Exhibit 10.10




 




 




INTERCREDITOR

AND SUBORDINATION AGREEMENT




 




THIS

INTERCREDITOR AND SUBORDINATION AGREEMENT (“Intercreditor Agreement”) dated as

of March 31, 2003, is by and among CONGRESS FINANCIAL CORPORATION (FLORIDA), a

Florida corporation in its capacity as agent pursuant to the Senior Loan

Agreement (as hereinafter defined) acting for and on behalf of the financial

institutions from time to time party thereto as lenders (in such capacity,

“Senior Creditor Agent” as hereinafter further defined), and the financial

institutions from time to time party to the Senior Loan Agreement as lenders

(“Lenders” as hereinafter further defined), and U.S. BANK NATIONAL ASSOCIATION,

a national banking association (“Junior Creditor” as hereinafter further

defined).




 




W

I  T  N  E  S  S  E  T  H:




 




WHEREAS,

pursuant to the Junior Loan Agreement, Mackie Designs Inc., a Washington

corporation (“Borrower” as hereinafter further defined) is indebted to Junior

Creditor, which indebtedness is secured by certain assets and properties of Borrower

and Obligors (as hereinafter defined);




 




WHEREAS, the

Lenders have entered or are about to enter into financing arrangements with

Borrower, pursuant to which Lenders may, upon certain terms and conditions,

make loans and provide other financial accommodations to Borrower secured by

certain assets and properties of Borrower and Obligors; and




 




WHEREAS,

Creditors (as hereinafter defined) desire to enter into this Intercreditor

Agreement to (i) confirm the relative priority of the security interests of each

Creditor in the assets and properties of Borrower and Obligors, (ii) provide

for the orderly sharing among Creditors, in accordance with such priorities, of

proceeds of such assets and properties upon any foreclosure thereon or other

disposition thereof, and (iii) agree upon the terms of the subordination of the

obligations of Borrower and Obligors to Junior Creditor and related matters;




 




NOW THEREFORE,

in consideration of the mutual benefits accruing to Creditors hereunder and

other good and valuable consideration, the receipt and sufficiency of which is

hereby acknowledged, the parties hereto do hereby agree as follows:




 




1.                                       DEFINITIONS




 




As used above

and in this Intercreditor Agreement, the following terms shall have the

meanings ascribed to them below:




 




1.1      “Agreements” shall mean,

collectively, the Senior Creditor Agreements and the Junior Creditor

Agreements; each sometimes being referred to individually as an “Agreement”.




 





























 




1.2      “Blockage Notice” shall mean a

written notice from the Senior Creditor Agent to the Borrower and the Junior

Creditor that a Non-Triggering Event of Default has occurred and is continuing

with respect to the Senior Debt and which specifies that such notice is a

“Blockage Notice”.




 




1.3      “Blockage Period” shall mean (a)

any period during which a Triggering Event of Default has occurred and is

continuing; and (b) any other period commencing on the date a Blockage Notice

is given by the Senior Creditor Agent and ending on the earliest to occur of

(1) the date when each Non-Triggering Event of Default that was the basis for

such notice has been cured or waived, and (2) one hundred eighty (180) days

after the date such Blockage Notice is given,




 




1.4      “Borrower” shall mean Mackie

Designs Inc. a Washington corporation, and its successors and assigns (and

including a receiver, trustee or debtor-in-possession on behalf of such person

or on behalf of any such successor or assign).




 




1.5      “Collateral” shall mean all of the

property and interests in property, real or personal, tangible or intangible,

now owned or hereafter acquired by any Debtor in or upon which any of Creditors

at any time has a Lien, and including, without limitation, all proceeds of such

property and interests in property.




 




1.6      “Creditors” shall mean,

collectively, Senior Creditor Agent, Lenders, Junior Creditor and their

respective successors and assigns; each sometimes being referred to

individually as a “Creditor”.




 




1.7      “Debtors” shall mean, collectively,

Borrower and Obligors; each sometimes being referred to individually as a

“Debtor”.




 




1.8      “Excess Availability” shall have

the meaning assigned in the Senior Loan Agreement.




 




1.9      “Guarantors” shall mean

collectively, Mackie Investment Co., Mackie Designs Manufacturing, Inc., and

SIA Software Company, Inc.




 




1.10    “Junior Creditor” shall mean U.S.

Bank National Association, and its successors and assigns.




 




1.11    “Junior Creditor Agreements” shall

mean, collectively, the Junior Loan Agreement, the Subordinated Note and all

agreements, documents and instruments at any time executed and/or delivered by

Debtors or any other Person to, with or in favor of Junior Creditor in

connection therewith or related thereto, as all of the foregoing now exist or

may hereafter be amended, modified, supplemented, extended, renewed, restated,

refinanced, replaced or restructured (in whole or in part and including any

agreements with, to or in favor of any other lender or group of lenders that at

any time refinances, replaces or succeeds to all or any portion of the Junior

Debt).




 




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1.12    “Junior Creditor’s Credit Percentage” shall

mean, at any given date, the principal amount of the Junior Debt divided by the

sum of the principal amount of the Junior Debt plus the Maximum Credit (as

defined in the Senior Loan Agreement).




 




1.13    “Junior Debt” shall mean all

obligations, liabilities and indebtedness of every kind, nature and description

owing by any or all Debtors to Junior Creditor, including principal, interest,

charges, fees, premiums, indemnities and expenses, however evidenced, whether

as principal, surety, endorser, guarantor or otherwise, whether arising under

the Junior Creditor Agreements or otherwise, whether now existing or hereafter

arising, whether arising before, during or after the initial or any renewal

term of the Junior Creditor Agreements or after the commencement of any case

with respect to any Debtor under the U.S. Bankruptcy Code or any state or

foreign insolvency law or similar statute (and including, without limitation,

any principal, interest, fees, costs, expenses and other amounts which would

accrue and become due but for the commencement of such case, whether or not

such amounts are allowed or allowable in whole or in part in any such case or

similar proceeding), whether direct or indirect, absolute or contingent, joint

or several, due or not due, primary or secondary, liquidated or unliquidated,

secured or unsecured, and whether arising directly or howsoever acquired by

Junior Creditor.




 




1.14    “Junior Debt Stated Maturity Date”

shall mean March 31, 2006.




 




1.15    “Junior Loan Agreement” shall mean the

Second Amended and Restated Subordinated Credit Agreement, dated of even date

herewith, by and among Borrower, Guarantors, and Junior Creditor, as the same

now exists or may hereafter be amended, modified, supplemented, extended,

renewed, restated, refinanced, replaced or restructured (in whole or in part

and including any agreement with, to or in favor of any other lender or group

of lenders that at any time refinances, replaces or succeeds to all or any

portion of the Junior Debt).




 




1.16    “Lenders” shall mean Congress

Financial Corporation (Florida), a Florida corporation, in its individual

capacity and not as agent and any other party to the Senior Loan Agreement or

any of the other Senior Creditor Agreements as a lender, and their respective

successors and assigns.




