exv10w31



 





Exhibit 10.31




Ableco Finance LLC

299 Park Avenue, 23rd Floor

New York, New York 10171




as of April 10, 2007          




LOUD TECHNOLOGIES INC.

16220 Wood-Red Road NE

Woodinville, Washington 98072

Attention: Tim O’Neil, Chief Financial Officer




          Re: Post-Closing Matters




Ladies and Gentlemen:




     LOUD Technologies Inc., a Washington corporation (“Parent” or “US Borrower”),
Grace Acquisitionco Limited, a company incorporated under the laws of England and Wales with
registered number 06078534 (“UK Borrower”), and Ableco Finance LLC, a Delaware limited
liability company (“Ableco”), as administrative agent for the Lenders (in such capacity,
together with any successor administrative agent, the “Administrative Agent”) have entered
into financing arrangements pursuant to which Administrative Agent and Lenders (as defined below)
have made and may make loans and advances as set forth in that certain Financing Agreement, dated
of even date herewith, by and among US Borrower and UK Borrower, each subsidiary of the Parent
listed on the signature pages thereto (together with US Borrower UK Borrower, each a “Loan
Party” and collectively the “Loan Parties”), the lenders from time to time party
thereto (each a “Lender” and collectively, the “Lenders”), Ableco, as collateral
agent for the Lenders (in such capacity, together with any successor collateral agent, the
“Collateral Agent”), and Administrative Agent, (together with the Collateral Agent, each an
“Agent” and collectively, the “Agents”) (as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan
Agreement”). Initially capitalized terms used herein but not defined herein shall have the
respective meanings ascribed thereto in the Loan Agreement.



     The Loan Parties, Administrative Agent, Collateral Agent, and the Required Lenders hereby
agree as follows:



          (a) Section 1.01 of the Loan Agreement is hereby amended by inserting the following
new definitions in proper alphabetical order:



               “Treaty” has the meaning specified therefor in the definition of Treaty State.



               “Treaty Lender” means a Lender (or Transferee) which (i) is treated as a resident of a
Treaty State for the purposes of a Treaty, (ii) does not carry on business in the United Kingdom
through a permanent establishment with which that Lender’s (or Transferee’s)



 









 







participation in the Loan is effectively connected and (iii) is entitled to receive interest free
of United Kingdom withholding tax under the terms of a Treaty.



               “Treaty Representation” has the meaning specified therefor in Section 2.08(i).



               “Treaty State” means a jurisdiction having a double taxation agreement (a
“Treaty”) with the United Kingdom which makes provision for full exemption from United
Kingdom tax on interest.



          (b) Section 2.05(c) of the Loan Agreement is hereby amended by inserting the following
new subsection (x) immediately following Section 2.05(c)(ix):




               “(x) On or before the date that is one (1) day after the UK Term Loan B Effective Date, US
Borrower (from the Cash and Cash Equivalents held by Martin on the UK Term Loan B Effective Date)
shall prepay (to Administrative Agent’s Account) the Revolving Loans by an amount that is
sufficient to reduce the outstanding principal balance of the Revolving Loans by $3,000,000.”



          (c) Section 2.05(d)(i) of the Loan Agreement is hereby amended by (i) deleting the
word “and” immediately following the end of Section 2.05(d)(i)(A) and replacing it with a
comma, (ii) deleting the period appearing at the end of Section 2.05(d)(i)(B) and replacing
it with the following language “, and (C) subsection (c)(x) above shall be applied to the
Revolving Loans.”




          (d) Section 5.3 of the Loan Agreement is hereby amended by inserting the following new
subsection (c) immediately following Section 5.03(b):




               “(c) Outstanding Balance of Revolving Loans. The outstanding balance of all Revolving
Loans as of the UK Term Loan B Effective Date, after giving effect to all Loans made or to be made
on or before the UK Term Loan B Effective Date, shall not exceed $5,500,000 in the aggregate.”



          (e) Section 5.4 of the Loan Agreement is hereby amended by deleting the “and” at the
end of Section 5.4(e), replacing the “.” at the end of Section 5.4(f) with a
semicolon, and inserting the following new subsections (g) and (h) immediately
following Section 5.04(f):




               “(g) On or before the date that is 45 days after the UK Term Loan B Effective
Date, Collateral Agent shall have received each of the acknowledgments from the
applicable financial institutions to the notices that are required by Section
6 of the UK Debentures, duly executed and delivered by each such financial
institution; and



               (h) On or before the date that is 30 days after the Effective Date, Collateral
Agent shall have received acknowledgements from the applicable insurance companies
to the notices regarding insurance coverage that are required by Section 7
of the UK Debentures, duly executed and delivered by each such



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insurance company.”



          (f) The definition of “Security Interest” appearing in the Security Agreement is hereby
amended and restated in its entirety as follows”




               ““Security Interest” means the UK Obligations Security Interest and/or the US
Obligations Security Interest, as the context requires.”



          (g) Section 2(a) of the Security Agreement is hereby amended by (i) deleting the words
“all or any portion of” appearing therein, and (ii) deleting the words “Lender Group’s” appearing
in the last paragraph thereof and replacing it with the words “Collateral Agent’s”.




