Exhibit 10.18
March 31, 2000

 

FOURTH AMENDMENT TO CREDIT AGREEMENT

This fourth amendment to credit agreement (this “Amendment”) is made and entered
into as of March 31, 2000, by and among U.S. BANK NATIONAL ASSOCIATION, a
national banking association (“U.S. Bank”), and MACKIE DESIGNS INC., a
Washington corporation (“Borrower”).

R E C I T A L S:

A.      On or about June 18, 1998, U.S. Bank and Borrower entered into that
certain credit agreement (together with all amendments, supplements, exhibits,
and modifications thereto, the “Credit Agreement”) whereby U.S. Bank agreed to
extend certain credit facilities to Borrower.  U.S. Bank and Borrower have
entered into three amendments to the Credit Agreement.

B.       Borrower has requested U.S. Bank to (1) extend the expiry and maturity
date of the Revolving Loan, (2) increase the amount of the Acquisition Loan to
$29,714,000, and (3) modify certain financial covenants set forth in the Credit
Agreement.  The purpose of this Amendment is to set forth the terms and
conditions upon which U.S. Bank will grant Borrower’s requests.

NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein, the parties agree as follows:

ARTICLE I. AMENDMENT

The Credit Agreement, as well as all of the other Loan Documents, are hereby
amended as set forth herein.  Except as specifically provided for herein, all of
the terms and conditions of the Credit Agreement and each of the other Loan
Documents shall remain in full force and effect throughout the terms of the
Loans, as well as any extensions or renewals thereof.

ARTICLE II. DEFINITIONS

As used herein, capitalized terms shall have the meanings given to them in the
Credit Agreement, except as otherwise defined herein, or as the context
otherwise requires.  Section 1.1 of the Credit Agreement is hereby amended to
modify or add (as the case may be) the following definitions:

“Applicable Margin” means the rate per annum that is determined by reference to
the following matrix and based upon the quarterly financial statements of
Borrower provided to U. S. Bank in accordance with the terms of this Agreement
for the preceding fiscal quarter of Borrower.  Adjustments shall be made 60 days
after the end of each fiscal quarter of Borrower (when quarterly financial
statements are required to be delivered to U. S. Bank); provided, however, that
if Borrower has not delivered its financial statements for the previous fiscal
quarter within 60 days of the end of such fiscal quarter, then the Applicable
Margin in effect for the previous fiscal quarter shall continue to apply unless
U. S. Bank exercises its right to impose the default rate provided for in this
Agreement.

 

 

Through and Including 12/31/00

Funded Debt Ratio Prime Rate
Applicable Margin LIBOR Rate
Applicable Margin > 3.0:1.0 0.50% 2.25% £ 3.0:1.0 and > 2.0:1.0 0.25% 2.00% £
2.0:1.0 and > 1.0:1.0 0% 1.50% £ 1.0:1.0 0% 1.25%

After 12/31/00

Funded Debt Ratio Prime Rate
Applicable Margin LIBOR Rate
Applicable Margin > 2.0:1.0 0.25% 2.00% £ 2.0:1.0 and > 1.0:1.0 0% 1.50% £
1.0:1.0 0% 1.25%

          Where:
                    £ = less than or equal to
                    > =  greater than

The Applicable Margins set forth above shall apply unless there exists an Event
of Default, in which case U. S. Bank may elect to apply the default rate
pursuant to the terms of this Agreement.  The Funded Debt Ratio as used in this
definition shall be calculated as of the last day of the relevant fiscal quarter
of Borrower for the four trailing fiscal quarters then ended.
“Debt Service Coverage Ratio” means the ratio of (a) EBITDA, less (i) cash paid
by Borrower during the relevant period for Capital Expenditures, which cash does
not constitute proceeds of purchase money Capital Expenditure loans made to
Borrower, (ii) taxes paid by Borrower in cash or cash equivalents, and
(iii) dividends, distributions paid to Borrower’s shareholders, to (b) Debt
Service.

