RECOTON CORP
EXHIBIT 10.6
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>8
<FILENAME>recoton-ex106_111302.htm
<DESCRIPTION>EXHIBIT 10.6
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 10.6</TITLE>
</HEAD>
<BODY>

<P ALIGN=RIGHT><FONT SIZE=3><B>Exhibit 10.6</B></FONT></P>

<P ALIGN=RIGHT><FONT SIZE=3><B>EXECUTION COPY</B></FONT></P>


<P ALIGN=CENTER><FONT SIZE=3><U>AMENDMENT NO. 12 TO THE LOAN AGREEMENT</U></FONT></P>


<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS AMENDMENT NO.
12 TO THE LOAN AGREEMENT is made as of October 4, 2002 (this
&#147;<U>Agreement</U>&#148;) by and among RECOTON CORPORATION, a New York
corporation (&#147;<U>Recoton</U>&#148;), INTERACT ACCESSORIES, INC., a Delaware
corporation (&#147;<U>InterAct</U>&#148;), RECOTON AUDIO CORPORATION, a Delaware
corporation (&#147;<U>Audio</U>&#148;), AAMP OF FLORIDA, INC., a Florida
corporation (&#147;<U>AAMP</U>&#148;), RECOTON HOME AUDIO, INC., a California
corporation (&#147;<U>RHAI</U>&#148;), RECOTON ACCESSORIES, INC., a Delaware
corporation (&#147;<U>Recoton Accessories</U>&#148;) and RECOTON MOBILE
ELECTRONICS, INC., a Delaware corporation (&#147;<U>Mobile
Electronics</U>&#148;) and together with Recoton, InterAct, Audio, AAMP, RHAI
and Recoton Accessories collectively, the &#147;<U>Borrowers</U>&#148;, the
Guarantors (the Borrowers and the Guarantors are sometimes collectively referred
to herein as the &#147;<U>Loan Parties</U>&#148;), the Lenders, HELLER
FINANCIAL, INC., a Delaware corporation, for itself as a Lender and as
Administrative Agent and Senior agent and GENERAL ELECTRIC CAPITAL CORPORATION,
a New York corporation for itself as a Lender and as Collateral Agent and
Syndication Agent (the Administrative Agent, Senior Agent, Collateral Agent and
Syndication Agent are sometimes referred to herein as the
&#147;<U>Agents</U>&#148;) and is made with reference to the Loan agreement
dated as of October 31, 2000 (as amended by the (i) Consent and Amendment No. 1
to the Credit Agreement and Amendment No. 1 to the Security Agreement, dated as
of February 7, 2001, (ii) Amendment No. 2 to the Credit Agreement, dated as of
May 10, 2001, (iii) Consent and Amendment No. 3 to the Loan Agreement, Amendment
No. 2 to the Security agreement and Amendment No. 1 to the Pledge Agreement,
dated as of July 3, 2001, (iv) Fourth Amendment to Loan Agreement, dated as of
February 26, 2002, (v) Waiver, Consent and Amendment No. 5 to the Loan
Agreement, dated as of March 29, 2002, (vi) Waiver and Amendment No. 6, dated as
of August 28, 2002, (vii) Amendment No. 7 to the Loan Agreement, dated as of
September 13, 2002, (viii) Amendment No. 8 to the Loan Agreement dated as of
September 18, 2002, (ix) Amendment No. 9 to the Loan Agreement dated as of
September 20, 2002, (x) Amendment No. 10 to the Loan Agreement dated as of
September 23, 2002 and (xi) Amendment No.11 to the Loan Agreement, Amendment No.
3 to the Security Agreement and Amendment No. 2 to the Pledge Agreement dated as
of September 25, 2002 (&#147;<U>Amendment No. 11</U>&#148;), as the same may be
further amended, supplemented, restated or otherwise modified from time to time,
the &#147;<U>Loan Agreement</U>&#148;), among the Borrowers, the Guarantors, the
Lenders and the Agent. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Loan Agreement as
amended hereby.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><U>R</U> <U>E</U> <U>C</U> <U>I</U> <U>T</U>
<U>A</U> <U>L</U> <U>S</U></FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the
Borrowers, the Guarantors, the Lenders and the Agents have entered into the Loan
Agreement;</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the Lenders have made Loans to the Borrowers pursuant to the terms of
the Loan Agreement;</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the
Borrowers expressly reaffirm all of the Loan Documents and the debt and other
obligations thereunder, the Borrowers agree that nothing contained herein shall
operate to release the Borrowers or any other person or persons from their
liability to keep and perform the provisions, conditions, obligations, and
agreements contained in the Loan Documents, except as may be herein modified,
and the Borrowers hereby reaffirm that each and every provision, condition,
obligation and agreement in such documents shall continue in full force and
effect, except as may be herein modified;</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the validity, priority and perfection of all mortgages, security
