Document:

Exhibit

10.12

 

THIS NOTE IS SUBORDINATED

TO THE PAYMENT AND SATISFACTION IN FULL OF THE SENIOR DEBT, AS DEFINED IN AND

PURSUANT TO THE TERMS OF THE SUBORDINATION AGREEMENT REFERRED TO BELOW.

 

THIS NOTE HAS NOT BEEN

REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER

ANY OTHER APPLICABLE SECURITIES LAWS. 

IT MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, PLEDGED, HYPOTHECATED OR

OTHERWISE DISPOSED OF WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR

EXEMPTION THEREFROM.

 

MACKIE

DESIGNS INC.

SUBORDINATED PROMISSORY NOTE

 

March 31, 2003

Woodinville, Washington

 

MACKIE DESIGNS INC., a

Washington corporation (the “Company”), for value received, hereby promises to

pay to the order of SUN MACKIE, LLC a Delaware limited liability company

(“Sun”), its successors and permitted assigns, the principal sum of Three

Million Nine Hundred Thirty One Thousand, Four Hundred Twenty Nine Dollars

($3,931,429) (as such amount may be increased from time to time pursuant to the

following paragraph, the “Principal Sum”).

 

Interest shall accrue on

a daily basis at the rate of fifteen percent (15.0%) per annum (compounded

annually as set forth below), commencing on the date hereof, on the unpaid

Principal Sum outstanding from time to time. 

The Company shall pay all accrued interest on each anniversary of the

date hereof, subject to the terms of the Subordination Agreement.  In the event that the Company does not pay

all accrued interest due and owing on the date on which it is due, such accrued

interest shall, effective as of such due date, be added to the Principal

Sum.  Any interest that is added to the

Principal Sum pursuant to the terms of this paragraph will no longer be

considered accrued and unpaid hereunder. 

Any accrued interest which for any reason has not theretofore been paid

shall be paid in full on the date on which the Principal Sum is paid, subject

to the terms of the Subordination Agreement. 

The Company shall not pay any accrued interest in cash without the prior

written consent of the holder hereof, subject to the terms of the Subordination

Agreement.

 

The Principal Sum shall

be payable in one payment of Three Million Nine Hundred Thirty One Thousand,

Four Hundred Twenty Nine Dollars ($3,931,429), plus any amount by which

the Principal Sum has been increased under the foregoing paragraph, on March

     , 2007, subject to the terms of the Subordination

Agreement.  The Principal Sum, together

with any accrued but unpaid interest, shall be immediately due and owing on the

occurrence of an Event of Default, subject to the terms of the Subordination

Agreement.

 

For purposes of this

Subordinated Promissory Note (this “Note”), “Event of Default” shall mean (a)

the Company shall default in the payment of principal or accrued interest of

this Note on any date when due, (b) the Company makes a general assignment for

the benefit of 

 

 

creditors; or an order,

judgment or decree is entered adjudicating the Company bankrupt or insolvent;

or any order for relief with respect to the Company is entered under the

federal Bankruptcy Code, or the Company petitions or applies to any tribunal

for the appointment of a custodian, trustee, receiver or liquidator of the

Company of any substantial part of the assets of the Company, or commences any

proceeding relating to the Company under any bankruptcy, reorganization,

arrangement, insolvency, readjustment of debt, dissolution or liquidation law

of any jurisdiction; or any such petition or application is filed, or any such

proceeding is commenced, against the Company and either (i) the Company by any

act or failure to act indicates its approval thereof, consent thereto or

acquiescence therein or (ii) such petition, application or proceeding is not

dismissed within 90 days or (c) Sun shall cease to own a majority of the issued

and outstanding Common Stock, no par value, of the Company.

 

All cash payments on or

in respect of this Note shall be made in the lawful currency of the United

States of America as at the time of payment is legal tender for the payment of

public and private debts by wire transfer of immediately available funds

pursuant to written wire transfer instructions given to the Company by the

holder hereof from time to time. 

Whenever a payment to be made hereunder shall be due on a day which is

not a business day in New York, New York, such payment shall be made on the

next succeeding business day and such extension of time shall be included in

the computation of the payment of interest hereunder.

