Document:

exv10w58xay

EXHIBIT 10.58(a)

AMENDMENT NO. 1 TO PLEDGE AND SECURITY AGREEMENT

     THIS AMENDMENT NO. 1 TO PLEDGE AND SECURITY AGREEMENT (this “Amendment”) is made as of
the 31st day of October, 2008, by and among Smith &Wesson Holding Corporation, a Nevada corporation
(“Holdings”), Smith & Wesson Corp., a Delaware corporation (“S&W Corp.”),
Thompson/Center Arms Company, Inc., a New Hampshire corporation (“TCAC”), Thompson Center
Holding Corporation, a Delaware corporation (“TCHC”), Fox Ridge Outfitters, Inc., a New
Hampshire corporation (“Fox Ridge”), Bear Lake Holdings, Inc., a Delaware corporation
(“Bear Lake”), K.W. Thompson Tool Company, Inc., a New Hampshire corporation (“K.W.
Thompson”), and O.L. Development, Inc., a New Hampshire corporation (“O.L.
Development”), as pledgors, assignors and debtors (Holdings, S&W Corp., TCAC, TCHC, Fox Ridge,
Bear Lake, K.W. Thompson and O.L. Development are, individually, a “Pledgor”, and,
collectively, the “Pledgors”), and Toronto Dominion (Texas) LLC, a Delaware limited
liability company, in its capacity as administrative agent pursuant to the Credit Agreement (as
hereinafter defined), as pledgee, assignee and secured party (in such capacities and together with
any successors and assigns in such capacity, the “Administrative Agent”).

W
I T N E S S E
T H       T H A T:

     WHEREAS, Holdings, S&W Corp. and TCAC, as borrowers (collectively, the “Borrowers”),
the lenders from time to time party thereto (the “Lenders”), and the Administrative Agent
have entered into a Credit Agreement dated as of November 30, 2007 (the “Original Credit
Agreement”); and

     WHEREAS, as security for the Obligations (as defined in the Credit Agreement as hereinafter
defined), the Pledgors and the Administrative Agent entered into a Pledge and Security Agreement
dated as of November 30, 2007 (the “Pledge and Security Agreement”); and

     WHEREAS, the Borrowers, the Guarantors (as defined in the Credit Agreement as hereinafter
defined), the Lenders, the Administrative Agent, and TD Bank, N.A., a national banking association,
are entering into an Amendment No. 1 to Credit Agreement and Assignment and Acceptance of
Collateral Documents of even date herewith (the “Amendment No. 1 to Credit Agreement”) (the
Original Credit Agreement, as amended by the Amendment No. 1 to Credit Agreement, and as the same
may be further amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”). Capitalized terms used and not defined herein are used with the
meanings assigned to such terms in the Credit Agreement; and

     WHEREAS, it is a condition to effectiveness of the Amendment No. 1 to Credit Agreement that
the Pledgors and the Administrative Agent enter into this Amendment to amend the Pledge and
Security Agreement; and

     WHEREAS, the Pledgors and the Administrative Agent desire to amend the Pledge and Security
Agreement as hereinafter provided.

     NOW THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

     1. Recitals. The foregoing recitals are hereby incorporated by reference herein.

     2. Amendments to Pledge and Security Agreement. The parties hereto hereby agree that
the Pledge and Security Agreement is hereby amended as follows:

 

 

     2.1. The following defined terms are hereby deleted in their entirety from
Section 1.1(b) of Pledge and Security Agreement: “Copyrights”, “Copyright
Security Agreement”, “Intellectual Property Collateral”, “Intellectual Property
Licenses”, “Patents”, “Patent Security Agreement”, “Trademarks” and “Trademark
Security Agreement”, and all references to Copyrights, Copyright Security Agreement,
Intellectual Property Collateral, Intellectual Property Licenses, Patents, Patent
Security Agreement, Trademarks and Trademark Security Agreement are hereby deleted
from the Pledge and Security Agreement.