 




1.17    “Lien” shall mean any mortgage, deed

of trust, pledge, hypothecation, assignment, deposit arrangement, security

interest, encumbrance (including, but not limited to, easements, rights of way

and the like), lien (statutory or other), security agreement or transfer

intended as security, including without limitation, any conditional sale or

other title retention agreement, the interest of a lessor under a capital lease

or any financing lease having substantially the same economic effect as any of

the foregoing.




 




1.18    “Non-Triggering Event of Default”

shall mean any Senior Debt Event of Default (other than a Triggering Event of

Default) the occurrence of which permits acceleration of the Senior Debt.




 




1.19    “Obligors” shall mean, collectively,

Guarantors and any other person (other than Borrower) liable on or in respect

of the Senior Debt or the Junior Debt, and its successors and assigns,

including, without limitation, a receiver, trustee or debtor-in-possession on

behalf of such person or on behalf of any such successor or assign.




 




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1.20    “Person” or “person” shall

mean any individual, sole proprietorship, partnership, corporation (including,

without imitation, any corporation which elects subchapter S status under the

Internal Revenue Code of 1986, as amended), limited liability company, limited

liability partnership, business trust, unincorporated association, joint stock

company, trust, joint venture, or other entity or any government or any agency

or instrumentality or political subdivision thereof.




 




1.21    “Senior Creditor Agent” shall mean

Congress Financial Corporation (Florida), a Florida corporation, in its

capacity as agent on behalf of Lenders pursuant to the Senior Loan Agreement

(and not in its individual capacity), and any successor or replacement agent

for and on behalf of Lenders under the Senior Loan Agreement.




 




1.22    “Senior Creditor Agreements” shall

mean, collectively, the Senior Loan Agreement and all agreements, documents and

instruments at any time executed and/or delivered by any Debtor or any other

person to, with or in favor of Senior Creditor Agent or any Lender in

connection therewith or related thereto, as all of the foregoing now exist or

may hereafter be amended, modified, supplemented, extended, renewed, restated,

refinanced, replaced or restructured (in whole or in part and including any

agreements with, to or in favor of any other lender or group of lenders that at

any time refinances, replaces or succeeds to all or any portion of the Senior

Debt).




 




1.23    “Senior Debt” shall mean any and all

obligations, liabilities and indebtedness of every kind, nature and description

owing by any or all Debtors to Senior Creditor Agent or any Lender and/or its

affiliates or participants, including principal, interest, charges, fees,

premiums, indemnities and expenses, however evidenced, whether as principal,

surety, endorser, guarantor or otherwise, whether arising under the Senior

Creditor Agreements or otherwise, whether now existing or hereafter arising,

whether arising before, during or after the initial or any renewal term of the

Senior Creditor Agreements or after the commencement of any case with respect

to any Debtor under the U.S. Bankruptcy Code or any state or foreign insolvency

law or similar statute (and including, without limitation, any principal,

interest, fees, costs, expenses and other amounts which would accrue and become

due but for the commencement of such case, whether or not such amounts are

allowed or allowable in whole or in part in any such case or similar

proceeding), whether direct or indirect, absolute or contingent, joint or

several, due or not due, primary or secondary, liquidated or unliquidated,

secured or unsecured, and whether arising directly or howsoever acquired by

Senior Creditor Agent or any Lender.




 




1.24    “Senior Debt Event of Default” shall

mean any “Event of Default” under and as defined in the Senior Loan Agreement.




 




1.25    “Senior Loan Agreement “ shall mean

the Loan and Security Agreement, dated of even date herewith, by and among

Senior Creditor Agent, Lenders, Borrower and Guarantors, as the same may be

amended, modified, supplemented, extended, renewed, restated, refinanced,

replaced or restructured (in whole or in part and including any agreement with,

to or in favor of any other lender or group of lenders that at any time

refinances, replaces or succeeds to all or any portion of the Senior Debt).




 




1.26    “Subordinated Note” shall mean the

Amended and Restated Term Loan Note by Borrower in favor of Junior Creditor

under or in connection with the Junior Loan Agreement (as




 




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the same now exist or may hereafter be

amended, modified, supplemented, extended, renewed, restated or replaced).




 




1.27    “Triggering Event of Default” shall

mean either of the following:  (a) any

default in the payment of any Senior Debt when due (whether upon maturity,

mandatory prepayment, acceleration or otherwise) beyond any applicable grace

period with respect thereto; or (b) Excess Availability of Borrower shall be

less than $1,500,000.




 




1.28    Interpretive Provisions. All terms

defined in the Uniform Commercial Code as in effect in the State of Florida,

unless otherwise defined herein shall have the meanings set forth therein. All

references to any term in the plural shall include the singular and all

references to any term in the singular shall include the plural.




 




2.                       SECURITY

INTERESTS; PRIORITIES; REMEDIES




 




2.1      Acknowledgment of Liens. (a) Junior Creditor hereby

acknowledges that Senior Creditor Agent, on behalf of itself and the Lenders,

has been granted a first priority Lien upon the Collateral to secure the Senior

Debt.




 




(b)              Senior Creditor Agent and the

Lenders hereby acknowledge that Junior Creditor has been granted a second

priority Lien upon the Collateral to secure the Junior Debt.




 




2.2      Priority of Liens. Notwithstanding

the order or time of attachment, or the order, time or manner of perfection, or

the order or time of filing or recordation of any document or instrument, or

other method of perfecting a security interest in favor of each Creditor in any

Collateral, and notwithstanding any conflicting terms or conditions which may

be contained in any of the Agreements, the Liens upon the Collateral of Senior

Creditor Agent, on behalf of itself and the Lenders, have and shall have

priority over the Liens upon the Collateral of Junior Creditor, and such Liens

of Junior Creditor are and shall be, in all respects, subject and subordinate

to the Liens of Senior Creditor Agent therein to the full extent of the Senior

Debt.




 




2.3      Priorities Unaffected by Action or

Inaction The lien priorities provided in Sections 2.1 and 2.2 shall not be

altered or otherwise affected by any amendment, modification, supplement,

extension, renewal, restatement or refinancing of either the Senior Debt or the

Junior Debt, nor by any action or inaction which any Creditor may take or fail

to take in respect of the Collateral.




 




2.4      Rights of Third Parties; No contest of

Liens. Each Creditor shall be solely responsible for perfecting and

maintaining the perfection of its Lien in and to each item constituting the

Collateral in which such Creditor has been granted a Lien.  The foregoing provisions of this Agreement

are intended solely to govern the respective lien priorities as between the

Creditors and shall not impose on Senior Creditor Agent or Lenders any

obligations in respect of the disposition of proceeds of foreclosure on any

Collateral which would conflict with prior perfected claims therein in favor of

any other person or any order or decree of any court or other governmental

authority or any applicable law. Junior Creditor agrees that it will not

contest the validity, perfection, priority or enforceability of the Liens upon

the Collateral of Senior Creditor Agent and that as among Senior Creditor

Agent, Lenders and Junior Creditor, the terms of this Intercreditor Agreement

shall govern even if part or all of the Senior Debt or the




 




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Liens securing payment and performance

thereof are not perfected or are avoided, disallowed, set aside or otherwise

invalidated in any judicial proceeding or otherwise.




