Document:

exv4w5

Exhibit 4.5

EXECUTION COPY

 

COLLATERAL AGREEMENT

made by

SIRIUS XM RADIO INC.

and certain of its Subsidiaries

to and in favor of

U.S. BANK NATIONAL ASSOCIATION,

as Collateral Agent

Dated as
of January 12, 2011

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	SECTION 1. DEFINED TERMS
	 	 	1	 
	 
	1.1. Definitions
	 	 	1	 
	1.2. Other Definitional Provisions
	 	 	12	 
	 
	SECTION 2. GRANT OF SECURITY INTEREST; CONTINUING LIABILITY UNDER COLLATERAL

	 	 	12	 
	 
	2.1. Grant of Security
	 	 	12	 
	2.2. Collateral Agency Agreement
	 	 	14	 
	 
	SECTION 3. REPRESENTATIONS AND WARRANTIES
	 	 	14	 
	 
	3.1. [Reserved]
	 	 	14	 
	3.2. Title; No Other Liens
	 	 	14	 
	3.3. Perfected First Priority Liens
	 	 	14	 
	3.4. Name; Jurisdiction of Organization, etc.
	 	 	15	 
	3.5. [Reserved]
	 	 	15	 
	3.6. [Reserved]
	 	 	15	 
	3.7. Investment Property
	 	 	15	 
	3.8. [Reserved]
	 	 	17	 
	3.9. [Reserved]
	 	 	17	 
	3.10. Intellectual Property
	 	 	17	 
	3.11. [Reserved]
	 	 	20	 
	3.12. [Reserved]
	 	 	20	 
	3.13. Commercial Tort Claims
	 	 	20	 
	 
	SECTION 4. COVENANTS
	 	 	20	 
	 
	4.1. [Reserved]
	 	 	20	 
	4.2. Delivery and Control of Instruments, Chattel Paper,
Negotiable Documents, Investment Property and Deposit Accounts
	 	 	20	 
	4.3. Maintenance of Insurance
	 	 	21	 
	4.4. [Reserved]
	 	 	22	 
	4.5. Maintenance of Perfected Security Interest; Further Documentation
	 	 	22	 
	4.6. Changes in Locations, Name, Jurisdiction of Incorporation, etc.
	 	 	22	 
	4.7. Notices
	 	 	23	 
	4.8. Investment Property
	 	 	23	 
	4.9. Accounts
	 	 	24	 
	4.10. [Reserved]
	 	 	24	 
	4.11. Intellectual Property
	 	 	24	 
	4.12. Further Covenants
	 	 	27	 
	 
	SECTION 5. REMEDIAL PROVISIONS
	 	 	27	 
	 
	5.1. Certain Matters Relating to Accounts
	 	 	27	 
	5.2. Communications with Obligors; Grantors Remain Liable
	 	 	28	 

i

 

	 	 	 	 	 
	 	 	Page	 
	5.3. Pledged Securities
	 	 	28	 
	5.4. Proceeds to be Turned Over To Collateral Agent
	 	 	29	 
	5.5. Application of Proceeds
	 	 	29	 
	5.6. Code and Other Remedies
	 	 	30	 
	5.7. Registration Rights
	 	 	31	 
	5.8. Waiver; Deficiency
	 	 	32	 
	5.9. FCC Licenses
	 	 	32	 
	5.10. Voting
	 	 	33	 
	 
	SECTION 6. THE COLLATERAL AGENT
	 	 	34	 
	 
	6.1. Collateral Agent’s Appointment as Attorney-in-Fact, etc.
	 	 	34	 
	6.2. Duty of Collateral Agent
	 	 	35	 
	6.3. No Duty of the Collateral Agent
	 	 	36	 
	6.4. Execution of Financing Statements
	 	 	36	 
	6.5. Authority of Collateral Agent
	 	 	37	 
	6.6. Appointment of Co-Collateral Agents
	 	 	37	 
	 
	SECTION 7. MISCELLANEOUS
	 	 	37	 
	 
	7.1. Amendments in Writing
	 	 	37	 
	7.2. Notices
	 	 	37	 
	7.3. No Waiver by Course of Conduct; Cumulative Remedies
	 	 	37	 
	7.4. Enforcement Expenses; Indemnification
	 	 	38	 
	7.5. Successors and Assigns
	 	 	38	 
	7.6. Set-Off
	 	 	38	 
	7.7. Counterparts
	 	 	39	 
	7.8. Severability
	 	 	39	 
	7.9. Section Headings
	 	 	39	 
	7.10. Integration
	 	 	39	 
	7.11. GOVERNING LAW
	 	 	39	 
	7.12. Submission to Jurisdiction; Waivers
	 	 	39	 
	7.13. Acknowledgments
	 	 	40	 
	7.14. Additional Grantors
	 	 	40	 
	7.15. Additional Secured Obligations
	 	 	40	 
	7.16. [Reserved]
	 	 	41	 
	7.17. Releases
	 	 	41	 
	7.18. Effects of Certain Errors or Omissions
	 	 	41	 
	7.19. Existing Obligations
	 	 	42	 
	7.20. WAIVER OF JURY TRIAL
	 	 	42	 

ii

 

SCHEDULES:

Schedule 1 — Notice Addresses of Grantors

Schedule 2 — Description of Pledged Investment Property

Schedule 3 — Filings and Other Actions Required to Perfect Security Interests

Schedule 4 — Name, Jurisdiction or Organization and Chief Executive Office

Schedule 5 — [Reserved]

Schedule 6 — Intellectual Property

Schedule 7 — [Reserved]

Schedule 8 — Vehicles

Schedule 9 — Letters of Credit

Schedule 10 — Commercial Tort Claims

Schedule 11 — FCC Licenses

Schedule 12 — Pledged Interests

EXHIBITS:

Exhibit A — Form of Acknowledgment and Consent

Exhibit B — Form of Grant of Security Interest in Patents and Trademarks

Exhibit C — Form of Grant of Security Interest in Copyrights

Exhibit D — Assumption and Joinder Agreement

iii

 

 

          COLLATERAL
AGREEMENT, dated as of January 12, 2011, made by each of the signatories hereto
other than the Collateral Agent and Trustee referred to below (together with any other entity that
may become a party hereto as provided herein, the “Grantors”), to and in favor of U.S. Bank
National Association, as Collateral Agent for the ratable benefit of the Secured Parties, and
accepted and agreed to by U.S. Bank National Association as the Trustee (as defined below) and each
other Authorized Representative for any Additional Secured Debtholder from time to time party
hereto.