     2.2 The following words are hereby inserted immediately before the period at
the end of the definition of “General Intangibles” appearing in Section 1.1(b) of
the Pledge and Security Agreement: “. . ., and (viii) Goodwill”.

     2.3 The following language is hereby inserted immediately following the last
sentence of the definition of “General Intangibles” appearing in Section 1.1(b) of
the Pledge and Security Agreement:

“Notwithstanding anything in this Agreement or the UCC to the
contrary, General Intangibles shall not include patents, patent
applications and registrations, trademarks, trademark applications
and registrations, copyrights, copyright applications and
registrations, and any rights related to the foregoing.”

     2.4 The definition of “Goodwill” appearing in Section 1.1(b) of the Pledge and
Security Agreement is hereby deleted in its entirety and the following is hereby
inserted in its stead:

“‘Goodwill’ shall mean, collectively, with respect to each Pledgor,
the goodwill connected with such Pledgor’s business including all
goodwill connected with (i) intentionally omitted, (ii) all
know-how, trade secrets, customer and supplier lists, proprietary
information, inventions, methods, procedures, formulae,
descriptions, compositions, technical data, drawings,
specifications, name plates, catalogs, confidential information and
the right to limit the use or disclosure thereof by any person,
pricing and cost information, business and marketing plans and
proposals, consulting agreements, engineering contracts and such
other assets which relate to such goodwill and (iii) all product
lines of such Pledgor’s business. Notwithstanding anything in this
Agreement to the contrary, Goodwill shall not include any goodwill
connected with patents, patent applications and registrations,
trademarks, trademark applications and registrations, copyrights,
copyright applications and registrations, and any rights related to
the foregoing.”

     2.5
Exhibit 4 (Form of Copyright Security Agreement), Exhibit 5 (Form of Patent
Security Agreement) and Exhibit 6 (Form of Trademark Security Agreement) are hereby
deleted in their entirety from the Pledge and Security Agreement.

     3. Representations and Warranties. The representations and warranties contained in
the Pledge and Security Agreement are true and correct on and as of the date of this Amendment as
though made at and as of such date.

-2-

 

     4. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AMENDMENT OR ANY OTHER LOAN
DOCUMENT (AS DEFINED IN THE CREDIT AGREEMENT) OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AMENDMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

     5. References in Credit Agreement and Other Loan Documents. All references in the
Credit Agreement and the other Loan Documents to the Pledge and Security Agreement are hereby
amended to refer to and include the Pledge and Security Agreement as amended by this Amendment and
all further amendments, modifications, extensions, renewals, supplements and substitutions thereof.

     6. Miscellaneous. This Amendment may be executed in any number of counterparts, which
together shall constitute one instrument, and shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of an executed counterpart of a
signature page of this Amendment by telecopy or in PDF format by electronic mail shall be effective
as delivery of a manually executed counterpart of this Amendment. This Amendment shall be
governed and construed in accordance with the laws of the State of New York, including, but not
limited to, Section 5-1401 of the New York General Obligations Law.

     7. Ratification. Except as amended hereby, the Pledge and Security Agreement shall
remain in full force and effect and is in all other respects ratified and affirmed.

[Signatures Begin on Next Page]

-3-

 

     IN WITNESS WHEREOF, each of the undersigned has caused this Amendment No. 1 to Pledge and
Security Agreement to be executed and delivered by its duly authorized officer as of the date first
above written.

	 	 	 	 	 
	 	Pledgors:

SMITH & WESSON HOLDING CORPORATION

 	 
	 	By:  	/s/ Michael F. Golden
 	 
	 	 	Michael F. Golden, President 	 
	 	 	 	 
	 
	 	SMITH & WESSON CORP.

 	 
	 	By:  	/s/ Michael F. Golden
 	 
	 	 	Michael F. Golden, President 	 
	 	 	 	 
	 
	 	THOMPSON/CENTER ARMS COMPANY, INC.

