exv10w1






Exhibit 10.1




Separation and General Release Agreement




     This Separation and General Release Agreement (this “Agreement”) is made as of this
18th day of August, 2008 by and among LOUD Technologies Inc. (the “Company”) and James T.
Engen (“Executive,” and together with the Company, the “Parties”).



     WHEREAS, Executive has been employed by the Company under terms set forth in that certain
Employment Agreement effective August 1, 2001 by and between Executive and the Company (the
“Executive Employment Agreement”);



     WHEREAS, Executive’s employment with the Company has ended by agreement of the Parties (the
“Separation”) effective as of August 15, 2008 (the “Separation Date”); and



     WHEREAS, the Parties desire to enter into this Agreement in order to set forth the definitive
rights and obligations of the Parties in connection with the Separation.



     NOW, THEREFORE, in consideration of the mutual covenants, commitments and agreements contained
herein, and for other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the Parties intending to be legally bound hereby agree as follows:



     1. Acknowledgment of Separation. The Parties acknowledge and agree that the
Separation is effective as of the Separation Date.



     2. Resignation of Office. Effective as of the Separation Date, Executive voluntarily
resigns his position as Director, President and Chief Executive Officer of the Company, and from
any and all other offices which he holds at the Company or any of the Company’s subsidiaries or
affiliates.



     3. Executive’s Acknowledgment of Consideration. Executive specifically acknowledges
and agrees that certain of the obligations created and payments made to him by the Company under
this Agreement are promises and payments to which he is not otherwise entitled under any law or
contract.



     4. Payments Upon and After the Separation.



          (a) Final Pay. On the next regular payroll date following the Separation Date,
Executive shall receive a lump sum payment of all then-outstanding final wages and accrued unused
vacation, minus applicable federal, state and local tax withholdings, for services performed for
the Company through and including the Separation Date.




          (b) Continuing Indemnification of Executive. As a former officer of the Company,
Executive shall remain entitled to all indemnification rights and benefits provided from time to
time to other officers and former officers of the Company.




          (c) Severance Benefits. Beginning on or about the Separation Date, Executive (his
heirs or assigns) shall be entitled to receive the following severance benefits (the “Severance
Benefits”). The payment or provision of such Severance Benefits by the Company




 









 







shall not represent any admission or concession by the Company that such benefits are owed to
Executive under any agreement or obligation that might be asserted by or on behalf of Executive:




               (i) Severance Pay. Subject to the conditions set forth in this Section 4(c)
and Executive’s execution and delivery of and Executive’s performance under this Agreement,
Executive shall be entitled to receive, on a salary continuation basis, severance payments totaling
$350,000, representing 12 months of Executive’s base salary at the rate in effect as of the
Separation Date, minus applicable tax and other withholdings, which shall be payable in conformance
with the Company’s payroll policies and practices and which will begin no later than the Company’s
second regular payroll date following the end of the Revocation Period.



               (ii) COBRA and COBRA Premium Payments. Effective as of the Separation Date, as
required by the continuation coverage provisions of Section 4980B of the U. S. Internal Revenue
Code of 1986, as amended (“the Code”), Executive shall be offered the opportunity to elect
continuation coverage under the group medical plan(s) of the Company (“COBRA coverage”).
The Company shall provide Executive with the appropriate COBRA coverage notice and election form
for this purpose. If Executive elects COBRA coverage, the Company shall pay up to $1,186.68 per
month of Executive’s and his Dependents’ health insurance premiums under COBRA for up to twelve
months following the Separation Date; provided, however, that Executive shall notify the Company
within two weeks of any change in his circumstances that would warrant discontinuation of his COBRA
coverage and benefits (including but not limited to Executive’s receipt of group medical benefits
from any other employer), and the Company’s obligation to pay any portion of Executive’s and his
Dependents’ health insurance premiums shall automatically terminate upon the date such
circumstances warranting discontinuation of Executive’s COBRA coverage and benefits occur. The
existence and duration of Executive’s rights and/or the COBRA rights of any of Executive’s eligible
dependents shall be determined in accordance with Section 4980B of the Code.