 




2.5      Right to Enforce Agreements. Senior

Creditor Agent shall have the exclusive right to manage, perform and enforce

the terms of the Senior Creditor Agreements with respect to the Collateral, to

exercise and enforce all privileges and rights thereunder according to its

discretion and the exercise of its business judgment, including, without

limitation, the exclusive right to take or retake control or possession of the

Collateral and to hold, prepare for sale, process, sell, lease, dispose of, or

liquidate such Collateral in accordance with applicable law. Junior Creditor

shall not have any right to direct Senior Creditor Agent to exercise any right,

remedy or power with respect to the Collateral and Junior Creditor consents to

the exercise by Senior Creditor Agent of any such right, remedy or power.  Junior Creditor shall not institute any suit

or assert in any suit, bankruptcy, insolvency or other proceeding any claim

against Senior Creditor Agent or Lenders seeking damages from or other relief

by way of specific performance, instructions or otherwise, with respect to, and

Senior Creditor Agent and Lenders shall not be liable for, any action taken or

omitted to be taken by Senior Creditor Agent with respect to the Collateral in

accordance with applicable law. Until such time as the Senior Debt is paid in

full and the Senior Creditor Agreements are terminated, Junior Creditor shall

not have any right to participate in any negotiations or proceedings involving

any condemnation of the Collateral or any part thereof or involving any

insurance that may be available for loss of or damage to the Collateral or any

part thereof, and Junior Creditor hereby appoints Senior Creditor Agent as

Junior Creditor’s attorney-in-fact to settle or compromise any claim for

proceeds of insurance or condemnation with respect to the Collateral and to

collect or deposit any such proceeds, which power of attorney is irrevocable

and coupled with an interest for so long as this Intercreditor Agreement is in

effect.




 




2.6      Sale and Release of Collateral.

Notwithstanding anything to the contrary contained in any of the Agreements,

until all of the Senior Debt is indefeasibly paid in full and the Senior

Creditor Agreements are terminated, only Senior Creditor Agent shall have the

right to restrict or permit, or approve or disapprove, the sale, transfer or

other disposition of Collateral. Junior Creditor shall (a) be deemed to have

automatically and without further action released and terminated any Liens it

may have on the Collateral to the extent such Collateral is sold or otherwise disposed

of in a commercially reasonable manner either by Senior Creditor Agent, any

agent of Senior Creditor Agent, or any Debtor with the consent of Senior

Creditor Agent (provided that, in the case of a sale of Collateral other than

inventory or accounts, the cash proceeds thereof are applied to repay the term

loan made by Lenders to Borrower until fully repaid and thereafter to repay

revolving loans made by Lenders to Borrower), (b) be deemed to have authorized

Senior Creditor Agent to file UCC amendments and terminations covering the

Collateral so sold or otherwise disposed of as to UCC financing statements

between any Debtor and Junior Creditor to evidence such release and

termination, (c) promptly upon the request of Senior Creditor Agent, execute

and deliver such other release documents and confirmations of the authorization

to file UCC amendments and terminations provided for herein, in each case as

Senior Creditor Agent reasonably may require in connection with such sale or

other disposition by Senior Creditor Agent, Senior Creditor Agent’s agents or

any Debtor with the consent of Senior Creditor Agent to evidence and effectuate

such termination and release, provided, that, any such release or

UCC amendment or termination by Junior Creditor shall not extend to or

otherwise affect any of the rights, if any, of Junior Creditor to the proceeds

from any such sale or




 




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other disposition of Collateral and (d) be

deemed to have consented under the Junior Creditor Agreements to such sale or

other disposition. In the event that for any reason Junior Creditor shall fail

to immediately execute and deliver to Senior Creditor Agent any such release

documents, Senior Creditor Agent is hereby irrevocably authorized to execute

and deliver such release documents on behalf of Junior Creditor as Junior

Creditor’s attorney-in-fact. 

Notwithstanding anything to the contrary contained in this Section 2.6,

Junior Creditor shall not be deemed to release or terminate the Liens of Junior

Creditor to the extent that any proceeds of the sale, transfer or other

disposition of Collateral are in excess of the amount necessary to pay in full

all of the Senior Debt in immediately available funds.




 




2.7      Remedies.




 




(a)               Except as otherwise specifically

provided in Section 2.8 hereof, notwithstanding any rights or remedies

available to a Creditor under any of the Agreements, applicable law or

otherwise, Junior Creditor shall not, directly or indirectly, (i) exercise any

rights or remedies upon a default or event of default by Debtor under the

Junior Creditor Agreements or otherwise against any Collateral, or (ii) seek to

foreclose or realize upon (judicially or non-judicially) its Lien on any

Collateral or assert any claims or interests therein (including without

limitation, by setoff or notification of account debtors), or (iii) take any

other action against the Collateral.




 




(b)              Notwithstanding any rights or

remedies available to Junior Creditor under any of the Junior Creditor

Agreements, applicable law or otherwise, during a Blockage Period, Junior

Creditor shall not, directly or indirectly, (i) seek to collect from Debtors

(including, without limitation, from or by way of any of the Collateral) any of

the Junior Debt, (ii) exercise any of Junior Creditor’s rights or remedies upon

a default or event of default under the Junior Creditor Agreements or otherwise

(including, without limitation, accelerating the maturity of any Junior Debt)

or (iii) commence or join in any action or proceeding against any Debtor or its

properties under the U.S. Bankruptcy Code or any state or foreign insolvency

law or similar law, or any proceedings for liquidation, dissolution or any

winding up of any Debtor’s business, or the appointment of any trustee,

receiver or liquidator for any Debtor or any of its properties, or any

assignment for the benefit of creditors.




 




(c)               Notwithstanding any rights or

remedies available to Junior Creditor under any of the Junior Creditor

Agreements, Junior Creditor shall not, directly or indirectly, take any of the

actions set forth in Section 2.7(b) or Section 2.8(f) until at least fifteen

(15) business days after Junior Creditor shall have given Senior Creditor Agent

written notice of its intention to take any such action.




 




(d)              Notwithstanding anything to the

contrary contained herein, if, as of the Junior Debt Stated Maturity Date, the

Senior Debt has not been indefeasibly satisfied in full and the financing

arrangements among Senior Creditor Agent, Lenders and Debtors have not been terminated,

Junior Creditor shall not be entitled, directly or indirectly, for the 180 day

period immediately following the Junior Debt Stated Maturity Date (the “Waiting

Period”) to (i) seek to collect from Debtors (including, without limitation,

from or by way of any of the Collateral) any of the Junior Debt, (ii) exercise

any of Junior Creditor’s rights or remedies upon a default or event of default

under the Junior Creditor Agreements or otherwise (including, without

limitation, accelerating the maturity of any Junior Debt) or (iii) commence or

join in any action




 




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or proceeding against any Debtor or its

properties under the U.S. Bankruptcy Code or any state or foreign insolvency

law or similar law, or any proceedings for liquidation, dissolution or any

winding up of any Debtor’s business, or the appointment of any trustee,

receiver or liquidator for any Debtor or any of its properties, or any

assignment for the benefit of creditors. 

