Document:

Exhibit 10.6

 

TRADEMARK COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT

 

THIS AGREEMENT

(“Agreement”), dated March 31, 2003, is by and between MACKIE DESIGNS INC., a

Washington corporation (“Debtor”), and CONGRESS FINANCIAL CORPORATION

(FLORIDA), a Florida corporation, in its capacity as agent (“Secured Party”),

pursuant to the Loan Agreement (as hereinafter defined) acting for and on

behalf of the financial institutions which are parties thereto as lenders (each

individually, a “Lender” and collectively, “Lenders”).

 

W  I  T

N  E  S  S  E  T  H :

 

WHEREAS, Debtor has adopted,

used and is using, and is the owner of the entire right, title, and interest in

and to the trademarks, trade names, terms, designs and applications therefor

described in Exhibit A hereto and made a part hereof;

 

WHEREAS, Debtor, certain

affiliates of Debtor, Secured Party and Lenders have entered into or are about

to enter into financing arrangements pursuant to which Secured Party and

Lenders may make loans and advances and provide other financial accommodations

to Debtor and certain of its affiliates as set forth in the Loan and Security

Agreement, dated of even date herewith, by and among Debtor, certain affiliates

of Debtor, Secured Party and Lenders (as the same now exists or may hereafter be

amended, modified, supplemented, extended, renewed, restated or replaced, the

“Loan Agreement”) and the other agreements, documents and instruments referred

to therein or at any time executed and/or delivered in connection therewith or

related thereto, including, but not limited to, this Agreement (all of the

foregoing, together with the Loan Agreement, as the same now exist or may

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

replaced, being collectively referred to herein as the “Financing Agreements”);

and

 

WHEREAS, in order to induce

Secured Party and Lenders to enter into the Loan Agreement and the other

Financing Agreements and to make loans and advances and provide other financial

accommodations to Debtor and certain of its affiliates pursuant thereto, Debtor

has agreed to grant to Secured Party certain collateral security as set forth

herein.

 

NOW, THEREFORE, in

consideration of the premises and for other good and valuable consideration,

the receipt and sufficiency of which are hereby acknowledged, Debtor hereby

agrees as follows:

 

1. GRANT OF SECURITY

INTEREST.  As collateral security

for the prompt performance, observance and indefeasible payment in full of all

of the Obligations (as hereinafter defined), Debtor hereby grants to Secured

Party a continuing security interest in and a general lien

 

 

upon, and a conditional

assignment of, the following (being collectively referred to herein as the

“Collateral”): (a) all of Debtor’s now existing or hereafter acquired right,

title, and interest in and to: (i) all of Debtor’s trademarks, trade names,

trade styles and service marks and all applications for registration,

registrations and recordings relating to the foregoing as may at any time be

filed in the United States Patent and Trademark Office or in any similar office

or agency of the United States, any State thereof, any political subdivision

thereof or in any other country, including, without limitation, the trademarks,

terms, designs and applications described in Exhibit A hereto, together with

all rights and privileges arising under applicable law with respect to Debtor’s

use of any trademarks, trade names, trade styles and service marks, and all

reissues, extensions, continuation and renewals thereof (all of the foregoing

being collectively referred to herein as the “Trademarks”); and (ii) all prints

and labels on which such trademarks, trade names, trade styles and service

marks appear, have appeared or will appear, and all designs and general

intangibles of a like nature; (b) the goodwill of the business symbolized by

each of the Trademarks, including, without limitation, all customer lists and

other records relating to the distribution of products or services bearing the

Trademarks; (c) all present and future license and distribution agreements

(subject to the rights of the licensors therein) pertaining to the Trademarks,

(d) all income, fees, royalties and other payments at any time due or payable

with respect thereto, including, without limitation, payments under all

licenses at any time entered into in connection therewith; (e) the right to sue

for past, present and future infringements thereof; (f) all rights

corresponding thereto throughout the world; and (g) any and all other proceeds

of any of the foregoing0, including, without limitation, all damages and

payments or claims by Debtor against third parties for past or future

infringement of the Trademarks. 

Notwithstanding anything to the contrary contained in this Section 1,

the Collateral shall not include any rights or interest in any contract,

license or license agreement covering personal property of Debtor, so long as

under the terms of such contract, license or license agreement, or applicable

law with respect thereto, the grant of a security interest or lien therein to

Secured Party is prohibited and such prohibition has not been or is not waived

or the consent of the other party to such contract, license or license

agreement has not been or is not otherwise obtained; provided, that, the

foregoing exclusion shall in no way be construed (i) to apply if any such

prohibition is unenforceable under the Uniform Commercial Code or other

applicable law or (ii) so as to limit, impair or otherwise affect Secured

Party’s unconditional continuing security interests in and liens upon any

rights or interests of such Debtor in or to monies due or to become due under

any such contract, license or license agreement.

 

2.                     OBLIGATIONS

SECURED

 

The security interest, lien

and other interests granted to Secured Party pursuant to this Agreement shall

secure the prompt performance, observance and payment in full of any and all

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

owing by Debtor to Secured Party, any Lender and/or their respective affiliates,

including principal, interest, charges, fees, costs and expenses, however

evidenced, whether as principal, surety, endorser, guarantor or otherwise,

whether arising under this Agreement, the Loan Agreement or the other Financing

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

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

Agreement or after the commencement of any case with

 

2

 

respect to Debtor under the

United States Bankruptcy Code or any similar statute (including, without

limitation, the payment of interest and other amounts which would accrue and

become due but for the commencement of such case), whether direct or indirect,

absolute or contingent, joint or several, due or not due, primary or secondary,

liquidated or unliquidated, secured or unsecured, and however acquired by

Secured Party or any Lender (all of the foregoing being collectively referred

to herein as the “Obligations”).

 

3.                     REPRESENTATIONS,

WARRANTIES AND COVENANTS

 

Debtor hereby represents,

warrants and covenants with and to Secured Party the following (all of such

representations, warranties and covenants being continuing so long as any of

the Obligations are outstanding):

 

(a) Debtor shall pay and

perform all of the Obligations according to their terms.

 

(b) To the Debtor’s

knowledge, all of the existing Trademarks are valid and subsisting in full

force and effect.  Debtor owns the sole,

full and clear title to the Collateral, and the right and power to grant the

security interest and conditional assignment granted hereunder.  Debtor shall, at Debtor’s expense, perform

all acts and execute all documents necessary to maintain the existence of the

Trademarks, including, without limitation, the filing of any renewal affidavits

and applications.  The Collateral is not

subject to any liens, claims, mortgages, assignments, licenses, security

interests or encumbrances of any nature whatsoever, except:  (i) the security interests granted hereunder

and pursuant to the Loan Agreement, (ii) the security interests permitted under

the Loan Agreement and (iii) the licenses permitted under Section 3(e) below.

 

(c) Debtor shall not assign,

sell, mortgage, lease, transfer, pledge, hypothecate, grant a security interest

in or lien upon, encumber, grant an exclusive license relating to the

Collateral, or otherwise dispose of any of the Collateral, in each case without

the prior written consent of Secured Party, except as otherwise permitted

herein or in the Loan Agreement. 

Nothing in this Agreement shall be deemed a consent by Secured Party to

any such action, except as such action is expressly permitted hereunder.

 

(d) Debtor shall, at

Debtor’s expense, promptly perform all acts and execute all documents requested

at any time by Secured Party in writing to evidence, perfect, maintain, record

or enforce the security interest in and conditional assignment of the

Collateral granted hereunder or to otherwise further the provisions of this

Agreement.  Debtor hereby authorizes

Secured Party to execute and file one or more financing statements (or similar

documents) with respect to the Collateral, signed only by Secured Party or as

otherwise determined by Secured Party. 

Debtor further authorizes Secured Party to have this Agreement or any

other similar security agreement filed with the Commissioner of Patents and

Trademarks or any other appropriate federal, state or government office.

 

3

 

(e) As of the date hereof,

Debtor, to its knowledge, does not have any Trademarks registered, or subject

to pending applications, in the United States Patent and Trademark Office or

any similar office or agency in the United States, any State thereof, any

political subdivision thereof or in any other country, other than those

described in Exhibit A hereto and has not granted any licenses with respect

thereto other than as set forth in Exhibit B hereto.

