schedule 3.5 constitutes all of the real property
owned, leased, subleased, or used by any Loan Party. Each Loan Party owns good
and marketable fee simple title to all of its owned Real Estate, and valid and
subsisting leasehold interests in all of its leased Real Estate, all as
described on Schedule 3.5, and copies of all such leases or a summary of terms
thereof reasonably satisfactory to the Senior Agent have been delivered to the
Senior Agent. Schedule 3.5 further describes any Real Estate with respect to
which any Loan Party is a lessor, sublessor or assignee as of the Closing
Date.

                    
3.6 Litigation; Adverse Facts. As of the Closing Date, there are no
judgments outstanding against any Loan Party or affecting any property of any
Loan Party nor is there any action, charge, claim, demand, suit, proceeding,
petition, governmental investigation or arbitration now pending or, to the best
knowledge of the Loan Parties after due inquiry, threatened against or affecting
any Loan Party or any property of any Loan Party which could reasonably be
expected to result in any Material Adverse Effect. Promptly upon any executive
officer of the Borrower obtaining knowledge of (a) the institution of any
action, suit, proceeding, governmental investigation or arbitration against or
affecting any Loan Party or any property of any Loan Party not previously
disclosed by the Borrowers to the Administrative Agent or (b) any material
development in any action, suit, proceeding, governmental investigation or
arbitration at any time pending against or affecting any Loan Party or any
property of any Loan Party, in each case which could reasonably be expected to
have a Material Adverse Effect, the Borrower will promptly give notice thereof
to the Administrative Agent and provide such other information as may be
reasonably available to enable the Administrative Agent and its counsel to
evaluate such matter.

                    
3.7 Payment of Taxes. All material tax returns and reports of each Loan
Party and each of its Subsidiaries required to be filed by any of them have been
timely filed and are complete and accurate in all material respects. All taxes,
assessments, fees and other governmental charges which are due and payable by
each Loan Party and each of its Subsidiaries have been paid when due; provided
that no such tax need be paid if a Loan Party or one of its Subsidiaries is
contesting same in good faith by appropriate proceedings promptly instituted and
diligently conducted and if such Loan Party or such Subsidiary has established
appropriate reserves as shall be required in conformity with GAAP. As of the
Closing Date, except as set forth in Schedule 3.7, none of the income tax
returns of any Loan Party or any of their Subsidiaries are under audit and each
Loan Party shall promptly notify Administrative Agent in the event that any of
such Loan Party's or any of its Subsidiaries' income tax returns become the
subject of an audit. No tax liens have been filed against a Loan Party or any of
its Subsidiaries. The charges, accruals and reserves on the books of each Loan
Party and its Subsidiaries in respect of any taxes or other governmental charges
are in accordance with GAAP.

                    
3.8 Performance of Agreements. None of the Loan Parties and none of their
respective Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
material contractual obligation of any such Person, and no condition exists
that, with the giving of notice or the lapse of time or both, would constitute
such a default.

                    
3.9 Employee Benefit Plans. With respect to Employee Benefit Plans, each
Loan Party, each of its respective Subsidiaries and each ERISA Affiliate (other
than Recoton Canada) are in compliance, and will continue to remain in
compliance, in all material respects with all applicable provisions of ERISA,
the Code and all other applicable laws and the regulations and interpretations
thereof with respect to all Employee Benefit Plans and with the terms of such
Employee Benefit Plans. No material liability has been incurred by any Loan
Party, any Subsidiaries or any ERISA Affiliate which remains unsatisfied for any
funding obligation, taxes or penalties with respect to any Employee Benefit
Plan. No ERISA Event has occurred or is reasonably likely to occur. No Loan
Party or its ERISA Affiliates contribute to or have any liability with respect
to any Multiemployer Plan. As to any Canadian Pension Plans (as defined in the
Senior Loan Agreement) of the Borrowers or the other Loan Parties: (1) the
Canadian Pension Plans are duly registered under all applicable provincial
pension benefits legislation; (2) all obligations of the Borrowers or the other
Loan Parties (including fiduciary, funding, investment and administration
obligations) required to be performed in connection with the Canadian Pension
Plans or the funding agreements therefor have been performed in a timely
fashion. There are no outstanding disputes concerning the assets held pursuant
to any such funding agreement; (3) all contributions or premiums required to be
made by the Borrowers or the other Loan Parties to the Canadian Pension Plans
have been made in a timely fashion in accordance with the terms of the Canadian
Pension Plans and applicable laws and regulations; (4) all employees
contributions to the Canadian Pension Plans required to be made by way of
authorized payroll deduction have been properly withheld by the Borrowers or the
other Loan Parties, as applicable, and fully paid into the Canadian Pension
Plans in a timely fashion; (5) all reports and disclosures relating to the
Canadian Pension Plans required by any applicable laws or regulations have been
filed or distributed in a timely fashion; (6) there have been no improper
withdrawals, or applications of, the assets of any of the Canadian Pension
Plans; (7) no amount is owning by any of the Canadian Pension Plans under the
Income Tax Act (Canada) or any provincial taxation statute; (8) the
Canadian Pension Plans are fully funded both on an ongoing basis and on a
solvency basis (using actuarial assumptions and methods which are consistent
with the valuations last filed with the applicable governmental authorities and
which are consistent with generally accepted actuarial principles); (9) the
Borrowers, after diligent enquiry, have neither any knowledge, nor any grounds
for believing, that any of the Canadian Pension Plans is the subject of an
investigation, any other proceeding, an action or a claim. There exists no state
of facts which after notice or lapse of time or both could reasonably be
expected to give rise to any such proceeding, action or claim. The Loan Parties
or any of their Subsidiaries shall not establish any new Employee Benefit Plan
or amend any existing Employee Benefit Plan if the liability or increased
liability resulting from such establishment or amendment is material. Schedule
3.9 lists all the Employee Benefit Plans of the Loan Parties.

                    
3.10 Broker's Fees. No broker's or finder's fee or commission will be
payable with respect to any of the transactions contemplated hereby.

                    
3.11 Environmental Matters. Each Loan Party (including without
limitation, all operations and conditions at or in the real estate presently
owned and operated by such Loan Party) is in compliance with all applicable
Environmental Laws (which compliance includes, but is not limited to, the
possession by such Loan Party of all permits and other governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof), except where failure to be in compliance
could not reasonably be expected to have a Material Adverse Effect. Each Loan
Party has not received any written communication, whether from a Governmental
Authority, citizens group, employee or otherwise, alleging that such Loan Party
is not in such compliance, and there are no past or present actions, activities,
circumstances conditions, events or incidents that may prevent or interfere with
such compliance in the future.

                    
(a) There is no Environmental Claim pending or threatened against any Loan Party
or, to the best knowledge of such Loan Party, against any Person whose liability
for any Environmental Claim such Loan Party has or may have retained or assumed
either contractually or by operation of law, in each such case which,
individually or in the aggregate, would have a Material Adverse Effect.

                    
(b) There are no past or present actions, activities, circumstances, conditions,
events or incidents, including, without limitation, the Release, threatened
Release or presence of any Hazardous Material, which could reasonably be
expected to form the basis of any Environmental Claim against any Loan Party, or
to the best knowledge of such Loan Party, against any Person whose liability for
any Environmental Claim such Loan Party has or may have retained or assumed
either contractually or by operation of law, in each such case which would have
a Material Adverse Effect.

                    
(c) Each Loan Party has not, and to the best knowledge of such Loan Party, no
other Person has placed, stored, deposited, discharged, buried, dumped or
disposed of Hazardous Materials or any other wastes produced by, or resulting
from, any business, commercial or industrial activities, operations or
processes, on, beneath or adjacent to any property currently or formerly owned,
operated or leased by such Loan Party, except for inventories of such substances
to be used, and wastes generated therefrom, in the ordinary course of business
of such Loan Party (which inventories and wastes, if any, were and are stored or
disposed of in accordance with applicable Environmental Laws and in a manner
such that there has been no Release of any such substances), in each case,
which, individually or in the aggregate, would have a Material Adverse
Effect.

                    
(d) No Lien in favor of any Person relating to or in connection with any
Environmental Claim has been filed or has been attached to any real estate owned
or leased by a Loan Party.

                    
3.12 Solvency. From and after the date of this Agreement, the Loan Parties are
and will be Solvent.

                    
3.13 Disclosure. No representation or warranty of a Loan Party or any of
its Subsidiaries contained in this Agreement, the financial statements, the
other Loan Documents, any Related Agreements, or any other document, certificate
or written statement furnished to the Administrative Agent or any Lender by or
on behalf of a Loan Party for use in connection with the Loan Documents or any
Related Agreements contains any untrue statement of a material fact or omitted,
omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made. There is no material fact known to
any Loan Party that has had or could have a Material Adverse Effect and that has
not been disclosed herein or in such other documents, certificates and
statements furnished to the Administrative Agent or any Lender for use in
connection with the transactions contemplated hereby.