 

The holder hereof, by

acceptance of the Note, covenants and agrees that the indebtedness evidenced by

the Note shall be subordinate and junior in right of payment to the prior

payment in full of all Senior Debt as defined, and upon terms and conditions

set forth, in the Subordination Agreement, dated on or about the date hereof,

between Sun and Congress Financial Corporation (Florida) (as the same may be

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

“Subordination Agreement”).

 

The Company waives

diligence, presentment, demand, protest and notice of every kind

whatsoever.  The failure of the holder

hereof to exercise any of its rights hereunder in any particular instance shall

not constitute a waiver of the same or of any other right in that or any

subsequent instance.

 

The Note shall be binding

upon the Company, its successors, and permitted assigns, and shall inure to the

benefit of Sun, its successors, and permitted assigns.

 

This Note is a contract

made under and governed by, and shall be construed and enforced in accordance

with, the laws of the State of Delaware, without regard to conflict of laws

principles.

 

*     *    

*     *     *

 

2

 

IN WITNESS WHEREOF, the

undersigned has executed this Subordinated Promissory Note as of the date first

above written.

 

	

   

  	

  MACKIE DESIGNS INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

  By: 

  	

  James T. Engen

  
	

   

  	

  Name: James T. Engen

  
	

   

  	

  Its: President &

  CEO

  

 

3

 

AFFIDAVIT

REGARDING DELIVERY

 

I, JASON H. NEIMARK,

hereby certify that I am a Vice President of Sun Mackie, LLC, and that the

foregoing was delivered to me as a representative of such entity in the State

of Washington, County of King.

 

 

	

   

  	

  /s/ Jason H. Neimark

  
	

   

  	

  Signature

  

 

On this the 27th day of

March, 2003, before me, the undersigned, a Notary Public in and for the State

of Washington, County of King, JASON H. NEIMARK personally known to me or

proved to me on the basis of satisfactory evidence to be a Vice President of

Sun Mackie, LLC, a Delaware limited liability company, who executed the

foregoing affidavit on behalf of such entity and acknowledged to me that such

entity executed the foregoing pursuant to its charter documents, said execution

taking place in the State of Washington, County of King.

 

	

  Nancy L. Keller

  	

   

  
	

  Notary Signature

  	

   

  
	

   

  	

   

  
	

  Commission

  Expires:

  	

   

  
	

   

  	

   

  
	

  4-1-2005

  	

   

  
	

   

  	

   

  
	

  [Affix Notarial

  Seal]

  	

   

  

 

4Exhibit 10.1

                        RRUN Staff Consultant Memorandum

By and Between:
                        RRUN Ventures Network Inc.      herein known as ("RRUN" or "The Company")
                        62 W. 8th Avenue, 4th Floor,
                        Vancouver, BC
                        Canada V5Y 1M7
And
                        Troy Mutter                     herein known as  ("TM")
                        1974 Cliffwood Road
                        North Vancouver, BC
                        Canada V7G 1S2                  Ph. 604-984-2886

ON this the 1st day of October, 2002.

WHEREAS RRUN is desirous of engaging TM as an independent Staff Consultant and
TM is desirous of performing as an independent Staff Consultant for RRUN as per
the following terms and conditions;

1)   Services
     1.1) TM will provide Independent Staff Consultant services to RRUN (details
     as per Schedule A), including but not limited to:
              - Business development for RRUN;
              - Business development for RRUN subsidiaries such as RAHX, Inc.
                ("RAHX");
              - Venture Development.
     1.2) It is understood by both parties that during the term of this
     Memorandum TM will be considered a "Staff Consultant" defined as a
     consultant that affords the Company with the first right to purchase and
     subsequently benefit from his/her services during the Term.  Under this
     Memorandum "First Right shall be defined as all services required by the
     Company of TM during the Term shall take precedent over services of other
     Clients of TM.