interests and other liens granted or created by the Loan Documents is hereby
acknowledged and confirmed by the Borrowers, and the Borrowers agree that such
documents shall continue to secure the Loans and the other Obligations, as may
be amended by this Agreement, without any change, loss or impairment of the
priority of such mortgages, security interests or other liens;</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the
Borrowers have requested that the Lenders agree to amend certain provisions of
the Loan Agreement;</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, subject to the terms and conditions of this Agreement, the Lenders have
agreed to amend certain provisions of the Loan Agreement as specifically set
forth herein;</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the
Borrowers have failed to cause that certain Irrevocable Letter of Credit No.
MAI91373 issued by Commerzbank AG, Filale Mainz to be amended as required by
<U>Section 7(g)</U> of Amendment No. 11 (the &#147;<U>German LC
Covenant</U>&#148;) on or before September 30, 2002 ; </FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the Borrowers have requested that the Lenders waive the Borrowers&#146;
failure to timely comply with the German LC Covenant (the &#147;<U>German LC
Covenant Violation</U>&#148;);</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, subject to the terms and conditions of this Agreement, the Lenders have
agreed to waive the German LC Covenant Violation;</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the Borrowers have requested that the Lenders consent to the assignment
by Recoton of its "Loudspeaker With Acoustic Band-Pass Filter" patent, U.S.
Patent No. 4875546 (the "Patent Sale"); and</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, subject to the terms and conditions of this Agreement, the Lenders
hereby consent to the consummation of the Patent Sale and hereby waive any
non-compliance with <U>Section 7.3</U> of the Loan Agreement with respect to
such transaction;</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 1.
<U>Certain Amendments to the Loan Agreement</U>. Subject to the satisfaction of
each of the conditions set forth in <U>Section 5</U> of this Agreement, as of
the Effective Date (as defined herein) the Loan Agreement is hereby amended as
follows:</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a) The first two
sentences of the first paragraph of <U>Section 2.1(B)</U> of the Loan Agreement
are hereby amended and restated in their entirety as follows: </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=80%><FONT SIZE=3>
&#147;Each Revolving Loan Lender severally agrees to lend to the Borrowers from
time to time its Pro Rata Share of each Revolving Advance. The aggregate amount
of all Revolving Loan Commitments shall not exceed (i) $160,000,000 during the
period beginning on October 4, 2002 and ending on the earlier to occur of the
date on which the German LC is drawn and October 15, 2002, (ii) $144,000,000
from and after such date until October 31, 2002 and (iii) $130,000,000 from and
after October 31, 2002, in each case as such amount may be reduced from time to
time pursuant to subsections 2.4(B)(5), 2.4(B)(6) or 2.4(C).&#148;</FONT></TD>
<TD WIDTH=10%>&nbsp;</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) <U>Clause</U> (b) of
<U>Section 2.1(B)(2)</U> of the Loan Agreement is hereby amended and restated in its
entirety as follows:</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=80%><FONT SIZE=3>
&#147;(b) up to the lesser of (i) 70% of Eligible Inventory, which percentage
shall be permanently reduced by 1% on October 31, 2002 and on each Thursday
thereafter until such percentage is reduced to 65% and (ii) (A) 100% of the
Appraised Value of Eligible Inventory for the period beginning October 4, 2002
and ending November 30, 2002, and (B) 85% of the Appraised Value of Eligible
Inventory at all times after November 30, 2002;&quot;</FONT></TD>
<TD WIDTH=10%>&nbsp;</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) <U>Clause (e)</U> of
<U>Section 2.1(B)(2)</U> of the Loan Agreement is hereby amended and restated in its
entirety as follows:</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=80%><FONT SIZE=3>
&#147;(e)
100% of the undrawn portion of the letter of credit, if any, provided by Recoton
Germany as set forth in <U>Section 5.12</U> (the &#147;German LC&#148;),&#148;</FONT></TD>
<TD WIDTH=10%>&nbsp;</TD>
</TR>
</TABLE>
<BR>