 

(f) Debtor shall,

concurrently with the execution and delivery of this Agreement, execute and

deliver to Secured Party five (5) originals of a Special Power of Attorney in

the form of Exhibit C annexed hereto for the implementation of the assignment,

sale or other disposition of the Collateral pursuant to Secured Party’s

exercise of the rights and remedies granted to Secured Party hereunder.

 

(g) Secured Party may, in

its discretion, pay any amount or do any act which Debtor fails to pay or do as

required hereunder or as requested by Secured Party to preserve, defend,

protect, maintain, record or enforce the Obligations, the Collateral, or the

security interest and conditional assignment granted hereunder, including, but

not limited to, all filing or recording fees, court costs, collection charges,

reasonable attorneys’ fees and legal expenses. 

Debtor shall be liable to Secured Party for any such payment, which

payment shall be deemed an advance by Secured Party to Debtor, shall be payable

on demand together with interest at the rate then applicable to the Obligations

set forth in the Loan Agreement and shall be part of the Obligations secured

hereby.

 

(h) In the event Debtor

shall file any application for the registration of a Trademark with the United

States Patent and Trademark Office or any similar office or agency in the

United States, any State thereof, any political subdivision thereof or in any

other country, Debtor shall provide Secured Party with written notice of such

action as soon as practicable but in no event later than 30 days after such

action.  If, after the date hereof,

Debtor shall (i) obtain any registered trademark or trade name, or apply for

any such registration in the United States Patent and Trademark Office or in

any similar office or agency in the United States, any State thereof, any

political subdivision thereof or in any other country, or (ii) become the owner

of any trademark registrations or applications for trademark registration used

in the United States, any State thereof, any political subdivision thereof or

in any other country, the provisions of Section 1 hereof shall automatically

apply thereto.  Upon the request of

Secured Party, Debtor shall promptly execute and deliver to Secured Party any

and all assignments, agreements, instruments, documents and such other papers

as may be requested by Secured Party to evidence the security interest in and

conditional assignment of such Trademark in favor of Secured Party.

 

(i) Debtor has not abandoned

any of the Trademarks and Debtor will not do any act, nor omit to do any act,

whereby the Trademarks may become abandoned, invalidated, unenforceable,

avoided, or avoidable; provided, that, Debtor may, after written

notice to Secured Party, abandon, cancel, not renew or otherwise not maintain a

Trademark so long as (i) such Trademark is no longer used or useful in the

business of Debtor or any of its affiliates or subsidiaries, (ii) such

Trademark has not been used in the business of Debtor or any of its affiliates

or subsidiaries for a period of six (6) consecutive months, (iii) such

Trademark is not otherwise material to the business of Debtor or any of

 

4

 

its affiliates or

subsidiaries in any respect, (iv) such Trademark has little or no value, and

(v) no Default (as defined in the Loan Agreement) or Event of Default (as

hereinafter defined) shall exist or have occurred as of such time.  Debtor shall notify Secured Party promptly

if it knows or has reason to know of any reason why any application,

registration, or recording with respect to the Trademarks may become abandoned,

canceled, invalidated, avoided, or avoidable.

 

(j) Debtor shall render any

assistance, as Secured Party shall determine is necessary, to Secured Party in

any proceeding before the United States Patent and Trademark Office, any

federal or state court, or any similar office or agency in the United States,

any State thereof, any political subdivision thereof or in any other country,

to maintain such application and registration of the Trademarks as Debtor’s

exclusive property and to protect Secured Party’s interest therein, including,

without limitation, filing of renewals, affidavits of use, affidavits of

incontestability and opposition, interference, and cancellation proceedings.

 

(k) To Debtor’s knowledge,

no material infringement or unauthorized use presently is being made of any of

the Trademarks that would adversely affect in any material respect the fair

market value of the Collateral or the benefits of this Agreement granted to

Secured Party, including, without limitation, the validity, priority or

perfection of the security interest granted herein or the remedies of Secured

Party hereunder.  To Debtor’s knowledge,

there has been no judgment holding any of the Trademarks invalid or

unenforceable, in whole or in part, nor is the validity or enforceability of

any of the Trademarks presently being questioned in any litigation or

proceeding to which Debtor is a party. Debtor shall promptly notify Secured

Party if Debtor (or any affiliate or subsidiary thereof) learns of any use by

any person of any term or design which infringes on any Trademark or is likely

to cause confusion with any Trademark. 

If requested by Secured Party in writing, Debtor, at Debtor’s expense,

shall join with Secured Party in such action as Secured Party, in Secured

Party’s discretion, may deem advisable for the protection of Secured Party’s

interest in and to the Trademarks.

 

(l) Debtor assumes all

responsibility and liability arising from the use of the Trademarks and Debtor

hereby indemnifies and holds Secured Party and Lenders harmless from and

against any claim, suit, loss, damage, or expense (including reasonable

attorneys’ fees and legal expenses) arising out of any alleged defect in any

product manufactured, promoted, or sold by Debtor (or any affiliate or

subsidiary thereof) in connection with any Trademark or out of the manufacture,

promotion, labeling, sale or advertisement of any such product by Debtor (or

any affiliate or subsidiary thereof). 

The foregoing indemnity shall survive the payment of the Obligations,

the termination of this Agreement and the termination or non-renewal of the

Loan Agreement.

 

(m) Debtor shall promptly

pay Secured Party and Lenders for any and all expenditures made by Secured

Party or any Lender pursuant to the provisions of this Agreement or for the

defense, protection or enforcement of the Obligations, the Collateral, or the

security interests and conditional assignment granted hereunder, including, but

not limited to, all filing or recording fees, court costs, collection charges,

travel expenses, and reasonable attorneys’ fees and legal expenses.  Such

 

5

 

expenditures shall be

payable on demand, together with interest at the rate then applicable to the

Obligations set forth in the Loan Agreement and shall be part of the

Obligations secured hereby.

 

4.                     EVENTS OF

DEFAULT

 

The occurrence or existence

of any Event of Default under the Loan Agreement is referred to herein

individually as an “Event of Default” and collectively as “Events of Default”.

 

5.                     RIGHTS AND

REMEDIES

 

At any time an Event of

Default exists or has occurred and is continuing, in addition to all other

rights and remedies of Secured Party, whether provided under this Agreement,

the Loan Agreement, the other Financing Agreements, applicable law or

otherwise, Secured Party shall have the following rights and remedies which may

be exercised without notice to, or consent by, Debtor except as such notice or

consent is expressly provided for hereunder:

 

(a) Secured Party may

require that neither Debtor nor any affiliate or subsidiary of Debtor make any

use of the Trademarks or any marks similar thereto for any purpose

whatsoever.  Secured Party may make use

of any Trademarks for the sale of goods, completion of work-in-process or

rendering of services or otherwise in connection with enforcing any other

security interest granted to Secured Party by Debtor or any subsidiary or

affiliate of Debtor or for such other reason as Secured Party may determine.

 

(b) Secured Party may grant

such license or licenses relating to the Collateral for such term or terms, on

such conditions, and in such manner, as Secured Party shall in its discretion

deem appropriate.  Such license or

licenses may be general, special or otherwise, and may be granted on an exclusive

or non-exclusive basis throughout all or any part of the United States of

America, its territories and possessions, and all foreign countries.

 

(c) Secured Party may

assign, sell or otherwise dispose of the Collateral or any part thereof, either

with or without special conditions or stipulations except that if notice to

Debtor of intended disposition of Collateral is required by law, the giving of

ten (10) days prior written notice to Debtor of any proposed disposition shall

be deemed reasonable notice thereof and Debtor waives any other notice with

respect thereto.  Secured Party shall

have the power to buy the Collateral or any part thereof, and Secured Party

shall also have the power to execute assurances and perform all other acts

which Secured Party may, in its discretion, deem appropriate or proper to

complete such assignment, sale, or disposition.  In any such event, Debtor shall be liable for any deficiency.