 

“EAW” means Eastern Acoustic Works, Inc., a Massachusetts corporation.  “EAW
Entities” means EAW, SIA Software Company, Inc., a New York corporation, and
Blackstone Technologies, Inc., a Massachusetts corporation.  “EAW Entity
Guaranties” has the meaning set forth in Article VIII (d) of this Amendment and
includes all amendments and replacements thereof.  “EAW Entity Security
Agreements” has the meaning set forth in Article VIII (b) of this Amendment and
includes all amendments and replacements thereof.  “Guarantor” means,
collectively, Mackie Designs Manufacturing Inc., a Washington corporation, and
Eastern Acoustic Works, a Massachusetts corporation.
“Guaranty” means, collectively, the EAW Entity Guaranties and the MDM Guaranty.
“Interest Period” means as to any LIBOR Rate Borrowing , a period of one, two,
three, six, nine or 12 months commencing on the date the LIBOR Borrowing Rate
becomes applicable thereto; provided however, that:  (a) no Interest Period
shall be selected that would extend beyond the maturity date of the applicable
Loan; (b) any  Interest Period that would otherwise expire on a day that is not
a Business Day shall be extended to the next succeeding Business Day, unless the
result of such extension would be to extend such Interest Period into another
calendar month, in which event the Interest Period shall end on the immediately
preceding Business Day; and (c) 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 end on the last Business Day of a calendar month during which the
applicable Interest Period expires.
“LIBOR Borrowing Rate” means the LIBOR Rate (Reserved Adjusted) plus the
Applicable Margin in effect as of the first day of the applicable LIBOR Rate
Borrowing.
“LIBOR Rate” means the average offered rate (computed on the basis of a 360–day
year and the actual number of days elapsed) for deposits in United States
Dollars for delivery of such deposits on the day that is two Business Days
preceding the first day of the applicable Interest Period of a LIBOR Rate
Borrowing for the number of days comprised therein for the number of days
comprised therein, which appears on Telerate Page 3750 as of 11:00 a.m., London
time (or such other time as of which such rate appears) or the rate for such
deposits determined by U.S. Bank at such time based on such other published
service of general application as shall be selected by U.S. Bank for such
purpose; provided, that in lieu of determining the rate in the foregoing manner,
U.S. Bank may determine the rate based on rates offered to U.S. Bank for
deposits in United States Dollars in the interbank Eurodollar market at such
time for delivery on the first day of the Interest Period for the number of days
comprised therein.  “Telerate Page 3750” means the display designated as such on
the Bridge Telerate, Inc. service or any successor service (or such other page
as may replace page 3750 on that service for the purpose of displaying London
interbank offered rates of major banks for United States Dollar deposits).

 

“LIBOR Rate (Reserved Adjusted)” means a rate per annum calculated for the
applicable Interest Period of a LIBOR Rate Borrowing in accordance with the
following formula:

  LRRA= LIBOR Rate     1.00 - LRR

In such formula, “LRR” means “LIBOR Reserve Rate” and “LRRA” means “LIBOR Rate
(Reserve Adjusted)”, in each instance determined by U.S. Bank for the applicable
Interest Period.  U.S. Bank’s determination of all such rates for any Interest
Period shall be conclusive in the absence of manifest error.

“LIBOR Reserve Rate” means a percentage equal to the daily average during the
applicable Interest Period of the aggregate maximum reserve requirements
(including all basic, supplemental, marginal, and other reserves), as specified
under Regulation D of the Federal Reserve Board, or any other applicable
regulation that prescribes reserve requirements applicable to Eurocurrency
liabilities (as presently defined in Regulation D) or applicable to extensions
of credit by U.S. Bank the rate of interest on which is determined with regard
to rates applicable to Eurocurrency liabilities.  Without limiting the
generality of the foregoing, the Eurocurrency reserve requirement shall reflect
any reserves required to be maintained by U.S. Bank against (a) any category of
liabilities that includes deposits by reference to which the LIBOR Rate is to be
determined, or (b) any category of extensions of credit or other assets that
includes LIBOR Rate Borrowings.

“Loan Documents” means this Agreement, the Notes, the Security Agreements, the
EAW Entity Security Agreements, the Guaranty and the Pledge Agreement, together
with all other agreements, instruments and documents arising out of or relating
to this Agreement or the Loans, and includes all renewals, replacements and
amendments thereof.

“MDM Guaranty” means the guaranty from Mackie Designs Manufacturing Inc., duly
executed and delivered to U.S. Bank, and includes all replacements, amendments
and modifications of the MDM Guaranty.

“Pledge Agreement” has the meaning set forth in Article VIII (e) of this
Amendment and includes all amendments and replacements thereof.