From and after the expiration of the Waiting Period, Junior Creditor

shall be entitled to enforce its rights and remedies against the Debtors, except

that, under no circumstances, shall Junior Creditor, directly or

indirectly, (A) exercise any rights or remedies upon a default or event of

default by Debtor under the Junior Creditor Agreements or otherwise against any

Collateral, or (B) seek to foreclose or realize upon (judicially or

non-judicially) its Lien on any Collateral or assert any claims or interests

therein (including without limitation, by setoff or notification of account

debtors), or (C) take any other action against the Collateral.




 




2.8      Limited Rights of Junior Creditor.

The foregoing shall not in any way limit or impair the right of Junior Creditor

(in accordance with the terms of the Junior Creditor Agreements) to: (a) bid

for and purchase Collateral at any private or judicial foreclosure upon such

Collateral initiated by Senior Creditor Agent, or (b) participate in any

administrative, legal or equitable action or proceeding against any Obligor

seeking any reorganization, liquidation, bankruptcy or any other action

involving the readjustment of all or any part of the Junior Debt, or other

similar relief under the U.S. Bankruptcy Code, or (c) send such notices of the

existence of, or any evidence or confirmation of, the Liens of Junior Creditor

in the Collateral to any court or governmental agency, or file or record any

such notice or evidence to the extent necessary to prove or preserve the Liens

of Junior Creditor in the Collateral or (d) join (but not control) any

foreclosure or other lien enforcement proceeding with respect to the Collateral

initiated by Senior Creditor Agent, so long as Junior Creditor does not delay

or interfere with the exercise by Senior Creditor Agent of its rights or (e)

accelerate the maturity of the Junior Debt following the date (if any) on which

Senior Creditor Agent has accelerated the maturity of the Senior Debt or (f)

increase the interest rate under the Junior Creditor Agreements to a post-default

rate of interest if, and only if, an event of default occurs and is continuing

under the Junior Creditor Agreements provided, however, that Junior Creditor

shall not be entitled to be paid in cash on a monthly basis at its post-default

rate of interest (and the 3 percent increase resulting from the invocation of

the post-default interest rate will be payable in kind by Borrower) if either

(i) Senior Creditor elects not to increase the interest rate under the Senior

Creditor Agreements to a post-default rate of interest, or (ii) Senior Creditor

subsequently elects to reduce the interest rate under the Senior Creditor

Agreements to a pre-default rate of interest or (g) to charge and receive a

waiver or amendment fee if, and only if, a Senior Debt Event of Default occurs

and such default is also an event of default under the Junior Creditor

Agreements and Senior Creditor elects to waive such Senior Debt Event of

Default and Junior Creditor elects or is required to waive such default under

the Junior Creditor Agreements; provided that the amount of such waiver fee

payable to Junior Creditor shall be in an amount equal to the product of the

amount of the waiver fee received by Lenders under the Senior Creditor

Agreements times Junior Creditor’s Credit Percentage or (h) to commence an

action against Borrower and any Obligors to collect any unpaid principal,

interest, or fees owed in respect of the Junior Debt, so long as (i) the

payment and receipt of any such unpaid amount is permitted under Section 3.2

hereof as of the due date of any such payment and is permitted under Section

3.2 hereof as of the date that Junior Creditor receives payment thereof, and

(ii) any collection action shall be limited to only an operating account of the

Borrower or any Obligor or any of their other assets not constituting

Collateral (under no circumstances shall any action be taken by Junior Creditor

against the




 




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Collateral or any lockbox or blocked account

or any other account of Borrower or any Obligor (other than an operating

account of the Borrower or such Obligor)). 

Any collection action permitted under clause (h) of this Section 2.8

shall be limited to the amount of the installment (or installments) of

principal, interest, or fees the payment of which as regularly scheduled or

required is then in default and shall not result in, nor shall such clause (h)

be deemed to permit, acceleration of the remaining unpaid principal of and

interest on the Junior Debt.




 




2.9      Right to Cure. Senior Creditor

Agent shall have the right, but not any obligation, to cure for the account of

Debtors any default by any Debtor under the Junior Creditor Agreements at any

time. In no event shall Senior Creditor Agent by virtue of the payment of amounts,

or performance of any obligation required to be paid or performed by any

Debtor, be deemed to have assumed any obligation of any Debtor to Junior

Creditor or any other person.




 




2.10    Certain Revolving Loans. If Senior

Creditor Agent or any Lender shall honor a request by a Debtor for a loan,

advance or other financial accommodation under the Senior Creditor Agreements,

whether or not Senior Creditor Agent or any Lender has knowledge that the

honoring of such request would result in an event of default, or act, condition

or event which with notice or passage of time or both would constitute an event

of default, under the Junior Creditor Agreements, Senior Creditor Agent and

Lenders shall not have any liability whatsoever to Junior Creditor as a result

of such breach, and without limiting the generality of the foregoing, Junior

Creditor agrees that Senior Creditor Agent and Lenders shall not have any

liability for tortious interference with contractual relations or for

inducement to breach any contract of Junior Creditor for actions taken (or not

taken, as the case may be) consistent with the terms of the Senior Creditor

Agreements.




 




3.                       SUBORDINATION

OF JUNIOR DEBT




 




3.1      Subordination.  Except as specifically set forth in Section

3.2 below, Junior Creditor hereby subordinates Junior Creditor’s right to

payment and satisfaction of the Junior Debt, directly or indirectly, by any

means whatsoever, to the indefeasible payment and satisfaction in full of all

Senior Debt.




 




3.2      Permitted Payments.  (a) Senior Creditor Agent and Lenders hereby

agree that, notwithstanding anything to the contrary contained in Section 3.1,

so long as no Blockage Period exists, Obligors may make and Junior Creditor may

receive and retain from Obligors (i) regularly scheduled non-cash payments of

interest in respect of the Junior Debt in accordance with the terms of the

Junior Loan Agreement as in effect on the date hereof in the form of additional

Junior Debt having the same terms as the existing Junior Debt evidenced by the

Junior Loan Agreement that are outstanding on the date hereof, (ii) regularly

scheduled mandatory payments of cash interest in respect of the Junior Debt in

accordance with the terms of the Junior Loan Agreement as in effect on the date

hereof, (iii)

mandatory prepayments of principal in respect of the Junior Debt in accordance

with the terms of the Junior Loan Agreement as in effect on the date hereof, (iv) regularly scheduled payment of

fees in respect of the Junior Debt in accordance with the terms of the Junior

Loan Agreement as in effect on the date hereof and (v) the payment in full of all outstanding Junior Debt on

the Junior Debt Stated Maturity Date; provided  that




 