                    
3.14 Insurance. Each Loan Party and its Subsidiaries maintains adequate
insurance policies for public liability, property damage, product liability, and
business interruption with respect to its business and properties and the
business and properties of its Subsidiaries against loss or damage of the kinds
customarily carried or maintained by corporations of established reputation
engaged in similar businesses and in amounts acceptable to the Senior Agent.
Schedule 3.14 lists all insurance policies of any nature maintained, as of the
Closing Date, for current occurrences by each Loan Party.

                    
3.15 Compliance with Laws. Each Loan Party and its Subsidiaries are not
in violation of any law, ordinance, rule, regulation, order, policy, guideline
or other requirement of any domestic or foreign government or any
instrumentality or agency thereof, having jurisdiction over the conduct of its
business or the ownership of its properties, including, without limitation, any
Environmental Law, which violation would subject such Loan Party or its
Subsidiaries, or any of their respective officers to criminal liability or have
a Material Adverse Effect and no such violation has been alleged.

                    
3.16 Employee Matters. Except as set forth on Schedule 3.16, (a) no Loan
Party nor any of such Loan Party's employees is subject to any collective
bargaining agreement, (b) no petition for certification or union election is
pending with respect to the employees of any Loan Party and no union or
collective bargaining unit has sought such certification or recognition with
respect to the employees of any Loan Party and (c) there are no strikes,
slowdowns, work stoppages or controversies pending or, to the best knowledge of
Borrowers after due inquiry, threatened between any Loan Party and its
respective employees, other than employee grievances arising in the ordinary
course of business, which could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. Except as set forth
on Schedule 3.16, the Borrower and its Subsidiaries are not subject to any
written employment contract.

                    
3.17 Governmental Regulation. None of the Loan Parties is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940 or to any federal, state or
foreign statute or regulation limiting its ability to incur indebtedness for
borrowed money.

                    
3.18 Currency Controls. There are no controls on payments by any
Governmental Authority which could interfere with payments of obligations under
the Loan Documents.

                    
3.19 Customer and Trade Relations. As of the Closing Date, there exists
no actual or, to the knowledge of any Loan Party, threatened termination or
cancellation of, or any material adverse modification or change in the business
relationship of any Loan Party with any of the material customers or the
business relationship of any Loan Party with any supplier material to its
operations.

                    
3.20 Subordinated Debt. As of the Closing Date, the Borrowers have
delivered to the Administrative Agent a complete and correct copy of the First
Amendment to Securities Purchase Agreement dated as of the date hereof among
Recoton Corporation, The Prudential Insurance Company of America and ING (U.S.)
Capital LLC (including all schedules, exhibits, amendments, supplements,
modifications, assignments and all other documents delivered pursuant thereto or
in connection therewith). The subordination provisions of the 1999 Securities
Purchase Agreement are enforceable against the holders of the Subordinated Debt
by the Administrative Agent and the Lenders. All Obligations constitute senior
Indebtedness entitled to the benefits of the subordination provisions contained
in the 1999 Securities Purchase Agreement. Borrowers acknowledge that the
Administrative Agent and each Lender are entering into this Agreement and are
extending the Commitments in reliance upon the subordination provisions of the
1999 Securities Purchase Agreement and this subsection 3.20.

SECTION 4. CONDITIONS PRECEDENT

          
The agreement of each Lender to make the Loans requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
Loans on the Closing Date, of the following conditions precedent:

	 	          
(i) Senior Loan Agreement Conditions. All conditions set forth in Section
3 of the Senior Loan Agreement shall have been satisfied.

	 	          
(ii) Repayment of Existing Lender Obligations. The obligations under the
LIFO Loan Documents and the Existing Lender Obligations shall have been repaid
in full and all commitments under the LIFO Loan Documents and the Existing
Credit Agreement shall have been terminated.

	 	          
(iii) Loan Documents. The Administrative Agent shall have received each
Loan Document, executed and delivered by a duly authorized officer of the
Borrower or other relevant Loan Party, with a counterpart for each Lender.

	 	          
(iv) Corporate Proceedings of the Loan Parties; Closing Certificate. The
Administrative Agent shall have received, with a counterpart for each Lender, a
copy of the resolutions, in form and substance satisfactory to the
Administrative Agent, of the Board of Directors of the Borrower and each
Subsidiary authorizing (A) the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party and (B) the
performance of all transactions contemplated under the Loan Documents, certified
by the Secretary or an Assistant Secretary of such Loan Party as of the Closing
Date, which certificate shall be (x) in form and substance satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded, and (y) executed by the
President or any Vice President and the Secretary or any Assistant Secretary of
the Borrower and each Subsidiary.

	 	          
(v) Borrower Incumbency Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a Borrowing Certificate, dated the
Closing Date, as to the incumbency and signature of the officers of the Borrower
executing any Loan Document satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of the Borrower.

	 	          
(vi) Fees. The Borrower shall have (A) paid to the Administrative Agent
for the Administrative Agent's own account any fee due to the Administrative
Agent and (B) reimbursed, with respect to invoices received at least one
Business Day prior to the Closing Date, each Lender and the Administrative Agent
for all its reasonable costs and expenses, including without limitation, the
reasonable fees and disbursements of counsel to each Lender and the
Administrative Agent (including the allocated fees and expenses of in-house
counsel) as provided in Section 9.5; provided that with respect to
invoices received on or after the Closing Date, the Borrower shall reimburse the
entity submitting such invoice in accordance with this Agreement as soon as
practicable thereafter.

	 	          
(vii) Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents shall be
true and correct on and as of the Closing Date as if made on and as of such date
except that if they relate to an earlier time shall be true and correct as of
such earlier time.

	 	          
(viii) No Default. No Default or Event of Default shall have occurred and
be continuing on the Closing Date or after giving effect to the extensions of
credit requested to be made on such date.

	 	          
(ix) Legal Opinions. The Administrative Agent shall have received, with a
copy for each Lender, (i) with respect to this Agreement, the executed legal
opinion of Stroock & Stroock & Lavan L.L.P., as counsel to the Borrowers
and the other Loan Parties and (ii) with respect to each Security Document, a
copy of each legal opinion delivered with respect thereto, which legal opinions
shall be delivered for the benefit of the Senior Lenders and the Lenders.

SECTION 5. REPORTING AND OTHER AFFIRMATIVE COVENANTS; FINANCIAL
COVENANTS

          
Borrowers covenant and agree that, so long as any of the Commitments hereunder
shall be in effect and until payment in full of all Obligations, Borrowers shall
perform, and shall cause each of their Subsidiaries to perform, all covenants in
this Section 5.

                    
5.1 Financial Statements and Other Reports. Recoton will deliver to
Administrative Agent the financial statements and other reports contained in the
Reporting Rider attached as Schedule 5.1 hereto.

                    
5.2 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.

                    
5.3 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.

                    
5.4 Use of Proceeds and Margin Security. Borrowers shall use the proceeds
of all Loans for ordinary working capital and general corporate purposes (and as
described in the recitals to this Agreement) consistent with all applicable
laws, statutes, rules and regulations. No portion of the proceeds of any Loan
shall be used by Borrowers or any of their 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.

                    
5.5 Year 2000. Each Borrower 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".
Borrowers have 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
Borrowers are not aware of any circumstances that would be reasonably likely to
result in a material adverse change in the business or financial condition of
any Borrower or any of their Subsidiaries as a result of the failure of
Borrowers or any of their 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,
each Borrower 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.

                    
5.6 Environmental Matters.

                    
(a) 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.

                    
(b) Each Loan Party shall promptly advise the Administrative Agent in writing
and in reasonable detail of (i) 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, (ii) 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; (iii) 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.

                    
(c) Each Loan Party shall promptly notify the Administrative Agent of (i) any
proposed acquisition of stock, assets, or property by such Loan Party that could
reasonably be expected to expose such Loan Party and (ii) 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.

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

                    
5.7 Notices. Promptly give notice to the Administrative Agent and each
Lender of:

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

	 	          
(b) 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 a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action the Borrower proposes to take with
respect thereto.

                    
5.8 Collateral Inspection Rights. Permit employees, representatives
and/or agents of the Administrative Agent, at any time upon the Administrative
Agent's reasonable request, during normal business hours, to enter into the
premises of the Borrower and any of its Subsidiaries to conduct an audit, the
reasonable cost and expense of which will be borne by the Borrower, of the
assets of the Borrower and its Subsidiaries that comprise the Collateral.