 

(d) In addition to the

foregoing, in order to implement the assignment, sale, or other disposition of

any of the Collateral pursuant to the terms hereof, upon the occurrence and

during the continuance of an Event of Default, Secured Party may at any time

execute and deliver on behalf of Debtor, pursuant to the authority granted in

the Powers of Attorney described in Section 3(f) hereof, one or more

 

6

 

instruments of assignment of

the Trademarks (or any application for registration, registration, or recording

relating thereto), in form suitable for filing, recording, or

registration.  Debtor agrees to pay

Secured Party on demand all costs incurred in any such transfer of the

Collateral, including, but not limited to, any taxes, fees, and reasonable attorneys’

fees and legal expenses.  Debtor agrees

that Secured Party and Lenders have no obligation to preserve rights to the

Trademarks against any other parties.

 

(e) Secured Party may first

apply the proceeds actually received from any such license, assignment, sale or

other disposition of any of the Collateral to the costs and expenses thereof,

including, without limitation, reasonable attorneys’ fees and all legal, travel

and other expenses which may be incurred by Secured Party.  Thereafter, Secured Party may apply any

remaining proceeds to such of the Obligations as Secured Party may in its

discretion determine.  Debtor shall

remain liable to Secured Party for any of the Obligations remaining unpaid

after the application of such proceeds, and Debtor shall pay Secured Party on

demand any such unpaid amount, together with interest at the rate then

applicable to the Obligations set forth in the Loan Agreement.

 

(f) Debtor shall supply to

Secured Party or to Secured Party’s designee, Debtor’s knowledge and expertise

relating to the manufacture, sale and distribution of the products and services

bearing the Trademarks and Debtor’s customer lists and other records relating

to the Trademarks and the distribution thereof.

 

(g) Nothing contained herein

shall be construed as requiring Secured Party or any Lender to take any such

action at any time.  All of Secured

Party’s and any Lender’s rights and remedies, whether provided under this

Agreement, the other Financing Agreements, applicable law, or otherwise, shall be

cumulative and none is exclusive.  Such

rights and remedies may be enforced alternatively, successively, or

concurrently.

 

6.                     JURY TRIAL

WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW

 

(a) The validity,

interpretation and enforcement of this Agreement and the other Financing

Agreements and any dispute arising out of the relationship between the parties

hereto, whether in contract, tort, equity or otherwise, shall be governed by

the internal laws of the State of Florida without regard to principals of

conflicts of laws, but excluding any rule of law that would cause the

application of the law of any jurisdiction other than the laws of the State of

Florida.

 

(b) Debtor and Secured Party

irrevocably consent and submit 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 and waive any objection based on venue or forum

non  conveniens with respect to any action instituted therein

arising under this Agreement or any of the other Financing Agreements or in any

way connected or related or incidental to the dealings of Debtor and Secured

Party or any Lender in respect of this Agreement or the other Financing

Agreements or the transactions related hereto or

 

7

 

thereto, in each case

whether now existing or thereafter arising, and whether in contract, tort,

equity or otherwise, and agree that any dispute with respect to any such

matters shall be heard only in the courts described above (except that Secured

Party shall have the right to bring any action or proceeding against Debtor or

its property in the courts of any other jurisdiction which Secured Party deems

necessary or appropriate in order to realize on the Collateral or to otherwise

enforce its rights against Debtor or its property).

 

(c) Debtor hereby waives

personal service of any and all process upon it and consents that all such

service of process may be made by certified mail (return receipt requested)

directed to its address set forth herein and service so made shall be deemed to

be completed five (5) days after the same shall have been so deposited in the

U.S. mails, or, at Secured Party’s option, by service upon Debtor in any other

manner provided under the rules of any such courts.

 

(d) DEBTOR AND SECURED PARTY

EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR

CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING

AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE

DEALINGS OF DEBTOR AND SECURED PARTY OR ANY LENDER IN RESPECT OF THIS AGREEMENT

OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR

THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN

CONTRACT, TORT, EQUITY OR OTHERWISE. 

DEBTOR AND SECURED PARTY EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH

CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL

WITHOUT A JURY AND THAT DEBTOR OR SECURED PARTY MAY FILE AN ORIGINAL

COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF

THE CONSENT OF DEBTOR AND SECURED PARTY TO THE WAIVER OF THEIR RIGHT TO TRIAL

BY JURY.

 

(e) Notwithstanding any

other provisions contained herein, Secured Party and Lenders shall not have any

liability to Debtor (whether in tort, contract, equity or otherwise) for losses

suffered by Debtor in connection with, arising out of, or in any way related to

the transactions or relationships contemplated by this Agreement, or any act,

omission or event occurring in connection herewith, unless it is determined by

a final and non-appealable judgment or court order binding on Secured Party or

such Lender that the losses were the result of acts or omissions constituting

gross negligence or willful misconduct. 

In any such litigation, Secured Party and Lenders shall be entitled to

the benefit of the rebuttable presumption that it acted in good faith and with

the exercise of ordinary care in the performance by it of the terms of this

Agreement and the other Financing Agreements.

 

7.                     MISCELLANEOUS

 

(a) All notices, requests

and demands hereunder shall be in writing and deemed to have been given or

made:  if delivered in person,

immediately upon delivery; if by facsimile transmission,

 

8

 

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 by certified mail, return receipt requested, five (5)

days after mailing.  All notices,

requests and demands upon the parties are to be given to the following

addresses (or to such other address as any party may designate by notice in

accordance with this Section):

 

	

  If to Debtor:

  	

  Mackie Designs Inc.

  
	

   

  	

  16220 Woodinville-Redmond Rd., N.E.

  
	

   

  	

  Attention: Chief Financial Officer

  
	

   

  	

  Telephone No.: 425-487-4335

  
	

   

  	

  Telecopy No.: 425-483-6595

  
	

   

  	

   

  
	

  with a copy to:

  	

  Sun Capital Partners Management, LLC

  
	

   

  	

  5355 Town Center Road, Suite 802

  
	

   

  	

  Boca Raton, Florida 33486

  
	

   

  	

  Attention: Marc J. Leder,

  
	

   

  	

  Rodger R. Krouse and

  
	

   

  	

  C. Deryl Couch, Esq.

  
	

   

  	

  Telephone No.: 561-394-0550

  
	

   

  	

  Telecopier No.: 561-394-0540

  
	

   

  	

   

  
	

  with a copy to:

  	

  Kirkland & Ellis

  
	

   

  	

  200 East Randolph Drive

  
	

   

  	

  Chicago, Illinois

  
	

   

  	

  Attention: Francesco Penati, Esq.

  
	

   

  	

  Telephone No.: 312-861-2000

  
	

   

  	

  Telecopier No.: 312-861-2200

  
	

   

  	

   

  
	

  If to Secured Party:

  	

  Congress Financial Corporation

  (Florida)

  
	

   

  	

  777 Brickell Avenue

  
	

   

  	

  Miami, Florida 33131

  
	

   

  	

  Attention: Portfolio Manager

  
	

   

  	

  Telephone No.:305-371-6671

  
	

   

  	

  Telecopy No.:305-371-9456

  

 

(b) All references to the

plural herein shall also mean the singular and to the singular shall also mean

the plural.  All references to Debtor,

Secured Party and any Lender pursuant to the definitions set forth in the

recitals hereto, or to any other person herein, shall include their respective

successors and assigns.  The words

“hereof,” “herein,” “hereunder,” “this Agreement” and words of similar import

when used in this Agreement shall refer to this Agreement as a whole and not

any particular provision of this Agreement and as this Agreement now exists or

may hereafter be amended, modified, supplemented,

 

9

 

extended, renewed, restated

or replaced.  An Event of Default shall

exist or continue or be continuing until such Event of Default is waived in

accordance with Section 7(e) hereof. 

All references to the term “Person” or “person” herein shall mean any

individual, sole proprietorship, partnership, corporation (including, without

limitation, 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.

 

(c) This Agreement, the

other Financing Agreements and any other document referred to herein or therein

shall be binding upon Debtor and its successors and assigns and inure to the

benefit of and be enforceable by Secured Party and Lenders and their respective

successors and assigns.

 

(d) If any provision of this

Agreement is held to be invalid or unenforceable, such invalidity or

unenforceability shall not invalidate this Agreement as a whole, but this

Agreement shall be construed as though it did not contain the particular

provision held to be invalid or unenforceable and the rights and obligations of

the parties shall be construed and enforced only to such extent as shall be

permitted by applicable law.