W I T N E S S E T H:

          WHEREAS, pursuant to the 9.75% Senior Secured Notes Indenture dated as of August 24, 2009 (as
amended, amended and restated, supplemented, or otherwise modified from time to time, the
“Indenture”) by and among the Company, the other Guarantors, and U.S. Bank National
Association, as Trustee, the Company issued 9.75% senior secured notes due 2015 (the
“Notes”) to the Noteholders in accordance with the terms thereof;

          WHEREAS, the Collateral Agent has agreed to act as collateral agent for the Secured Parties
for the purposes of holding any and all security for the payment and performance of the obligations
of the Company under the Indenture, the Notes and the other 9.75% Indenture Documents, as well as
any Additional Secured Obligations;

          WHEREAS, pursuant to the 9.75% Indenture Documents, each Guarantor agreed to unconditionally
guarantee the payment of the Company Note Obligations;

          WHEREAS, each Grantor is a member of an affiliated group of companies that includes each other
Grantor;

          WHEREAS, the Grantors are engaged in related businesses, and each Grantor will derive
substantial direct and indirect benefit from the issuance of the Notes under the Indenture and the
other 9.75% Indenture Documents and each Grantor is, therefore, willing to enter into this
Agreement; and

          WHEREAS, each Grantor is required to execute and deliver this Agreement to the Collateral
Agent for its benefit and for the ratable benefit of the Secured Parties as security for the
payment and performance of such Grantor’s obligations under the Indenture, the Notes, the other
9.75% Indenture Documents and the Additional Secured Debt Documents to which it is a party;

          NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, each of Grantors hereby
agrees with the Collateral Agent, for the ratable benefit of the Secured Parties, as follows:

SECTION 1. DEFINED TERMS

          1.1. Definitions. (a) Unless otherwise defined herein, terms defined in the
Collateral Agency Agreement and used herein shall have the meanings given to them in the Collateral
Agency Agreement, including, without limitation, the following terms: 9.75%

 

 

Indenture Documents, Additional Secured Debt Notice and Joinder Agreement, Collateral
Documents, Equally and Ratably.

          (b) The following terms which are defined in the New York UCC are used herein as so defined:
Accounts, Account Debtor, Authenticate, Certificated Security, Chattel Paper, Commodity Account,
Commodity Contract, Commodity Intermediary, Documents, Electronic Chattel Paper, Entitlement Order,
Equipment, Farm Products, Financial Asset, Fixtures, Goods, Instruments, Inventory, Letter of
Credit Rights, Money, Payment Intangibles, Securities Account, Securities Intermediary, Security,
Security Entitlement, Supporting Obligations, Tangible Chattel Paper and Uncertificated Security.

     (c) The following terms shall have the following meanings:

     “Additional Company Secured Debt Obligations”: the unpaid principal of and
interest on (including interest accruing after the maturity of the Additional Secured Debt
and disbursements in respect of letters of credit issued thereunder, if any, and interest
accruing after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Company, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding) the
Additional Secured Debt and all other Obligations and liabilities of the Company to each
Authorized Representative of any Additional Secured Debtholder, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, each Additional Secured Debt Document, any
letters of credit issued thereunder, or any other document made, delivered or given in
connection therewith, whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel
to each Authorized Representative or to any Additional Secured Debtholder that are required
to be paid by the Company) or otherwise.

     “Additional Guarantor Secured Debt Obligations”: with respect to any
Guarantor, all Obligations and liabilities of such Guarantor which may arise under or in
connection with any Guarantee (as defined in the Collateral Agency Agreement) in respect of
the Additional Company Secured Debt Obligations or any Additional Secured Debt Document to
which such Guarantor is a party, in each case whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to any Additional Secured
Debtholder or any Authorized Representative that are required to be paid by such Guarantor
pursuant to the terms of any Additional Secured Debt Document).

     “Additional Secured Debt”: the unpaid amount of Indebtedness of the Company or
any Guarantor under any Additional Secured Debt Document which Indebtedness (i) is permitted
to be incurred by the Company or the Guarantors under the Indenture and each Additional
Secured Debt Document, (ii) is permitted under the Indenture and each Additional Secured
Debt Document to be secured Equally and Ratably with the Notes Obligations and any other
Additional Secured Debt, and (iii) the Company and each Guarantor takes the steps necessary
under the Collateral Agency Agreement in order for such Indebtedness to be secured Equally
and Ratably.

 

 

     “Additional Secured Debt Documents”: the agreements evidencing any Additional
Secured Obligations and the Collateral Documents.

     “Additional Secured Debtholder”: at any time, a Person which then is a holder
of any Additional Secured Debt; provided that the Company and the Authorized
Representative of such Additional Secured Debtholder shall have executed and delivered an
Additional Secured Debt Notice and Joinder Agreement in accordance with Section 6.18 of the
Collateral Agency Agreement.

     “Additional Secured Obligations”: the Additional Company Secured Debt
Obligations and the Additional Guarantor Secured Debt Obligations.

     “Agreement”: this Collateral Agreement, as the same may be amended, restated
supplemented or otherwise modified from time to time.

     “Authorized Representative”: (i) the Trustee and (ii) any other trustee or
agent designated as an “Authorized Representative” for any Additional Secured Debtholder in
an Additional Secured Debt Notice and Joinder Agreement delivered to the Collateral Agent in
accordance with Section 6.18 of the Collateral Agency Agreement for so long as the
Additional Secured Obligations for which such party is serving in such capacity constitutes
Secured Obligations hereunder; provided that so long as there are no Additional
Secured Obligations, the Trustee will be deemed to be the only Authorized Representative for
the Secured Parties.

     “Capital Stock”: of any Person, any and all shares, interests (including
partnership interests), rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person, including any
preferred stock, but excluding any debt securities convertible into such equity.

     “Code”: the Internal Revenue Code of 1986, as amended.

     “Collateral”: as defined in Section 2(a).

     “Collateral Account”: any collateral account established by the Collateral
Agent as provided in Section 5.1 or 5.4.

     “Collateral Agency Agreement”: that certain collateral agency agreement dated
as of January 12, 2011 by and among the Company, the Subsidiary Grantors, the Trustee, each
Additional Secured Debt Agent (as defined therein), and the Collateral Agent.