ARTICLE III. MODIFICATIONS TO REVOLVING LOAN

3.1     Extension of Expiry and Maturity Date

Section 2.1 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:

          Subject to and upon the terms and conditions set forth herein and in
reliance upon the representations, warranties, and covenants of Borrower
contained herein or made pursuant hereto, U.S. Bank will make Fundings to
Borrower from time to time during the period ending on April 30, 2002 the
(“Commitment Period”), but such Fundings (together with any outstanding Letters
of Credit) shall not exceed, in the aggregate principal amount at any one time
outstanding, $5,000,000 (the “Revolving Loan”).  Borrower may borrow, repay, and
reborrow hereunder either the full amount of the Revolving Loan or any lesser
sum.

 

3.2     Use of Proceeds

Section 2.2 of the Agreement is hereby amended to reflect that the proceeds of
the Revolving Loan may be used by Borrower to finance the operations of the EAW
Entities.

3.3     Renewal Revolving Note

Concurrently with the execution of this Amendment, Borrower shall execute and
deliver to U.S. Bank a renewal promissory note in the form attached hereto as
Exhibit A (“Renewal Revolving Note”) which shall continue to evidence the
Revolving Loan.  The Revolving Note and all previous renewals thereof shall be
marked “Renewed” and retained by U.S. Bank until the Revolving Loan is paid in
full and U.S. Bank’s commitment to advance Fundings thereunder is terminated.

3.4     Revolving Loan Fee

Concurrently with the execution of this Amendment, Borrower shall pay U.S. Bank
a nonrefundable loan fee for the Revolving Loan in the amount of $6,250.

3.5     Letters of Credit

Section 2.7(a) of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:

            (a) Subject to and upon the terms and conditions set forth herein
and in reliance upon the representations, warranties, and covenants of Borrower
contained herein or made pursuant hereto, U. S. Bank will issue standby and
commercial letters of credit (the "Letters of Credit") for the benefit of
Borrower in forms acceptable to U. S. Bank from time to time during the
Commitment Period.  The expiration date of any Letter of Credit shall not extend
beyond October 31, 2002.  The maximum aggregate amount of outstanding Letters of
Credit plus the aggregate outstanding amount of principal and interest on the
Revolving Loan shall not exceed, at any one time, $5,000,000.

ARTICLE IV.  MODIFICATIONS TO ACQUISITION LOAN

4.1     Loan Commitment

Section 3.1(b) of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:

          (b) “Acquisition Loan Commitment” means the sum of (i) $29,714,000,
less (ii) on an aggregate basis, on March 31 of each year (commencing March 31,
2001) $2,714,286, less (iii) on an aggregate basis, on September 30 of each year
(commencing September 30, 2000) $1,828,571,and less (iv) the aggregate amount of
all Disposition Payments.

4.2     Use of Proceeds

Section 3.2 of the Agreement is hereby amended to reflect that up to $19,000,000
of the proceeds of the Acquisition Loan shall be used for the acquisition by
Borrower of all of the issued and outstanding stock of EAW and the payment in
full of all indebtedness of EAW to Fleet National Bank.  After completion of the
EAW acquisition and the payment in full of Fleet National Bank, the proceeds of
the Acquisition Loan may be used by Borrower for general corporate purposes,
including the financing of the operations of the EAW Entities.

4.3     Renewal Acquisition Note

Concurrently with the execution of this Amendment, Borrower shall execute and
deliver to U.S. Bank a renewal promissory note in the form attached hereto as
Exhibit B (“Renewal Acquisition Note”) which shall continue to evidence the
Acquisition Loan.  The Acquisition Note and all previous renewals thereof shall
be marked “Renewed” and retained by U.S. Bank until the Acquisition Loan is paid
in full and U.S. Bank’s commitment to advance Fundings thereunder is terminated.

4.4     Disbursement Under Acquisition Loan

Borrower shall not be entitled to the advance of any Acquisition Loan proceeds
to finance the EAW acquisition or to pay the indebtedness of EAW to Fleet
National Bank unless and until Borrower has received written notice from
U.S. Bank that the following conditions have been fulfilled to the satisfaction
of U.S. Bank:

(a)      U.S. Bank shall have received, reviewed, and approved all agreements,
instruments, and other documents (together with the substance thereof) arising
out of or related to the acquisition of all of the issued and outstanding stock
of EAW; and

(b)      U.S. Bank shall have received, reviewed, and approved the structure of
and accounting with respect to the acquisition of EAW.