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(x) as to any

payment of interest in respect of the Junior Debt based upon an interest rate

of 10% per annum (the “Stated Rate”) permitted under this Section 3.2, (1) the

Excess Availability of Borrower for the thirty (30) consecutive days

immediately preceding the date of each such payment shall not be less than

$6,000,000 and (2) the Excess Availability of Borrower on the date of such

payment and after giving effect to such payment shall not be less than

$6,000,000; except that if the Borrower fails to meet the foregoing Excess

Availability test, Borrower may pay interest in respect of the Junior Debt at a

rate of equal to 8% (the “Reduced Rate”) if, at any time, (A) the Excess

Availability of Borrower for the thirty (30) consecutive days immediately

preceding the date of each such payment shall not be less than $2,000,000 and

(B) the Excess Availability of Borrower on the date of such payment and after

giving effect to such payment shall not be less than $2,000,000; and with

respect to that portion of the interest payment equal to the difference between

the Stated Rate and the Reduced Rate (the “Unpaid Interest Payment”), such

Unpaid Interest Payment shall be due and payable on the Junior Debt Stated

Maturity Date;




 




(y) as to any

payment of fees in respect of the Junior Debt permitted under this Section 3.2,

(1) the Excess Availability of Borrower for the thirty (30) consecutive days

immediately preceding the date of such payment shall not be less than

$2,000,000 and (2) the Excess Availability of Borrower on the date of such

payment and after giving effect to such payment shall not be less than

$2,000,000; and




 




(z) as to any

other payment or prepayment permitted under this Section 3.2, (1) the Excess

Availability of Borrower for the thirty (30) consecutive days immediately

preceding the date of such payment or prepayment shall not be less than

$4,000,000 and (2) the Excess Availability of Borrower on the date of such

payment or prepayment and after giving effect to such payment or prepayment

shall not be less than $4,000,000.




 




(b)              Notwithstanding anything to the

contrary contained in Section 3.2(a) above, (i) no more than one Blockage

Notice may be given during any 360 day period and (ii) no Blockage Period shall

block or otherwise prohibit Obligors from paying, and Junior Creditor from

receiving, the payment of any Junior Debt following the date which is one

hundred eighty (180) days after the Junior Debt Stated Maturity Date (subject

to the provisions of Section 2.7(a) hereof).




 




3.3      Distributions.




 




(a)               In the event of any distribution,

division, or application, partial or complete, voluntary or involuntary, by

operation of law or otherwise, of all or any part of the assets of any Debtor

or the proceeds thereof to the creditors of any Debtor or readjustment of the

obligations and indebtedness of any Debtor, whether by reason of liquidation,

bankruptcy, arrangement, receivership, assignment for the benefit of creditors,

marshaling of assets of any Debtor or any other action or proceeding involving

the readjustment of all or any part of the indebtedness or other obligations of

any Debtor or the application of the assets of any Debtor to the payment or

liquidation thereof, or upon the dissolution or other winding up of any

Debtor’s business, or upon the sale of all or substantially all of any Debtor’s

assets, then, and in any such event, (i) Senior Creditor Agent and Lenders

shall first receive indefeasible payment in full in cash of all of the Senior

Debt prior to the payment of all or any part of the Junior Debt, and (ii)

Senior Creditor Agent and Lenders shall be entitled to receive any payment or

distribution of any




 




10





























 




kind or character, whether in cash,

securities or other property, which is payable or deliverable in respect of any

or all of the Junior Debt.




 




(b)              In order to enable Senior Creditor

Agent (on behalf of itself and the Lenders) to enforce its rights under Section

3.3(a) above, Senior Creditor Agent is hereby irrevocably authorized and

empowered (in its own name or in the name of Junior Creditor or otherwise), but

shall have no obligation, to enforce claims comprising any of the Junior Debt

by proof of debt, proof of claim, suit or otherwise and take generally any

action which Junior Creditor might otherwise be entitled to take, as Senior

Creditor Agent may deem necessary or advisable for the enforcement of its

rights or interests hereunder, except that Senior Creditor Agent shall not file

any proof of claim on behalf of Junior Creditor, either for itself or on behalf

of Junior Creditor, so long as Junior Creditor has properly filed such proof of

claim at least ten (10) days prior to the last day for which such proof of

claim may be filed.




 




(c)               To the extent necessary for

Senior Creditor Agent and Lenders to realize the benefits of the subordination

of the Junior Debt provided for herein (including the right to receive any

payment and distributions which might otherwise be payable or deliverable in

respect of the Junior Debt in any proceeding described in Section 3.3(a) or

otherwise), Junior Creditor shall execute and deliver to Senior Creditor Agent

such instruments or documents (together with such assignments or endorsements

as Senior Creditor Agent shall deem necessary), as may be reasonably requested

by Senior Creditor Agent.




 




3.4      Payments Received by Junior Creditor.  Except for payments received by Junior

Creditor as provided in Section 3.2 above, should any payment or distribution

or security or instrument or proceeds thereof be received by Junior Creditor in

respect of the Junior Debt, Junior Creditor shall receive and hold the same in

trust, as trustee, for the benefit of Senior Creditor Agent, segregated from

other funds and property of Junior Creditor and shall forthwith deliver the

same to Senior Creditor Agent (together with any endorsement or assignment of

Junior Creditor where necessary), for application to any of the Senior Debt. In

the event of the failure of Junior Creditor to make any such endorsement or

assignment to Senior Creditor Agent, Senior Creditor Agent, or any of its

officers or employees, are hereby irrevocably authorized on behalf of Junior

Creditor to make the same.




 




3.5      Instrument Legend and Notation.  Any instrument at any time evidencing the

Junior Debt, or any portion thereof, shall be permanently marked on its face

with a legend conspicuously indicating that payment thereof is subject to the

terms and conditions of this Intercreditor Agreement. In the event any legend

or endorsement is omitted, Senior Creditor Agent or any of its officers or

employees, are hereby irrevocably authorized on behalf of Junior Creditor to

make the same. No specific legend, further assignment or endorsement or

delivery of notes, guarantees or instruments shall be necessary to subject any

Junior Debt to the terms and conditions of this Intercreditor Agreement.




 




3.6      Rights of Junior Creditor. When all

Senior Debt has been indefeasibly paid and satisfied in full and the Senior

Creditor Agreements have been terminated, Junior Creditor shall have the right

to enforce all of the provisions of the Junior Creditor Agreements and exercise

remedies thereunder against the Collateral.




 




11





























 




3.7      Application of Proceeds.




 




(a)               The proceeds of any sale,

disposition or other realization upon all or any part of the Collateral shall

be applied in the following order of priorities:




 




(i)            first, to the payment in full in

immediately available funds of the expenses of the collection and enforcement

of the Senior Debt and such sale, disposition or other realization of the Collateral,

including such expenses, liabilities and advances incurred or made by Senior

Creditor Agent or any Lender in connection therewith, or any amounts paid to or

on behalf of Senior Creditor Agent or any Lender in connection therewith;




 




(ii)           second, to the payment in full of all

of the Senior Debt in whatever manner and order Senior Creditor Agent chooses

in accordance with the provisions of the Senior Creditor Agreements and

applicable law (and including amounts to hold as cash collateral for any such

Senior Debt which is contingent in such amounts and on such terms as Senior

Creditor Agent reasonably may require pursuant thereto);




 




(iii)          third, to the Junior Creditor for

payment and satisfaction in full in immediately available funds of all of the Junior

Debt in whatever manner and order Junior Creditor chooses in accordance with

the provisions of the Junior Creditor Agreements and applicable law; and




 




(iv)          fourth, to the Debtors or such other

person as may be lawfully entitled thereto.