     “Collateral Agent”: U.S. Bank National Association, acting as collateral agent
on behalf of the Noteholders and other Secured Parties and any successor collateral agent
appointed hereunder and under the Collateral Agency Agreement, and its successors and
permitted assigns.

     “Company”: Sirius XM Radio Inc., a Delaware corporation.

 

 

     “Company Note Obligations”: the unpaid principal of and interest on (including
interest accruing after the maturity of the Notes) and interest accruing after the filing of
any petition in bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) all Obligations and liabilities of the Company to
the Trustee or to any Noteholder, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Indenture, any other 9.75% Indenture Document, or any other document
made, delivered or given in connection therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges
and disbursements of counsel to the Trustee, the Collateral Agent or to any Noteholder that
are required to be paid by the Company) or otherwise.

     “Contracts”: the contracts and agreements listed in Schedule 7 as the
same may be amended, restated, supplemented, replaced or otherwise modified from time to
time, including, without limitation, (i) all rights of any Grantor to receive moneys due and
to become due to it thereunder or in connection therewith, (ii) all rights of any Grantor to
receive proceeds of any insurance, indemnity, warranty or guaranty with respect thereto,
(iii) all rights of any Grantor to damages arising thereunder and (iv) all rights of any
Grantor to terminate, and to perform and compel performance of, such Contracts and to
exercise all remedies thereunder.

     “Copyright Licenses”: any agreement, whether written or oral, naming any
Grantor as licensor or licensee (including, without limitation, those listed in Schedule
6 as the same may be amended, restated, supplemented, replaced or otherwise modified
from time to time), granting any right in, to, or under any Copyright, including, without
limitation, the grant of rights to manufacture, print, publish, publicly perform, display,
copy, create derivative works of, import, export, distribute, exploit, and sell materials
derived from any Copyright.

     “Copyrights”: (i) all domestic and foreign copyrights, whether registered or
unregistered and whether or not the underlying works of authorship have been published,
including but not limited to copyrights in software and databases, all Mask Works (as
defined in 17 U.S.C. 901 of the U.S. Copyright Act), all protectable designs, and all works
of authorship and other intellectual property rights embodied therein, all copyrights of
works based on, incorporated in, derived from or relating to works covered by such
copyrights, all right to make and exploit derivative works based on or adopted from works
covered by such copyrights, and with respect to any and all of the foregoing: (i) all
registrations of and applications to register the rights corresponding thereto throughout
the world, including, without limitation, each registration and application identified in
Schedule 6 as the same may be amended, restated, supplemented, replaced or otherwise
modified from time to time, (ii) the right to, and to obtain, all renewals or extensions
thereof, (iii) the rights to print, publish and distribute any of the foregoing, (iv) the
right to sue or otherwise recover for any and all past, present and future infringements,
misappropriations, and other violations thereof, (v) all income, royalties, damages and
other payments now and hereafter due and/or payable with respect thereto

 

 

(including, without limitation, payments under all Copyright Licenses entered into in
connection therewith, payments arising out of any other Disposition thereof and damages and
payments for past, present or future infringements thereof), and (vii) all other rights of
any kind whatsoever accruing thereunder or pertaining thereto.

     “Deposit Account”: (i) all “deposit accounts” as defined in Article 9 of the
UCC, (ii) all other accounts maintained with any financial institution (other than
Securities Accounts or Commodity Accounts) and (iii) shall include, without limitation, all
of the accounts listed on Schedule 2 hereto under the heading “Deposit Accounts” (as
such schedule may be amended, restated, supplemented, replaced or otherwise modified from
time to time) together, in each case, with all funds held therein and all certificates or
instruments representing any of the foregoing.

     “Disposition”: with respect to any property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer, exchange or other disposition thereof; and the
terms “Dispose” and “Disposed of” shall have correlative meanings.

     “Excluded Assets”: (i) any licenses issued by the FCC to any Subsidiary
Grantor, but only to the extent such Subsidiary Grantor is prohibited from granting a
security interest therein pursuant to the Communications Act of 1934, as amended, and the
policies and regulations promulgated thereunder, but not including, to the maximum extent
permitted by law, all rights incident or appurtenant to such licenses and the rights to
receive all proceeds derived from or in connection with the sale, assignment or transfer of
such licenses; and (ii) the outstanding Capital Stock of any “controlled foreign
corporation” (as defined in the Code) in excess of 65% of the voting power of all classes of
Capital Stock of such “controlled foreign corporation” entitled to vote; provided that
immediately upon the amendment of the Code, to allow the pledge of a greater percentage of
the voting power of capital stock in a “controlled foreign corporation” without adverse tax
consequences, the Excluded Collateral shall no longer include, and the Grantors will be
deemed to have granted a security interest in, such greater percentage of capital stock of
the applicable “controlled foreign corporation”.

     “FCC License Subsidiary”: XM Radio Inc. and Satellite CD Radio, Inc. (together
with any successors or permitted assigns), the wholly owned subsidiaries of the Company that
own some or all of the Company’s FCC Licenses to provide satellite digital radio service in
the United States.

     “General Intangibles”: all “general intangibles” as such term is defined in
Section 9-102(a)(42) of the New York UCC and, in any event, including, without limitation,
with respect to any Grantor, all rights of such Grantor to receive any tax refunds, all
Hedge Agreements and all contracts, agreements, instruments and indentures and all licenses,
permits, concessions, franchises and authorizations issued by Governmental Authorities in
any form, and portions thereof, to which such Grantor is a party or under which such Grantor
has any right, title or interest or to which such Grantor or any property of such Grantor is
subject, as the same may from time to time be amended, supplemented, replaced or otherwise
modified, including, without limitation, (i) all rights of such Grantor to receive moneys
due and to become due to it thereunder or in connection

 

 

therewith, (ii) all rights of such Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect thereto, (iii) all rights of such Grantor to
damages arising thereunder, and (iv) all rights of such Grantor to terminate and to perform,
compel performance and to exercise all remedies thereunder.

     “Grantors”: as defined in the Preamble to this Agreement.

     “Guarantors”: the Subsidiary Grantors.