                    
5.9 Inspection of Property; Books and Records; Discussions. 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 Lender 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 Borrower and its
Subsidiaries with officers of the Borrower and its Subsidiaries and with its
independent certified public accountants so long as representatives of the
Borrower are given the opportunity to be present.

                    
5.10 Use of Proceeds. Use the proceeds of the Loans only to refinance the
portion of the Existing Lender Obligations that are outstanding on the Closing
Date after the application of the proceeds of the Senior Loan Agreement.

SECTION 6. NEGATIVE COVENANTS

          
Borrowers covenant and agree that so long as any of the Commitments remain in
effect and until indefeasible payment in full of all Obligations and termination
of all Lender Letters of Credit, each Borrower shall not and will not permit any
of its Subsidiaries to:

                    
6.1 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:

	 	          
(a) the Obligations;

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

	 	          
(c) 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;

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

	 	          
(e) (i) Indebtedness of any Loan Party to any other Loan Party; (ii)
Indebtedness of any Foreign Subsidiary to any Loan Party to the extent permitted
under subsection 6.4(f); (iii) Indebtedness of any Foreign Subsidiary to any
other Foreign Subsidiary; (iv) Indebtedness of any Loan Party to any Foreign
Subsidiary; provided, however, that (1) any intercompany
Indebtedness of any Loan Party permitted under this subsection 6.1(e) shall be
subordinated in right of payment to the Obligations on terms satisfactory to the
Senior Agent and evidenced by intercompany notes in form and substance
satisfactory to the Administrative Agent, (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, Administrative Agent and the Lenders, (3) at the time any intercompany
Indebtedness is incurred by any Loan Party pursuant to this subsection 6.1(e),
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 intercompany Indebtedness pursuant to this subsection
6.1(e).

	 	          
(f) 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;

	 	          
(g) the Subordinated Debt;

	 	          
(h) Indebtedness under the German Facility; provided, that the terms of
the Indebtedness permitted under this subsection 6.1(h) can not be amended,
increased, replaced or terminated without the prior written consent of the
Required Lenders;

	 	          
(i) Indebtedness existing on the Closing Date and identified on Schedule 6.1;

	 	          
(j) 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 set forth in subsection
2.5, (2) shall be subordinate to the Obligations; (3) the terms and conditions
shall be satisfactory to the Administrative Agent and the Required Lenders and
(4) the documentation shall be satisfactory to the Administrative Agent and the
Required Lenders;

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

	 	          
(l) Indebtedness with respect to the obligations of Recoton Italy and Recoton UK
referred to in subsection 6.2(e) and (f);

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

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

          
Borrowers will not, and will not permit any of their 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 the prior existing practices of the Borrowers.

                    
6.2 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:

	 	          
(a) endorsements of instruments or items of payment for collection in the
ordinary course of business;

	 	          
(b) guaranties in existence on the date hereof and listed on Schedule 6.2;
provided, that any such guaranty of the Subordinated Debt is
subordinated to the Obligations in a manner satisfactory to the Administrative
Agent;

	 	          
(c) guaranties pursuant to this Agreement or the Senior Loan Documents;

	 	          
(d) guaranties of the Indebtedness permitted under subsections 6.1 (b), (c) and
(d);

	 	          
(e) 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 Loan Parties;

	 	          
(f) 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 Loan Parties; and

	 	          
(g) guaranties made in the ordinary course of business by (i) a Loan Party with
respect to obligations of another Loan Party and (ii) 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

	 	          
(h) The guaranty made by Recoton of the obligation incurred by Recoton Germany
under the German Facility.

                    
6.3 Transfers, Liens and Related MattersTransfers. Sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to any of the Collateral or the assets of such Person, except that
Borrowers and their Subsidiaries may (i) sell or otherwise dispose of Inventory
in the ordinary course of business; (ii) sell, transfer or discount without
recourse, in the ordinary course of business, accounts receivables arising in
the ordinary course of business in connection with the compromise or collection
thereof or in connection with the receipt of proceeds under credit insurance;
provided, that such proceeds are applied to prepay the Senior Debt in
accordance with its terms or as otherwise provided in Section 2.5; (iii) sell or
otherwise dispose of worn out, obsolete or surplus equipment and fixtures, so
long as the Net Proceeds are applied to the prepayment of the Senior Debt in
accordance with its terms or as otherwise provided in Section 2.5; (iv) subject
to the provisions of the Security Documents, transfer, sell or assign Collateral
or other assets to another Loan Party (including in connection with the
dissolution, liquidation or winding up of any Subsidiary set forth on Schedule
6.6); (v) make other Asset Dispositions if all of the following conditions are
met: (1) the market value of assets sold or otherwise disposed of in one or a
series of related transactions does not exceed $250,000 and the aggregate market
value of assets sold or otherwise disposed of in any Fiscal Year does not exceed
$1,000,000; (2) the consideration received is at least equal to the fair market
value of such assets; (3) the sole consideration received is cash;
provided, that trade-ins for which the cash value of such trade-in is
applied against the purchase price of new equipment so purchased shall be deemed
to be cash; (4) the Net Proceeds of such Asset Disposition are applied to the
prepayment of Senior Debt in accordance with its terms or as otherwise provided
in Section 2.5; (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, each Borrower is in compliance on a pro forma basis
with the covenants set forth in the Financial Covenants Rider (as defined in the
Senior Loan Agreement on the date hereof) 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
(vii) 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) subject to the
provisions of the Security Documents any Subsidiary can sell stock to its parent
to the extent permitted by subsection 6.4(c), (g), (h) and (i).

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

                    
(c) No Negative Pledges. Enter into or assume any agreement (other than
the Loan Documents, the Notes under the 1999 Securities Purchase Agreement or
the Senior Loan Documents) prohibiting the creation or assumption of any Lien
upon its properties or assets, whether now owned or hereafter acquired.

                    
(d) No Restrictions on Subsidiary Distributions to Borrowers. Except as
provided herein (or in the Senior Loan Documents or the 1999 Securities Purchase
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 a Borrower or any Subsidiary of a Borrower; (2) pay any indebtedness
owed to a Borrower or any other Subsidiary; (3) make loans or advances to a
Borrower or any other Subsidiary; or (4) transfer any of its property or assets
to a Borrower or any other Subsidiary.

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

	 	          
(a) Borrowers 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;

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

	 	          
(c) Borrowers and their Subsidiaries may (i) continue loans made to employees
and former employees as set forth in Schedule 6.4(c) which loans, after the
Closing Date, may not be increased or reborrowed, (ii) 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) the
Borrowers and their 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;

	 	          
(d) Borrowers and their Subsidiaries may make and maintain extensions of trade
credit in the ordinary course of business;

	 	          
(e) Borrowers and their Subsidiaries may make and maintain Investments existing
as of the Closing Date in their respective Subsidiaries as set forth in Schedule
6.4(e);

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

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

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

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

	 	          
(g) each Loan Party may make and maintain additional equity Investments in their
respective Subsidiaries which are Loan Parties;

	 	          
(h) Borrowers and their Subsidiaries may make additional equity Investments in
existing and new Subsidiaries in connection with the STD Restructuring to the
extent permitted under subsection 6.11;

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

	 	          
(j) Borrowers and their Subsidiaries may make intercompany loans to the extent
permitted pursuant to subsection 6.1(e);

	 	          
(k) Borrowers and their 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; and

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

                    
6.5 Restricted Junior Payments. Directly or indirectly declare, order,
pay, make or set apart any sum for any Restricted Junior Payment, except that:
(i) Subsidiaries of any Borrower 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 Obligations; (ii) 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 (1) provided that, 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 and
(2) Borrowers may make regularly scheduled interest payments on the Subordinated
Debt. 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.