 	 
	 	By:  	/s/ Michael F. Golden
 	 
	 	 	Michael F. Golden, President 	 
	 	 	 	 
	 
	 	THOMPSON CENTER HOLDING CORPORATION

 	 
	 	By:  	/s/ Michael F. Golden
 	 
	 	 	Michael F. Golden, President 	 
	 	 	 	 
	 

[Signatures continued on following pages]

[Signature Page to Amendment No. 1 to Pledge and Security Agreement]

 

 

	 	 	 	 	 
	 	FOX RIDGE OUTFITTERS, INC.

 	 
	 	By:  	/s/ Michael F. Golden
 	 
	 	 	Michael F. Golden, President 	 
	 	 	 	 
	 
	 	BEAR LAKE HOLDINGS, INC.

 	 
	 	By:  	/s/ Michael F. Golden
 	 
	 	 	Michael F. Golden, President 	 
	 	 	 	 
	 
	 	K.W. THOMPSON TOOL COMPANY, INC.

 	 
	 	By:  	/s/ Michael F. Golden
 	 
	 	 	Michael F. Golden, President 	 
	 	 	 	 
	 
	 	O.L. DEVELOPMENT, INC.

 	 
	 	By:  	/s/ Michael F. Golden
 	 
	 	 	Michael F. Golden, President 	 
	 	 	 	 
	 

[Signatures continued on following page]

[Signature Page to Amendment No. 1 to Pledge and Security Agreement]

 

 

	 	 	 	 	 
	 	Administrative Agent:

TORONTO DOMINION (TEXAS) LLC,

as Administrative Agent

 	 
	 	By:  	/s/ Deborah Gravinese
 	 
	 	 	Deborah Gravinese, President 	 
	 	 	 	 
	 

[Signature Page to Amendment No. 1 to Pledge and Security Agreement]exv10w36

Exhibit 10.36

SIRIUS XM

RADIO INC.

1221 Avenue of the Americas

New York, NY 10020

Tel: 212-584-5100

Fax: 212-584-5200

www.sirius.com

October 15, 2008

Directed Electronics Inc.

1 Viper Way

Vista, CA 92081

Facsimile No. (760) 599-1389

Attention: Jim Minarik, President and CEO

Letter Agreement re: End of Agreement Matters

Dear Jim:

     Reference is made to the Manufacturing and Distribution Agreement, dated April 7, 2005 (as
amended on July 17, 2007, November 8, 2007, and April 23, 2008, the “Agreement”), between Sirius XM
Radio Inc. (“Sirius,” successor to Sirius Satellite Radio Inc.) and DEI Holdings, Inc., f.k.a.
Directed Electronics. Inc. (“Directed”). Capitalized terms used but not defined herein shall have
the meanings set forth in the Agreement.

     Directed and Sirius have decided to allow the Agreement to terminate on its own terms
effective January 31, 2009. To facilitate the efficient transition and termination of the
Agreement the parties hereby agree to the following processes relating to the wind-down of their
relationship at the expiration of the Agreement:

     1. 2008 Year-End Inventory Report. Following the close of business on December 31,
2008, Directed shall use best efforts to complete, by January 4, 2009, a physical inventory of all
Core Product in Directed’s warehouses. Such inventory will be conducted in accordance with Sirius’
Physical Inventory Instructions attached hereto as Exhibit A, or as modified with Sirius’ consent
which will not be unreasonably withheld. Within two Business Days following the completion of the
physical inventory, Directed will provide to Sirius a report (the “Year-End Inventory Report”)
specifying, (i) the quantity (net of Backstop Inventory) and the actual Landed Cost for each item
of Core Product held by Directed at each of its warehouse locations as of the close of business on
December 31, 2008 (“Year-End Non-Backstop Inventory”), (ii) the quantity of Sirius Backstop
Inventory held by Directed at each of its locations as of the close of business on December 31,
2008 (“Year-End Backstop Inventory”), and (iii) the quantity of eligible