     “Guarantor Note Obligations”: with respect to any Guarantor, all Obligations
and liabilities of such Guarantor which may arise under or in connection with the Indenture
(including, without limitation, Section 10 thereof) or any other 9.75% Indenture Document to
which such Guarantor is a party, in each case whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to any Secured Party that are
required to be paid by such Guarantor pursuant to the terms of any 9.75% Indenture
Document).

     “Insurance”: (i) all insurance policies covering any or all of the Collateral
(regardless of whether the Collateral Agent is the loss payee thereof) and (ii) any key man
life insurance policies.

     “Intellectual Property”: the collective reference to all rights, priorities,
and privileges relating to intellectual property, whether arising under United States,
multinational or foreign laws or otherwise, including, without limitation, all (i)
Copyrights, (ii) Copyright Licenses, (iii) Patents, (iv) Patent Licenses, (v) Trademarks,
(vi) Trademark Licenses, (vii) Trade Secrets, and (viii) Trade Secret Licenses, and all
rights to sue at law or in equity for any past, present, or future infringement,
misappropriation, dilution, or other violation thereof, including the right to receive all
proceeds and damages therefrom.

     “Intercompany Note”: any promissory note evidencing loans made by any Grantor
to the Company or any of its Subsidiaries.

     “Investment Property”: the collective reference to (i) all “investment
property” as such term is defined in Section 9-102(a)(49) of the New York UCC including,
without limitation, all Certificated Securities and Uncertificated Securities, all Security
Entitlements, all Securities Accounts, all Commodity Contracts and all Commodity Accounts
(other than any Voting Stock of a Foreign Subsidiary excluded from the definition of
“Pledged Equity Interests”), (ii) security entitlements, in the case of any United States
Treasury book-entry securities, as defined in 31 C.F.R. section 357.2, or, in the case of
any United States federal agency book-entry securities, as defined in the corresponding
United States federal regulations governing such book-entry securities, and (iii) whether or
not constituting “investment property” as so defined, all Pledged Notes, all Pledged Equity
Interests, all Pledged Security Entitlements and all Pledged Commodity Contracts.

     “Issuers”: the collective reference to each issuer of a Pledged Security.

 

 

     “Lien”: any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention agreement or
lease in the nature thereof).

     “Material Adverse Effect”: a material adverse effect on (a) the business,
assets, operations or financial condition of the Company and its Subsidiaries taken as a
whole, (b) the ability of the Company and the Guarantors to perform any of their respective
obligations under any Secured Debt Document or (c) the validity or enforceability of any
Secured Debt Document or the rights or remedies of the Collateral Agent or any Secured Party
thereunder.

     “Material Contract”: any agreement, contract or license (other than the
licenses issued by the Federal Communications Commission) or other arrangement (other than
an agreement, contract or arrangement representing indebtedness for borrowed money) to which
any Grantor is a party that is material to the Grantors and their Subsidiaries, taken as a
whole, and for which breach, nonperformance, cancellation or failure to renew could
reasonably be expected to materially adversely affect the business or financial condition of
the Company or the Guarantors.

     “New York UCC”: the Uniform Commercial Code as from time to time in effect in
the State of New York.

     “Noteholder”: a Person in whose name a Note is registered in the register
maintained by the Registrar pursuant to the Indenture.

     “Note Obligations”: the Company Note Obligations and the Guarantor Note
Obligations.

     “Notes”: the notes issued and outstanding under the Indenture (or under any
supplemental indenture) at any time and from time to time, including any additional notes.

     “Obligations”: any principal, interest (including any interest accruing
subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding
at the rate provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable state, federal or foreign law), penalties,
fees, indemnifications, reimbursements (including reimbursement obligations with respect to
letters of credit and banker’s acceptances), damages and other liabilities, and guarantees
of payment of such principal, interest, penalties, fees, indemnifications, reimbursements,
damages and other liabilities, payable under the documentation governing any Indebtedness.

     “Patent License”: any agreement, whether written or oral, providing for the
grant by or to any Grantor of any right to manufacture, use, import, export, distribute,
sell or offer to sell any invention or design covered in whole or in part by a Patent,
including, without limitation, any of the foregoing referred to in Schedule 6 as the
same may be amended, restated, supplemented, replaced or otherwise modified from time to
time.

 

 

     “Patents”: (i) all United States, foreign, and multinational patents, patent
applications and patentable inventions (whether or not reduced to practice), including,
without limitation, each issued patent and patent application identified in Schedule
6 as the same may be amended, restated, supplemented, replaced or otherwise modified
from time to time, all certificates of invention or similar property rights, (ii) all
reissues, divisions, continuations, continuations-in-part, substitutes, renewals, and
extensions of any of the foregoing, (iii) all inventions and improvements described and
claimed therein, (iii) the right to sue or otherwise recover for any and all past, present,
and future infringements, misappropriations, and other violations thereof, (iv) all income,
royalties, damages, and other payments now and hereafter due and/or payable with respect
thereto (including, without limitation, payments under all Patent Licenses entered into in
connection therewith, payments arising out of any other Disposition thereof and damages and
payments for past, present or future infringement thereof), and (v) all other rights of any
kind whatsoever accruing thereunder or pertaining thereto.

     “Permitted Liens”: with respect to each Grantor, any Lien permitted on such
Grantor’s Collateral pursuant to the 9.75% Indenture Documents and any Additional Secured
Debt Documents applicable to such Grantor.

     “Pledged Alternative Equity Interests”: all interests of any Grantor in
participation or other interests in any equity or profits of any business entity and the
certificates, if any, representing such interests and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or proceeds from time
to time received, receivable or otherwise distributed in respect of or in exchange for any
or all of such interests and any other warrant, right or option to acquire any of the
foregoing; provided, however, that Pledged Alternative Equity Interests
shall not include any Pledged Stock, Pledged Partnership Interests, Pledged LLC Interests
and Pledged Trust Interests.

     “Pledged Commodity Contracts”: all commodity contracts listed on Schedule
2 (as the same may be amended, restated, supplemented, replaced or otherwise modified
from time to time) and all other commodity contracts to which any Grantor is party from time
to time.

     “Pledged Debt Securities”: all debt securities now owned or hereafter acquired
by any Grantor, including, without limitation, the debt securities listed on Schedule
2, (as the same may be amended, restated, supplemented, replaced or otherwise modified
from time to time) together with any other certificates, options, rights or security
entitlements of any nature whatsoever in respect of the debt securities of any Person that
may be issued or granted to, or held by, any Grantor while this Agreement is in effect.