                    
(a) 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:

                    
(1) 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;

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

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

                    
6.6 Restriction on Fundamental Changes. (a) Enter into any transaction of
merger, amalgamation or consolidation (other than a merger, amalgamation or
consolidation among Loan Parties); (b) other than the Subsidiaries set forth in
Schedule 6.6, liquidate, wind-up or dissolve itself (or suffer any liquidation
or dissolution); (c) convey, sell, lease, sublease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its business or assets, 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 6.11 or the liquidation, winding up or dissolution of the Subsidiaries
set forth on Schedule 6.6; provided, that, in connection with the
transfer of assets or creation of Subsidiaries in connection with the
transactions described on Schedule 6.11, Agents shall have received, with a copy
for the Administrative Agent and the Lenders, (1) such amendments and
counterparts to the Security Documents, Guaranties and the other Loan Documents
as may be requested by Agents to bind newly created Subsidiaries or existing
Subsidiaries to the terms of this Agreement and Related Agreements and other
applicable Loan Documents, (2) copies of organizational documents, resolutions
and incumbency certificates of any Persons executing any of the foregoing
amendments or counterparts, and such other documents and instruments in
connection therewith as may be reasonably requested by Senior Agent, and (3) a
favorable opinion of counsel to Loan Parties as to due authorization, execution,
and delivery of such amendments or counterparts, the enforceability thereof and
such other matters as may be reasonably requested by Agents (including as to the
creation and perfection of Liens pursuant to the Security Documents), all of the
foregoing in form and substance reasonably satisfactory to Agents; or (d)
acquire by purchase or otherwise all or any substantial part of the business or
assets of, or stock or other beneficial ownership of, any Person; provided,
however, that any Subsidiary may be merged, amalgamated or consolidated with or
into a Borrower (provided that such Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned Subsidiaries
of the Borrowers that are Guarantors (provided that the wholly owned Subsidiary
or Subsidiaries that are Guarantors shall be the continuing or surviving
corporations). It is understood and agreed that the InterAct International IPO
shall be permitted if the following conditions are met:

	 	          
(i) 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 subsection 2.4(B)(6) of the Senior Loan Agreement;

	 	          
(ii) Borrowers 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 date hereof) after giving effect to
the InterAct International IPO; and

	 	          
(iii) upon the indefeasible 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 and the Collateral with respect to
InterAct International shall be released.

                    
6.7 Changes Relating to Subordinated Debt. Change or amend the terms of
the Subordinated Debt (including any guaranties thereof) if the effect of such
amendment is an attempt to: (a) increase the interest rate on such Indebtedness;
(b) change the dates upon which payments of principal or interest are due on
such Indebtedness; (c) change any event of default or add any covenant with
respect to such Indebtedness; (d) change the payment or amendment and
modification provisions of such Indebtedness; (e) change the subordination
provisions thereof; or (f) 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 Borrowers, any of their Subsidiaries, the Administrative Agent or any
Lender.

                    
6.8 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 a Borrower's business and upon fair and reasonable terms and
except for the transactions set forth in subsection 6.4(c) on terms which are no
less favorable to such Borrower than it would obtain in a comparable arm's
length transaction with an unaffiliated Person.

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

                    
6.10 Tax Consolidations. File or consent to the filing of any
consolidated income tax return with any Person other than any other Borrowers or
any of their Subsidiaries, or any Guarantor, provided that in the event a
Borrower files a consolidated return with any such Person, such Borrower'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 such Borrower not filed a consolidated return with
such Person.

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

                    
6.12 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 Code.

                    
6.13 Press Release; Public Offering Materials. Without the prior written
consent of the applicable party, such consent not to be unreasonably withheld or
delayed, disclose the name of the Agent or any Lender in any press release or in
any prospectus, proxy statement or other materials filed with any governmental
entity relating to a public offering of the capital stock or other equity
interest of any Loan Party except as may be required by law or regulators of
applicable self regulatory organizations.

                    
6.14 Sale-Leasebacks. No Loan Party shall engage in any sale-leaseback,
synthetic lease or similar transaction involving any of its assets.

                    
6.15 Inactive Subsidiaries. Each of the Inactive Subsidiaries (as defined
in the Senior Loan Agreement as of the date hereof) shall not 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.

                    
6.16 Parity with Senior Lender. No Loan Party shall grant any security
interest in property or 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 Senior Agent on
behalf of the Lenders (as subordinated creditors) to secure payment and
performance of the Obligations hereunder.

SECTION 7. DEFAULT, RIGHTS AND REMEDIES

                    
7.1 Event of Default. "Event of Default" shall mean the occurrence or
existence of any one or more of the following:

                    
(a) Payment. Failure to make payment of the principal of or interest on
any Loan, or failure to pay any other Obligation pursuant to this Agreement
within five days after such amount becomes due in accordance with this
Agreement; or

                    
(b) Default in Other Agreements. (1) Failure of Borrowers or any of their
Subsidiaries to pay when due any principal or interest on any Indebtedness
(other than the Obligations) or (2) breach or default of Borrowers or any of
their Subsidiaries with respect to any Indebtedness (other than the
Obligations); 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

                    
(c) Breach of Certain Provisions. Failure of any Borrower to perform or
comply with any term or condition contained in paragraphs (A), (B), (C) and (K)
of Schedule 5.1 or subsection 5.2 or contained in Section 3 or Section 6; or

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

                    
(e) Other Defaults Under Loan Documents. Any Loan Party defaults in the
performance of or compliance with any term contained in this Agreement or the
other Loan Documents and such default is not remedied or waived within 15 days
after receipt by such Loan Party of notice from Administrative Agent, or
Required Lenders, of such default (other than occurrences described in other
provisions of this subsection 7.1, 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

                    
(f) Change in Control. (i) 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, (ii) the Board of directors of Recoton shall not consist of a
majority of Continuing Directors ("Continuing Directors" means the directors of
Recoton on the date of this Agreement 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), (iii) Recoton ceases to
own, directly or indirectly, 100% of the other Borrowers, ReCone or Recoton
Canada other than with respect to options to acquire InterAct International
stock and (iv) Robert L. Borchardt or any trust established by him shall cease
to beneficially own and control 4% of the outstanding capital stock of
Recoton.

                    
(g) 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, arrangement, 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

                    
(h) 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; (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 7.1(h); 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

                    
(i) Liens. Any lien, levy or assessment is filed or recorded with respect to or
otherwise imposed upon all or any part of the Collateral or the 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

                    
(j) 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

                    
(k) 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 split up or
winding up; or

                    
(l) 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

                    
(m) 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
Borrowers' and their Subsidiaries, on a consolidated basis, and such order
continues for 30 days or more; or

                    
(n) Invalidity of Loan Documents. Any of the Loan Documents 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 under any Loan
Documents to which it is party, or gives notice to such effect; or

                    
(o) Failure of Security. Senior Agent, on behalf of Agents, Senior
Lenders, the Administrative Agent and the Lenders, does not have or ceases to
have a valid and perfected first priority security interest in the Collateral
(other than in de minimis amounts and subject to Permitted
Encumbrances), in each case, for any reason other than the failure of Senior
Agent or any Senior Lender to take any action within its control; or

                    
(p) Damage, Strike, Casualty. Any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or 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.

                    
(q) Licenses and Permits. The loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by any
Borrower 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.

                    
(r) Forfeiture. There is filed against any Loan Party or any of its
Subsidiaries any civil or criminal action, suit or proceeding under any federal
or state racketeering statute (including, without limitation, the Racketeer
Influenced and Corrupt Organization Act of 1970), which action, suit or
proceeding (1) is not dismissed within 120 days; and (2) could reasonably be
expected to result in the confiscation or forfeiture of any material portion of
the Collateral; or.

                    
(s) Currency Controls. There are controls on payments imposed by a
Governmental Authority which interfere with the payment of obligations under the
Loan Documents; or

                    
(t) 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

                    
(u) Default Under German Facility. There shall occurred a default under
the loan documents evidencing the German Facility and to the extent a cure
period is provided under such documents with respect to such default, such
default shall continue unremedied for such period of time during which cure of
such default is permitted thereunder; or

                    
(v) Recoton Germany. Recoton Germany shall have failed to comply with the
terms of subsection 5.12 of the Senior Loan Agreement; or

                    
(w) 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

                    
(x) Foreign Exchange. There occurs a fluctuation in the foreign exchange
affecting the Deutsche Mark which results in the aggregate amount of commitments
outstanding under the German Facility and the Senior Loan Documents and the
aggregate amounts outstanding hereunder to exceed $275,000,000; or

                    
(y) Resignation of Borrowers' Accountants. The Borrowers' Accountants (as
defined in the Senior Loan Agreement on the date hereof) shall resign because of
impropriety or irregularity in the conduct of the Loan Parties or their
Subsidiaries.

                    
(z) Income Tax Act. A requirement from the Minister of National Revenue
for payment pursuant to Section 224 or any successor section of the Income Tax
Act (Canada) or Section 317, or any successor section of the Excise Tax Act
(Canada) or any comparable provision or similar legislation shall have been
received by any Agent or any Senior Lender or any other Person in respect of any
Borrower or its Subsidiaries or otherwise issued in respect of any Borrower or
any of its Subsidiaries.

Then, (1) upon the occurrence of any Event of Default described in the
foregoing paragraphs (g) and (h), all Obligations shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Borrowers and (2) upon the occurrence and during the continuance of any other
Event of Default, subject to the terms of the Subordination Agreement, and with
the consent of the Required Lenders the Administrative Agent may, and upon the
request of the Required Lenders the Administrative Agent shall, by notice to the
Borrowers, declare all or any portion of the Obligations to be, and the same
shall forthwith become, immediately due and payable.