     5. Consulting Services.



          (a) For a 90-day period beginning on the Effective Date (the “Consulting Term”),
Executive agrees to render such consulting services to the Company in connection with the Company’s
business as the Company from time to time reasonably requests, including, but not limited to, using
his best efforts and dedicating a reasonable amount of his business time and attention as requested
by the Company to transitioning his duties to and training other employees of the Company. In
consideration for such consulting services, during the Consulting Term, the Company shall pay
Executive $29,167 per month, payable monthly in arrears in gross amounts on a contract basis on the
last business day of each month. Except as pre-approved in writing by the Company’s Chief
Financial Officer and as properly documented and reasonably incurred in accordance with the
Company’s reimbursement policies, Executive will not be reimbursed for any travel, entertainment,
business and other expenses incurred by Executive in his performance of the consulting services.
Executive and the Company shall file all tax returns and reports required to be filed by them on
the basis that Executive is an independent contractor, rather than an employee, as defined in
Treasury Regulation §31.3121(d)-1(c)(2), and Executive shall indemnify the Company for the amount
of any employment and/or




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withholding taxes (and any interest, penalties or costs with respect thereto) paid by the
Company as the result of any determination to the contrary by any taxing authority.




          (b) By executing this Agreement, Executive represents and warrants that the agreements set
forth herein will not violate any other agreements by which Executive is bound and, that upon the
execution and delivery by the Company of this Agreement, this Agreement shall be a valid and
binding obligation of Executive, enforceable against Executive in accordance with its terms.




          (c) The Company and Executive agree and acknowledge that Executive’s relationship with the
Company, as of and after the date hereof, is that of an independent contractor. Neither the
Company nor Executive shall in any way represent itself or himself as a partner, joint venturer,
agent, employee or general representative of the other party. Nothing in this Section 5
shall be construed to create an employment relationship between the Company and Executive.




     6. Confidential Information; Non-Competition; Non-Solicitation.



          (a) Confidential Information. Executive acknowledges that the information,
observations and data obtained by him concerning the business and affairs of the Company during the
course of his employment with the Company, or that may be obtained in connection with his
assistance and cooperation with the Company as set forth in Section 11 of this Agreement,
is the property of the Company. Executive agrees that he will not, directly, willfully or
negligently disclose to any unauthorized person or use for his own account any of such information,
observations or data which is of a confidential or proprietary nature (“Confidential
Information”) without the Company’s written consent, unless, and to the extent, that (i) the
aforementioned matters become generally known to and available for use by the public other than as
a result of the Executive’s acts or omissions to act, or (ii) he is required to do so by order of a
court of competent jurisdiction (by subpoena or similar process), in which event Executive shall
reasonably cooperate with the Company in connection with any action by the Company to limit or
suppress such disclosure. Executive represents, warrants and covenants that at no time prior to or
contemporaneous with his execution of this Agreement has he, directly, willfully or negligently
disclosed Confidential Information to any unauthorized person or used such Confidential Information
for his own purposes or benefit. Executive acknowledges his understanding of his non-competition,
non-solicitation and non-disclosure restrictions as set forth in the Executive Employment
Agreement. Executive understands that his breach of this Section 5 shall eliminate his
entitlement to any Severance Benefits under this Agreement, including such payments already
received and, with respect to payments received, Executive shall be required to immediately return
any such amounts in the event of a breach.




          (b) Non-Solicitation. During the twelve months following the Separation Date (the
“Restriction Period”), Executive shall not, to the detriment of the Company, directly or
indirectly, for himself or on behalf of any other person, firm or entity: (i) solicit, employ,
engage, retain or enter into a business affiliation with any person who at any time during the
12-month period preceding the Separation Date was an employee of the Company, or (ii) encourage,
induce or attempt to encourage or induce any person who at any time during the 12-month preceding
the Separation Date was a supplier or customer of the Company to cease doing




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business with the Company or to decrease the amount of business such supplier or customer does
with the Company. In the event of Executive’s breach of his obligations under this provision, the
length of the Restriction Period shall be increased by the amount of time during which Executive
was in breach.