     “Pledged Equity Interests”: all Pledged Stock, Pledged LLC Interests, Pledged
Partnership Interests, Pledged Trust Interests and Pledged Alternative Equity Interests.

     “Pledged LLC Interests”: all interests of any Grantor now owned or hereafter
acquired in any limited liability company including, without limitation, all limited
liability company interests listed on Schedule 2 hereto under the heading “Pledged
LLC Interests” (as such schedule may be amended from time to time) and the certificates, if

 

 

any, representing such limited liability company interests and any interest of such
Grantor on the books and records of such limited liability company and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and other property
or proceeds from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such limited liability company interests and any other
warrant, right or option to acquire any of the foregoing.

     “Pledged Partnership Interests”: all interests of any Grantor now owned or
hereafter acquired in any general partnership, limited partnership, limited liability
partnership or other partnership including, without limitation, all partnership interests
listed on Schedule 2 hereto under the heading “Pledged Partnership Interests” (as
such schedule may be amended, restated, supplemented, replaced or otherwise modified from
time to time) and the certificates, if any, representing such partnership interests and any
interest of such Grantor on the books and records of such partnership and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and other property
or proceeds from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such partnership interests and any other warrant, right or
option to acquire any of the foregoing.

     “Pledged Notes”: all promissory notes now owned or hereafter acquired by any
Grantor including, without limitation, those listed on Schedule 2 (as the same may
be amended, restated, supplemented, replaced or otherwise modified from time to time) and
all Intercompany Notes at any time issued to any Grantor.

     “Pledged Securities”: the collective reference to the Pledged Debt Securities,
the Pledged Notes and the Pledged Equity Interests.

     “Pledged Security Entitlements”: all security entitlements with respect to the
financial assets listed on Schedule 2 (as the same may be amended, restated,
supplemented, replaced or otherwise modified from time to time) and all other security
entitlements of any Grantor.

     “Pledged Stock”: all shares of capital stock now owned or hereafter acquired
by such Grantor, including, without limitation, all shares of capital stock described on
Schedule 2 hereto under the heading “Pledged Stock” (as such schedule may be
amended, restated, supplemented, replaced or otherwise modified from time to time), and the
certificates, if any, representing such shares and any interest of such Grantor in the
entries on the books of the issuer of such shares and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or proceeds from time
to time received, receivable or otherwise distributed in respect of or in exchange for any
or all of such shares and any other warrant, right or option to acquire any of the
foregoing; provided, however, in the event that a pledge of the Equity
Interests in any Foreign Subsidiary shall result in an adverse tax consequence to the
Company, no more than 65% of the total outstanding Voting Stock of such Foreign Subsidiary
shall be required to be pledged hereunder.

 

 

     “Pledged Trust Interests”: all interests of any Grantor now owned or
hereafter acquired in a Delaware business trust or other trust including, without
limitation, all trust interests listed on Schedule 2 hereto under the heading
“Pledged Trust Interests” (as such schedule may be amended, restated, supplemented, replaced
or otherwise modified from time to time) and the certificates, if any, representing such
trust interests and any interest of such Grantor on the books and records of such trust or
on the books and records of any securities intermediary pertaining to such interest and all
dividends, distributions, cash, warrants, rights, options, instruments, securities and other
property or proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such trust interests and any other warrant,
right or option to acquire any of the foregoing.

     “Proceeds”: all “proceeds” as such term is defined in Section 9-102(a)(64) of
the New York UCC from time to time and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Securities, collections thereon or distributions
or payments with respect thereto.

     “Receivable”: all Accounts and any other right to payment for goods or other
property Disposed of or for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper or classified as a Payment Intangible and whether or not it has
been earned by performance. References herein to Accounts shall include any Supporting
Obligation or collateral securing such Receivable.

     “Required Secured Parties”: at any time, the holders of more than 50% of the
aggregate outstanding amount of the Secured Obligations then outstanding (together with, in
the case of the Additional Secured Obligations, other than in connection with the exercise
of remedies, if applicable, the aggregate unfunded commitments to extend credit which, when
funded, would constitute Secured Obligations), voting as a single class. For this purpose
only, Secured Obligations (or, if applicable, any such unfunded commitments in respect
thereof) registered in the name of, or beneficially owned by, the Company or any affiliate
of the Company shall be deemed not to be outstanding.

     “Requirement of Law”: as to any Person, the certificate of incorporation and
by-laws or other organizational or governing documents of such Person, and any law, treaty,
rule or regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.

     “Secured Parties”: (a) the Collateral Agent, (b) the Trustee and the
Noteholders at any time and from time to time and (c) the Additional Secured Debtholders and
their Authorized Representatives; provided that the Company and the Authorized
Representative of such Additional Secured Debtholders comply with Section 6.18 of the
Collateral Agency Agreement and execute an Additional Secured Debt Notice and Joinder
Agreement in accordance with the terms thereof.

     “Secured Obligations”: collectively, (a) the Note Obligations and (b) the
Additional Secured Obligations.

 

 

     “Securities Act”: the Securities Act of 1933, as amended.

     “Subsidiary Grantor”: the collective reference to each Grantor other than the
Company.

     “Trademark License”: any agreement, whether written or oral, providing for the
grant by or to any Grantor of any right in, to, or under any Trademark, including, without
limitation, any of the foregoing referred to in Schedule 6 as the same may be
amended, restated, supplemented, replaced or otherwise modified from time to time.

     “Trademarks”: (i) all domestic and foreign trademarks, service marks, trade
names, corporate names, company names, business names, fictitious business names, trade
dress, trade styles, logos, designs, or other indicia of origin or source identification,
Internet domain names, and all registrations and applications to register any of the
foregoing, whether in the United States Patent and Trademark Office or in any similar office
or agency of the United States, any state thereof or any other country, union of countries,
or any political subdivision of any of the foregoing, including, without limitation, each
registration and application identified in Schedule 6,as the same may be
amended, restated, supplemented, replaced or otherwise modified from time to time (ii) the
right to, and to obtain, all renewals thereof, (iii) the right to sue or otherwise recover
for any and all past, present and future infringements, dilutions, and other violations of
any of the foregoing or for any injury to goodwill, (iv) all income, royalties, damages and
other payments now and hereafter due and/or payable with respect thereto (including, without
limitation, payments under all Trademark Licenses entered into in connection therewith, and
damages and payments for past, present or future infringements thereof), and (v) all other
rights of any kind whatsoever accruing thereunder or pertaining thereto, together, in each
case, with the goodwill of the business connected with the use of, and symbolized by, each
of the above.