                    
7.2 Application of Payments and Proceeds. Upon the occurrence and during
the continuance of an Event of Default, the Administrative Agent shall apply any
payments or proceeds received by it pursuant to Section 2.7 of the Subordination
Agreement as follows:

                    
first, to the payment in full of all unpaid fees and expenses of the
Administrative Agent incurred in connection with the enforcement of the
Administrative Agent's and the Lenders' rights hereunder;

                    
second, to the payment in full of all Obligations relating to the Tranche
A Loans, including principal and accrued but unpaid interest with respect to the
Tranche A Loans, and if such moneys shall be insufficient to pay such amounts in
full, then ratably (without priority of any one over the other) to the holders
of such Tranche A Loans in proportion to the unpaid amounts thereof;

                    
third, to the payment in full of all Obligations relating to the Tranche
B Loans, including principal and accrued but unpaid interest with respect to the
Tranche B Loans, and if such moneys shall be insufficient to pay such amounts in
full, then ratably (without priority of any one over the other) to the holders
of such Tranche B Loans in proportion to the unpaid amounts thereof;

                    
fourth, to pay to the Borrowers or the applicable Loan Party, or their
respective representatives as a court of competent jurisdiction may direct, any
surplus remaining.

SECTION 8. THE ADMINISTRATIVE AGENT

                    
8.1 Appointment. Each Lender hereby irrevocably designates and appoints
the Administrative Agent as the agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall have no duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.

                    
8.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.

                    
8.3 Exculpatory Provisions. Neither the Administrative Agent nor any of
its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.

                    
8.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any instrument,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Loan Parties), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.

                    
8.5 Notice of Default; Notices Under Subordination Agreement. The
Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or any Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative Agent
receives such a notice the Administrative Agent shall give notice thereof to the
Lenders. The Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders (or, if so specified by this Agreement, all Lenders); provided
that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.

                    
(b) The Administrative Agent shall promptly deliver to the Lenders any notice
that it receives pursuant to the Subordination Agreement.

                    
8.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Administrative Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
the Administrative Agent hereinafter taken, including any review of the affairs
of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute
any representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.

                    
8.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not reimbursed by the Borrowers and
without limiting the obligation of the Borrowers to do so), ratably according to
their respective Commitments in effect on the date on which indemnification is
sought (or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Loans shall have been paid in full,
ratably in accordance with such Commitments immediately prior to such date),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements which are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from the Administrative Agent's gross negligence or willful misconduct. The
agreements in this Section 8.7 shall survive the payment of the Loans and all
other amounts payable hereunder. The Administrative Agent shall have the right
to deduct any amount owed to it by any Lender under this Section 8.7 from any
payment made by it to such Lender hereunder.

                    
8.8 Administrative Agent in Its Individual Capacity. The Administrative
Agent and its affiliates may make loans to, accept deposits from and generally
engage in any kind of business with any Loan Party as though the Administrative
Agent was not the Administrative Agent. With respect to its Loans made or
renewed by it, the Administrative Agent shall have the same rights and powers
under this Agreement and the other Loan Documents as any Lender and may exercise
the same as though it were not the Administrative Agent, and the terms "Lender"
and "Lenders" shall include the Administrative Agent in its individual
capacity.

                    
8.9 Successor Administrative Agent. The Administrative Agent may resign
as Administrative Agent upon 30 days' notice to the Lenders and the Borrowers.
If the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. If no successor agent has accepted appointment as
Administrative Agent by the date that is 30 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective, and the
Lenders shall assume and perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. After the Administrative Agent's resignation as the
Administrative Agent, the provisions of this Section 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Agent under this Agreement and the other Loan Documents.

SECTION 9. MISCELLANEOUS

                    
9.1 Amendments and Waivers. Neither this Agreement, any other Loan
Document (other than the Subordination Agreement, which shall be governed by the
terms thereof), nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 9.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may, or
(with the written consent of the Required Lenders) the Administrative Agent and
each Loan Party party to the relevant Loan Document may, from time to time, (a)
enter into written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lenders
or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders, or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend the
scheduled or final date of maturity of any Loan, extend any scheduled date of
payment or reduce the stated rate of any interest payable hereunder, increase
the amount or extend the expiration date of any Lender's Commitment, modify the
provisions of Section 2.8 with regard to the pro-rata treatment of Lenders or
modify Section 3.1 of the Subordination Agreement in each case without the
consent of each Lender directly affected thereby; (ii) amend, modify or waive
any provision of this Section 9.1, or reduce any percentage specified in the
definition of Required Lenders, consent to the release of all or substantially
all of the Collateral, or consent to the assignment or transfer by the Borrower
of any of its rights and obligations under this Agreement and the other Loan
Documents, in each case without the written consent of all Lenders; or (iii)
amend, modify or waive any provision of Section 8 without the written consent of
the Administrative Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Loan Parties, the Lenders, the Administrative Agent and all future
holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders
and the Administrative Agent shall be restored to their former position and
rights hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.

             
       
(a) Notwithstanding anything to the contrary set forth in this Agreement:

             
       
(1)  Any amendment, supplement, modification, consent or waiver in respect of
the observance or performance of the covenants set forth Sections 5, 6 and 7 of
the Senior Loan Agreement shall be binding on each of the parties hereto and
shall be deemed an amendment, supplement, modification, consent or waiver of or
the corresponding provision of to this Agreement 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.

             
       
(2)      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 of
Section 7.1 hereof, and shall be binding on each of the parties hereto and shall be deemed an
amendment, supplement, modification, consent or waiver of or to this Agreement 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, provided that no such waiver shall be effective to
waive a Default or Event of Default in pursuant to Section 7.1(a) hereof without the written
consent of each Lender.

                    
(3)      Upon the occurrence of a Permitted Refinancing (as defined in the
Subordination Agreement) the covenants and Events of Default set forth herein shall be modified in
a manner consistent with any covenants and events of default contained in any agreement providing
for such refinancing.

                    
9.2  Notices.  All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile transmission) and,
unless otherwise expressly provided herein, shall be deemed to have been duly given or made (a) in
the case of delivery by hand, when delivered, (b) in the case of delivery by registered or
certified mail, five days (or ten days, in the case of mailings between locations inside and
outside of the United States) after being deposited in the mails, postage prepaid (airmail, in the
case of mailings between locations inside and outside of the United States), or (c) in the case of
delivery by facsimile transmission, when sent and receipt has been confirmed, addressed as follows
in the case of the Borrower and the Administrative Agent, and as set forth in Schedule 9.2 in the
case of the other parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto:

	  
	The Borrower:
	Recoton Corporation

2950 Lake Emma Road

Lake Mary, Florida  32746

Attention: Arnold Kezsbom

Fax: 407-444-0559

With a copy to:

Stroock & Stroock & Lavan LLP

180 Maiden Lane

New York, New York  10038

Fax:  212-806-6006

Attn:  Theodore S. Lynn, Esq.

	  
	The Administrative

   Agent:

	
The Chase Manhattan Bank

241-02 Northern Boulevard, 3rd Floor

Douglaston, New York  11362

Attention: Recoton Account Officer

Fax: 718-279-8326

with a copy to:

Mr. Roger Odell

The Chase Manhattan Bank

380 Madison Avenue, 9th Floor

New York, New York  10017

	  
	with a copy to:
	
HELLER FINANCIAL, INC.

500 West Monroe

Chicago, Illinois,  60661

Attn: Account Manager -  Heller Corporate

Finance - Recoton Corporation

Fax/Telecopy No.:  (312) 441-7367

provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.

                    
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of either the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

                    
9.4  Survival of Representations and Warranties.  All representations and
warranties made hereunder, in the other Loan Documents and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the making of the Loans hereunder.