<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d) <U>Section
11.1</U> of the Loan Agreement is amended to delete in its entirety the
definition of &#147;Permitted Overadvance&#148; and to replace such definition
with the following definition: </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=80%><FONT SIZE=3>
"`Permitted Overadvance' means an overadvance of an amount equal to $15,250,000
plus the amount of any withholding tax paid by the Administrative Agent with
respect to amounts drawn under the German LC, up to a maximum amount of
$750,000, which amount of overadvance shall be permanently reduced to zero on
October 31, 2002."</FONT></TD>
<TD WIDTH=10%>&nbsp;</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e) <U>Section
11.1</U> of the Loan Agreement is amended to add in the appropriate alphabetical
order the following definition:</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=80%><FONT SIZE=3>
&#147;&#145;German LC&#146; has the meaning assigned to it in <U>Section
2.1(B)(2)</U>.&#148; </FONT></TD>
<TD WIDTH=10%>&nbsp;</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2. <U>Consent
and Waiver; Authority to Release Liens</U>.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a) Subject to the
satisfaction of the conditions set forth in <U>Section 5</U> of this Agreement,
and subject to the provisions of <U>Section 3</U> hereof regarding the
application of the proceeds thereof, the Lenders hereby consent to
Recoton&#146;s consummation of the Patent Sale pursuant to the terms and
conditions of an Assignment Agreement (the &#147;<U>Assignment
Agreement</U>&#148;) between Recoton and Logitech, Inc. (the
&#147;<U>Assignee</U>&#148;), substantially in the form attached hereto as
<U>Exhibit A</U>, and waive any noncompliance by the Borrowers with <U>Section
7.3(A)</U> of the Loan Agreement with respect to such transaction. </FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) Subject to the
satisfaction of the conditions set forth in <U>Section 5</U> of this Agreement,
the Lenders hereby irrevocably authorize the Senior Agent and Collateral Agent
(i) to release its Liens on all of the &#147;Released Collateral&#148;, as such
term is defined in the form of Release of Security Interest (Patent) attached
hereto as <U>Exhibit B</U>, to the extent conveyed to the Assignee pursuant to
the terms of the Assignment Agreement and to the extent constituting Collateral
under the Security Documents and (ii) to execute and deliver such agreements,
documents and instruments as may be requested by the Borrowers and prepared at
the Borrowers&#146; sole expense in form and substance acceptable to the Senior
Agent and Collateral Agent, to evidence the Lien release described in <U>clause
(i)</U> above, including, without limitation, UCC Termination Statements, UCC
Partial Release Statements, and UCC Statements of Amendment, and releases and
assignments with respect to intellectual property security interests filed with
the United States Patent and Trademark Office, it being understood and agreed
that to the extent any such documents are to be recorded publicly such
recordation shall be the sole and exclusive responsibility of the Borrowers and
shall be made at the Borrowers&#146; sole expense; <U>provided</U>,
<U>however</U>, that such releases shall specifically exclude, and the Loan
Parties hereby reaffirm, the Senior Agent&#146;s and Collateral Agent&#146;s
Liens under the Security Documents on all proceeds of the Released Collateral
conveyed under and pursuant to the Assignment Agreement to the extent payable to
or for the account of Recoton, all of the Recoton&#146;s claims, rights and
interests in, to and under the Assignment Agreement, and all property of the
Loan Parties expressly excluded from the conveyances contemplated by the
Assignment Agreement. </FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c) Subject to the conditions set forth in <U>Section 5</U> hereof, the Lenders
hereby waive the German LC Covenant Violation; <U>provided</U>, <U>however</U>,
that such waiver is only effective if such covenant is complied with by the
Borrowers on or before [October 15, 2002].</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section 3. <U>Application of Proceeds</U>. Upon receipt by Recoton of each
payment (including each royalty payment) from the Assignee pursuant to or in
connection with the Assignment Agreement, the Borrowers shall immediately pay to
the Administrative Agent an amount equal to such payment received from the
Assignee (each such amount being a &#147;<U>Received Amount</U>&#148;). If the
initial Received Amount is in excess of $170,000, the Administrative Agent shall
apply the first $100,000 of the initial Received Amount to the payment of the
Revolving Loan without reducing the Revolving Loan Commitment. The
Administrative Agent shall apply the remainder of the initial Received Amount
(provided that if the initial Received Amount is less than or equal to $170,000,
the remainder shall be the entire initial Received Amount) and each other
Received Amount <U>first</U>, to the payment of Scheduled Installments of Term
Loan B, <U>then</U>, to the payment of Scheduled Installments of Term Loan A,
and <U>then</U> to the payments of Scheduled Installments of Term Loan C, each
in the inverse order of maturity, and <U>then</U> to the payment of the