 




(b)              Notwithstanding any instruction,

notice or claim to the contrary at any time received by Senior Creditor Agent

from Junior Creditor or otherwise, Senior Creditor Agent shall have no

obligation, liability or responsibility with respect to the distribution,

delivery or remittance of any proceeds of the Collateral to Junior Creditor,

except as specified in the following sentence. 

Any proceeds of Collateral received by Senior Creditor Agent which are

to be applied to the Junior Debt in accordance with the terms hereof are

required to be remitted by Senior Creditor Agent to Junior Creditor.




 




4.                       COVENANTS,

REPRESENTATIONS AND WARRANTIES




 




4.1      Additional Covenants.  (a) Junior Creditor and Debtors agree in

favor of Senior Creditor Agent and Lenders that:




 




(i)            except as specifically set forth in

Section 3.2 above, Debtors shall not, directly or indirectly, make and Junior

Creditor shall not, directly or indirectly, accept or receive any payment or

prepayment of principal or interest or fees or any payment pursuant to acceleration

or claims of breach or any payment to acquire Junior Debt or otherwise in

respect of any Junior Debt;




 




(ii)           Junior Creditor and Debtors shall not

amend, modify, alter or change in any material respect the terms of any of the

Junior Creditor Agreements or any other arrangements related to the Junior

Debt;




 




12





























 




(iii)          Junior Creditor shall not subordinate

any of the Junior Debt to any indebtedness of Debtors other than the Senior

Debt;




 




(iv)          Junior Creditor and Debtors shall at

any time or times, upon the request of Senior Creditor Agent, promptly furnish

to Senior Creditor Agent a true, correct and complete statement of the

outstanding Junior Debt; and




 




(v)           Junior Creditor shall execute and

deliver to Senior Creditor Agent such additional agreements, documents and

instruments and take such further actions as may be necessary or desirable in

the opinion of Senior Creditor Agent to effectuate the provisions and purposes

of this Intercreditor Agreement.




 




(b)           Junior Creditor represents and

warrants to Senior Creditor Agent and Lenders that:




 




(i)            to the best of the knowledge of the

Junior Creditor, as of the date hereof, no default or event of default, or act,

condition or event which with notice or passage of time or both would

constitute an event of default under any of the Junior Creditor Agreements

exists or has occurred;




 




(ii)           the execution, delivery and

performance of this Intercreditor Agreement by the Junior Creditor is within

its powers and has been authorized by Junior Creditor as provided in, and in

accordance with the requirements of, the Junior Creditor Agreements, and does

not contravene any law, any provision of any of the Junior Creditor Agreements

or any other agreement to which Junior Creditor is a party or by which it is

bound;




 




(iii)          Junior Creditor has not been granted

and has no Liens upon the assets and properties of any Debtor, except the Liens

of Junior Creditor under the Junior Creditor Agreements;




 




(iv)          this Intercreditor Agreement constitutes

the legal, valid and binding agreement of Junior Creditor, and is enforceable

in accordance with its terms and shall be binding on Junior Creditor; and




 




(v)           the Junior Creditor Agreements

provide that this Intercreditor Agreement is the valid and binding agreement of

Junior Creditor and is enforceable in accordance with its terms with respect to

Junior Creditor.




 




4.2      Additional Representations and

Warranties.  Junior Creditor and

Debtors represent and warrant to Senior Creditor Agent that:




 




(a)               as of the date hereof, the total

outstanding principal amount of the Junior Debt is $11,000,000;




 




(b)              as of the date hereof, Junior

Creditor is the exclusive legal and beneficial owner of all of the Junior Debt;

and




 




13





























 




(c)               none of the Junior Debt is

subject to any lien, security interest, financing statements, subordination,

assignment or other claim, except for Liens in favor of Junior Creditor and the

subordination set forth herein.




 




4.3      Representations, Warranties and

Covenants of Senior Creditor Agent and Lenders.  This Intercreditor Agreement constitutes the legal, valid and

binding obligations of Senior Creditor Agent and each Lender, enforceable in

accordance with its terms. Senior Creditor Agent shall at any time or times,

upon the request of Junior Creditor, promptly furnish to Junior Creditor a

true, correct and complete statement of the outstanding Senior Debt.




 




4.4      Waivers.  Notice of acceptance hereof, the making of loans, advances and

extensions of credit or other financial accommodations to, and the incurring of

any expenses by or in respect of, Debtors by Senior Creditor Agent and Lenders,

and presentment, demand, protest, notice of protest, notice of nonpayment or

default and all other notices to which Junior Creditor and Debtors are or may

be entitled are hereby waived (except as expressly provided for herein or as to

Debtor, in the Senior Creditor Agreements). Junior Creditor also waives notice

of, and hereby consents to, (a) any amendment, modification, supplement,

renewal, restatement or extensions of time of payment of or increase or

decrease in the amount of any of the Senior Debt or to the Senior Creditor

Agreements or any Collateral, (b) the taking, exchange, surrender and releasing

of Collateral or guarantees now or at any time held by or available to Senior

Creditor Agent or any Lender for the Senior Debt or any other person at any

time liable for or in respect of the Senior Debt, (c) the exercise of, or

refraining from the exercise of any rights against Debtors or any other obligor

or any Collateral, (d) the settlement, compromise or release of, or the waiver

of any default with respect to, any of the Senior Debt, and/or (e) Senior

Creditor Agent’s election, in any proceeding instituted under the U.S.

Bankruptcy Code, of the application of Section 1111(b)(2) of the U.S.

Bankruptcy Code. Any of the foregoing shall not, in any manner, affect the

terms hereof or impair the obligations of Junior Creditor hereunder.  Notwithstanding the foregoing, so long as

any Junior Debt is outstanding, (x) the amount of the Senior Debt consisting of

principal (but not interest, costs, expenses or other charges at any time

payable by any Debtor to Senior Creditor Agent or any Lender or charged by

Senior Creditor Agent to the loan account of any Debtor maintained by Senior

Credit Agent) shall not exceed the principal amount of $33,500,000, (y) prior

to an Event of Default under the Senior Credit Agreement, the amount of

principal payments Borrower is required to make in respect of the Senior Debt

shall not increase above the payments specified in the Senior Credit Agreements

as in effect on the date hereof, and (z) the definition of Excess Availability

and the amount thereof required to exist before a payment by Borrower in

respect of the Junior Debt shall not be changed from the applicable provisions

of the Senior Credit Agreements as in effect on the date hereof.  All of the Senior Debt shall be deemed to

have been made or incurred in reliance upon this Intercreditor Agreement.