                    
9.5  Payment of Expenses.  The Borrower and each other Loan Party agree (a) to
pay or reimburse each of the Administrative Agent and each Lender for all their reasonable
out-of-pocket costs and expenses incurred in connection with the development, preparation and
execution of  this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, including, without limitation, the reasonable fees and
disbursements of professionals to the Administrative Agent or counsel to any such Lender, (b) to
pay or reimburse the Administrative Agent, The Prudential Insurance Company of America and John
Hancock Life Insurance Company for all their reasonable out of pocket costs and expenses incurred
in connection with the development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement, the other Loan Documents and any other documents prepared in
connection therewith, and the consummation and administration of the transactions contemplated
hereby and thereby, including, without limitation, the reasonable fees and disbursements of
professionals to the Administrative Agent and counsel to The Prudential Insurance Company of
America and John Hancock Life Insurance Company, (c) to pay or reimburse the Administrative Agent
and each Lender for all their reasonable costs and expenses incurred in connection with the
enforcement or preservation, whether in a bankruptcy or insolvency proceeding or otherwise, of any
rights under this Agreement, the other Loan Documents and any such other documents including,
without limitation, the reasonable fees and disbursements of counsel (including the allocated fees
and expenses of in-house counsel) to the Administrative Agent and each Lender, (d) to pay,
indemnify, and hold the Administrative Agent and each Lender harmless from, any and all recording
and filing fees and any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Agreement, the other Loan Documents and any such other
documents, and (e) to pay, indemnify, and hold the Administrative Agent and each Lender, their
respective officers, directors, employees, affiliates, agents and controlling persons (each, an
"indemnitee") harmless from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and administration of
this Agreement, the other Loan Documents and any such other documents, including any of the
foregoing relating to the violation of, noncompliance with or liability under, any environmental
law applicable to the operations or properties of the Borrower, any of its Subsidiaries, all the
foregoing in this clause (e), collectively, the "indemnified liabilities"), provided, that the
Borrower shall have no obligation hereunder to any indemnitee with respect to indemnified
liabilities to the extent such indemnified liabilities result from the gross negligence or willful
misconduct of such indemnitee.  The agreements in this subsection shall survive repayment of the
Obligations and all other amounts payable under the Loan Documents.

                    
9.6  Successors and Assigns; Participations and Assignments.  This Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Administrative Agent, all future holders of the Loans and their respective successors
and assigns, except that the Borrower may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of the Administrative Agent and each Lender.

                    
(a) Any Lender may, without the consent of the Borrower, in accordance with
applicable law, at any time sell to one or more banks, financial institutions or
other entities (each, a "Participant") participating interests in any Loan owing
to such Lender, any Commitment of such Lender or any other interest
of such Lender hereunder and under the other Loan Documents. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Administrative Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. In no event shall any Participant under
any such participation have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Loans or any fees payable
hereunder, or postpone the date of the final maturity of the Loans, in each case
to the extent subject to such participation. The Borrower agrees that if amounts
outstanding under this Agreement and the Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement, provided that, in purchasing such
participating interest, such Participant shall be deemed to have agreed to share
with the Lenders the proceeds thereof as provided in Section 9.7(a) as fully as
if it were a Lender hereunder. The Borrower also agrees that each Participant
shall be entitled to the benefits of Sections 2.8 and 2.9 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it was a Lender; provided that, in the case of Section 2.9, such
Participant shall have complied with the requirements of said Section and
provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such Section than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.

                    
(b) Any Lender (an "Assignor") may, in accordance with applicable law, at any
time and from time to time assign to any Lender or any affiliate thereof or,
with the consent of the Administrative Agent (which shall not be unreasonably
withheld or delayed), to an additional bank, financial institution or other
entity (an "Assignee") all or any part of its rights and obligations
under this Agreement pursuant to an Assignment and Acceptance, substantially in
the form of Exhibit A, executed by such Assignee, such Assignor and the
Administrative Agent and delivered to the Administrative Agent for its
acceptance and recording in the Register; provided that the
Administrative Agent's consent shall not be required with respect to assignments
made by any Lender that is an insurance company; and provided, further, that,
unless otherwise agreed by the Administrative Agent, no such
assignment (other than to an Assignee that is a Lender or any affiliate thereof
or an assignment of all of an Assignor's interests under this Agreement) shall
(i) be in an aggregate principal amount of less than $1,000,000 or (ii) result
in such Assignor's aggregate Loans then outstanding being less than $1,000,000.
Upon such execution, delivery, acceptance and recording, from and after the
effective date determined pursuant to such Assignment and Acceptance, (x) the
Assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment and/or Loans as set forth therein, and (y) the Assignor
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto).

                    
(c) The Administrative Agent shall maintain at its address referred to in
Section 9.2 a copy of each Assignment and Acceptance delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Loans owing to, each
Lender from time to time and any Notes evidencing such Loans. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders shall treat each Person whose
name is recorded in the Register as the owner of the Loan and any Note
evidencing such Loan recorded therein for all purposes of this Agreement. Any
assignment of any Loan whether or not evidenced by a Note shall be effective
only upon appropriate entries with respect thereto being made in the Register
(and each Note shall expressly so provide). Any assignment or transfer of all or
part of a Loan evidenced by a Note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Note evidencing such
Loan, accompanied by a duly executed Assignment and Acceptance, and thereupon
one or more new Notes in the same aggregate principal amount shall be issued to
the designated Assignee and the old Notes shall be returned by the
Administrative Agent to the Borrower marked "cancelled". The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.

                    
(d) Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and an Assignee (and, in the case of an Assignee that is not then a
Lender or an affiliate thereof or a Person under common management with such
Lender, by the Borrower, the Administrative Agent and the Issuing Lender)
together with payment to the Administrative Agent of a registration and
processing fee of $3,500 by the Assignee (except that no such registration and
processing fee shall be payable in the case of an Assignee which is already a
Lender or is an affiliate of a Lender or a Person under common management with a
Lender), the Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Lenders and the Borrower. On or prior to such effective
date, the Borrower, at its own expense, upon request, shall execute and deliver
to the Administrative Agent (in exchange for the Note of the assigning Lender) a
new Note to the order of such Assignee in an amount equal to the Commitment
and/or applicable Loans, as the case may be, assumed or acquired by it pursuant
to such Assignment and Acceptance and, if the assigning Lender has retained a
Commitment and/or Loans, as the case may be, upon request, a new Note to the
order of the assigning Lender in an amount equal to the Commitment and/or
applicable Loans, as the case may be, retained by it hereunder. Such new Notes
shall be dated the Closing Date and shall otherwise be in the form of the Note
replaced thereby.

                    
(e) For avoidance of doubt, the parties to this Agreement acknowledge that the
provisions of this Section concerning assignments of Loans and Notes relate only
to absolute assignments and that such provisions do not prohibit assignments
creating security interests, including, without limitation, any pledge or
assignment by a Lender of any Loan or Note to any Federal Reserve Bank in
accordance with applicable law.

                    
9.7 Adjustments; Set-off. Subject to the terms of the Subordination
Agreement, if any Lender (a "Benefitted Lender") shall at any time
receive any payment of all or part of its Loans owing to it, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 7.1(g) or (h), or otherwise), in a greater
proportion than any such payment to or collateral received by any other Lender,
if any, in respect of such other Lender's Loans owing to such other Lender, or
interest thereon, such Benefitted Lender shall purchase for cash from the other
Lenders a participating interest in such portion of each such other Lender's
Loan owing to each such other Lender, or shall provide such other Lenders with
the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such Benefitted Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest.

                    
(a) In addition to any rights and remedies of the Lenders provided by law and,
subject to the terms of the Subordination Agreement, each Lender shall have the
right, without prior notice to the Borrower, any such notice being expressly
waived by the Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the
Borrower. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such setoff and application made by such Lender,
provided that the failure to give such notice shall not affect the
validity of such setoff and application.

                    
9.8 Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.

                    
9.9 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

                    
9.10 Integration. This Agreement and the other Loan Documents represent the
agreement of the Borrower, the Administrative Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender relative
to subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.

                    
9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

                    
9.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably and
unconditionally:

	 	        (a)
submits for itself and its Property in any legal action or proceeding relating
to this Agreement and the other Loan Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern District of
New York, and appellate courts from any thereof;

	 	        (b)
consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any such
action or proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the same;

	 	        (c)
agrees that service of process in any such action or proceeding may be effected
by mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to the Borrower at its address set forth
in Section 9.2 or at such other address of which the Administrative Agent
shall have been notified pursuant thereto;

	 	        (d)
agrees that nothing herein shall affect the right to effect service of process
in any other manner permitted by law or shall limit the right to sue in any
other jurisdiction; and

	 	        (e)
waives, to the maximum extent not prohibited by law, any right it may have to
claim or recover in any legal action or proceeding referred to in this Section
9.12 any special, exemplary, punitive or consequential damages.

                    
9.13 Acknowledgements. The Borrower hereby acknowledges that:

	 	        
(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents;

	 	        (b)
neither the Administrative Agent nor any Lender has any fiduciary relationship
with or duty to the Borrower arising out of or in connection with this Agreement
or any of the other Loan Documents, and the relationship between Administrative
Agent and Lenders, on one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and

	 	        (c)
no joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Lenders or
among the Borrower and the Lenders.