          (h) Section 2(b) of the Security Agreement is hereby amended by (i) deleting the words
“all or any portion of” appearing therein, (ii) deleting the words “Lender Group’s” appearing in
the last paragraph thereof and replacing it with the words “Collateral Agent’s” and (iii) deleting
the word “if” appearing in clause (i) of the last paragraph thereof immediately before the first
clause (A) thereof and replacing it with the words “to the extent”.




          (i) Section 3 of the Security Agreement is hereby amended and restated in its entirety
as follows:




               “3. Security for Obligations. The UK Obligations Security Interest created hereby
secures the payment and performance of all the UK Obligations (including such Grantor’s Obligations
in respect of all or any portion of the UK Obligations pursuant to the Guaranty set forth in
Section 11.01(a) of the Financing Agreement), whether now existing or arising hereafter. The US
Obligations Security Interest created hereby secures the payment and performance of all the US
Obligations (including such Grantor’s Obligations in respect of all or any portion of the US
Obligations pursuant to the Guaranty set forth in Section 11.01(a) of the Financing Agreement),
whether now existing or arising hereafter. Without limiting the generality of the foregoing, this
Agreement secures the payment of all amounts which constitute part of the Secured Obligations and
would be owed by Grantors, or any of them, to Agent, the Lender Group or any of them, but for the
fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding
involving any Grantor. It is hereby acknowledged and agreed that the US Obligations Security
Interest shall have priority over the UK Obligations Security Interest for all purposes with
respect to the Loan Documents.”



     This letter agreement supersedes all other prior discussions, understandings, commitments and
contracts concerning the subject matter hereof, whether oral or written and constitutes the entire
understanding of Loan Parties, Administrative Agent, Collateral Agent, and the Lenders with respect
thereto. No provision of this letter agreement may be waived, amended or otherwise modified
without the prior written consent of each party hereto.



     The validity, interpretation and enforcement of this letter agreement, whether in contract,
tort, equity or otherwise, shall be governed by the internal laws of the State of New York but
excluding any principles of conflicts of laws or other rule that would cause the application of the
law of any jurisdiction other than the laws of the State of New York.



[Remainder of Page Intentionally Left Blank]





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This letter agreement may be executed in any number of counterparts, each of which shall be an
original, but all of which taken together shall constitute one and the same agreement. Delivery of
an executed counterpart of this letter agreement by telefacsimile or other electronic method of
transmission shall have the same force and effect as the delivery of an original executed
counterpart of this letter agreement. Any party delivering an executed counterpart of this letter
agreement by telefacsimile or other electronic method of transmission shall also deliver an
original executed counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of this letter agreement.




	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	ABLECO FINANCE LLC,	 	 
	 	 	as Administrative Agent, Collateral Agent, and on
behalf of itself, and its affiliate assigns, as
Lenders	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Dan
Wolf 	 	 
	 

	 	Title:
	 	SVP
	 	 






[SIGNATURE PAGE TO SIDE LETTER]




 









 





	 	 	 	 	 
	AGREED:	 	 
	 
	 	 	 	 
	LOUD TECHNOLOGIES INC.,	 	 
	as US Borrower	 	 
	 
	 	 	 	 
	By:

	 	/s/ Timothy P. O’Neil	 	 
	Title:

	 	 

CFO
	 	 
	 
	 	 	 	 
	GRACE ACQUISITIONCO LIMITED,	 	 
	as UK Borrower	 	 
	 
	 	 	 	 
	By:
	 	/s/ Scott William Edwards	 	 
	Title:

	 	Secretary

	 	 
	 

	 	

	 	 
	 
	 	 	 	 
	LOUD TECHNOLOGIES EUROPE PLC,	 	 
	as a Foreign Guarantor	 	 
	 
	 	 	 	 
	By:
	 	/s/ Jamie Engen	 	 
	Title:

	 	CEO

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	MACKIE DESIGNS INC.,	 	 
	as a US Guarantor	 	 
	 
	 	 	 	 
	By:

	 	/s/ Timothy P. O’Neil	 	 
	Title:

	 	 

VP
	 	 
	 
	 	 	 	 
	SIA SOFTWARE COMPANY, INC.,	 	 
	as a US Guarantor	 	 
	 
	 	 	 	 
	By:

	 	/s/ Timothy P. O’Neil	 	 
	Title:

	 	 

VP
	 	 





[SIGNATURE PAGE TO SIDE LETTER]





 









 






	 	 	 	 	 
	SLM HOLDING CORP.,	 	 
	as a US Guarantor	 	 
	 
	 	 	 	 
	By:

	 	/s/ Timothy P. O’Neil	 	 
	Title:

	 	 

VP
	 	 
	 
	 	 	 	 
	ST. LOUIS MUSIC, INC.,	 	 
	as a US Guarantor	 	 
	 
	 	 	 	 
	By:

	 	/s/ Timothy P. O’Neil	 	 
	Title:

	 	 

VP
	 	 






[SIGNATURE PAGE TO SIDE LETTER]