Revolving Loan without reducing the Revolving Loan Commitment.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section 4. <U>Representations and Warranties</U>. The Loan Parties hereby
represent and warrant to each Agent and each Lender that after giving effect to
this Agreement:</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a) no Default or
Event of Default has occurred and is continuing on and as of the date hereof;</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) the
representations and warranties of the Loan Parties and the other Loan Parties
contained in the Loan Agreement and the other Loan Documents are true and
correct on and as of the date hereof as if made on and as of the date hereof,
except to the extent such representations and warranties expressly relate to a
different date; and</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) the execution
and delivery by the Loan Parties to this Agreement and the performance by the
Loan Parties of all of their respective agreements and obligations under this
Agreement and the Loan Agreement as amended hereby, respectively, are within the
power and authority of the Loan Parties and have been duly authorized by all
necessary action on the part of the Loan Parties, and that the execution and
delivery by the Loan Parties, of this Agreement and the performance by each of
the transactions contemplated hereby will not contravene any term or condition
set forth in any material agreement or instrument to which each is a party or by
which each is bound.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 5.
<U>Effectiveness and Conditions Precedent</U>. This Agreement shall become
effective on October 4, 2002 (the &#147;<U>Effective Date</U>&#148;), upon the
Administrative Agent&#146;s receipt of counterparts of this Agreement executed
and delivered by each of the Lenders (other than the Term Loan C Lenders), the
Borrowers and the Guarantors (which executions and deliveries may be effected by
delivery and receipt by facsimile transmission).</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6. <U>Status
of Loan Documents; Additional Representations and Warranties</U>.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a) This Agreement
is limited solely for the purposes and to the extent expressly set forth herein,
and, except as expressly provided hereby, (i) the terms, provisions and
conditions of the Loan Documents and (ii) the Liens granted under the Loan
Documents shall continue in full force and effect and are hereby ratified and
confirmed in all respects.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) No waiver or
amendment of any terms or provisions of the Loan Agreement made hereunder shall
relieve the Loan Parties from complying with any other term or provision of the
Loan Agreement or any other Loan Document.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) No action taken
by any Lender, the Administrative Agent or the Collateral Agent prior to, on or
after the date hereof shall constitute a waiver of or modification of any term
or condition of any of the Loan Documents, except as specifically set forth
herein, or prejudice any rights which the Administrative Agent, the Collateral
Agent or any of the Lenders may now have as of the date hereof or may have in
the future under or in connection with the Loan Documents, including without
limitation all rights and remedies in connection with Defaults, Events of
Default and failures of conditions precedent to the making of Loans and the
issuance of Lender Letters of Credit that have occurred and are continuing, all
of which rights and remedies each Lender, the Administrative Agent and the
Collateral Agent hereby expressly reserve.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d) The Loan
Parties represent and warrant to each of the other parties hereto that except as
heretofore disclosed in writing by the Loan Parties to the Lenders, as of the
date hereof, there is no pending or, to the knowledge of the Loan Parties,
threatened action, suit, proceeding, governmental investigation or arbitration
against or affecting any of the Loan Parties or any property of any of the Loan
Parties that is likely to have a Material Adverse Effect. </FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.
<U>Lenders&#146; Consent to Term Loan D</U>. The Lenders agree to permit the
making by one or more Lenders of an additional loan substantially in accordance
with the terms set forth in <U>Exhibit C</U> attached hereto, subject to written
approval by the Lenders (other than the Term Loan C Lenders) of the definitive
terms of the amendment to the Loan Agreement contemplated in such Exhibit.
</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.
<U>German LC Draw</U>. As soon as practicable following the Borrowers&#146;
compliance with the German LC covenant, the Administrative Agent shall prepare a
draw certificate for the full amount of the German LC. </FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.
<U>Miscellaneous</U>.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a) <U>No Waiver,
Cumulative Remedies</U>. No failure or delay or course of dealing on the part of
any Agent or any Lender in exercising any right, power or privilege hereunder
shall operate as an express or implied waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder. The rights, powers and remedies herein expressly provided are