                    
9.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

                    
9.15 Confidentiality. The Administrative Agent and each Lender agrees to
keep confidential all non-public information provided to it by any Loan Party
pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent the
Administrative Agent or any Lender from disclosing any such information (a) to
the Administrative Agent, any other Lender or any affiliate of any Lender, (b)
to any Participant or Assignee (each, a "Transferee") or prospective
Transferee which agrees to comply with the provisions of this Section, (c) to
the employees, directors, agents, attorneys, accountants and other professional
advisors of such Lender or its affiliates, (d) upon the request or demand of any
Governmental Authority having jurisdiction over the Administrative Agent or such
Lender, (e) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law,
(f) if requested or required to do so in connection with any litigation or
similar proceeding, (g) which has been publicly disclosed other than in breach
of this Section 9.15, (h) to the National Association of Insurance Commissioners
or any similar organization or any nationally recognized rating agency that
requires access to information about a Lender's investment portfolio in
connection with ratings issued with respect to such Lender, or (i) in connection
with the exercise of any remedy hereunder or under any other Loan Document.

                    
9.16 Joint and Several Obligations. Notwithstanding anything to the contrary
contained herein or in any other Loan Documents, the Borrower and the Guarantors
are jointly and severally responsible for their respective agreements,
covenants, representations, warranties and obligations contained and set forth
in this Agreement or in any other Loan Document to which they are a party.

                    
9.17 Legend. This instrument and the rights and obligations evidenced hereby are
subordinate in the manner and the extent set forth in that certain Subordination
and Intercreditor Agreement (the "Subordination Agreement") dated as of October
31, 2000 among the parties set forth in the signature pages under the name
"Subordinated Creditors, 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 collectively
referred to, as "Borrowers"), CHRISTIE DESIGN CORPORATION, Delaware corporation
("CDC"), RECOTON INTERNATIONAL HOLDINGS, INC., a Delaware corporation ("RHI"),
RECOTON EUROPEAN HOLDINGS, INC., a Delaware corporation ("REH"), RECONE, INC., a
Delaware corporation (RECONE) and RECOTON JAPAN INC., RECONE, INC., a Delaware
corporation (RECONE) and RECOTON JAPAN INC., and Illinois corporation (JAPAN);
(CDC, RHI, REH, RECONE and JAPAN are collectively referred to , as Guarantors";
the Borrowers and the Guarantors are collectively, as Loan Parties"); and HELLER
FINANCIAL, INC., a Delaware corporation, as Senior Agent and as Administrative
Agent, to the indebtedness (including interest) owed by the Loan Parties
pursuant to that certain Loan Agreement dated as of the date hereof among the
Loan Parties, Administrative Agent and General Electric Capital Corporation, as
Collateral Agent, and the lenders from time to time party thereto, as such Loan
Agreement has been and hereafter may be amended, supplemented or otherwise
modified from time to time and to indebtedness refinancing the indebtedness
under that agreement as contemplated by the Subordination Agreement; and each
holder of this instrument, by its acceptance hereof, irrevocably agrees to be
bound by the provisions of the Subordination Agreement.

                    
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

        IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the day and year
first above written. 

	 	RECOTON CORPORATION

INTERACT ACCESSORIES, INC.

RECOTON HOME AUDIO, INC.

RECOTON AUDIO CORPORATION

AAMP OF FLORIDA, INC., each of the foregoing as a Borrower

By:  /s/ Arnold Kezsbom         
          
          
          

      Name: Arnold Kezsbom

      Title: Senior Vice President--Finance of

                Recoton Corporation and Vice President

                of all other Borrowers 

	 	CHRISTIE DESIGN CORPORATION

RECOTON INTERNATIONAL HOLDINGS, INC.

RECOTON EUROPEAN HOLDINGS, INC.

RECOTON JAPAN, INC.

RECOTON CANADA, LTD.

RECONE, INC., each of the foregoing in its capacity as Guarantor

By:  /s/ Arnold Kezsbom         
          
          
          

          Name: Arnold Kezsbom

          Title: Vice President 

	 	THE CHASE MANHATTAN BANK,

as Administrative Agent and a Lender

By:  /s/ R. A. Odell         
          
          
          

          Name: R. A. Odell

          Title: Managing Director

	 	HARRIS TRUST AND SAVINGS BANK,

as a Lender

By:  /s/ Janet Maxwell-Wickett         
          
          
          

          Name: Janet Maxwell-Wickett

          Title: Vice President

	 	HSBC BANK U.S.A. (formerly known as MARINE MIDLAND
BANK), as a Lender

By:  /s/ Joseph E. Salonia         
          
          
          

          Name: Joseph E. Salonia

          Title: Vice President

	 	FIRST UNION NATIONAL BANK,

as a Lender

By:  /s/ James R. Connors         
          
          
          

          Name: James R. Connors

          Title: Senior Vice President

	 	THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, as a Lender

By:  /s/ Gwendolyn S. Foster         
          
          
          

          Name: Gwendolyn S. Foster

          Title: Vice President

	 	JOHN HANCOCK LIFE INSURANCE COMPANY, as a Lender

By:  /s/ Marlene J. DeLeon         
          
          
          

          Name: Marlene J. DeLeon

          Title: Director

	 	JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY, as a Lender

By:  /s/ Marlene J. DeLeon         
          
          
          

          Name: Marlene J. DeLeon

          Title: Authorized Signatory

	 	MELLON BANK, N.A., AS TRUSTEE FOR THE LONG-TERM INVESTMENT TRUST, solely in its
capacity as Trustee and not in its individual capacity (as directed by John
Hancock Life Insurance Company), as a Lender

By:  /s/ Bernadette Rist         
          
          
          

          Name: Bernadette Rist

          Title: Authorized Signatory

	 	MELLON BANK, N.A. AS TRUSTEE FOR BELL ATLANTIC MASTER TRUST, solely in its
capacity as Trustee and not in its individual capacity (as directed by John
Hancock Life Insurance Company), as a Lender

By:  /s/ Bernadette Rist         
          
          
          

          Name: Bernadette Rist

          Title: Authorized Signatory

	 	THE NORTHERN TRUST COMPANY, AS TRUSTEE OF THE LUCENT
TECHNOLOGIES INC. MASTER PENSION TRUST, as a Lender BY: John Hancock Life
Insurance Company, as Investment Manager

By:  /s/ Scott S. Hartz         
          
          
          

          Name: Scott S. Hartz

          Title: Managing Director

	 	INVESTORS PARTNER LIFE INSURANCE COMPANY, as a Lender

By:  /s/ Marlene J. DeLeon         
          
          
          

          Name: Marlene J. DeLeon

          Title: Authorized Signatory

	 	SUNTRUST BANK, as a Lender

By:  /s/ Byron P. Kurtgis         
          
          
          

          Name: Byron P. Kurtgis

          Title: Director

SCHEDULE 1.1(A)

TRANCHE A TERM LOAN COMMITMENT

	LENDER
	  
	COMMITMENT AMOUNT

	The Chase Manhattan Bank
	  
	$2,283,766.05

	First Union National Bank
	 
	1,321,031.10

	HSBC Bank U.S.A.
	 
	1,319,586.15

	Harris Trust and Savings Bank
	 
	914,611.20

	Sun Trust Bank
	 
	1,319,586.15

	The Prudential Insurance Company of America
	 
	3,217,015.34

	John Hancock Life Insurance Company
	 
	1,570,968.05

	John Hancock Variable Life Insurance Company
	 
	216,685.25

	Investors Partner Life Insurance Company
	 
	54,171.24

	Mellon Bank, N.A., as Trustee for Long-Term
Investment Trust, solely in its capacity as Trustee and not in its
individual capacity (as directed by John Hancock Life Insurance Company)
	 
	34,670.33

	Mellon Bank, N.A., as Trustee for Bell Atlantic
Master Pension Trust, solely in its capacity as Trustee and not in its
individual capacity (as directed by John Hancock Life Insurance Company)
	  
	81,256.48

	The Northern Trust Company, as Trustee of the Lucent
Technologies, Inc. Master Pension Trust.
	  
	73,673,05

	TOTAL:
	  
	$12,407,056.40

SCHEDULE 1.1(B)

TRANCHE B TERM LOAN COMMITMENT

	LENDER
	  
	COMMITMENT AMOUNT

	The Prudential Insurance Company of America
	  
	$1,708,944.46

	John Hancock Life Insurance Company
	  
	683,626.00

	John Hancock Variable Life Insurance Company
	  
	94,293.25

	Investors Partner Life Insurance Company
	  
	23,573.31

	Mellon Bank, N.A., as Trustee for Long-Term Investment Trust, solely in
its capacity as Trustee and not in its individual capacity (as directed
by John Hancock Life Insurance Company)
	  
	15,086.92

	Mellon Bank, N.A., as Trustee for Bell Atlantic Master Pension Trust,
solely in its capacity as Trustee and not in its individual capacity (as
directed by John Hancock Life Insurance Company) 
	  
	35,359.97

	The Northern Trust Company, as Trustee of the Lucent Technologies, Inc.
Master Pension Trust.
	  