2)   Compensation
     2.1) RRUN will compensate TM for the above mentioned services as per the
     following:
     2.2.) Cash Compensation of USD $3,000/month plus commissions (See terms
     Schedule B)
     2.3) Reimbursement or advancement of reasonable expenses related to the
     services rendered hereunder.
     2.4) Consideration for Stock Options Grants or Warrants Grants* (See
     Schedule B)

3)   Term
     3.1) The Term of this Memorandum will be for a term of three months until
     December 31, 2002 and renewable for four (4) additional 3 month term(s).
     - The renewable term(s) will be effective automatically unless the
     Memorandum is terminated as per section 4 below. Terms of this Memorandum
     will continue to stand for all consequent renewal terms unless specified.
     3.2) This Memorandum may be replaced at the option of RRUN by a long form
     consultant or employment agreement.
     3.3) During the term RRUN reserves the right to conduct periodic reviews of
     services provided by TM to RRUN.

                                  Page 1 of 3

4)   Termination
     Either party has the right to terminate this agreement at any time. RRUN
     must provide TM with 15 days notice of termination. TM must provide RRUN
     with 30 days notice of termination.

THIS Memorandum is governed by the laws of the province of British Columbia.

Agreed and Accepted on the date above written:

                                                /s/ Troy Muter
_________________________________              ______________________________
RRUN Ventures Network Inc.                          Troy Mutter
Authorized Signatory

                                  Page 2 of 3

Schedule A - Scope of Services

Responsibilities including but not limited to the following:
              - Business development for RRUN;
              - Business development for RRUN subsidiaries such as RAHX, Inc.
                ("RAHX");
              - Venture Development.

Specifically, including but not limited to:
        o   assist, lead or co-lead research and help actualize acquisitions
            (i.e. nightclubs, promotion companies, etc.)
        o   assist to strategize and manage the growth of closed acquisitions
            (with sales and marketing management, and HR)
        o   work with Management with strategy, management and structure
        o   ongoing effort towards business networking to grow RRUN's business
            interests
        o   work to secure partnerships with promoters and promotion companies
        o   work to secure strategic partners
        o   develop, market and sell sponsorship packages
        o   work with Management to develop the RAHX Live promotion network
        o   create, present and help actualize new business projects
        o   assist in the headhunting and hiring process of quality employees
        o   assist with development of business structure of RRUN (i.e.
            improving efficiency and effectiveness of business operations)
        o   oversee sales, marketing and promotions team (short-medium term),
            develop and oversee bus dev team (long term)

Schedule B - Compensation Terms

________________________________________________________________________________
Chart B1) Cash Compensation Terms
________________________________________________________________________________

Total       USD $3,000 / month
________________________________________________________________________________

Billing     Invoiced to RRUN or RAHX, Inc. or other subsidiary as directed by
            RRUN management. Invoiced Monthly at rate of USD $3000.00/month. All
            payments to be made to Troy Mutter.
________________________________________________________________________________

________________________________________________________________________________
Chart B2) Commission Based Incentive Structure
________________________________________________________________________________
______________________________________ _________________________________________
Commissionable Transaction             Details
______________________________________ _________________________________________
Acquisitions                           5% on stock exchanges and 2.5% on cash
                                       exchanges (i.e. if an acquisition closes
                                       and RRUN expends $100,000 USD in stock
                                       and $100,000 USD in cash, TM would
                                       receive $5,000 USD in stock and $2,500
                                       USD in cash)
______________________________________ _________________________________________
Sponsorships                           $1,000 USD in stock for every $10,000 USD
                                       of sponsorship secured made and 10% cash
                                       commission
______________________________________ _________________________________________
Strategic Partners                     $1,000 USD in stock and $2,500 USD in
                                       cash
______________________________________ _________________________________________
Human Resources                        $1,000 USD in stock and $1,000 USD in
                                       cash for each employee

______________________________________ _________________________________________
Note:
 -  All stock based conversion done at market price
 -  All stock based compensation is defined as RRUN common stock
 -  All above compensation is in effect only when TM is the lead agent for RRUN
    on the transaction
 -  The transaction must close fully for TM to receive the respective commission
 -  Commission will be payable in 60 days upon closing of Transaction
________________________________________________________________________________

________________________________________________________________________________
Chart B3)  Stock Derivatives (Options and Warrants)
________________________________________________________________________________
Note 1: - during the Term the Company will consider TM eligible for Grants of
Stock Options or Warrants.
________________________________________________________________________________

                                  Page 3 of 3

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