          (c) Non-Competion. During the Restriction Period, Executive shall not, directly or
indirectly, engage in, or serve as a principal, partner, joint venturer, member, creditor, manager,
trustee, agent, stockholder, director, officer or employee of, or advisor to, or in any other
capacity, or in any manner, own, control, finance, manage, operate, or otherwise participate,
invest, or have any interest in, or be connected with, any person, firm or entity that engages in
the manufacture, production, sale, marketing and distribution of audio and music products anywhere
in the United States and Europe. In the event of Executive’s breach of his obligations under this
provision, the length of the Restriction Period shall be increased by the amount of time during
which Executive was in breach.




     7. General Release and Waiver.



          (a) General Release. Executive, for and on behalf of himself and each of his heirs,
executors, administrators, personal representatives, successors and assigns, to the maximum extent
permitted by law, hereby acknowledges full and complete satisfaction of and ABSOLUTELY AND
IRREVOCABLY AND UNCONDITIONALLY FULLY AND FOREVER RELEASES, ACQUITS AND DISCHARGES LOUD
Technologies Inc., together with its subsidiaries, parents and affiliates, including but not
limited to Sun Capital Partners II, LP, and each of their past and present direct and indirect
stockholders, directors, members, partners, officers, employees, attorneys, agents and
representatives, and their heirs, executors, administrators, personal representatives, successors
and assigns (collectively, the “Releasees”), from any and all claims, demands, suits,
causes of action, liabilities, obligations, judgments, orders, debts, liens, contracts, agreements,
covenants and causes of action of every kind and nature, whether known or unknown, suspected or
unsuspected, concealed or hidden, vested or contingent, in law or equity, existing by statute,
common law, contract or otherwise, which have existed, may exist or do exist, through and including
the execution and delivery by Executive of this Agreement (but not including Executive’s or the
Company’s performance under this Agreement), including, without limitation, any of the foregoing
arising out of or in any way related to or based upon:




               (i) Executive’s application for and employment with the Company, his being an officer or
employee of the Company, or the Separation;



               (ii) any and all claims in tort or contract, and any and all claims alleging breach of an
express or implied, or oral or written, contract, policy manual or employee handbook;



               (iii) any alleged misrepresentation, defamation, interference with contract, intentional or
negligent infliction of emotional distress, sexual harassment, negligence or wrongful discharge; or



               (iv) any federal, state or local statute, ordinance or regulation,



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including but not limited to labor laws or discrimination laws such as Title VII of the Civil
Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1987, as amended by the
Older Workers Benefit Protection Act and otherwise (the “ADEA”), the Family and Medical
Leave Act, the Civil Rights Act set forth at 42 U.S.C. § 1981, the Civil Rights Act of 1986, and
the Civil Rights Act of 1991.



          (b) Acknowledgment of Waiver; Disclaimer of Benefits. Executive acknowledges and
agrees that he is waiving all rights to sue or obtain equitable, remedial or punitive relief from
any or all Releasees of any kind whatsoever, including, without limitation, reinstatement, back
pay, front pay, attorneys’ fees and any form of injunctive relief. Notwithstanding the above,
Executive further acknowledges that he is not waiving and is not being required to waive any right
that cannot be waived by law, including the right to file a charge or participate in an
administrative investigation or proceeding; provided, however, that Executive disclaims and waives
any right to share or participate in any monetary award resulting from the prosecution of such
charge or investigation.




          (c) Effect of Release and Waiver. Executive understands and intends that this
Section 7 constitutes a general release of all claims except as otherwise provided in
Section 7(a) above, and that no reference therein to a specific form of claim, statute or
type of relief is intended to limit the scope of such general release and waiver.




          (d) Waiver of Unknown Claims. Executive expressly waives all rights afforded by any
statute which limits the effect of a release with respect to unknown claims. Executive understands
the significance of his release of unknown claims and his waiver of statutory protection against a
release of unknown claims.