 

 

Core Product returned by
Approved Dealers and processed by Directed as of December 31, 2008 in accordance with the Agreement
and April 23, 2008 Letter Agreement (“Year-End Returns”). The Year-End Inventory Report shall be
based on Directed’s year-end inventory count, during which Sirius shall be allowed to be present to
inspect and certify the quantity of Core Products held by Directed at each of its warehouse
locations and to reconcile such inventory quantity balances with Directed’s perpetual inventory
balances. For purposes of this Letter Agreement, the term Core Products shall have the meaning set
forth in the Agreement and shall include those items set forth in Schedule 1 attached to this
Letter Agreement

     2. 2008 Year-End Purchases. Notwithstanding anything to the contrary in the
Agreement or our April 23, 2008 Letter Agreement, not later than two business days following
delivery to Sirius by Directed of the Year-End Inventory Report, Sirius agrees to purchase all (i)
Year-End Non-Backstop Inventory, and (ii) Year-End Returns, as reflected in the Year-End Inventory
Report, by issuance of a purchase order (the “Year-End Inventory PO”). Sirius shall purchase such
Year-End Non-Backstop Inventory from Directed at the actual Landed Cost paid or payable by
Directed, and it shall purchase the Year-End Returns at the cost set forth in Section 3.09(e) of
the Agreement, less any missing Material Part credits as set forth in Section 3.09(d) of the
Agreement. Upon receipt of the Year-End Inventory PO from Sirius, Directed shall issue to Sirius a
corresponding invoice and shall, subject to the possible retention of “January Non-Backstop
Inventory” pursuant to Section 3(c) hereof, prepare the Year-End Non-Backstop Inventory and
Year-End Returns to be loaded for shipment not later than five business days from Directed’s
receipt of the Year-End Inventory PO.

     3. Sirius Backstop Inventory. (a) Notwithstanding anything to the contrary in
Section 3.07 of the Agreement, on the date the Year-End Non-Backstop Inventory and Year-End Returns
are shipped pursuant to Section 6, Sirius shall remit to Directed payment in full for all Year-End
Backstop Inventory (not previously paid for) via electronic funds transfer (“EFT”). In conjunction
with the placement of the Year-End Inventory PO, Sirius shall place a shipping order for shipment,
along with the Year-End Non-Backstop Inventory and Year-End Returns, of all Year-End Backstop
Inventory then
in Directed’s possession, subject to the possible retention of “January Non-Backstop
Inventory” pursuant to Section 3(c) hereof.

     (b) With respect to Sirius Backstop Inventory held by Directed and sold, pursuant to Section
3.07(b) of the Agreement, prior to January 1, 2009 (“2008 Consignment Inventory”), all payments
owed Sirius by Directed for such 2008 Consignment Inventory shall be due and payable in full by EFT
on the date the Year-End Non-Backstop Inventory and Year-End Returns are shipped pursuant to
Section 6.

     (c) Sirius and Directed shall mutually determine a quantity of Core Product up to a maximum
aggregate amount of two million dollars at dealer cost that may be required for shipment to
Approved Dealers between January 1, 2009 and January 31, 2009 (“January Non-Backstop Inventory”)
based on Approved Dealer forecasts for January 2009. During January 2009, Directed will continue to
fulfill orders from Approved

 

 

Dealers from the January Non-Backstop Inventory in accordance with
Section 3.07(b) of the Agreement.

     4. February Purchases. (a) On February 2, 2009, Directed will provide to Sirius a
report (the “February Report”) specifying (i) as of the close of business January 31, 2009, the
quantity and the actual Landed Cost paid by Directed for each item of Core Product that is: (1)
held by Directed at each of its warehouse locations (which shall include any remaining January
Non-Backstop Inventory), (2) in transit to Directed from an Authorized Manufacturer, and (3) on
open purchase order issued by Directed to each Authorized Manufacturer (collectively (1), (2) and
(3), the “Final Non-Backstop Inventory”), and (ii) the quantity of Core Product returned by
Approved Dealers and processed by Directed as of January 31, 2009, but in no event duplicative of
Year-End Returns (“January Returns”). On January 31, 2009, Sirius shall have the right to be
present to inspect and certify the quantity of Core Products held by Directed at each of its
warehouse locations and reconcile such inventory quantity balances with Directed’s perpetual
inventory balances.