 

(e) Neither this Agreement

nor any provision hereof shall be amended, modified, waived or discharged

orally or by course of conduct, but only by a written agreement signed by an

authorized officer of Secured Party. 

Secured Party and Lenders shall not, by any act, delay, omission or

otherwise be deemed to have expressly or impliedly waived any of its rights,

powers and/or remedies unless such waiver shall be in writing and signed by an

authorized officer of Secured Party.  Any

such waiver shall be enforceable only to the extent specifically set forth

therein.  A waiver by Secured Party or

any Lender of any right, power and/or remedy on any one occasion shall not be

construed as a bar to or waiver of any such right, power and/or remedy which

Secured Party or such Lender would otherwise have on any future occasion,

whether similar in kind or otherwise.

 

(f) This Agreement (i) may

be executed in separate counterparts, each of which taken together shall

constitute one and the same instrument and (ii) may be executed and delivered

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

executed and delivered counterpart.

 

(g) Upon payment and

satisfaction in full of the Obligations and the termination of the Financing

Agreements and upon Debtor’s written request and at Borrowers’ and Debtor’s

expense, Secured Party shall promptly deliver the Collateral to Debtor which

has not been used or applied towards payment of the Obligations and shall

execute such documents and instruments necessary to release the Secured Party’s

lien on the Collateral.

 

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IN WITNESS WHEREOF, Debtor

and Secured Party have executed this Agreement as of the day and year first

above written.

 

 

	

   

  	

  MACKIE DESIGNS INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  James T. Engen

  	

   

  
	

   

  	

   

  
	

   

  	

  Title:

  	

  President & CEO

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  CONGRESS FINANCIAL

  CORPORATION

  (FLORIDA), as Agent

  
	

   

  	

   

  
	

   

  	

  By:

  	

  Daniel Cott

  	

   

  
	

   

  	

   

  
	

   

  	

  Title:

  	

  Sr. Vice President

  	

   

  
					

 

11

 

	

  STATE OF WASHINGTON

  	

  )

  
	

   

  	

  )  ss.:

  
	

  COUNTY OF KING

  	

  )

  

 

On this 21st day of March,

2003, before me personally came Jamie Engen, to me known, who being duly sworn,

did depose and say, that he is the CEO of MACKIE DESIGNS INC., the corporation

described in and which executed the foregoing instrument; and that he signed

his name thereto by order of the Board of Directors of said corporation.

 

	

   

  	

  Nancy L. Keller

  
	

   

  	

  Notary Public

  

 

	

  STATE OF

  	

  )

  
	

   

  	

  )  ss.:

  
	

  COUNTY OF

  	

  )

  

 

On this 28th day of March,

2003, before me personally came Daniel Cott, to me known, who being duly sworn,

did depose and say, that he is the Sr. Vice-President of CONGRESS FINANCIAL

CORPORATION (FLORIDA), the corporation described in and which executed the

foregoing instrument; and that he signed his name thereto by order of the Board

of Directors of said corporation.

 

	

   

  	

   

  
	

   

  	

  Notary Public

  

 

12

 

EXHIBIT

A

TO

TRADEMARK

COLLATERAL ASSIGNMENT

AND SECURITY AGREEMENT

 

List

of Trademarks and Trademark Applications

 

See

Exhibit A Attached Hereto

 

A-1

 

EXHIBIT

B

TO

TRADEMARK

COLLATERAL ASSIGNMENT

AND SECURITY AGREEMENT

 

List

of Licenses

 

1. License Agreement, dated

March 29, 1999, between Mackie Designs Inc. and Massenburg Design Works LLC,

whereby Massenburg licensed Mackie Designs Inc. to incorporate certain software

into Mackie Designs Inc. products and the use of its trademarks in connection

therewith. Mackie Designs Inc. also licensed the limited use of its trademark

to Massenburg in conjunction with the transaction. This Agreement was amended

in April, 2000, and again on September 8, 2000.

 

2. Reciprocal License

Agreement, dated January 13, 1998, between Mackie Designs Inc. and TC Electronic

A/S, whereby TC licensed certain software to Mackie Designs Inc. for use in its

products and the use of its trademarks in conjunction therewith. Mackie Designs

Inc. also licensed the limited use of its trademark to TC in conjunction with

the transaction. This Agreement was amended January 13, 1998, August 16, 1999,

and November 10, 1999.

 

3. Mutual License Agreement,

dated in 1997, between Mackie Designs Inc. and Avid Technologies Inc., whereby

the DigiDesign Division of Avid licensed Mackie Designs Inc. to use certain

software protocols to allow certain Company products to interface with

DigiDesign’s protocols software. Each granted the other a limited license to

use its name and trademarks in conjunction therewith.

 

4. Sales and License

Agreement, dated July, 1999, between Mackie Designs Inc. and the Bomb Factory,

whereby TBF granted Mackie Designs Inc. a license to use certain of TBF’s

software. Each granted the other a limited license to use its name and the

trademarks in conjunction therewith.

 

5. Sales and License

Agreement, dated November 5, 1998, between Mackie Designs Inc. and Apogee

Electronics Corporation, whereby Apogee licensed Mackie Designs Inc. to use

certain of its Digital Audio Technology (low jitter clock and low jitter video

clock). The license includes a grant to Mackie Designs Inc. to use certain of

Apogee’s trademarks in conjunction therewith.

 

6. Sales and License

Agreement, dated June 6, 1997, between Mackie Designs Inc. and Apogee

Electronics Corporation, whereby Apogee Licensed to Mackie Designs Inc. certain

of its Digital Audio Technology (UV-22). The license includes a grant to Mackie

Designs Inc. to use certain of Apogee’s Trademarks in conjunction therewith.

The agreement was amended August 22, 2000.

 

B-1

 

7. Sales and License

Agreement, dated May 22, 1997, between Mackie Designs Inc. and Apogee

Electronics Corporation whereby Apogee licensed to Mackie Designs Inc. certain

of its Digital Audio Technology (Digital I/O card). The license includes a

grant to Mackie Designs Inc. to use certain of Apogee’s trademarks in

conjunction therewith. The Agreement was amended August 23, 2000 and September

18, 2000.

 

8. Sales and License

Agreement, dated March 29, 2002, between Mackie Designs Inc. and Apogee

Electronics Corporation whereby Apogee agreed to develop for Mackie Designs

Inc. a Mackie I/O 96 Main Board. The agreement includes a license to Mackie

Designs Inc. to use (a) Apogee’s technology incorporated into the board and (b)

certain of Apogee’s trademarks in conjunction therewith.

 

9. License Agreement, dated

May 7, 1999, between Mackie Designs Inc. and Auburn Audio Technologies, Inc.,

d/b/a Antares Audio Technologies, whereby Antares licensed Mackie Designs Inc.

to use certain software. The license includes a grant to Mackie Designs Inc. to

use certain of Antares’ trademarks in conjunction therewith. This Agreement was

amended September 9, 1999.

 

10. Sales and License

Agreement, dated October, 1998, between Mackie Designs Inc. and Opcode Systems,

Inc., whereby Opcode licensed the use of certain circuitry to Mackie Designs

Inc.. The license includes a grant to Mackie Designs Inc. to use certain of

Opcode’s trademarks in conjunction therewith.

 

11. Sales and License

Agreement, dated November, 1998, between Mackie Designs Inc. and Sonorus

Systems Inc., whereby Sonorus agreed to develop an HDR interface card for

Mackie Designs Inc.’s sole and exclusive use. The HDR interface card is

proprietary to Mackie Designs Inc..

 

12. Sales and License

Agreement, dated August, 1999, between Mackie Designs Inc. and JSK Engineering,

whereby JSK agreed to develop an alternate synchronization card for Mackie

Designs Inc.’s sole and exclusive use. This card is proprietary to Mackie

Designs Inc..

 

13. Development Agreement,

dated in 1997, between Mackie Designs Inc. and Praxair Specialty Ceramics,

whereby Praxair agreed to develop certain products for Mackie Designs Inc.’s

sole and exclusive use. The agreement allows for joint patenting of patentable

inventions which might be forthcoming as a result of the work performed.

 

14. License Agreement, dated

in 2001, between Mackie Designs Inc. and Hablador, Inc., whereby Hablador

licensed Mackie Designs Inc. to use its publishing software application.