     8. Executive’s Representations and Covenants Regarding Actions. Executive represents,
warrants and covenants to each of the Releasees that at no time prior to or contemporaneous with
his execution of this Agreement has he knowingly engaged in any wrongful conduct against, on behalf
of or as the representative or agent of the Company. Executive further represents, warrants and
covenants to each of the Releasees that at no time prior to or contemporaneous with his execution
of this Agreement has he filed or caused or knowingly permitted the filing or maintenance, in any
state, federal or foreign court, or before any local, state, federal or foreign administrative
agency or other tribunal, any charge, claim or action of any kind, nature and character whatsoever
(“Claim”), known or unknown, suspected or unsuspected, which he may now have or has ever
had against the Releasees which is based in whole or in part on any matter referred to in
Section 7(a) above. Executive hereby grants the Company his perpetual and irrevocable
power of attorney with full right, power and authority to take all actions necessary to dismiss or
discharge any such Claim. Executive further covenants and agrees that he will not encourage any
person or entity, including but not limited to any current or former employee, officer, director or
stockholder of the Company, to institute any Claim against the Releasees or any of them.



     9. No Disparaging Remarks. Executive hereby covenants to each of the Releasees and
agrees that he shall not, directly or indirectly, make or solicit or encourage others to make or
solicit any disparaging remarks concerning the Releasees, or any of their products, services,
businesses or activities. Executive understands that his breach of this Section 9 (as



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determined by a court of competent jurisdiction) shall eliminate his entitlement to any
Severance Benefits under this Agreement, including such payments already received and, with respect
to payments received, Executive shall be required to immediately return any such amounts to the
Company in the event of a breach. The Company hereby covenants to Executive and agrees that it
shall cause its directors, officers, employees and representatives not to, directly or indirectly,
make or solicit or encourage others to make or solicit any disparaging remarks concerning the
Executive, or any of his services, businesses or activities.



     10. No Conflict of Interest. Executive hereby covenants and agrees that he shall not,
directly or indirectly, incur any obligation or commitment, or enter into any contract, agreement
or understanding, whether express or implied, and whether written or oral, which would be in
conflict with his obligations, covenants or agreements hereunder or which could cause any of his
representations or warranties made herein to be untrue or inaccurate.



     11. Assistance, Cooperation, Future Litigation.



          (a) Executive’s Business Assistance and Cooperation. Executive shall make himself
reasonably available to assist and cooperate with the Company in connection with any internal
and/or independent review of the Company’s financial policies, procedures and activities in respect
of all periods during which Executive was employed by the Company. The Company will make all
reasonable efforts to insure that such assistance and cooperation will not materially interfere
with Executive’s employment and business responsibilities.




          (b) Executive’s Litigation Assistance and Cooperation. Executive acknowledges and
affirms his understanding that he may be a witness in litigation, arbitrations, government or other
administrative proceedings involving the Company, and/or the other Releasees. Executive hereby
covenants and agrees to testify truthfully in any and all such litigation, arbitrations, government
or administrative proceedings. Executive further covenants and agrees, upon prior notice and for
no further compensation, to make himself reasonably available to and otherwise reasonably assist
and cooperate with the Company and/or such other Releasees and with its or their respective
attorneys and advisors in connection with any such litigation or administrative proceeding. The
Company will make all reasonable efforts to insure that such assistance and cooperation will not
materially interfere with Executive’s employment and business responsibilities.




          (c) Executive’s Expenses. Executive shall be entitled to reimbursement of any
reasonable pre-approved out-of-pocket expenses for travel, lodging, meals and other transportation
incurred by him in relation to any cooperation supplied by Executive as described in this
Section 11, subject to the Company’s regular business expense policies and procedures.



     12. Confidentiality. The Company and Executive agree that the terms and conditions of
this Agreement are to be strictly confidential, except that Executive may disclose the terms and
conditions to his family, attorneys, accountants, tax consultants, state and federal tax
authorities or as may otherwise be required by law. The Company may disclose the terms and
conditions of this Agreement as the Company deem necessary to their officers, employees, board of
directors, stockholders, insurers, attorneys, accountants, state and federal tax authorities,



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or as may otherwise be required by law. Executive asserts that he has not discussed, and
agrees that except as expressly authorized by the Company he will not discuss, this Agreement or
the circumstances of his Separation with any employee of the Company, and that he will take
affirmative steps to avoid or absent himself from any such discussion even if he is not an active
participant therein. EXECUTIVE ACKNOWLEDGES THE SIGNIFICANCE AND MATERIALITY OF THIS PROVISION TO
THIS AGREEMENT, AND HIS UNDERSTANDING THEREOF.