4.5     Acquisition Loan Fee

Concurrently with the execution of this Agreement, Borrower shall pay U.S. Bank
a nonrefundable fee in the amount of $95,000.

ARTICLE V. GENERAL PROVISIONS APPLICABLE TO THE LOANS

5.1     LIBOR Rate Borrowing Provisions

Sections 4.9, 4.10 and 4.11 of Credit Agreement are hereby deleted in their
entirety and replaced with the following:

 

            4.9     LIBOR Rate Borrowing Provisions

            (a)      The minimum amount of each LIBOR Rate Borrowing shall be
$1,000,000 with increments of $500,000 in excess thereof.

            (b)      Payments and prepayments of all or any portion of any LIBOR
Rate Borrowing prior to the expiration of the applicable Interest Period shall
be subject to the payment by Borrower to U.S. Bank of amounts due pursuant to
Section 4.9(c).

            (c)      Borrower will indemnify U.S. Bank upon demand against any
loss or expense that U.S. Bank may sustain or incur (including, without
limitation, any loss or expense sustained or incurred in obtaining, liquidating
or employing deposits or other funds acquired to effect, fund, or maintain any
LIBOR Rate Borrowing) as a consequence of (i) any failure of Borrower to make
any payment when due of any amount due hereunder or under the Notes, (ii) any
failure of Borrower to borrow, continue or convert any LIBOR Rate Borrowing on a
date specified therefor in a notice thereof, or (iii) any payment, prepayment or
conversion of any LIBOR Rate Borrowing on a date other than the last day of the
Interest Period for such LIBOR Rate Borrowing.  Determinations by U.S. Bank for
purposes of this Section 4.6(c) of the amount required to indemnify U.S. Bank
shall be conclusive in the absence of manifest error.

            (d)      Upon any termination of any LIBOR Rate Borrowing as a
result of (i) acceleration under Section 9.2 hereof, or (ii) repayment in
response to a mandatory repayment under Section 4.11, Borrower shall pay to
U.S. Bank on demand such amount as U.S. Bank reasonably determines (determined
as though 100 percent of the applicable LIBOR Rate Borrowing had been funded in
the applicable Eurodollar market) is equivalent to all direct or indirect
losses, expenses, liabilities, or reductions in yield to U.S. Bank resulting
therefrom, whether incurred in connection with liquidation or reemployment of
funds or otherwise.  Determinations by U.S. Bank for purposes of this
Section 4.6(d) of the amount required to indemnify U.S. Bank shall be conclusive
in the absence of manifest error.

            (e)      Notwithstanding any other term of this Agreement, Borrower
may not select the LIBOR Borrowing Rate if an Event of Default hereunder has
occurred and is continuing.

            (f)       Nothing contained in this Agreement, including, without
limitation, the determination of any Interest Period or U.S. Bank’s quotation of
any LIBOR Borrowing Rate, shall be construed to prejudice U.S. Bank’s right to
decline to make any requested Funding provided that U.S. Bank acts in accordance
with the provisions of this Agreement.

            4.10   Deposits Unavailable or Interest Rate Unascertainable or
                    Inadequate; Impracticability

            If U.S. Bank determines (which determination shall be conclusive and
binding on the parties hereto) that:

            (a)      Deposits of the necessary amount for the relevant Interest
Period for any LIBOR Rate Borrowing are not available to U.S. Bank in the
relevant markets or that, by reason of circumstances affecting such market,
adequate and reasonable means do not exist for ascertaining the LIBOR Rate for
such Interest Period;

 

 

            (b)      The LIBOR Rate (Reserved Adjusted) will not adequately and
fairly reflect the cost to U.S. Bank of making or funding the LIBOR Rate
Borrowing for a relevant Interest Period; or

            (c)      The making or funding of LIBOR Rate Borrowing has become
impracticable as a result of any event occurring after the date of this
Agreement which, in the opinion of U.S. Bank, materially and adversely affects
such LIBOR Rate Borrowing or U.S. Bank’s commitment to make such LIBOR Rate
Borrowing or the relevant market;

            U.S. Bank shall promptly give notice of such determination to
Borrower, and (i) any notice of a new LIBOR Rate Borrowing previously given by
Borrower and not yet borrowed or converted shall be deemed to be a notice to
make a Prime Rate Borrowing, and (ii) Borrower shall be obligated to either
repay in full any outstanding LIBOR Rate Borrowings, on the last day of the
current Interest Period with respect thereto or convert any such LIBOR Rate
Borrowing to a Prime Rate Borrowing on such last day.