 

15. Fixed Price Engagement

Contract, dated September 26, 2000, between Mackie Designs Inc. and Oracle

Corporation, whereby Oracle agreed to implement its Oracle Release 11 i

Application to Mackie Designs Inc. and license its use. A related Service

Agreement was also entered into between Oracle and Mackie Designs Inc..

 

B-2

 

16. Sales and License

Agreement, dated September, 1999, between Mackie Designs Inc. and Drawmer

Distribution (Yorkshire) Ltd., whereby Drawmer licensed Mackie Designs Inc. to

use certain software specialized for Mackie Designs Inc.’s sole and exclusive

use. The license also includes the right of Mackie Designs Inc. to use certain

of Drawmer’s names and trademarks.

 

17. License and Supply

Agreement, dated May 14, 1997, between Mackie Designs Inc. and IVL Technologies

Ltd., whereby IVL developed certain reverb, chorus, and delay algorithms, and a

digital signal processing card for Mackie Designs Inc.’s use. IVL licensed

Mackie to use the same, retaining the right of manufacture and sale to Mackie

Designs Inc.. Mackie Designs Inc. was licensed and required to use IVL’s

Trademark in conjunction with these products.

 

18. License and Supply

Agreement, dated November 17, 1997, between Mackie Designs Inc. and IVL

Technologies Ltd., whereby IVL developed a Mackie/Motorola DSP Card for Mackie

Designs Inc.’s use. IVL licensed Mackie to use the same, retaining the right of

manufacture and sale to Mackie Designs Inc.. Mackie Designs Inc. was licensed

and required to use IVL’s Trademark in conjunction with these products.

 

19. Sales and License

Agreement, dated September, 1997, between Mackie Designs Inc. and Lexicon, a

division of Harmon International, Inc., whereby Lexicon licensed to Mackie

Designs Inc. the use of certain software.

 

20. Development Resource

Center Agreement, dated July, 1998, between Mackie Designs Inc. and Mistral

Solutions Private Limited, whereby Mistral undertook to develop software as

requested for Mackie Designs Inc.’s sole and exclusive use. All proprietary

rights to resulting Intellectual Property are granted to Mackie Designs Inc..

 

21. Miscellaneous shrink

wrap, click on, or similar licenses granted to Mackie Designs Inc. by various

manufacturers in conjunction with Mackie Designs Inc.’s purchase and use of

off-the-shelf software.

 

22. Mutual Release and

License, dated October, 1999, among Radio Cine Forniture (RCF) S.p.A., B&C

Speakers S.p.A., Jiri Krampera and Mackie Designs Inc. related to RCF and

B&C’s claims to right to use certain technology know as Transcoil developed

by Krampera and used in the manufacture of speakers. Under the Agreement

B&C granted Mackie, RCF and their affiliates a perpetual, worldwide,

non-exclusive, royalty-free license to the Transcoil technology acquired from

any source other than B&C, and Krampera, Mackie and RCF granted B&C and

its affiliates the same as to the Transcoil technology acquired from any source

other than Mackie or RCF.

 

23. End-user licenses to

purchasers of the products of Mackie Designs Inc. and its Subsidiaries.

 

24. License Agreement dated

January 26, 1995 between Johan Bonneraerans and Mackie Designs (Belgium)

BN.B.A., amended December 31, 2000.

 

B-3

 

25. License to Mackie

Designs (Belgium) B.V.B.A. for use of CD Writer software.

 

26. Assignment of Rights,

Title and Interest in Invention dated May 22, 1998 between Marcelo Vercelli and

Mackie Designs Inc. relating to Fussion Audio products.

 

27. Assignment of Rights,

Title and Interest in Invention dated May 22, 1998 between Jiri Krampera and

Mackie Designs Inc. relating to Fussion Audio products.

 

28. License Agreement dated

April 5, 2000, between Eastern Acoustic Works, Inc. and Gunness.

 

29. License Agreement dated

July 2, 2001 between Mackie Designs Inc. and Auburn Audio Technologies, Inc.,

d/b/a Antares Audio Technologies, relating to the licensing of Antares’

Microphone Modeler software. The license includes a grant to Mackie Designs

Inc. to use certain of Antares’ trademarks in conjunction therewith.

 

30. License Agreement dated

December 5, 2001 between Mackie Designs Inc. and Auburn Audio Technologies,

Inc., d/b/a Antares Audio Technologies, relating to the licensing of Antares’

DSP algorithms and editable parameters for Motorola 563xx compatibility. The

license includes a grant to Mackie Designs Inc. to use certain of Antares’

trademarks in conjunction therewith.

 

31.Strategic Alliance and

License Agreement between Eastern Acoustic Works and Peak Audio, Inc. relating

to the licensing of digital packet transmission technology employing standard

Ethernet componentry known as CobraNet Technology. The license includes the

right to use the CobraNet Technology in Eastern’s products and to use certain

of Peak’s logos and trademarks in conjunction therewith.

 

B-4

 

EXHIBIT

C

TO

TRADEMARK

COLLATERAL ASSIGNMENT

AND SECURITY AGREEMENT

 

SPECIAL

POWER OF ATTORNEY

 

	

  STATE OF

  	

  )

  
	

   

  	

  )  ss.:

  
	

  COUNTY OF

  	

  )

  

 

KNOW ALL MEN BY THESE

PRESENTS, that MACKIE DESIGNS INC. (“Debtor”), having an office at 16220

Woodinville-Redmond Rd., N.E., Woodinville, Washinton 98072 hereby appoints and

constitutes, CONGRESS FINANCIAL CORPORATION (FLORIDA), as Agent (“Secured

Party”), and each of its officers, its true and lawful attorney, with full

power of substitution and with full power and authority to perform the

following acts on behalf of Debtor:

 

1.             Execution and delivery of any and all agreements,

documents, instrument of assignment, or other papers which Secured Party, in

its discretion, deems necessary or advisable for the purpose of assigning,

selling, or otherwise disposing of all right, title, and interest of Debtor in

and to any trademarks and all registrations, recordings, reissues, extensions,

and renewals thereof, or for the purpose of recording, registering and filing

of, or accomplishing any other formality with respect to the foregoing.

 

2.             Execution and delivery of any and all documents,

statements, certificates or other papers which Secured Party, in its

discretion, deems necessary or advisable to further the purposes described in

Subparagraph 1 hereof.

 

This Power of Attorney is

made pursuant to a Trademark Collateral Assignment and Security Agreement,

dated of even date herewith, between Debtor and Secured Party (the “Security

Agreement”) and is subject to the terms and provisions thereof.  This Power of Attorney, being coupled with

an interest, is irrevocable until all “Obligations”, as such term is defined in

the Security Agreement, are paid in full and the Security Agreement is

terminated in writing by Secured Party.

 

	

  Dated: March     , 2003

  	

  MACKIE DESIGNS INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

   

  
					

 

C-1

 

	

  STATE OF

  	

  )

  
	

   

  	

  )  ss.:

  
	

  COUNTY OF

  	

  )

  

 

On the

     day of

                   ,

2003, before me personally came

                                      ,

to me known, who being by me duly sworn, did depose, acknowledge and say that

he/she is the

                                                

of Mackie Designs Inc., the corporation which executed the foregoing instrument

and that he/she signed his/her name thereto by order of the Board of Directors

of said corporation.

 

	

   

  	

   

  
	

   

  	

  Notary Public

  

 

C-2Exhibit 10.7

 

GUARANTEE

 

March 31, 2003

 

Congress Financial Corporation (Florida), as Agent
  for and on behalf of the Lenders as

referred to below

777 Brickell Avenue, Suite 808

Miami, Florida 33131

 

Re:          Mackie Designs Inc. (“Borrower”)

 

Gentlemen:

 

Congress Financial

Corporation (Florida), in its capacity as agent pursuant to the Loan Agreement

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

which are parties thereto as lenders (in such capacity “Agent”), and the

financial institutions which are parties to the Loan Agreement as lenders

(individually, a “Lender” and collectively, “Lenders”) have entered into

financing arrangements with Borrower and the undersigned pursuant to which

Lenders (or Agent on behalf of Lenders) may make loans and advances and provide

other financial accommodations to Borrower as set forth in the Loan and

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

undersigned, Agent and Lenders (as the same now exists or may hereafter be

amended, modified, supplemented, extended, renewed, restated or replaced, the

“Loan Agreement”), and the other agreements, documents and instruments referred

to therein or at any time executed and/or delivered in connection therewith or

related thereto, including, but not limited to, this Guarantee (all of the

foregoing, together with the Loan Agreement, as the same now exist or may

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

replaced, being collectively referred to herein as the “Financing Agreements”).