cumulative and not exclusive of any rights, powers or remedies which the Lenders
would otherwise have. No notice to or demand on the Borrowers or Guarantors in
any case shall entitle the Borrowers or Guarantors to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Lenders to any other or further action in any circumstances
without notice or demand.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)
<U>Ratification, Etc.</U> Except as expressly provided for herein, the Loan
Agreement and all documents, instruments and agreements related thereto,
including but not limited to, the Security Documents, are hereby ratified and
confirmed in all respects and shall continue in full force and effect. Without
limiting the generality of the foregoing, each of the Loan Parties and each of
the Lenders party hereto ratify and confirm the effectiveness, validity, and
enforceability of each of the amendments to the Loan Agreement entered into by
the Borrowers and the Lenders or the Requisite Lenders and each of the
amendments to the Security Agreement and Pledge Agreement entered into by the
Loan Parties and the Senior Agent. The Loan Agreement and this Agreement shall
be read and construed as a single agreement. This Agreement shall constitute one
of the Loan Documents and the obligations of the Borrowers and Guarantors under
this Agreement shall constitute Obligations for all purposes of the Loan
Documents. All references in the Loan Agreement, the Loan Documents or any
related agreement or instrument to the Loan Agreement shall hereafter refer to
the Loan Agreement as amended hereby.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)
<U>Expenses</U>. The Borrowers agree to pay and reimburse the Administrative
Agent and Lenders for all of their costs and expenses (including, without
limitation, costs and expenses of legal counsel and Richter Consulting, Inc.) in
connection with this Agreement.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d) <U>Bankruptcy;
Insolvency</U>. The Borrowers represent and warrant that, on and as of the date
hereof, no proceeding has been filed or commenced by or against the Borrowers
for dissolution or liquidation, or by or against the Borrowers voluntarily or
involuntarily terminating or dissolving or being terminated or dissolved; nor
does there exist insolvency of the Borrowers, nor do the Borrowers fail to pay
their debts as they become due in the ordinary course of business; nor has a
creditor&#146;s committee been appointed for the business of the Borrowers; nor
have the Borrowers made an assignment for the benefit of creditors, or filed a
petition in bankruptcy or for reorganization or to effect a plan of arrangement
with creditors; nor have the Borrowers applied for or permitted the appointment
of a receiver or trustee for any or all of their property, assets or rights; nor
are the Borrowers aware of any such receiver or trustee being appointed for any
or all of their property, assets or rights; nor has any of the above actions or
proceedings whatsoever been commenced by or against any other party liable for
the Obligations.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e) <U>Headings
Descriptive</U>. The headings of the several Sections and subsections of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (f)
<U>Severability</U>. In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (g)
<U>Counterparts</U>. This Agreement may be executed and delivered in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with each of Recoton and the Administrative Agent.
</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 10.
<U>Release</U>. The Borrowers and each of the Guarantors hereby acknowledges and
confirms that (i) it does not have any grounds, and hereby agrees not to
challenge (or to allege or to pursue any matter, cause or claim arising under or
with respect to), in any case based upon acts or omissions of any of the Agents
or Lenders occurring prior to the date hereof or facts otherwise known to it as
of the date hereof, the effectiveness, genuineness, validity, collectibility or
enforceability of the Loan Agreement or any of the other Loan Documents, the
Obligations, the Liens securing such Obligations, or any of the terms or
conditions of any Loan Document (it being understood that such acknowledgement
and confirmation does not preclude the Borrowers or the Guarantors from
challenging the Agents&#146; or any Bank&#146;s interpretation of any term or
provision of the Loan Agreement or other Loan Document) and (ii) it does not
possess (and hereby forever waives, remises, releases, discharges and holds
harmless the Agents, the Lenders, and their respective affiliates, stockholders,
directors, officers, employees, attorneys, agents and representatives and each
of their respective heirs, executors, administrators, successors and assigns
(collectively, the &#147;<U>Indemnified Parties</U>&#148;) from and against, and
agrees not to allege or pursue) any action, cause of action, suit, debt, claim,
counterclaim, cross-claim, demand, defense, offset, opposition, demand and other
right of action whatsoever, whether in law, equity or otherwise (which it, all
those claiming by, through or under it, or its successors or assigns, have or
may have) against the Indemnified Parties, or any of them, by reason of, any
matter, cause or thing whatsoever, with respect to events or omissions occurring
or arising on or prior to the date hereof and relating to the Loan Agreement or