     13. Return of Corporate Property; Conveyance of Information.



          (a) Company Property. Executive hereby covenants and agrees to immediately return all
documents, keys, credit cards (without further use thereof), and all other items which are the
property of the Company and/or which contain Confidential Information; and, in the case of
documents, to return any and all materials of any kind and in whatever medium evidenced, including,
without limitation, all hard disk drive data, diskettes, microfiche, photographs, negatives,
blueprints, printed materials, tape recordings and videotapes.




          (b) Information. Executive hereby acknowledges and affirms that he possesses
intellectual information regarding the Company and their businesses, operations, and customer
relationships. In addition to the obligation to turn over any physical embodiment of such
information as defined in the Federal Rules of Civil Procedure and pursuant to Section
13(a), above, and to keep such information strictly confidential pursuant to Section 5,
above, Executive agrees to make himself available from time to time at the Company’s request
(during normal business hours and with reasonable prior notice) to discuss and disseminate such
information and to otherwise cooperate with the Company’s efforts relating thereto.




     14. Remedies. Executive hereby acknowledges and affirms that in the event of any
breach by Executive of any of his covenants, agreements and obligations hereunder, monetary damages
would be inadequate to compensate the Releasees or any of them. Accordingly, in addition to other
remedies which may be available to the Releasees hereunder or otherwise at law or in equity, any
Releasee shall be entitled to specifically enforce such covenants, obligations and restrictions
through injunctive and/or equitable relief, in each case without the posting of any bond or other
security with respect thereto. Should any provision hereof be adjudged to any extent invalid by
any court or tribunal of competent jurisdiction, each provision shall be deemed modified to the
minimum extent necessary to render it enforceable.



     15. Acknowledgment of Voluntary Agreement; ADEA Compliance. Executive acknowledges
that he has entered into this Agreement freely and without coercion, that he has been advised by
the Company to consult with counsel of his choice, that he has had adequate opportunity to so
consult, and that he has been given all time periods required by law to consider this Agreement,
including but not limited to the 45-day period required by the ADEA (the “Consideration
Period”), and has received and understands the attached Exhibit A reflecting all job
titles affected by the layoff of which Executive is a part and the ages of all current employees
holding those jobs. Executive understands that he may execute this Agreement less than 45 days
from its receipt from the Company, but agrees that such execution will represent his knowing waiver
of such Consideration Period. Executive further acknowledges that within the 7-day period following
his execution of this Agreement (the “Revocation Period”), he shall have




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the unilateral right to revoke this Agreement, and that the Company’s obligations hereunder
shall become effective only upon the expiration of the Revocation Period without Executive’s
revocation hereof. In order to be effective, notice of Executive’s revocation of this Agreement
must be received by the Company in writing on or before the last day of the Revocation Period.




     16. Complete Agreement; Inconsistencies. This Agreement, including the Executive
Employment Agreement, and any other documents referenced herein, constitute the complete and entire
agreement and understanding of the Parties with respect to the subject matter hereof, and
supersedes in its entirety any and all prior understandings, commitments, obligations and/or
agreements, whether written or oral, with respect thereto; it being understood and agreed that this
Agreement and including the mutual covenants, agreements, acknowledgments and affirmations
contained herein, is intended to constitute a complete settlement and resolution of all matters set
forth in Section 7 hereof. Notwithstanding anything to the contrary set forth herein, each
of Executive’s stock option grant agreements remain outstanding in accordance with their respective
terms.



     17. No Strict Construction. The language used in this Agreement shall be deemed to be
the language mutually chosen by the Parties to reflect their mutual intent, and no doctrine of
strict construction shall be applied against any Party.



     18. No Admission of Liability. Nothing herein shall be deemed or construed to
represent an admission by the Company or the Releasees of any violation of law or other wrongdoing
of any kind whatsoever.