     “Trade Secret License”: any agreement, whether written or oral, providing for
the grant by or to any Grantor of any right in, to, or under any Trade Secret.

     “Trade Secrets”: (i) all trade secrets and all confidential and proprietary
information, including know-how, manufacturing and production processes and techniques,
inventions, research and development information, technical data, financial, marketing and
business data, pricing and cost information, business and marketing plans, and customer and
supplier lists and information, (ii) the right to sue or otherwise recover for any and all
past, present and future infringements, misappropriations, and other violations thereof,
(iii) all income, royalties, damages and other payments now and hereafter due and/or payable
with respect thereto (including, without limitation, payments arising out of any Disposition
thereof, and damages and payments for past, present or future infringements thereof), and
(iv) all other rights of any kind whatsoever accruing thereunder or pertaining thereto.

     “Trustee”: U.S. Bank National Association, acting as trustee for the
Noteholders and any successor trustee appointed under the Indenture and its successors and
permitted assigns.

 

 

     “Vehicles”: all cars, trucks, trailers, construction and earth moving
equipment and other Equipment of any nature covered by a certificate of title law of any
jurisdiction and, in any event including, without limitation, the vehicles listed on
Schedule 8 (as the same may be amended, restated, supplemented, replaced or
otherwise modified from time to time) and all tires and other appurtenances to any of the
foregoing.

          1.2. Other Definitional Provisions. (a) The words “hereof”, “herein”, “hereto” and
“hereunder” and words of similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and Section and Schedule
references are to this Agreement unless otherwise specified.

          (b) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

          (c) Where the context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part
thereof.

          (d) The expression “paid in full” and any other similar terms or phrases when used herein with
respect to the Secured Obligations shall mean the unconditional, final and irrevocable payment in
full, in immediately available funds, of all of the Secured Obligations, except for those
contingent obligations and indemnification obligations which are not then due and payable.

          (e) For the avoidance of doubt, all notices, requests, directions, demands or other forms of
communications delivered to the Collateral Agent pursuant to this Agreement shall be in writing.

SECTION 2. GRANT OF SECURITY INTEREST;

CONTINUING LIABILITY UNDER COLLATERAL

          2.1. Grant of Security.

          (a) Each Grantor hereby assigns and transfers to the Collateral Agent, and hereby grants to
the Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in, all
of the personal property of such Grantor, including, without limitation, the following property, in
each case, wherever located and now owned or at any time hereafter acquired by such Grantor or in
which such Grantor now has or at any time in the future may acquire any right, title or interest
(collectively, the “Collateral”), as collateral security for the prompt and complete
payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of
the Secured Obligations:

          (i) all Accounts;

          (ii) all Chattel Paper;

          (iii) all Contracts;

 

 

          (iv) all Deposit Accounts;

          (v) all Documents;

          (vi) all Equipment;

          (vii) all General Intangibles;

          (viii) all Instruments;

          (ix) all Insurance

          (x) all Intellectual Property;

          (xi) all Inventory;

          (xii) all Investment Property (other than the Capital Stock of the FCC License
Subsidiaries);

          (xiii) all Letter of Credit Rights;

          (xiv) all Money;

          (xv) all Vehicles;

          (xvi) all Goods not otherwise described above;

          (xvii) any Collateral Account;

          (xviii) all books, records, ledger cards, files, correspondence, customer lists,
blueprints, technical specifications, manuals, computer software, computer printouts, tapes,
disks and other electronic storage media and related data processing software and similar
items that at any time evidence or contain information relating to any of the Collateral or
are otherwise necessary or helpful in the collection thereof or realization thereupon;

          (xix) each of the commercial tort claims set forth on Schedule 10 (as the same
may be amended, restated, supplemented, replaced or otherwise modified from time to time)
that equal or exceed $5,000,000;

          (xx) to the extent not otherwise included, all other property of the Grantor and all
Proceeds and products, accessions, rents and profits of any and all of the foregoing and all collateral security, Supporting Obligations and guarantees given by
any Person with respect to any of the foregoing; and

          (xxi) solely to the extent permitted under applicable law, rules or regulations,
including rules and regulations of the Federal Communications Commission, the Equity
Interests of the FCC License Subsidiaries.

 

 

          Notwithstanding anything to the contrary in this Agreement, none of the Excluded Assets shall
constitute Collateral for so long as such property or assets constitute Excluded Assets.

          (b) Notwithstanding anything herein to the contrary, (i) each Grantor shall remain liable for
all obligations under the Collateral and nothing contained herein is intended or shall be a
delegation of duties to the Collateral Agent or any Secured Party, (ii) each Grantor shall remain
liable under and each of the agreements included in the Collateral, including, without limitation,
any Accounts, any Contracts and any agreements relating to Pledged Partnership Interests or Pledged
LLC Interests, to perform all of the obligations undertaken by it thereunder all in accordance with
and pursuant to the terms and provisions thereof and neither the Collateral Agent nor any Secured
Party shall have any obligation or liability under any of such agreements by reason of or arising
out of this Agreement or any other document related thereto nor shall the Collateral Agent nor any
Secured Party have any obligation to make any inquiry as to the nature or sufficiency of any
payment received by it or have any obligation to take any action to collect or enforce any rights
under any agreement included in the Collateral, including, without limitation, any agreements
relating to any Accounts, any Contracts, Pledged Partnership Interests or Pledged LLC Interests and
(iii) the exercise by the Collateral Agent of any of its rights hereunder shall not release any
Grantor from any of its duties or obligations under the contracts and agreements included in the
Collateral.

          2.2. Collateral Agency Agreement. Notwithstanding anything herein to the contrary,
the rights and remedies of Collateral Agent hereunder shall be subject to and governed by the terms
of the Collateral Agency Agreement.

SECTION 3. REPRESENTATIONS AND WARRANTIES

          Each of the Grantors represents and warrants and covenants and agrees, acknowledging and
confirming that the Collateral Agent and each other Secured Party is relying on such
representations, warranties, covenants and agreements, that:

          3.1. [Reserved].