     (b) Not later than February 6, 2009, Sirius agrees to purchase all (i) Final Non-Backstop
Inventory, and (ii) January Returns, as reflected in the February Report, by issuance of a purchase
order (the “February Inventory PO”). Sirius shall purchase such Final Non-Backstop Inventory from
Directed at the actual Landed Cost paid or payable by Directed, and Sirius shall purchase the
January Returns at the cost set forth in Section 3.09(e) of the Agreement, less any missing
Material Part credits as set forth in Section 3.09(d) of the Agreement. Upon receipt of the
February Inventory PO from Sirius, Directed shall issue to Sirius a corresponding invoice and shall
prepare the Final Non-Backstop Inventory, and January Returns to be loaded for shipment no later
than February 13, 2009.

     5. Final Returns Purchases. (a) On March 6, 2009, Directed will provide to Sirius a
report (the “March Report”) specifying the quantity of Core Product returned by Approved Dealers by
February 28, 2009 and processed and credited by Directed to the
Approved Dealers as of the close of business on March 5, 2009, but in no event duplicative of
Year-End Returns or January Returns (“Final Returns”).

     (b) Not later than March 10, 2009, Sirius agrees to purchase all Final Returns, as reflected
in the March Report, by issuance of a purchase order (such purchase order, the “Final Returns PO”).
Sirius shall purchase the Final Returns at the cost set forth in Section 3.09(e) of the Agreement,
less any missing Material Part credits as set forth in Section 3.09(d) of the Agreement. Upon
receipt of the Final Returns PO from Sirius, Directed shall issue to Sirius a corresponding invoice
and shall prepare the Final Returns to be loaded for shipment not later than March 16, 2009.

     6. Shipping. Prior to the loading of any shipments from Directed, Sirius shall have
the right to inspect each shipment and shall be allowed to be present during the loading of each
such shipment. Upon the completion of loading of shipments by Directed, Sirius personnel shall
seal the trucks and Sirius shall remit to Directed payment

 

 

in full for the corresponding invoice
via EFT. Upon receipt in full of payment from Sirius for the Year-End Backstop Inventory and
Year-End Inventory PO (“January Shipment”), February Inventory PO (“February Shipment”), and Final
Returns PO (“March Shipment”) respectively, Directed shall ship the corresponding shipment to a
location designated by Sirius, provided that Directed will re-direct to a location
designated by Sirius all Final Non-Backstop Inventory that is in-transit or on open purchase order.
The Sirius payment for the February Inventory PO shall, as indicated above, include payment for
any remaining January Non-Backstop Inventory held by Directed as of the close of business on
January 31, 2009. All shipping costs in connection with this Agreement shall be freight collect at
Sirius’ expense.

     7. Non-Core Products. On January 31, 2009, subject to availability and Directed’s
standard terms of purchase Sirius may, at its option, purchase non-Core Products in Directed’s
inventory of satellite radio related products. Sirius may purchase any such non-Core Products from
Directed at Directed’s then current price sheet or as otherwise mutually agreed.