     19. Third Party Beneficiaries. The Releasees are intended third-party beneficiaries
of this Agreement, and this Agreement may be enforced by each of them in accordance with the terms
hereof in respect of the rights granted to such Releasees hereunder. Executive’s heirs or assigns
also are intended third-party beneficiaries with respect to the payments set forth in Section
4 of this Agreement in the event of Executive’s death, and this Agreement may be enforced by
each of them in accordance with the terms of that Section 4 in respect of the rights
granted to such heirs or assigns therein. Except and to the extent set forth in the preceding two
sentences, this Agreement is not intended for the benefit of any person other than the Parties, and
no such other person shall be deemed to be a third party beneficiary hereof. Without limiting the
generality of the foregoing, it is not the intention of the Company to establish any policy,
procedure, course of dealing or plan of general application for the benefit of or otherwise in
respect of any other employee, officer, director or stockholder, irrespective of any similarity
between any contract, agreement, commitment or understanding between the Company and such other
employee, officer, director or stockholder, on the one hand, and any contract, agreement,
commitment or understanding between the Company and Executive, on the other hand, and irrespective
of any similarity in facts or circumstances involving such other employee, officer, director or
stockholder, on the one hand, and Executive, on the other hand.



     20. Tax Withholdings. Notwithstanding any other provision herein, the Company shall
be entitled to withhold from any amounts otherwise payable hereunder to Executive any amounts
required to be withheld in respect of federal, state or local taxes.



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     21. Notices. All notices, consents, waivers and other communications required or
permitted by this Agreement shall be in writing and shall be deemed given to a Party when:
(a) delivered to the appropriate address by hand or by nationally recognized overnight courier
service (costs prepaid); (b) sent by facsimile or e-mail with confirmation of transmission by the
transmitting equipment; or (c) three (3) days following mailing by certified or registered mail,
postage prepaid and return receipt requested, in each case to the following addresses, facsimile
numbers or e-mail addresses and marked to the attention of the Party (by name or title) designated
below (or to such other address, facsimile number, 

e-mail address or person as a Party may
designate by notice to the other Parties):


If to the Company:



LOUD Technologies Inc.

16220 Wood-Red Road NE

Woodinville, WA 98072

Attn: Chief Executive Officer

With a mandatory copy to:



With a mandatory copy to:



Kirkland & Ellis LLP

200 East Randolph Drive

Chicago, Illinois 60601

Attn: Douglas C. Gessner, P.C.

Ph: (312) 861-2000

Fax: (312) 861-2200



If to Executive:



to the address on record with the Company




     22. Governing Law. All issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by, and construed in accordance
with, the laws of the State of Washington, without giving effect to any choice of law or conflict
of law rules or provisions that would cause the application hereto of the laws of any jurisdiction
other than the State of Washington. In furtherance of the foregoing, the internal law of the State
of Washington shall control the interpretation and construction of this Agreement, even though
under any other jurisdiction’s choice of law or conflict of law analysis the substantive law of
some other jurisdiction may ordinarily apply.



     23. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
which shall otherwise remain in full force and effect.



     24. Counterparts. This Agreement may be executed in separate counterparts, each of
which shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement.



     25. Successors and Assigns. The Parties’ obligations hereunder shall be binding upon
their successors and assigns. The Parties’ rights and the rights of the other



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Releasees shall inure to the benefit of, and be enforceable by, any of the Parties’ and
Releasees’ respective successors and assigns. The Company may assign all rights and obligations of
this Agreement to any successor in interest to the assets of the Company. In the event that the
Company are dissolved, all obligations of the Company under this Agreement shall be provided for in
accordance with applicable law.




     26. Amendments and Waivers. Except with respect to any non-competition or similar
post-employment restrictions, which shall be subject to modification by a court of competent
jurisdiction pursuant to their express terms (as may be modified herein), no amendment to or waiver
of this Agreement or any of its terms shall be binding upon any Party unless consented to in
writing by such Party.



     27. Headings. The headings of the Sections and subsections hereof are for purposes of
convenience only, and shall not be deemed to amend, modify, expand, limit or in any way affect the
meaning of any of the provisions hereof.