	32,059.70

	TOTAL:
	  
	$2,592,943.60

Schedule 5.1

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, Recoton will
deliver to the Administrative Agent (1) the consolidated and consolidating
balance sheet of Recoton 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 Recoton 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, Recoton will deliver to the Administrative
Agent (1) the consolidated and consolidating balance sheet of Recoton 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
Recoton 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, Recoton will deliver
to The Administrative Agent 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 Administrative Agent 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, Recoton will deliver to the
Administrative Agent (1) the consolidated and consolidating balance sheet of
Recoton 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 Recoton 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, Recoton will
deliver to the Administrative Agent the consolidated and consolidating balance
sheet of Recoton 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 Recoton 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), Recoton shall deliver to the Administrative Agent a copy of the
officer's certificate delivered to the Senior Agent 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 filing with the Securities and
Exchange Commission for such period is due) after the end of each Fiscal Year,
Recoton will deliver to the Administrative Agent: (1) the consolidated balance
sheet of Recoton 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
Recoton 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 Recoton
and its Subsidiaries and shall state that (a) such consolidated financial
statements present fairly the consolidated financial position of Recoton 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 Recoton
and its Subsidiaries, including (a) consolidating balance sheets of Recoton and
its Subsidiaries as at the end of such Fiscal Year showing inter company
eliminations and (b) related consolidating statements of income of Recoton and
its Subsidiaries showing inter company eliminations.

                    
(d) Accountants' Certification and Reports. Together with each delivery of
consolidated financial statements of Recoton and its Subsidiaries pursuant to
paragraph (C) above, Recoton will deliver to the Administrative Agent a copy of
the written statement by Borrowers' Accountants delivered to the Senior Agent
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, Recoton will deliver
to The Administrative Agent copies of all significant reports submitted to the
Recoton by Borrowers' Accountants in connection with each annual, interim or
special audit of the financial statements of the Recoton 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, Recoton will deliver to the Administrative Agent a
copy of the Compliance Certificate delivered to the Senior Agent in
substantially the form attached to the Senior Loan Agreement and addressed to
the Administrative Agent (the "Compliance Certificate"), including copies of the
calculations and work-up employed to determine Recoton'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, Recoton 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 Recoton is in compliance
with all other covenants in the Loan Agreement.

                    
(f) Borrowing Base Certificates, Registers and Journals.

	  
	          
(i)  [Intentionally Omitted]

	  
	          
(ii)  [Intentionally Omitted]

	  
	          
(iii) An executive officer of the Administrative Borrower shall deliver to the
Administrative Agent a copy of the Consolidating Borrowing Base Certificate (as
defined in the Senior Loan Agreement) ("Monthly Borrowing Base Certificate")
substantially in the form of Exhibit B-2 to the Senior Loan Agreement when
delivered to Senior Agent in accordance with the Senior Loan Agreement.

                    
(g)   [Intentionally Omitted]

                    
(h) Management Report. Together with each delivery of financial
statements of Recoton and its Subsidiaries pursuant to paragraphs (B) and (C)
above, Recoton will deliver to the Administrative Agent the corresponding form
10-Q or 10-K, as the case may be, which forms will include management's analysis
of the Recoton's financial performance on both a consolidated basis and by
business segment. Management will also provide a copy of the report being
provided to the Senior Agent 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 the Senior Agent pursuant to paragraph (L)
below. The information above shall be certified by the chief financial officer,
chief operating officer or chief executive officer of Recoton 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. Recoton will also provide a copy of any detailed
comparisons of the foregoing information provided to the Senior Agent.

                    
(i) [Intentionally Omitted]

                    
(j) Government Notices. Promptly after the receipt thereof, Recoton will deliver
to the Administrative Agent 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 Recoton's 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 Recoton's assets.

                    
(k) Events of Default, etc.  Promptly upon an executive officer of Recoton
obtaining knowledge of any of the following events or conditions, Recoton shall
deliver to the Administrative Agent a certificate of Recoton'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
Recoton 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) Projections. As soon as provided to the Senior Agent, Recoton will deliver
to the Administrative Agent all Projections provided to the Senior Agent.

                    
(m) Subordinated Debt and Equity Notices. As soon as practicable, Recoton will
deliver to the Administrative Agent copies of all material written notices given
or received by any Loan Party with respect to any Subordinated 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 Subordinated Debt, notice of such event of default.

                    
(n) Litigation. Promptly upon learning thereof, Recoton will deliver to The
Administrative Agent 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) Lease Default Notices. Within two Business Days after receipt thereof, the
Administrative Borrower will deliver to the Administrative Agent copies of (i)
any and all default notices received under or with respect to any leased
location or public warehouse where Collateral is located, and (ii) such other
notices or documents as the Administrative Agent may reasonably request.

                    
(p) SEC Filings and Press Releases. Promptly upon their becoming available,
Recoton will deliver to the Administrative Agent 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, Recoton will deliver to the
Administrative Agent such other information and data as the Administrative Agent
may reasonably request from time to time.

                    
(r) Casualty. The Administrative Borrower shall promptly notify the
Administrative Agent of any loss, damage, or destruction to the Collateral in
the amount of $250,000 or more, whether or not covered by insurance.

                    
(s) ERISA Matters. Promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event, Recoton will deliver to the
Administrative Agent 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.

SCHEDULE 9.2

ADDRESSES FOR NOTICE

First Union National Bank

Overnight Delivery

800 No. Magnolia Ave, Suite 700

Orlando, FL  32803

Attention:  James R. Connors, Sr. Vice President

Tel:  407-649-5620

Fax:  407-649-5628

U.S. Mail Delivery:

P.O. Box 1000

(SL 2202)

Orlando, Florida  32802

HSBC Bank USA

One HSBC Center, 26th Floor

Buffalo, NY 14203

Attention:  Gerald A. Nagle, Sr. Vice President & Manager Special Credits Unit

Tel:  716-841-1153

Fax:  716-841-1968

Harris Trust and Savings Bank

111 West Monroe Street, 4th Floor

Chicago, IL 60603

Attention: Diana Williams

Tel:  312-461-2334

Fax:  312-765-1724

The Prudential Insurance Company of America

Address for all notices relating to payments:

The Prudential Insurance Company of America

c/o Prudential Capital Group

Four Gateway Center, 7th Floor

100 Mulberry Street

Newark, New Jersey  07102-4077

Attn:  Trade Management Group

Fax:  973-802-9425

Recipient of telephonic prepayment notices:

Attn: Manager, Trade Management Group

Tel: (973) 367-3623

Address for all other communications, deliveries and notices:

The Prudential Insurance Company of America

c/o Prudential Capital Group

Corporate and Project Workouts

7th Floor, Gateway Center Four

100 Mulberry Street

Newark, New Jersey 07102-4069

Facsimile (973) 802-2333

Attention:  Managing Director

	 	John Hancock Life Insurance Company, on its own behalf and behalf of the
following entities:

John Hancock Life Insurance Company, as a Lender John
Hancock Variable Life Insurance Company Mellon Bank, N.A., as Trustee for the
Long-Term Investment Trust, solely in its capacity as Trustee and not in its
individual capacity (as directed by John Hancock Life Insurance Company) Mellon
Bank, N.A. as Trustee for Bell Atlantic Master Trust, solely in its capacity as
Trustee and not in its individual capacity (as directed by John Hancock Life
Insurance Company) The Northern Trust Company, as Trustee of the Lucent
Technologies Inc. Master Pension Trust Investors Partner Life Insurance Company

200 Clarendon Street, 57th Floor

Boston, MA 02117

Attention: Daniel Budde

Tel:  617-572-9644

Fax:  617-572-1628

Attn: Pam Memishian, Esq.

Tel:  617-572-9208

Fax: 617-572-9268

Attn: Christine Marquis

Tel:  617-572-1867

Fax:  617-572-9475

Attn: Bond & Corporate Finance Group, T-57

Fax: 617-572-1605

	 	
Mellon Bank, N.A., as Trustee for the Long-Term Investment Trust, solely in
its capacity as Trustee and not in its individual capacity (as directed
by John Hancock Life Insurance Company) Mellon Bank, N.A. as Trustee for
Bell Atlantic Master Trust, solely in its capacity as Trustee and not in
its individual capacity (as directed by John Hancock Life Insurance Company)

One Mellon Bank Center

Room 1935

Pittsburgh, PA 15258

Attn: Bernadette T. Rist

Tel:  412-234-6340

Fax:  412-234-0555

SunTrust Banks, Inc.

201 4th Avenue, N/12 Fl.

Nashville, Tennessee 37219

Fax:  615-748-5700

Attn:  Byron Kurtgis

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