 




4.5      Waiver of Financial Covenant Defaults.

If an event of default exists under any of the Junior Creditor Agreements

arising out of either the failure by Debtors to comply with Section 6.4, 6.7,

6.12, 6.17 or 6.18 of the Junior Loan Agreement or the failure of any Debtors

to comply with Section 9.4, 9.7, 9.12, 9.17, 9.18 or 9.19 of the Senior Loan

Agreement (each, a “Covenant Default”), then Junior Creditor shall be deemed to

have automatically waived any Covenant Default if and when Senior Creditor

Agent or Lenders waive any event of default under the Senior Creditor

Agreements arising out of such Covenant Default.  Upon the request of




 




14





























 




Senior Creditor Agent and at the expense of

Debtors, Junior Creditor shall execute such documents as Senior Creditor Agent

shall reasonably request to evidence the foregoing waiver.




 




4.6      Subrogation; Marshaling.  Junior Creditor shall not be subrogated to,

or be entitled to any assignment of any Senior Debt or of any Collateral or

guarantees or evidence of any thereof until all of the Senior Debt is

indefeasibly paid and satisfied in full and the Senior Creditor Agreements have

been terminated.  Junior Creditor hereby

waives any and all rights to have any Collateral or any part thereof granted to

Senior Creditor Agent marshaled upon any foreclosure or other disposition of

such Collateral by Senior Creditor Agent or Debtors.




 




4.7      No Offset.  In the event Junior Creditor at any time

incurs any obligation to pay money to Debtors, Junior Creditor hereby

irrevocably agrees that it shall pay such obligation in cash or cash

equivalents in accordance with the terms of the contract governing such

obligation and shall not deduct from or setoff against any amounts owed by Junior

Creditor to Debtors in connection with any such transaction any amounts Junior

Creditor claims are due to it with respect to the Junior Debt.




 




4.8      Bailee for Perfection.  Each of Creditors hereby appoints the others

as agent for the purposes of perfecting their respective Liens in and on any of

the Collateral; provided, that, no Creditor shall have any duty or liability to

protect or preserve any rights pertaining to any of the Collateral and, except

for gross negligence or willful misconduct as determined pursuant to a final

non-appealable order of a court of competent jurisdiction, each Creditor hereby

waives, and releases the other Creditors from, all claims and liabilities

arising pursuant to the other’s role as bailee with respect to the Collateral.




 




4.9      Notices of Default.  Each Creditor shall provide the other

Creditor with written notice of any declaration of a default by it under its

respective Agreements concurrently with the sending of same to any Debtor;

provided, that, the failure of either Creditor to do so shall not affect the

terms of this Intercreditor Agreement and shall not create a cause of action

against such Creditor or create any claim against it. The failure by either

Creditor to send a copy of any notice of a declaration of a default to the

other Creditor shall not affect the validity of such notice as against Debtors.

Debtors hereby authorize and consent to each of Creditors sending such notices

and other materials to the other as provided for herein.




 




5.                       MISCELLANEOUS




 




5.1      Amendments.  Any waiver, permit, consent or approval by

any Creditor of or under any provision, condition or covenant to this

Intercreditor Agreement must be in writing and shall be effective only to the

extent it is set forth in writing and as to the specific facts or circumstances

covered thereby. Any amendment of this Intercreditor Agreement must be in

writing and signed by each of the parties to be bound thereby.




 




5.2      Successors and Assigns.




 




(a)               This Intercreditor Agreement

shall be binding upon the parties hereto and their respective successors and

assigns and shall inure to the benefit of each of Creditors and its respective

successors, participants and assigns.




 




15





























 




(b)           To the extent provided in their respective

Agreements, each of the Creditors reserves the right to grant participations

in, or otherwise sell, assign, transfer or negotiate all or any part of, or any

interest in, the Senior Debt or Junior Debt, as the case may be, and the

Collateral securing same; provided, that, no Creditor shall be

obligated to give any notices to or otherwise in any manner deal directly with

any participant in the Senior Debt or Junior Debt, as the case may be, and no

participant shall be entitled to any rights or benefits under this

Intercreditor Agreement except through the Creditor from which it acquired its

participation. In connection with any participation or other transfer or

assignment, a Creditor (i) may disclose to such assignee, participant or other

transferee or assignee all documents and information which such Creditor now or

hereafter may have relating to any Debtor or the Collateral and (ii) shall

disclose to such participant or other transferee or assignee the existence and

terms and conditions of this Intercreditor Agreement. In the case of an

assignment or transfer, the assignee or transferee acquiring any interest in

the Senior Debt or the Junior Debt, as the case may be, shall execute and

deliver to each of Creditors a written acknowledgement of receipt of a copy of

this Intercreditor Agreement and the written agreement by such person to be

bound by the terms of this Intercreditor Agreement.




 




(c)           In connection with any assignment or

transfer of any or all of the Senior Debt or Junior Debt, as the case may be,

or any or all rights of any Creditor in the property of any Debtor (other than

pursuant to a participation), each of the Creditors agrees to execute and

deliver an agreement containing terms substantially identical to those

contained herein in favor of any such assignee or transferee and, in addition,

will execute and deliver an agreement containing terms substantially identical

to those contained herein in favor of any third person who succeeds to or

refinances, replaces or substitutes for any or all of Senior Creditor Agent’s

and Lenders’ financing of any Debtor, whether such successor or replacement

financing occurs by transfer, assignment, “takeout” or any other means or

vehicle.




 




5.3      Insolvency.  This Intercreditor Agreement shall be

applicable both before and after the filing of any petition by or against any

Debtor under the U.S. Bankruptcy Code, all state or foreign insolvency statutes

and all converted or succeeding cases in respect thereof, and all references

herein to any Debtor shall be deemed to apply to a trustee for any Debtor and

any Debtor as debtor-in-possession. The relative rights of Senior Creditor

Agent, Lenders, and Junior Creditor to repayment of the Senior Debt and the

Junior Debt, respectively, and in or to any distributions from or in respect of

any Debtor or any Collateral or proceeds of Collateral, shall continue after

the filing thereof on the same basis as prior to the date of the petition,

subject to any court order approving the financing of, or use of cash

collateral by, any Debtor as debtor-in-possession.




 




5.4      Bankruptcy Financing.  If any Debtor shall become subject to a

proceeding under the U.S. Bankruptcy Code and if Senior Creditor Agent and

Lenders desire to permit the use of cash collateral or to provide financing to

such Debtor under either Section 363 or Section 364 of the U.S. Bankruptcy

Code, Junior Creditor agrees as follows: (a) adequate notice to Junior Creditor

shall have been provided for such financing or use of cash collateral if Junior

Creditor receives notice three (3) business days prior to the entry of the

order approving such financing or use of cash collateral and (b) no objection

will be raised by Junior Creditor to any such financing or use of cash

collateral on the ground of a failure to provide “adequate protection” for

Junior Creditor’s junior Liens on the Collateral or any other grounds, provided

Junior Creditor retains a




 




16





























 




Lien on the post-petition Collateral with the

same priority as existed prior to the commencement of the proceeding under the

U.S. Bankruptcy Code. For purposes of this Section, notice of a proposed

financing or use of cash collateral shall be deemed given when given, in the

manner prescribed by Section 5.5 hereof, to Junior Creditor.