any of the other Loan Documents (including, without limitation, with respect to
the payment, performance, validity or enforceability of the Obligations, the
Liens securing the Obligations or any or all of the terms or conditions of any
Loan Document) or any transaction relating thereto; <U>provided</U>,
<U>however</U>, <U>that</U> no Borrower nor Guarantor hereby releases or holds
harmless any Indemnified Party for actions or omissions by any such Indemnified
Party constituting, or losses or expenses directly resulting from, the gross
negligence or willful misconduct of such Indemnified Party as determined by a
final judgment of a court of competent jurisdiction.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section 11. <U>Governing Law</U>. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed and delivered
by their respective duly authorized officers as of the date first written above.
</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>BORROWERS:</TD>
<TD WIDTH=50%>
RECOTON CORPORATION<BR>
<BR>
<BR>
By:<U>&nbsp;/s/ Arnold Kezsbom
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Arnold Kezsbom<BR>
Title:&nbsp;&nbsp;&nbsp;Executive Vice President - Finance<BR>
<BR>
<BR>
INTERACT ACCESSORIES, INC.<BR>
RECOTON AUDIO CORPORATION<BR>
AAMP OF FLORIDA, INC.<BR>
RECOTON HOME AUDIO, INC.<BR>
RECOTON ACCESSORIES, INC.<BR>
RECOTON MOBILE ELECTRONICS, INC.<BR>
<BR>
<BR>
By:<U>&nbsp;/s/ Arnold Kezsbom
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Arnold Kezsbom<BR>
Title:&nbsp;&nbsp;&nbsp;Vice President
</TD>
</TR>
</TABLE>
<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>GUARANTORS:</TD>
<TD WIDTH=50%>
CHRISTIE DESIGN CORPORATION<BR>
RECOTON INTERNATIONAL HOLDINGS, INC.<BR>
RECOTON JAPAN, INC.<BR>
RECONE, INC.<BR>
RECOTON CANADA LTD.<BR>
INTERACT CANADA, LTD.<BR>
INTERACT INTERNATIONAL, INC.<BR>
INTERACT HOLDINGS, INC.<BR>
INTERACT TECHNOLOGIES, INC.<BR>
<BR>
<BR>
By:<U>&nbsp;/s/ Arnold Kezsbom
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Arnold Kezsbom<BR>
Title:&nbsp;&nbsp;&nbsp;Vice President
</TD>
</TR>
</TABLE>
<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>LENDERS:</TD>
<TD WIDTH=50%>
HELLER FINANCIAL, INC.,<BR>
individually and as Senior Agent and<BR>
Administrative Agent
<BR>
<BR>
By:<U>&nbsp;/s/ Hugh Wilder
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Hugh Wilder<BR>
Title:&nbsp;&nbsp;&nbsp;Senior Vice President
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>&nbsp;</TD>
<TD WIDTH=50%>
GENERAL ELECTRIC CAPITAL CORPORATION,<BR>
individually and as Collateral Agent and<BR>
Syndication Agent<BR>
<BR>
<BR>
By:<U>&nbsp;/s/ Hugh Wilder
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Hugh Wilder<BR>
Title:&nbsp;&nbsp;&nbsp;Authorized Signatory
</TD>
</TR>
</TABLE>
<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>&nbsp;</TD>
<TD WIDTH=50%>
BANK OF AMERICA, N.A.<BR>
<BR>
<BR>
By:<U>&nbsp;/s/ Valerie Peppe
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Valerie Peppe<BR>
Title:&nbsp;&nbsp;&nbsp;Assistant Vice President
</TD>
</TR>
</TABLE>
<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>&nbsp;</TD>
<TD WIDTH=50%>
THE CIT GROUP / BUSINESS CREDIT, INC.<BR>
<BR>
<BR>
By:<U>&nbsp;/s/ Vincent Belcastro
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Vincent Belcastro<BR>
Title:&nbsp;&nbsp;&nbsp;Vice President
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>&nbsp;</TD>
<TD WIDTH=50%>
GUARANTY BUSINESS CREDIT CORPORATION<BR>
<BR>
<BR>
By:<U>&nbsp;/s/ James E. Casper
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: James E. Casper<BR>
Title:&nbsp;&nbsp;&nbsp;Senior Vice President
</TD>
</TR>
</TABLE>
<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>&nbsp;</TD>
<TD WIDTH=50%>
FOOTHILL CAPITAL CORPORATION<BR>
<BR>
<BR>
By:<U>&nbsp;/s/ Robert J. Cambora
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Robert J. Cambora<BR>
Title:&nbsp;&nbsp;&nbsp;Senior Vice President
</TD>
</TR>
</TABLE>
<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>&nbsp;</TD>
<TD WIDTH=50%>
CITIZENS BUSINESS CREDIT<BR>
<BR>
<BR>
By:<U>&nbsp;/s/ Thomas D. Opie
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Thomas D. Opie<BR>
Title:&nbsp;&nbsp;&nbsp;Vice President
</TD>
</TR>
</TABLE>
<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>&nbsp;</TD>
<TD WIDTH=50%>
WASHINGTON MUTUAL BANK<BR>
<BR>
<BR>
By:<U>&nbsp;/s/ Terri K. Lins
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Terri K. Lins<BR>
Title:&nbsp;&nbsp;&nbsp;Vice President
</TD>
</TR>
</TABLE>
<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>&nbsp;</TD>
<TD WIDTH=50%>
SIEMENS FINANCIAL SERVICES, INC.<BR>
<BR>
<BR>
By:<U>&nbsp;/s/ Frank Amodio
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Frank Amodio<BR>
Title:&nbsp;&nbsp;&nbsp;Vice President - Credit
</TD>
</TR>
</TABLE>
<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>&nbsp;</TD>
<TD WIDTH=50%>
GMAC BUSINESS CREDIT LLC<BR>
<BR>
<BR>
By:<U>&nbsp;/s/ Alexander J. Chobot
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Alexander J. Chobot<BR>
Title:&nbsp;&nbsp;&nbsp;Vice President
</TD>
</TR>
</TABLE>
<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>&nbsp;</TD>
<TD WIDTH=50%>
U.S. BANK BUSINESS CREDIT<BR>
<BR>
<BR>
By:<U>&nbsp;/s/ Suzanne Geiger
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Suzanne Geiger<BR>
Title:&nbsp;&nbsp;&nbsp;Senior Vice President
</TD>
</TR>
</TABLE>