 

Due to the close business

and financial relationships between Borrower and each of the undersigned

(individually each a “Guarantor” and collectively, “Guarantors”), in

consideration of the benefits which will accrue to Guarantors and as an

inducement for and in consideration of Lenders (or Agent on behalf of Lenders)

making loans and advances and providing other financial accommodations to

Borrower pursuant to the Loan Agreement and the other Financing Agreements,

each Guarantor hereby jointly and severally agrees in favor of Agent and

Lenders as follows:

 

1.               Guarantee.

 

(a) Each Guarantor

absolutely and unconditionally, jointly and severally, guarantees and agrees to

be liable for the full and payment and performance when due of the following

(all of which are collectively referred to herein as the “Guaranteed

Obligations”):  (i) all obligations,

liabilities and indebtedness of any kind, nature and description of Borrower to

Agent and any Lender and/or their affiliates, including principal, interest,

fees, costs and expenses, however evidenced, whether as principal, surety,

endorser, guarantor or, otherwise, whether arising under the Loan Agreement,

any of the other Financing Agreements or otherwise, whether now existing or hereafter

arising, whether arising

 

 

before, during or after the initial or any renewal term of the Loan

Agreement or after the commencement of any case with respect to Borrower under

the United States Bankruptcy Code or any similar statute (including, without

limitation, the payment of interest 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 and including

loans, interest, fees, charges and expenses related thereto and all other

obligations of Borrower or its successors to Agent and any Lender arising after

the commencement of such case), whether direct or indirect, absolute or

contingent, joint or several, due or not due, primary or secondary, liquidated

or unliquidated, secured or unsecured, and however acquired by Agent or any

Lender and (ii) all expenses (including, without limitation, reasonable

attorneys’ fees and legal expenses) incurred by Agent or any Lender in connection

with the preparation, execution, delivery, recording, administration,

collection, liquidation, enforcement and defense of Borrower’s obligations,

liabilities and indebtedness as aforesaid to Agent or any Lender, the rights of

Agent or any Lender in any collateral or under this Guarantee and all other

Financing Agreements or in any way involving claims by or against Agent or any

Lender directly or indirectly arising out of or related to the relationships

between Borrower, any Guarantor or other Obligor (as hereinafter defined) and

Agent or any Lender, whether such expenses are incurred before, during or after

the initial or any renewal term of the Loan Agreement and the other Financing

Agreements or after the commencement of any case with respect to Borrower or

any Guarantor under the United States Bankruptcy Code or any similar statute.

 

(b) This Guarantee is a

guaranty of payment and not of collection. 

Each Guarantor agrees that Agent and Lenders need not attempt to collect

any Guaranteed Obligations from Borrower, any other Guarantor or any other

Obligor or to realize upon any collateral, but may require any Guarantor to

make immediate payment of all of the Guaranteed Obligations to Agent when due,

whether by maturity, acceleration or otherwise, or at any time thereafter.  Agent and Lenders may apply any amounts

received in respect of the Guaranteed Obligations to any of the Guaranteed

Obligations, in whole or in part (including reasonable attorneys’ fees and legal

expenses incurred by Agent or any Lender with respect thereto or otherwise

chargeable to Borrower or Guarantors) and in such order as Agent may elect.

 

(c) Payment by Guarantors

shall be made to Agent at the office of Agent from time to time on demand as

Guaranteed Obligations become due.  Guarantors

shall make all payments to Agent on the Guaranteed Obligations free and clear

of, and without deduction or withholding for or on account of, any setoff,

counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,

withholding, restrictions or conditions of any kind.  One or more successive or concurrent actions may be brought

hereon against any Guarantor either in the same action in which Borrower or any

of the other Guarantors or any other Obligor is sued or in separate

actions.  In the event any claim or

action, or action on any judgment, based on this Guarantee is brought against

any Guarantor, each Guarantor agrees not to deduct, set-off, or seek any

counterclaim for or recoup any amounts which are or may be owed by Agent or any

Lender to any Guarantor.

 

(d)  Each Guarantor hereby agrees that to the

extent that a Guarantor shall have paid more than its proportionate share of

any payment made hereunder, such Guarantor shall be entitled to seek and

 

2

 

receive contribution from and against any other Guarantor hereunder who

has not paid its proportionate share of such payment.  Each Guarantor’s right of contribution shall be subject to the

terms and conditions of Section (e) hereof. 

The provisions of this Section shall in no respect limit the obligations

and liabilities of any Guarantor to the Agent and the Lenders, and each

Guarantor shall remain liable to the Agent and the Lenders for the full amount

guaranteed by such Guarantor hereunder.

 

(e)  Notwithstanding any payment or payments made

by any of the Guarantors hereunder or any set-off or application of funds of

any of the Guarantors by any Lender, no Guarantor shall be entitled to be

subrogated to any of the rights of the Agent or any Lender against any Borrower

or any other Guarantor or any collateral security or guarantee or right of

offset held by any Lender for the payment of the Obligations, nor shall any

Guarantor seek or be entitled to seek any contribution or reimbursement from

any Borrower or any other Guarantor in respect of payments made by such

Guarantor hereunder, until all amounts owing to the Agent and the Lenders by

Borrowers on account of the Obligations are paid in full and Financing

Agreements are terminated.  If any

amount shall be paid to any Guarantor on account of such subrogation rights at

any time when all of the Obligations shall not have been paid in full, such

amount shall be held by such Guarantor in trust for the Agent and the Lenders,

segregated from other funds of such Guarantor, and shall, forthwith upon

receipt by such Guarantor, be turned over to the Agent in the exact form

received by such Guarantor (duly indorsed by such Guarantor to the Agent, if

required), to be applied against the Obligations, whether matured or unmatured,

in such order as the Agent may determine.

 

2.     Waivers and Consents.

 

(a) Notice of acceptance of

this Guarantee, the making of loans and advances and providing other financial

accommodations to Borrower and presentment, demand, protest, notice of protest,

notice of nonpayment or default and all other notices to which Borrower or any

Guarantor is entitled are hereby waived by each Guarantor.  Each Guarantor also waives notice of and

hereby consents to, (i) any amendment, modification, supplement, extension,

renewal, or restatement of the Loan Agreement and any of the other Financing

Agreements, including, without limitation, extensions of time of payment of or

increase or decrease in the amount of any of the Guaranteed Obligations, the

interest rate, fees, other charges, or any collateral, and the guarantee made

herein shall apply to the Loan Agreement and the other Financing Agreements and

the Guaranteed Obligations as so amended, modified, supplemented, renewed,

restated or extended, increased or decreased, (ii) the taking, exchange,

surrender and releasing of collateral or guarantees now or at any time held by

or available to Lender for the obligations of Borrower or any other party at

any time liable on or in respect of the Guaranteed Obligations or who is the

owner of any property which is security for the Guaranteed Obligations

(individually, an “Obligor” and collectively, the “Obligors”), including,

without limitation, the surrender or release by Agent of any one of Guarantors hereunder,

(iii) the exercise of, or refraining from the exercise of any rights against

Borrower, any Guarantor or any other Obligor or any collateral, (iv) the

settlement, compromise or release of, or the waiver of any default with respect

to, any of the Guaranteed Obligations and (v) any financing by Agent or any

Lender of Borrower under Section 364 of the United States Bankruptcy Code or

consent to the use of cash collateral by Agent or Lenders under Section 363 of

the United States Bankruptcy Code.  Each

Guarantor agrees that the amount of

 

3

 

the Guaranteed Obligations shall not be diminished and the liability of

Guarantors hereunder shall not be otherwise impaired or affected by any of the

foregoing.