 




5.5      Notices.  All notices, requests and demands to or upon the respective

parties hereto shall be in writing and shall be deemed duly given, made or

received: if delivered in person, immediately upon delivery; if by telex, telegram

or facsimile transmission, immediately upon sending and upon confirmation of

receipt; if by nationally recognized overnight courier service with

instructions to deliver the next business day, one (1) business day after

sending; and if mailed by certified mail, return receipt requested, five (5)

days after mailing to the parties at their addresses set forth below (or to

such other addresses as the parties may designate in accordance with the

provisions of this Section):




 




	

  To Senior Creditor Agent


  or any Lender:


  	

   


  	

  Congress Financial Corporation (Florida)


  
	

   


  	

   


  	

  777 Brickell Avenue


  Miami, Florida 33131


  Attention: Portfolio Manager


  Telecopier: (305) 371-9456


  
	

   


  	

   


  	

   


  
	

  To Junior Creditor:


  	

   


  	

  U.S. Bank National Association


  Suite 810


  111 S.W. Fifth Avenue


  Portland, Oregon 97204


  Attention: Ms. Elizabeth C. Hengeveld


  Telecopier: (503) 275-5919


  





 




Any Creditor may change the address(es) to

which all notices, requests and other communications are to be sent by giving

written notice of such address change to the other Creditor in conformity with

this Section 5.5, but such change shall not be effective until notice of such

change has been received by the other Creditors.




 




5.6      Counterparts, etc.  This Intercreditor Agreement may be executed

in any number of counterparts, each of which shall be an original with the same

force and effect as if the signatures thereto and hereto were upon the same

instrument. This Intercreditor Agreement may be executed and delivered by

telecopier with the same force and effect as if it were a manually executed and

delivered counterpart.




 




5.7      Governing Law.  The validity, construction and effect of

this Intercreditor Agreement shall be governed by the internal laws of the

State of Florida but excluding any principles of conflicts of law or other

rules of law that would cause the application of the law of any jurisdiction

other than the laws of the State of Florida.




 




5.8      Consent to Jurisdiction; Waiver of Jury

Trial.  Each of the parties hereto

hereby irrevocably consents to the non-exclusive jurisdiction of the Circuit

Court of Dade County, Florida and the United States District Court for the

Southern District of Florida, whichever




 




17





























 




Senior Creditor Agent may elect, and waives

trial by jury in any action or proceeding with respect to this Intercreditor

Agreement.




 




5.9      Complete Agreement.  This written Intercreditor Agreement is

intended by the parties as a final expression of their agreement and is

intended as a complete statement of the terms and conditions of their

agreement.




 




5.10    No Third Parties Benefited.  Except as expressly provided in Section 5.2,

this Intercreditor Agreement is solely for the benefit of the Creditors and

their respective successors, participants and assigns, and no other person

shall have any right, benefit, priority or interest under, or because of the

existence of, this Intercreditor Agreement.




 




5.11    Disclosures; Non-Reliance.  Each Creditor has the means to, and shall in

the future remain, fully informed as to the financial condition and other

affairs of Debtors and no Creditor shall have any obligation or duty to

disclose any such information to any other Creditor. Except as expressly set

forth in this Intercreditor Agreement, the parties hereto have not otherwise

made to each other nor do they hereby make to each other any warranties,

express or implied, nor do they assume any liability to each other with respect

to: (a) the enforceability, validity, value or collectability of any of the

Junior Debt or Senior Debt or any guarantee or security which may have been

granted to any of them in connection therewith, (b) any Debtor’s title to or

right to transfer any of the Collateral, or (c) any other matter except as

expressly set forth in this Intercreditor Agreement.




 




5.12    Term.  This Intercreditor Agreement is a continuing agreement and shall

remain in full force and effect until the indefeasible satisfaction in full of

all Senior Debt and the termination of the financing arrangements among Senior

Creditor Agent, Lenders and Debtors.




 




18





























 




IN WITNESS

WHEREOF, the parties have caused this Intercreditor Agreement to be duly

executed as of the day and year first above written.




 




	

   


  	

  CONGRESS FINANCIAL CORPORATION,


  (FLORIDA) individually and as Senior


  Creditor Agent


  
	

   


  	

   


  
	

   


  	

   


  
	

   


  	

  By:


  	

  Daniel Cott


  
	

   


  	

   


  
	

   


  	

  Title:


  	

  Sr. Vice President


  
	

   


  	

   


  
	

   


  	

   


  
	

   


  	

  U.S. BANK NATIONAL ASSOCIATION


  
	

   


  	

   


  
	

   


  	

   


  
	

   


  	

  By:


  	

  /s/ E. C. Hengeveld


  
	

   


  	

   


  
	

   


  	

  Title:


  	

  Vice President


  
				





 




Each of the

undersigned hereby acknowledges and agrees to the foregoing terms and

provisions. By its signature below, each of the undersigned agrees that it

will, together with its successors and assigns, be bound by the provisions

hereof.




 




Each of the

undersigned agrees that any Creditor holding Collateral does so as bailee

(under the Uniform Commercial Code) for the other and is hereby authorized to

and may turn over to such other Creditor upon request therefor any such

Collateral, after all obligations and indebtedness of each of the undersigned

to the bailee Creditor have been fully paid and performed.




 




Each of the

undersigned acknowledges and agrees that: (i) although it may sign this

Intercreditor Agreement it is not a party hereto and does not and will not

receive any right, benefit, priority or interest under or because of the

existence of the foregoing Intercreditor Agreement, (ii) in the event of a

breach by any of the undersigned or Junior Creditor of any of the terms and

provisions contained in the foregoing Intercreditor Agreement, such a breach

shall constitute a Senior Debt Event of Default and (iii) it will execute and

deliver such additional




 




[REMAINDER OF

PAGE INTENTIONALLY LEFT BLANK]




 




19





























 




documents and take such additional action as

may be necessary or desirable in the opinion of any Creditor to effectuate the

provisions and purposes of the foregoing Intercreditor Agreement.




 




	

   


  	

  MACKIE DESIGNS, INC.


  
	

   


  	

   


  
	

   


  	

  By:


  	

  /s/ James T. Engen


  
	

   


  	

   


  
	

   


  	

  Title:


  	

  President & CEO


  
	

   


  	

   


  
	

   


  	

   


  
	

   


  	

  MACKIE DESIGNS MANUFACTURING, INC.


  
	

   


  	

   


  
	

   


  	

  By:


  	

  James T. Engen


  
	

   


  	

   


  
	

   


  	

  Title:


  	

  President


  
	

   


  	

   


  
	

   


  	

   


  
	

   


  	

  SIA SOFTWARE COMPANY, INC.


  
	

   


  	

   


  
	

   


  	

  By:


  	

  James T. Engen


  
	

   


  	

   


  
	

   


  	

  Title:


  	

  President


  
	

   


  	

   


  
	

   


  	

  MACKIE INVESTMENT CO.


  
	

   


  	

   


  
	

   


  	

  By:


  	

  James T. Engen


  
	

   


  	

   


  
	

   


  	

  Title:


  	

  President


  
				





 




20