<PAGE>

<P ALIGN=CENTER><FONT SIZE=3>EXHIBIT A</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>Assignment Agreement</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>[Attached]</FONT></P>


<PAGE>


<P ALIGN=CENTER><FONT SIZE=3>EXHIBIT B</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>Release of Security Interest (Patent)</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>[Attached]</FONT></P>


<PAGE>


<P ALIGN=CENTER><FONT SIZE=3>EXHIBIT C</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>Terms of Term Loan D</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>[Attached]</FONT></P>


<PAGE>


<P ALIGN=RIGHT><FONT SIZE=3>EXHIBIT C TO AMENDMENT NO. 12<BR>
TO THE LOAN AGREEMENT</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><B>Summary of Proposed Terms and Conditions of<BR>
$15,000,000 Tranche D Term Loan<BR>
to<BR>
AAMP of Florida, Inc.<BR>
as an<BR>
Amendment<BR>
to the<BR>
Recoton Corporation<BR>
Loan Agreement dated as October 31, 2000,<BR>
as previously amended</B>
</FONT></P>

<HR SIZE=1 NOSHADE>
<P><FONT SIZE=1>The Loan Agreement would be modified pursuant to an amendment agreement
substantially on the terms and conditions described below; all references herein
to the &#147;closing&#148; shall mean and refer to the consummation and
effectiveness of such amendment. All other terms and conditions of the Loan
Agreement and related Loan Documents will remain unchanged and shall be ratified
and confirmed. This term sheet is a summary of terms only and is not a
commitment of any lender to provide the proposed financing, which commitments
may only be established through later subsequent legal documentation approved in
writing and executed by all of the Lenders (other than the Term Loan C Lenders)
and by the lenders which ultimately agree to provide the Term Loan D described
below.</FONT></P>
<HR SIZE=1 NOSHADE>

<P><FONT SIZE=3>Bank Group would authorize the making of Term Loan D in the aggregate principal
amount of $15MM to AAMP of Florida, Inc. ("AAMP") by GE Capital/Heller and
possibly one or more of the other existing lenders (collectively, the "Term D
Lenders").</FONT></P>

<P><FONT SIZE=3>Term Loan D would mature with a balloon payment on January 25, 2003, and have an
interest rate of Prime + 3, payable monthly in arrears.</FONT></P>