     28. Disputes. Except as set forth in this paragraph, any dispute, claim or difference
arising out of this Agreement will be settled exclusively by binding arbitration in accordance with
the rules of the Federal Mediation and Conciliation Service (“FMCS”). The arbitration will
be held in Seattle, Washington unless Executive and the Company mutually agree otherwise. Nothing
contained in this Section 28 will be construed to limit or preclude a Party from bringing
any action in any court of competent jurisdiction for injunctive or other provisional relief to
compel another party to comply with its obligations under this Agreement or any other agreement
between or among the Parties during the pendency of the arbitration proceedings. Subject to the
proviso in this sentence below, each Party shall bear its own costs and fees of the arbitration,
and the fees and expenses of the arbitrator will be borne equally by the Parties unless the
arbitrator determines that any Party has acted in bad faith, in which event the arbitrator shall
have the discretion to require any one or more of the Parties to bear all or any portion of fees
and expenses of the Parties and/or the fees and expenses of the arbitrator; provided,
however, that with respect to claims that, but for this mandatory arbitration clause, could
be brought against the Company under any applicable federal or state labor or employment law
(“Employment Law”), the arbitrator shall be granted and shall be required to exercise all
discretion belonging to a court of competent jurisdiction under such Employment Law to decide the
dispute, whether such discretion relates to the provision of discovery, the award of any remedies
or penalties, or otherwise. As to claims not relating to Employment Laws, the arbitrator shall
have the authority to award any remedy or relief that a Court of the State of Washington could
order or grant. The decision and award of the arbitrator shall be in writing and copies thereof
shall be delivered to each Party. The decision and award of the arbitrator shall be binding on all
Parties. In rendering such decision and award, the arbitrator shall not add to, subtract from or
otherwise modify the provisions of this Agreement. Either Party to the arbitration may seek to
have the ruling of the arbitrator entered in any court having jurisdiction thereof. Each Party
agrees that it will not file suit, motion, petition or otherwise commence any legal action or
proceeding for any matter which is required to be submitted to arbitration as contemplated herein
except in connection with the enforcement of an award rendered by an arbitrator and except to seek
the issuance of an injunction or temporary restraining order pending a final determination by the
arbitrator. Upon the entry of any order dismissing or staying any action or proceeding filed
contrary to the preceding sentence, the Party which filed such action or



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proceeding shall promptly pay to the other Party the reasonable attorney’s fees, costs and
expenses incurred by such other Party prior to the entry of such order. All aspects of the
arbitration shall be considered confidential and shall not be disseminated by any Party with the
exception of the ability and opportunity to prosecute its claim or assert its defense to any such
claim. The arbitrator shall, upon request, issue all prescriptive orders as may be required to
enforce and maintain this covenant of confidentiality during the course of the arbitration and
after the conclusion of same so that the result and underlying data, information, materials and
other evidence are forever withheld from public dissemination with the exception of its subpoena by
a court of competent jurisdiction in an unrelated proceeding brought by a third party.




* * * * *





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     IN WITNESS WHEREOF, the Parties have executed this Separation and General Release Agreement
effective as of the date of the first signature affixed below or as otherwise provided in this
Agreement.



READ CAREFULLY BEFORE SIGNING



I have read this Separation and General Release Agreement and have had the opportunity to consult
legal counsel prior to my signing of this Agreement. I understand that by executing this Agreement
I will relinquish any right or demand I may have against the Releasees or any of them.




	 	 	 	 	 	 	 	 	 
	DATED:

	 	17 Aug 2008	 	 	 	By:	 	/s/ James T. Engen
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	     James T. Engen
	 
	 	 	 	 	 	 	 	 
	 
	DATED:

	 	18 Aug 2008	 	 	 	LOUD TECHNOLOGIES INC.
	 

	 	 
	 	 	 	 	 	 
	 
	 

	 	 	 	 	 	By:	 	/s/ James Stewart
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	James Stewart
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	Chief Operating Officer
	 

	 	 
	 	 	 	 	 	 








Signature
Page to Separation and General Release Agreement