          3.2. Title; No Other Liens. Such Grantor has the right, title and interest that it
purports to have in each item of the Collateral, free and clear of any and all Liens or claims,
including, without limitation, liens arising as a result of such Grantor becoming bound (as a result of merger or otherwise) as
Grantor under a security agreement entered into by another Person, except for Permitted Liens.
Except for Permitted Liens, no financing statement, mortgage or other public notice with respect to
all or any part of the Collateral is on file or of record in any public office, except such as have
been filed in favor of the Collateral Agent, for the ratable benefit of the Secured Parties,
pursuant to this Agreement or as are otherwise permitted by the 9.75% Indenture Documents and each
Additional Secured Debt Documents.

          3.3. Perfected First Priority Liens. (a) Except as otherwise contemplated by the
terms of the Indenture and each Additional Secured Debt Document, and except with respect to
Vehicles or Letter of Credit Rights, the Liens created under the Collateral Documents and the
security interests granted pursuant to this Agreement (i) constitute valid fully
perfected security

 

 

interests in all of the Collateral in favor of the Collateral Agent, for the
ratable benefit of the Secured Parties, as collateral security for such Grantor’s Secured
Obligations, enforceable in accordance with the terms hereof and (ii) are prior to all other Liens
on the Collateral except for Liens otherwise expressly permitted by the terms of the Indenture and
each Additional Secured Debt Document to have priority over the Liens created under the Collateral
Documents. Without limiting the foregoing, each Grantor has taken all actions necessary,
including without limitation those specified in Section 4.2 to: (A) establish the Collateral
Agent’s “control” (within the meanings of Sections 8-106 and 9-106 of the UCC) over any portion of
the Investment Property constituting Certificated Securities or Uncertificated Securities except to
the extent such Investment Property constitutes cash or Cash Equivalents only, (B) establish the
Collateral Agent’s control (within the meaning of Section 9-105 of the UCC) over all Electronic
Chattel Paper in excess of $5,000,000 individually, or $10,000,000 in the aggregate, and (C)
establish the Collateral Agent’s “control” (within the meaning of Section 16 of the Uniform
Electronic Transaction Act as in effect in the applicable jurisdiction “UETA”) over all
“transferable records” (as defined in UETA) in excess of $5,000,000 individually, or $10,000,000 in
the aggregate.

          3.4. Name; Jurisdiction of Organization, etc. On the date hereof, such Grantor’s
exact legal name (as indicated on the public record of such Grantor’s jurisdiction of formation or
organization), jurisdiction of organization, organizational i.d. number, if any, and the location
of such Grantor’s chief executive office or sole place of business are specified on Schedule
4. Each Grantor is organized solely under the law of the jurisdiction so specified and has not
filed any certificates of domestication, transfer or continuance in any other jurisdiction. Except
as otherwise indicated on Schedule 4 as the same may be amended, restated, supplemented,
replaced or otherwise modified from time to time, the jurisdiction of each such Grantor’s
organization of formation is required to maintain a public record showing the Grantor to have been
organized or formed. Except as specified on Schedule 4 as the same may be amended,
restated, supplemented, replaced or otherwise modified from time to time, it has not changed its
name, jurisdiction of organization, chief executive office or sole place of business or its
corporate structure in any way (e.g. by merger, consolidation, change in corporate form or
otherwise) within the past five years and has not within the last five years
become bound (whether as a result of merger or otherwise) as Grantor under a security
agreement entered into by another Person, which has not heretofore been terminated.

          3.5. [Reserved].

          3.6. [Reserved].

          3.7. Investment Property. (a) Schedule 2 hereto (as the same may be amended,
restated, supplemented, replaced or otherwise modified from time to time) sets forth under the
headings “Pledged Stock,” “Pledged LLC Interests,” “Pledged Partnership Interests” and “Pledged
Trust Interests,” respectively, all of the Pledged Stock, Pledged LLC Interests, Pledged
Partnership Interests and Pledged Trust Interests, in each case, of the Subsidiaries owned by any
Grantor and such Pledged Equity Interests constitute the percentage of issued and outstanding
shares of stock, percentage of membership interests, percentage of partnership interests or
percentage of beneficial interest of the respective issuers thereof indicated on such Schedule.
Schedule 2 hereto (as the same may be amended, restated, supplemented, replaced or

 

 

otherwise modified from time to time) sets forth under the heading “Pledged Debt Securities” or
“Pledged Notes” all of the Pledged Debt Securities and Pledged Notes, in each case, of the
Subsidiaries owned by any Grantor and all of such Pledged Debt Securities and Pledged Notes have
been duly authorized, authenticated or issued, and delivered and are the legal, valid and binding
obligations of the Issuers thereof enforceable in accordance with their terms and are not in
default and constitute all of the issued and outstanding inter-company indebtedness evidenced by an
instrument or certificated security of the respective issuers thereof owing to such Grantor.
Schedule 2 hereto (as such schedule may be amended from time to time) sets forth under the
headings “Securities Accounts,” “Commodities Accounts,” and “Deposit Accounts” respectively, all
of the Securities Accounts, Commodities Accounts and Deposit Accounts, in each case which contain
assets of more than $1,000,000, in which each Grantor has an interest. Each Grantor is the sole
entitlement holder or customer of each such account, and such Grantor has not consented to, and is
not otherwise aware of, any Person (other than the Collateral Agent pursuant hereto, or any party
acting for the benefit of the Collateral Agent) having “control” (within the meanings of Sections
8-106, 9-106 and 9-104 of the New York UCC) over, or any other interest in, any such Securities
Account, Commodity Account or Deposit Account or any securities, commodities or other property
credited thereto.

          (b) The shares of Pledged Equity Interests pledged by such Grantor hereunder constitute all of
the issued and outstanding shares of all classes of the Equity Interests of each Issuer owned by
such Grantor or, in the case of Voting Stock of any Foreign Subsidiary, if less (as a result of any
Voting Stock of a Foreign Subsidiary being excluded from the definition of “Pledged Equity
Interests”), 65% of the outstanding Voting Stock of any Foreign Subsidiary of each relevant Issuer.

          (c) All the shares of the Pledged Equity Interests of such Grantor’s Subsidiaries have been
duly and validly issued and are fully paid and nonassessable.