            4.11   Changes in Law Rendering LIBOR Rate Borrowing Unlawful

            If at any time due to the adoption of any law, rule, regulation,
treaty, or directive, or any change therein or in the interpretation or
administration thereof by any court, central bank, governmental authority,
agency, or instrumentality, or comparable agency charged with the interpretation
or administration thereof, or for any other reason arising subsequent to the
date of this Agreement, it shall become unlawful or impossible for U.S. Bank to
make or fund any LIBOR Rate Borrowing, the obligation of U.S. Bank to provide
such LIBOR Rate Borrowing shall, upon the happening of such event, forthwith be
suspended for the duration of such illegality or impossibility.  If any such
event shall make it unlawful or impossible for U.S. Bank to continue any LIBOR
Rate Borrowing previously made by it hereunder, U.S. Bank shall, upon the
happening of such event, notify Borrower thereof in writing, and Borrower shall,
at the time notified by U.S. Bank, either convert each such unlawful LIBOR Rate
Borrowing to a Prime Rate Borrowing or repay such LIBOR Rate Borrowing in full,
together with accrued interest thereon, subject to the provisions of
Section 4.6(d).

            4.12   Increased Costs

  If, as a result of any law, rule, regulation, treaty, or directive, or any
change therein or in the interpretation or administration thereof, or compliance
by U.S. Bank with any request or directive (whether or not having the force of
law) from any court, central bank, governmental authority, agency, or
instrumentality, or comparable agency:

 

 

            (a)      Any tax, duty, or other charge to the Loans, the Notes or
the commitments is imposed thereunder, modified or deemed applicable, or the
basis of taxation of payments to U.S. Bank of interest or principal of the Loans
or of the commitment fees (other than taxes imposed on the overall net income of
U.S. Bank by the jurisdiction in which has its principal office) is changed;

            (b)      Any reserve, special deposit, special assessment, or
similar requirement against assets of, deposits with, or for the account of, or
credit extended by, U.S. Bank is imposed, modified, or deemed applicable;

            (c)      Any increase in the amount of capital required or expected
to be maintained by U.S. Bank or any Person controlling U.S. Bank is imposed,
modified, or deemed applicable; or

            (d)      Any other condition affecting this Agreement or the
commitments hereunder is imposed on U.S. Bank or the relevant funding markets;

            and U.S. Bank determines that, by reason thereof, the cost to
U.S. Bank of making or maintaining the Loans or the commitment is increased, or
the amount of any sum receivable by U.S. Bank hereunder or under the Notes is
reduced;

            then, Borrower shall pay to U.S. Bank upon demand such additional
amount or amounts as will compensate U.S. Bank (or the controlling Person in the
instance of (c) above) for such additional costs or reduction (provided that
U.S. Bank has not been compensated for such additional cost or reduction in the
calculation of the LIBOR Reserve Rate).  Determinations by U.S. Bank for
purposes of this Section 4.12 of the additional amounts required to compensate
U.S. Bank shall be conclusive in the absence of manifest error.  In determining
such amounts, U.S. Bank may use any reasonable averaging, attribution, and
allocation methods.

            4.13   Discretion of U.S. Bank as to Manner of Funding

            Notwithstanding any provision of this Agreement to the contrary,
U.S. Bank shall be entitled to fund and maintain its funding of all or any part
of the Loans in any manner it elects; it being understood, however, that for
purposes of this Agreement, all determinations hereunder shall be made as if
U.S. Bank had actually funded and maintained each LIBOR Rate Borrowing during
the Interest Period for such LIBOR Rate Borrowing through the purchase of
deposits having a term corresponding to such Interest Period and bearing an
interest rate equal to the LIBOR Rate for such Interest Period (whether or not
U.S. Bank shall have granted any participations in such LIBOR Rate Borrowing).