<P><FONT SIZE=3>
The proceeds of Term Loan D would be used as follows:
</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>&nbsp;&nbsp;</TD>
<TD WIDTH=95%>$1MM fee to Term D Lenders; and<BR>
$14MM as a payment to the Revolving Loan, which will be a permanent reduction.</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3>The payment to the Revolving Loan would be first allocated to
the availability generated by the AAMP current assets in the existing Borrowing
Base, and secondly to the current outstanding Permitted Overadvance.</FONT></P>

<P><FONT SIZE=3>
Term Loan D would have a first security position on any and all of the AAMP
assets and capital stock, and a second behind the Lenders other than the Term D
Lenders (hereafter, the &#147;Senior Bank Group&#148;), including Term Loan C,
on all of assets and capital stock of Recoton and its other Subsidiaries. The
Senior Bank Group would retain a second position on the AAMP assets and capital
stock. Term Loan D would constitute &#147;Senior Debt&#148; for purposes of both
tranches of Recoton&#146;s existing subordinated indebtedness.</FONT></P>

<P><FONT SIZE=3>
At the close of Term Loan D, the Senior Bank Group would agree to reduce the
Required Minimum Excess Availability amount to zero (subject to the succeeding
paragraphs). Also, the Senior Bank Group would agree that the future changes to
the Required Minimum Excess Availability balance after the closing Term Loan D
will be governed by Requisite Lenders.</FONT></P>

<P><FONT SIZE=3> Any Overadvance outstanding after the application of Term Loan
D and the reduction of the Required Minimum Excess Availability to zero must be
repaid at the close of Term Loan D. However, the Required Minimum Excess
Availability would be increased to $6MM upon the earlier of the sale of AAMP and
11/30/02.</FONT></P>

<P><FONT SIZE=3>
The inventory advance rate would remain 70% until 10/31/02, at which time it
would be reduced by 1% per week until it reaches 65%. This reduction would
continue until the completion of the AAMP sale, at which time the advance rate
would reduce immediately to 65%.</FONT></P>

<P><FONT SIZE=3>Term Loan D would have no voting rights under the Loan Agreement
(other than with respect to payment and bankruptcy defaults and other matters
directly affecting Term Loan D), and the Senior Bank Group would not be able to
prevent the Term D Lenders from taking any action in respect to the AAMP assets
upon any default with respect to Term Loan D.</FONT></P>

<P><FONT SIZE=3>Upon the closing of the sale of AAMP the net proceeds would
initially be applied to the repayment in full of Term Loan D, and any proceeds
above and beyond the repayment in full of Term Loan D would be applied in the
following order:</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1.  If such excess proceeds are equal to or greater than $7MM:
</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10% ALIGN=LEFT>&nbsp;&nbsp;</TD>
<TD WIDTH=90%>a) 15% of the proceeds would be allowed to remain in the Company
for general working capital purposes.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10% ALIGN=LEFT>&nbsp;&nbsp;</TD>
<TD WIDTH=90%>b) 85% of the proceeds would be provided to the Senior Bank Group
for application:</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15% ALIGN=LEFT>&nbsp;&nbsp;</TD>
<TD WIDTH=85%>1) To the Revolving Loan in order to re-establish the $6MM level
of the Required Minimum Excess Availability, and to effectuate a 65% advance
rate on the Inventory, then,</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15% ALIGN=LEFT>&nbsp;&nbsp;</TD>
<TD WIDTH=85%>2) As a permanent paydown to the Revolving Loan; and</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.  If such excess proceeds are less than $7MM:</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10% ALIGN=LEFT>&nbsp;&nbsp;</TD>
<TD WIDTH=90%>a) the first proceeds would be provided to the Senior Bank Group
for application to the Revolving Loan in order to re-establish the $6MM level of
the Required Minimum Excess Availability and to effectuate a 65% advance rate on
the Inventory, then</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10% ALIGN=LEFT>&nbsp;&nbsp;</TD>
<TD WIDTH=90%>b) any remaining proceeds would be applied:</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15% ALIGN=LEFT>&nbsp;&nbsp;</TD>
<TD WIDTH=85%>1) 15% would be allowed to remain in the Company for general
working capital purposes.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15% ALIGN=LEFT>&nbsp;&nbsp;</TD>
<TD WIDTH=85%>2) 85% would be applied as a permanent paydown to the Revolving
Loan.</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3>The current Permitted Overadvance would remain at $15,250,000 until the calling
of the German L/C. Upon the receipt of the proceeds of the German L/C, the
Permitted Overadvance would increase to $16MM and the net proceeds of the German
L/C will be used as a permanent paydown on the Revolving Loan.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>* * * *</FONT></P>

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