 

(b) No invalidity,

irregularity or unenforceability of all or any part of the Guaranteed

Obligations shall affect, impair or be a defense to this Guarantee, nor shall

any other circumstance which might otherwise constitute a defense available to

or legal or equitable discharge of Borrower in respect of any of the Guaranteed

Obligations, or any Guarantor in respect of this Guarantee, affect, impair or

be a defense to this Guarantee.  Without

limitation of the foregoing, the liability of any Guarantor hereunder shall not

be discharged or impaired in any respect by reason of any failure by Agent or

any Lender to perfect or continue perfection of any lien or security interest

in any collateral or any delay by Agent or any Lender in perfecting any such

lien or security interest.  As to

interest, fees and expenses, whether arising before or after the commencement

of any case with respect to Borrower under the United States Bankruptcy Code or

any similar statute, each Guarantor shall be liable therefor, even if Borrower’s

liability for such amounts does not, or ceases to, exist by operation of

law.  Each Guarantor acknowledges that

Agent and Lenders have not made any representations to any Guarantor with

respect to Borrower, any other Guarantor or Obligor or otherwise in connection

with the execution and delivery by any Guarantor of this Guarantee and each

Guarantor is not in any respect relying upon Agent or any Lender or any

statements by Agent or any Lender in connection with this Guarantee.

 

(c) Until all of the Guaranteed

Obligations have been fully and finally paid and satisfied in full in

immediately available funds and the Financing Agreements have been terminated,

(i) each Guarantor hereby irrevocably and unconditionally waives and

relinquishes all statutory, contractual, common law, equitable and all other

claims against Borrower, any collateral for the Guaranteed Obligations or other

assets of Borrower or any other Obligor, for subrogation, reimbursement,

exoneration, contribution, indemnification, setoff or other recourse in respect

to sums paid or payable to Agent or any Lender by each Guarantor hereunder and

(ii) each Guarantor hereby further irrevocably and unconditionally waives and

relinquishes any and all other benefits which Guarantors might otherwise directly

or indirectly receive or be entitled to receive by reason of any amounts paid

by or collected or due from Guarantors, Borrower or any other Obligor upon the

Guaranteed Obligations or realized from their property.

 

3.     Subordination. 

Payment of all amounts now or hereafter owed to Guarantors by Borrower

or any other Obligor is hereby subordinated in right of payment to the fully

and finally payment to Agent and Lenders of the Guaranteed Obligations and,

except as permitted to be paid by Borrower to Guarantors pursuant to and in

accordance with the Loan Agreement, all such amounts and any security and

guarantees therefor are hereby assigned to Agent as security for the Guaranteed

Obligations.

 

4.     Acceleration. 

Notwithstanding anything to the contrary contained herein or any of the

terms of any of the other Financing Agreements, the liability of Guarantors for

the entire Guaranteed Obligations shall mature and become immediately due and

payable, even if the liability of Borrower or any other Obligor does not, upon

the occurrence of any act, condition or event which constitutes an Event of

Default as such term is defined in the Loan Agreement.

 

4

 

5.     Account Stated. 

The books and records of Agent showing the account between Agent and

Borrower shall be admissible in evidence in any action or proceeding against or

involving Guarantors as prima  facie evidence of the items therein

set forth, and the monthly statements of Agent rendered to Borrower, to the

extent to which no written objection is made within thirty (30) days from the

date of sending thereof to Borrower, shall be deemed conclusively correct and

constitute an account stated between Lender and Borrower and be binding on

Guarantors.

 

6.     Termination.  This

Guarantee is continuing, unlimited, absolute and unconditional.  All Guaranteed Obligations shall be

conclusively presumed to have been created in reliance on this Guarantee.  Each Guarantor shall continue to be liable

hereunder until the earlier to occur of the following:  (a) subject to the terms of Section 7 of

this Guarantee, the Guaranteed Obligations, other than unasserted contingent

indemnification obligations, have been paid and satisfied in full in cash or

other immediately available funds and (b) one of Agent’s officers actually

receives a written termination notice from a Guarantor sent to Agent at its

address set forth above by certified mail, return receipt requested and

thereafter as set forth below.  Such

notice received by Agent from any one of Guarantors shall not constitute a

revocation or termination of this Guarantee as to any of the other

Guarantors.  Revocation or termination

hereof by any Guarantor shall not affect, in any manner, the rights of Agent or

any obligations or duties of any Guarantor (including the Guarantor which may

have sent such notice) under this Guarantee with respect to (a) Guaranteed

Obligations which have been created, contracted, assumed or incurred prior to

the receipt by Agent of such written notice of revocation or termination as

provided herein, including, without limitation, (i) all amendments, extensions,

renewals and modifications of such Guaranteed Obligations (whether or not

evidenced by new or additional agreements, documents or instruments executed on

or after such notice of revocation or termination), (ii) all interest, fees and

similar charges accruing or due on and after revocation or termination, and

(iii) all reasonable attorneys’ fees and legal expenses, costs and other

expenses paid or incurred on or after such notice of revocation or termination

in attempting to collect or enforce any of such Guaranteed Obligations against

Borrower, Guarantors or any other Obligor (whether or not suit be brought), or

(b) Guaranteed Obligations which have been created, contracted, assumed or

incurred after the receipt by Agent of such written notice of revocation or

termination as provided herein pursuant to any contract entered into by Agent

or any Lender prior to receipt of such notice. 

The sole effect of such revocation or termination by any Guarantor shall

be to exclude from this Guarantee the liability of such Guarantor for those

Guaranteed Obligations arising after the date of receipt by Agent of such

written notice which are unrelated to Guaranteed Obligations arising or

transactions entered into prior to such date. 

Without limiting the foregoing, this Guarantee may not be terminated and

shall continue so long as the Loan Agreement shall be in effect (whether during

its original term or any renewal, substitution or extension thereof).

 

7.     Reinstatement.  If

after receipt of any payment of, or proceeds of collateral applied to the

payment of, any of the Guaranteed Obligations, Agent or any Lender is required

to surrender or return such payment or proceeds to any Person for any reason,

then the Guaranteed Obligations intended to be satisfied by such payment or

proceeds shall be reinstated and continue and this Guarantee shall continue in

full force and effect as if such payment or proceeds had not been received by

Agent or such Lender.  Each Guarantor

shall be liable to pay to Agent and Lenders, and does indemnify and hold

 

5

 

Agent and Lenders harmless for the amount of any payments or proceeds

surrendered or returned. This Section 7 shall remain effective notwithstanding

any contrary action which may be taken by Agent or any Lender in reliance upon

such payment or proceeds.  This Section

7 shall survive the termination or revocation of this Guarantee.

 

8.     Amendments and Waivers. 

Neither this Guarantee nor any provision hereof shall be amended,

modified, waived or discharged orally or by course of conduct, but only by a

written agreement signed by an authorized officer of Agent.  Agent shall not by any act, delay, omission

or otherwise be deemed to have expressly or impliedly waived any of its rights,

powers and/or remedies unless such waiver shall be in writing and signed by an

authorized officer of Agent.  Any such

waiver shall be enforceable only to the extent specifically set forth

therein.  A waiver by Agent of any

right, power and/or remedy on any one occasion shall not be construed as a bar

to or waiver of any such right, power and/or remedy which Agent would otherwise

have on any future occasion, whether similar in kind or otherwise.

 

9.     Existence, Power and Authority.  Each Guarantor is an entity duly organized or formed and in good

standing under the laws of its state or other jurisdiction of incorporation and

is duly qualified as a foreign entity and in good standing in all states or

other jurisdictions where the nature and extent of the business transacted by

it or the ownership of assets makes such qualification necessary, except for

those jurisdictions in which the failure to so qualify would not have a material

adverse effect on the financial condition, results of operation or businesses

of any Guarantor or the rights of Agent and Lenders hereunder or under any of

the other Financing Agreements.  The

execution, delivery and performance of this Guarantee is within the corporate

powers of each Guarantor, have been duly authorized and are not in

contravention of law or the terms of the certificates of incorporation,

by-laws, or other organizational documentation of each Guarantor, or any

indenture, agreement or undertaking to which any Guarantor is a party or by

which any Guarantor or its property are bound. 

This Guarantee constitutes the legal, valid and binding obligation of

each Guarantor enforceable in accordance with its terms, except as the

enforceability thereof may be limited by bankruptcy, insolvency or similar laws

of general application affecting the enforceability of creditors’ rights

generally or by general principles of equity limiting the availability of

equitable remedies.  Any one of

Guarantors signing this Guarantee shall be bound hereby whether or not any of

the other Guarantors or any other person signs this Guarantee at any time.