     8. Approved Dealer Account Transition. Sirius and Directed will cooperate in good
faith to, by October 25, 2008, develop and execute a mutually agreeable communication plan for
internal and external use (the “Communication Plan”). As part of the Communication Plan, by no
later than November 1, 2008, Sirius and Directed will communicate to all Approved Dealers that: (1)
effective February 1, 2009 a new Sirius distribution partner (the “New Distributor”) will be taking
over the distribution of Sirius Core Products, (2) each Approved Dealer should place its purchase
orders, for shipments of Core Product after January 31, 2009, with the New Distributor, (3) all
returns of Core Products shipped after January 31, 2009 by Approved Dealers should be sent to the
New Distributor, (4) all deductions for the return of Core Products shipped by Approved Dealers to
the New Distributor after January 31, 2009 should be applied against its account with the New
Distributor, (5) all inquiries, reconciliations and obligations related to the return of any Core
Product or resulting credits or deductions for all Core Products after January 31, 2009, regardless
of when the Approved Dealer purchased such Core
Products, are the responsibility of Sirius or the New Distributor, (6) all Dealer Payment
commissions accruing after December 31, 2008 to each Approved Dealer will be remitted by Sirius or
the New Distributor, (7) all market development funds and other allowance offered by Directed and
related to the sales of Core Product occurring after January 31, 2009 will no longer be in effect,
and (8) all payments, inquiries, and reconciliations for the purchase of Core Products from
Directed prior to February 1, 2009, excluding returns after January 31, 2009, should be routed to
Directed in the ordinary course. Sirius and Directed reserve the right to independently
communicate with any Approved Dealer regarding the subject matter of this Letter Agreement or
otherwise, provided that such communications are consistent with the terms of this Letter
Agreement.

     9. Dealer Returns. Effective February 1, 2009, Sirius will assume or cause the New
Distributor to assume all cost and responsibility whatsoever related to all Core Product returned
by an Approved Dealer, regardless of the date of sale, including but not limited to, consumer
warranty, returns processing, and any associated costs, such as

 

 

issuing credits to Approved
Dealers. Directed will have no further obligation with respect to such Approved Dealers’ returned
Core Product. Effective February 1, 2009, all credits and deductions for the return of Core
Product occurring on or after February 1, 2009 by Approved Dealers shall be applied to the Approved
Dealers account with Sirius or the New Distributor.

     10. Directed Activation Payments. (a) Notwithstanding anything to the contrary in
Section 4.02 of the Agreement, for activations of Core Products occurring on January 1, 2009 or
later, Directed shall have no responsibility to pay any Dealer Payment commissions and Sirius will
not charge back to Directed any Activation Fee or Dealer Payment. All Activation Fees and Dealer
Payments accrued as of December 31, 2008 to Directed shall become due and payable by Sirius by EFT
no later than February 13, 2009. Directed will notify all Approved Dealers that normally are
entitled to receive Dealer Payment commissions from Directed of the termination of Dealer Payment
commissions from Directed for activations made after December 31, 2008.

     (b) Effective within 30 days of the execution of the Communication Plan, Directed further
agrees to cooperate with Sirius and the New Distributor (or other designated third-party) to
smoothly transition the transfer to the New Distributor (or other designated third-party) of Dealer
Payment commission obligations to accounts formerly paid by Directed. Such cooperation shall
include Directed providing Sirius, New Distributor or other designated third-party with (i) the
name and contact information of all such accounts along with the ESN information for all Core
Receivers shipped to each such account which have yet to be activated, and (ii) the name and
contact information of all other such accounts that have received Dealer Payment commissions from
Directed in the 12 months preceding the execution date of the Communication Plan.

     11. Accruals and Offsets. Notwithstanding anything to the contrary in the Agreement
or this Letter Agreement, all amounts payable by Sirius (or Directed, if applicable) to Directed
(or Sirius, if applicable) that have been accrued through December 31, 2008 and not previously
remitted shall become due on the date the Year-
End Non-Backstop Inventory and Year-End Returns are shipped pursuant to Section 6,
provided, however, that subject to prior acknowledgment and approval from Directed
(or Sirius, if applicable), which acknowledgment and approval shall not be unreasonably withheld or
delayed, Sirius (or Directed, if applicable) may reduce its payable obligation through an offset of
amounts otherwise then owed to Sirius (or Directed, if applicable) under this Letter Agreement. All
payments, either to Directed from Sirius or to Sirius from Directed shall be executed via EFT.