 

ARTICLE VI. NEGATIVE COVENANTS

6.1     Tangible Net Worth

Section 7.15 of the Credit Agreement is hereby deleted and replaced with the
following:

 

            At any time during the terms of the Loans, permit Tangible Net Worth
to be less than the sum of (a) $30,000,000, plus, on an aggregate basis, (ii) as
of the end of each of Borrower's first fiscal quarters (commencing with
Borrower's first fiscal quarter in the year 2000), an amount equal to 50 percent
of Borrower's consolidated net income, without reduction for any consolidated
net losses experienced by Borrower in any fiscal year.

6.2 Working Capital

Section 7.16 of the Credit Agreement is hereby deleted and replaced with the
following:

            At any time during the terms of the Loans, permit Working Capital to
be less than the sum of (a) $35,000,000, plus, on an aggregate basis, (ii) as of
the end of each of Borrower's first fiscal quarters (commencing with Borrower's
first fiscal quarter in the year 2000), an amount equal to 50 percent of
Borrower's consolidated net income, without reduction for any consolidated net
losses experienced by Borrower in any fiscal year.

6.3 Debt Service Coverage

Section 7.17 of the Credit Agreement is hereby deleted and replaced with the
following:

            Permit the Debt Service Coverage Ratio to be less than 1.25:1.00 as
of the end of any fiscal quarter of Borrower for the trailing four-quarters then
ended.

6.4 Funded Debt Ratio

Section 7.18 of the Credit Agreement is hereby deleted and replaced with the
following:

            As of the end of any fiscal quarter of Borrower for the trailing
four-quarters then ended, permit the Funded Debt Ratio to be greater than the
following:

 

Time Period

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

Maximum Funded Debt
Ratio

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

3/31/00 - 12/31/00 3.5:1.0 Thereafter 2.5:1.0

 

ARTICLE VII. MODIFICATION TO SECURITY AGREEMENTS

The parties agree that the schedules attached to the Security Agreements shall
be replaced with Schedules I attached to this Amendment.  Borrower hereby
authorizes U.S. Bank to replace the schedules attached to the Security
Agreements with Schedules I attached hereto and to refile the Security
Agreements with the appropriate Governmental Bodies.

 

ARTICLE VIII. CONDITIONS PRECEDENT

The modifications set forth in this Amendment shall not be effective unless and
until the following conditions have been fulfilled to U.S. Bank’s satisfaction:

(a)      U.S. Bank shall have received this Amendment, the Renewal Revolving
Note, and the Renewal Acquisition Note duly executed and delivered by the
parties hereto.

(b)      U.S. Bank shall have received, duly executed and delivered by each of
the EAW Entities, a security agreement in the form attached hereto as Exhibit C
(the “EAW Entity Security Agreements”), granting to U.S. Bank a first priority
and exclusive security interest in all of the personal property of the EAW
Entities, whether tangible or intangible, now owned or hereafter acquired,
together with landlord waivers executed and delivered by EAW’s landlords in a
form reasonably designated by U.S. Bank.

(c)      U.S. Bank shall have received, duly executed and delivered by each of
the EAW Entities, such financing statements and other documents deemed necessary
by U.S. Bank to perfect the security interest granted to U.S. Bank.

(d)      U.S. Bank has received a guaranty from each of the EAW Entities, duly
executed and delivered, in the form attached hereto as Exhibit D (the “EAW
Entity Guaranties”).

(e)      U.S. Bank shall have received, duly executed and delivered by Borrower,
a pledge agreement in the form attached hereto as Exhibit E (“Pledge
Agreement”), pledging to U.S. Bank a first priority Lien against all of the
outstanding capital stock of EAW, together with an assignment separate from
certificate for each share certificate pledged and the originals of all share
certificates representing the stock pledged thereunder.

(f)       Borrower shall have paid the loan fees provided for in this Amendment.

(g)      U.S. Bank shall have received, reviewed and approved all agreements and
documents arising out of or related to the EAW acquisition and the payoff of
EAW’s indebtedness to Fleet National Bank.

(h)      There shall not exist any Default or Event of Default under the Credit
Agreement or any other Loan Document.

(i)       All representations and warranties of Borrower contained in the Credit
Agreement or otherwise made in writing in connection therewith or herewith shall
be true and correct and in all material respects have the same effect as though
such representations and warranties had been made on and as of the date of this
Amendment.

(j)       U.S. Bank shall have received, reviewed and approved all
organizational documents and a current certificate of good standing for each of
the EAW Entities, together with such board resolutions for the board of
directors of the EAW Entities, Borrower and Mackie Designs Manufacturing Inc. as
deemed necessary by U.S. Bank.