 

10.   Governing Law; Choice of Forum; Service of Process; Jury

Trial Waiver.

 

(a)  The validity, interpretation and enforcement

of this Guarantee and any dispute arising out of the relationship between any

Guarantor or Agent or any Lender, whether in contract, tort, equity or

otherwise, shall be governed by the internal laws of the State of Florida

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 Florida.

 

(b) Each Guarantor hereby

irrevocably consents and submits to the non-exclusive jurisdiction of the Circuit

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

 

6

 

Southern District of Florida and waives any objection based on venue or

forum non conveniens with respect to any action instituted therein

arising under this Guarantee or any of the other Financing Agreements or in any

way connected with or related or incidental to the dealings of any Guarantor

and Agent or any Lender in respect of this Guarantee or any of the other

Financing Agreements or the transactions related hereto or thereto, in each

case whether now existing or hereafter arising and whether in contract, tort,

equity or otherwise, and agrees that any dispute arising out of the

relationship between any Guarantor or any Borrower and Agent or any Lender or

the conduct of any such persons in connection with this Guarantee, the other

Financing Agreements or otherwise shall be heard only in the courts described

above (except that Agent and Lenders shall have the right to bring any action

or proceeding against any Guarantor or its property in the courts of any other

jurisdiction which Agent deems necessary or appropriate in order to realize on

collateral at any time granted by any Borrower or any Guarantor to Agent or any

Lender or to otherwise enforce its or their rights against any Guarantor or its

property).

 

(c) Each Guarantor hereby

waives personal service of any and all process upon it and consents that all

such service of process may be made by certified mail (return receipt

requested) directed to its address set forth on the signature pages hereof and

service so made shall be deemed to be completed five (5) days after the same

shall have been so deposited in the U.S. mails, or, at Agent’s option, by

service upon any Guarantor in any other manner provided under the rules of any

such courts.

 

(d) EACH GUARANTOR HEREBY

WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF

ACTION (i) ARISING UNDER THIS GUARANTEE OR ANY OF THE OTHER FINANCING

AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE

DEALINGS OF ANY GUARANTOR AND AGENT OR ANY LENDER IN RESPECT OF THIS GUARANTEE

OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR

THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN

CONTRACT, TORT, EQUITY OR OTHERWISE. 

EACH GUARANTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,

ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND

THAT ANY GUARANTOR OR AGENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS

AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF ANY GUARANTOR

AND AGENT TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

(e) Notwithstanding any

provision contained herein, Agent and Lenders shall not have any liability to

any Guarantor (whether in tort, contract, equity or otherwise) for losses

suffered by such Guarantor in connection with, arising out of, or in any way

related to the transactions or relationships contemplated by this Guarantee, or

any act, omission or event occurring in connection herewith, unless it is

determined by a final and non-appealable judgment or court order binding on

Agent or such Lender that the losses were the result of acts or omissions

constituting gross negligence or willful misconduct. In any such litigation,

Agent and Lenders shall be entitled to the benefit of the rebuttable

presumption

 

7

 

that it acted in good faith and with the exercise of ordinary care in the

performance by it of the terms of the Loan Agreement and the other Financing

Agreements.

 

11.   Notices.  All

notices, requests and demands hereunder shall be in writing and deemed to have

been given or made:  if delivered in

person, immediately upon delivery; if by 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 by certified mail, return receipt

requested, five (5) days after mailing. 

All notices, requests and demands upon the parties are to be given to

the following addresses (or to such other address as any party may designate by

notice in accordance with this Section):

 

	

  If to Debtor:

  	

  Mackie Designs Inc.

  
	

   

  	

  16220 Woodinville-Redmond Rd., N.E.

  
	

   

  	

  Attention: Chief Financial Officer

  
	

   

  	

  Telephone No.: 425-487-4335

  
	

   

  	

  Telecopy No.: 425-483-6595

  
	

   

  	

   

  
	

   

  
	

  with a copy to:

  	

  Sun Capital Partners Management, LLC

  
	

   

  	

  5355 Town Center Road, Suite 802

  
	

   

  	

  Boca Raton, Florida 33486

  
	

   

  	

  Attention: Marc J. Leder,

  
	

   

  	

  Rodger R. Krouse and

  
	

   

  	

  C. Deryl Couch, Esq.

  
	

   

  	

  Telephone No.: 561-394-0550

  
	

   

  	

  Telecopier No.: 561-394-0540

  
	

   

  	

   

  
	

  with a copy to:

  	

  Kirkland & Ellis

  
	

   

  	

  200 East Randolph Drive

  
	

   

  	

  Chicago, Illinois

  
	

   

  	

  Attention: Francesco Penati, Esq.

  
	

   

  	

  Telephone No.: 312-861-2000

  
	

   

  	

  Telecopier No.: 312-861-2200

  
	

   

  	

   

  
	

  If to Secured Party:

  	

  Congress Financial Corporation

  (Florida)

  
	

   

  	

  777 Brickell Avenue

  
	

   

  	

  Miami, Florida 33131

  
	

   

  	

  Attention: Portfolio Manager

  
	

   

  	

  Telephone No.:305-371-6671

  
	

   

  	

  Telecopy No.:305-371-9456

  

 

12.   Partial Invalidity. 

If any provision of this Guarantee is held to be invalid or

unenforceable, such invalidity or unenforceability shall not invalidate this

Guarantee as a whole, but this

 

8

 

Guarantee shall be construed as though it did not contain the

particular provision held to be invalid or unenforceable and the rights and

obligations of the parties shall be construed and enforced only to such extent

as shall be permitted by applicable law.

 

13.   Entire Agreement. 

This Guarantee represents the entire agreement and understanding of this

parties concerning the subject matter hereof, and supersedes all other prior

agreements, understandings, negotiations and discussions, representations,

warranties, commitments, proposals, offers and contracts among the parties

concerning the subject matter hereof, whether oral or written.

 

14.   Successors and Assigns. 

This Guarantee shall be binding upon Guarantors and their respective

successors and assigns and shall inure to the benefit of Agent and each Lender

and their successors, endorsees, transferees and assigns.  The liquidation, dissolution or termination

of any Guarantor shall not terminate this Guarantee as to such entity or as to

any of the other Guarantors.

 

15.   Construction.  All

references to the term “Guarantors” wherever used herein shall mean each and

all of Guarantors and their respective successors and assigns, individually and

collectively, jointly and severally (including, without limitation, any

receiver, trustee or custodian for any Guarantor or any of their respective

assets or any Guarantor in its capacity as debtor or debtor-in-possession under

the United States Bankruptcy Code or any similar law).  All references to the term “Agent” wherever

used herein shall mean Agent and its successors and assigns.  All references to the term “Lender” wherever

used herein shall mean Lender and its successors and assigns.  All references to the term “Borrower”

wherever used herein shall mean Borrower and its successors and assigns

(including, without limitation, any receiver, trustee or custodian for Borrower

or any of its assets or Borrower in its capacity as debtor or

debtor-in-possession under the United States Bankruptcy Code or any similar

law).  All references to the term

“Person” or “person” wherever used herein shall mean any individual, sole

proprietorship, partnership, corporation (including, without limitation, 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 corporation, trust,

joint venture or other entity or any government or any agency or instrumentality

of political subdivision thereof.  All

references to the plural shall also mean the singular and to the singular shall

also mean the plural.

 

(REMAINDER OF PAGE

INTENTIONALLY LEFT BLANK)

 

9

 

IN WITNESS WHEREOF, each

Guarantor has executed and delivered this Guarantee as of the day and year

first above written.

 

	

   

  	

  MACKIE DESIGNS MANUFACTURING, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ James T. Engen

  	

   

  
	

   

  	

   

  
	

   

  	

  Title:

  	

  President

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  SIA SOFTWARE COMPANY, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ James T. Engen

  	

   

  
	

   

  	

   

  
	

   

  	

  Title:

  	

  President

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  MACKIE INVESTMENT CO.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ James T. Engen

  	

   

  
	

   

  	

   

  
	

   

  	

  Title:

  	

  President

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