     12. Post Transition Cooperation. (a) In the event that any returns of Core Product
by an Approved Dealer are sent to Directed in error after January 31, 2009, Directed shall refuse
delivery of such Core Products.

     (b) In the event that any payments or deductions by an Approved Dealer related to the sale or
return of Core Product are misrouted or misapplied to Directed or the New

 

 

Distributor, Directed
shall, and Sirius will cause the New Distributor to, immediately reconcile and remediate such
errors upon discovery.

     13. Order Placement. (a) Directed shall continue to place Backstop Purchase Orders
with Authorized Manufacturers for all quantities of Core Product as Sirius determines appropriate
up to a maximum aggregate amount of six million dollars (from the date hereof) and for receipt at
Directed’s warehouses prior to December 31, 2008. Directed will receive such Core Product and work
in good faith with Sirius based on historical practices to process transactions with Approved
Dealers.

     (b) Directed will make payments in the ordinary course for purchase of Core Product by
Directed from Authorized Manufacturers.

     14. American Home Recording Act. With respect to any Sirius “digital audio recording
device” as that term is defined in the American Home Recording Act of 1992, U.S.C. § 1001 (the
“AHRA”), and including but not limited to the S50TK1, SL100TK1, SL10TK1, and SL2TK1,
notwithstanding any previous letter agreement between Directed and Sirius regarding such subject
matter, Directed shall prepare the 2008 annual AHRA royalty report by January 31, 2009 and submit
the same to Sirius for review. No later than February 13, 2009, Sirius shall remit to Directed all
unpaid royalty amounts as set forth in the 2008 AHRA royalty report and Directed shall remit any
such unpaid royalties to the United States Copyright Office as required under the AHRA. Sirius and
Directed shall work together to avoid further imports of any AHRA covered device by Directed
following December 31, 2008. In the event that such import is necessary to conduct the normal
course of business for sales to Approved Dealers between January 1, 2009 and January 31, 2009,
Directed shall prepare the 2009 annual AHRA royalty report and submit the same to Sirius for
review. Sirius shall remit to Directed all royalty amounts as set forth in the 2009 AHRA royalty
report and Directed shall remit such royalties to the United States Copyright Office as required
under the AHRA. Sirius will also reimburse Directed for the expense related to the audit required
under the AHRA

     15. Exclusivity. Effective with the execution of this Letter Agreement, Sirius Core
Products produced shall no longer be required to include the “Distributed by Directed” logos. Upon
receipt in full of payment from Sirius for the Year-End Inventory PO (including payment for 50% of
the January Non-Backstop Inventory) Directed shall no longer be the exclusive retail distributor
for Sirius Core Products.

     16. Counterparts. This letter agreement may be executed by the parties hereto on any
number of separate counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. This letter agreement may be delivered by facsimile
transmission and shall be effective upon receipt of such facsimile by the other party.

     17. Integration. This letter agreement, along with the Agreement and the April 23
Letter Agreement, represents the entire agreement of Sirius and Directed with respect to the
subject matter hereof and supersedes all previous agreements, and there are no

 

 

promises, undertakings, representations or warranties by the parties hereto relative to the subject matter
hereof that are not expressly set forth or referred to herein.

 

 

     Please indicate your acceptance with the terms of this letter agreement by signing in the
space below.

	 	 	 	 	 	 	 
	 	 	Sincerely,	 	 
	 
	 	 	 	 	 	 
	 	 	SIRIUS XM RADIO INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert F. Law
 

	 	 
	 	 	 	 	Robert F. Law	 	 
	 	 	 	 	Group Vice President and General Manager,	 	 
	 	 	 	 	After Market Division	 	 

Accepted and Agreed:

DEI HOLDINGS INC.

	 	 	 	 	 
	By:

	 	/s/ Jim Minarik
 

Jim Minarik
	 	 
	 

	 	President and CEO

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