 

 

 

 

ARTICLE IX. GENERAL PROVISIONS

9.1     Representations and Warranties

Borrower hereby represents and warrants to U.S. Bank that as of the date of this
Amendment, there exists no Default or Event of Default.  All representations and
warranties of Borrower contained in the Credit Agreement and the Loan Documents,
or otherwise made in writing in connection therewith, are true and correct as of
the date of this Amendment.  U.S. Bank acknowledges the disclosure by Borrower
of the existence of the case entitled The Travelers Insurance Company v. Eastern
Acoustic Works, Inc., et al vs. Eastern Acoustic Works, Inc., Superior Court
Department, Worcester Massachusetts, Civil Action No. 97-0922-B, and agrees that
neither the existence of such case nor the results of any trial or any pending
motions in such case will be deemed a violation of any warranty or
representation given by Borrower or Eastern Acoustic Works, Inc. either in this
Agreement or any other agreement or documentation given in connection herewith. 
Borrower acknowledges and agrees that all of Borrower’s Indebtedness to
U.S. Bank is payable without offset, defense, or counterclaim.

9.2     Security

All Loan Documents evidencing U.S. Bank’s security interest in the Collateral
shall remain in full force and effect, and shall continue to secure, without
change in priority, the payment and performance of the Loans, as amended herein,
and any other Indebtedness owing from Borrower to U.S. Bank.

9.3     Guaranty

The parties hereto agree that the Guaranty shall remain in full force and effect
and continue to guarantee the repayment of the Loans to U.S. Bank as set forth
in such Guaranty.

9.4     Payment of Expenses

Borrower shall pay on demand all costs and expenses of U.S. Bank incurred in
connection with the preparation, negotiation, execution, and delivery of this
Amendment, including, without limitation, reasonable attorneys’ fees incurred by
U.S. Bank.

9.5     Survival of Credit Agreement

The terms and conditions of the Credit Agreement and each of the other Loan
Documents shall survive until all of Borrower’s obligations under the Credit
Agreement are satisfied in full.

9.6     Year 2000

Borrower has reviewed and assessed its business operations and computer systems
and applications to address the “year 2000 problem” (that is, that computer
applications and equipment used by Borrower, directly or indirectly through
third parties, may have been or may be unable to properly perform date-sensitive
functions before, during and after January 1, 2000).  Borrower represents and
warrants that the year 2000 problem has not resulted in and to the best
knowledge of Borrower will not result in a material adverse change in Borrower’s
business condition (financial or otherwise), operations, properties or prospects
or ability to repay U.S. Bank.  Borrower agrees that this representation and
warranty will be true and correct on and shall be deemed made by Borrower on
each date Borrower requests any Funding under this Agreement or Revolving Note
or delivers any information to U.S. Bank.  Borrower will promptly deliver to
U.S. Bank such information relating to this representation and warranty as
U.S. Bank requests from time to time.

 

9.7     Counterparts

This Amendment may be executed in one or more counterparts, each of which shall
constitute an original agreement, but all of which together shall constitute one
and the same agreement.

9.8     Statutory Notice

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, U.S. Bank and Borrower have caused this Amendment to be duly
executed by their respective duly authorized signatories as of the date first
above written.

  MACKIE DESIGNS INC.           By

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    Name:

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    Title:

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              U.S. BANK NATIONAL ASSOCIATION           By

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    Ann B. Caldwell, Vice President

 

REAFFIRMATION OF GUARANTY AND COLLATERAL
DOCUMENTS

The undersigned hereby:  (a) acknowledges that it has read the foregoing Fourth
Amendment to Credit Agreement, (b) reaffirms its obligations under the Guaranty
and the Security Agreement and other collateral documents evidencing security
interests granted by the undersigned to U.S. Bank to secure the obligations of
Borrower to U.S. Bank, (c) agrees that its Guaranty guarantees and its Security
Agreement secures the repayment of the Loans, as amended by the foregoing Fourth
Amendment to Credit Agreement, and (d) acknowledges that its obligations
pursuant to its Guaranty and the Security Agreement are enforceable without
defense, offset, or counterclaim.

  MACKIE DESIGNS MANUFACTURING INC.               By

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    Name:

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    Title:

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