          (d) Part 1 of Schedule 12 (as the same may be amended, restated, supplemented,
replaced or otherwise modified from time to time) lists all uncertificated Pledged LLC Interests
and Pledged Partnership Interests of any Subsidiary of any Grantor the terms of which expressly
provide that they are governed by Article 8 of the uniform commercial code of any jurisdiction and
Part 2 of Schedule 12 (as the same may be amended, restated, supplemented, replaced or
otherwise modified) from time to time lists all uncertificated Pledged LLC Interests and Pledged
Partnership Interests of any Subsidiary of any Grantor the terms of which do not expressly provide
that they are governed by Article 8 of the uniform commercial code of any jurisdiction.

          (e) Part 3 of Schedule 12 (as the same may be amended, restated, supplemented,
replaced or otherwise modified from time to time) lists all certificated Pledged LLC Interests and
Pledged Partnership Interests of any Subsidiary of any Grantor the terms of which expressly provide
that they are governed by Article 8 of the uniform commercial code of any jurisdiction and Part 4
of Schedule 12 (as the same may be amended, restated, supplemented, replaced or otherwise
modified from time to time ) lists all certificated Pledged LLC Interests and Pledged Partnership
Interests of any Subsidiary of any Grantor the terms of which do not expressly provide that they
are governed by Article 8 of the uniform commercial code of any jurisdiction.

 

 

          (f) Such Grantor is the record and beneficial owner of the Investment Property and
Deposit Accounts pledged by it hereunder, free of any and all Liens or options in favor of, or
claims of, any other Person, except Permitted Liens and there are no outstanding warrants, options
or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with
respect to, or property that is convertible into, or that requires the issuance or sale of, any
Pledged Equity Interests in any majority-owed Subsidiary of such Grantor.

          (g) Each Issuer that is not a Grantor and is a Subsidiary of a Grantor hereunder has executed
and delivered to the Collateral Agent an Acknowledgment and Consent, in substantially the form of
Exhibit A hereto, to the pledge of its Pledged Securities pursuant to this Agreement.

          3.8. [Reserved].

          3.9. [Reserved].

          3.10. Intellectual Property. (a) Schedule 6 (as the same may be amended, restated,
supplemented, replaced or otherwise modified from time to time) sets forth a true and complete list
of all Intellectual Property owned by such Grantor in its own name on the date hereof that is
registered or applied to be registered in the United States Patent and Trademark Office, the United
States Copyright Office or any similar state, national or international offices or registries, and
the registration number or application number applicable to such Intellectual Property. Except as
set forth in Schedule 6 (as the same may be amended, restated, supplemented, replaced or
otherwise modified from time to time), such Grantor is the sole and exclusive owner of the entire
and unencumbered right, title, and interest in and to such Intellectual Property and is otherwise
entitled to use, and grant others the right to use, all such Intellectual Property, without
limitation, subject only to the license terms of the licensing or franchise agreements referred to
in paragraph (c) below, except where the failure to have such rights could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

          (b) On the date hereof, all Intellectual Property registered or applied to be registered in
the United States Patent and Trademark Office, the United States Copyright Office or any similar
state, national or international office or registry owned by such Grantor is subsisting and
unexpired and has not been abandoned, cancelled, or dedicated to the public, except where any such
abandonment, cancellation, or dedication to the public could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
Neither the operation of such Grantor’s business as currently conducted or as contemplated to
be conducted nor the use of the Intellectual Property in connection therewith conflicts with,
infringes upon, misappropriates, dilutes, or otherwises violate the Intellectual Property rights of
any other Person, except where any such infringement, misappropriation, dilution, or violation
could not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.

          (c) Except as set forth in Schedule 6, on the date hereof (i) none of the Intellectual
Property registered or applied to be registered in the United States Patent and Trademark Office,
the United States Copyright Office or any similar state, national or

 

 

international office or
registry owned by such Grantor is the subject of any licensing or franchise agreement pursuant to
which such Grantor is the licensor or franchisor, and (ii) there are no other agreements,
obligations, orders or judgments which affect the ownership, use, validity, enforceability, or
registration of any such Intellectual Property, except where, in each case, the existence of such
agreements, obligations, orders or judgments could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

          (d) To such Grantor’s knowledge, there is currently no infringement or unauthorized use of any
item of such Intellectual Property of such Grantor by any third party that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

          (e) No holding, decision or judgment has been rendered by any Governmental Authority which
would limit, cancel or question the validity, enforceability, ownership, or registration of, or
such Grantor’s rights in, any Intellectual Property registered or applied to be registered in the
United States Patent and Trademark Office, the United States Copyright Office or any similar state,
national or international office or registry owned by such Grantor, except where any such holding,
decision, or judgment could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. Such Grantor is not aware of any uses of any item of Intellectual
Property owned or used by such Grantor that could reasonably be expected to lead to such item
becoming invalid or unenforceable including, without limitation, unauthorized uses by third parties
and uses which were not supported by the goodwill of the business connected with Trademarks and
Trademark Licenses used in the conduct of such business, except where such use could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect.

          (f) No action or proceeding is pending or, to the knowledge of such Grantor, threatened, on
the date hereof (i) seeking to limit, cancel or question the validity, enforceability, ownership,
registration, or use of any Intellectual Property registered or applied to be registered in the
United States Patent and Trademark Office, the United States Copyright Office or any similar state,
national or international office or registry owned by such Grantor, (ii) alleging that any services
provided by, processes used by, or products manufactured or sold by such Grantor infringes upon,
misappropriates, dilutes, or otherwise violates, as the case may be, any such Intellectual Property
right of any third party, (iii) alleging that any such Intellectual Property owned by such Grantor
is being licensed, sublicensed or used in violation of any Intellectual Property right of any third
party, or (iv) which, if adversely determined, would have a material adverse effect on the value of
any such Intellectual Property owned by such Grantor, except
where such action or proceeding could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. To the knowledge of such Grantor, no Person is engaging
in any activity that infringes upon the Intellectual Property registered or applied to be
registered in the United States Patent and Trademark Office, the United States Copyright Office or
any similar state, national or international office or registry owned or held by such Grantor,
except where any such infringement could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Except as set forth in Schedule 6 hereto (as the
same may be amended, restated, supplemented, replaced or otherwise modified from time to time),
such Grantor has not granted any license, release, covenant not to sue, non-assertion assurance, or
other right to any person with respect to any such Intellectual Property owned by such Grantor.

 

 

The consummation of the transactions contemplated by this Agreement will not result in the
termination or impairment of any Intellectual Property owned or, to such Grantor’s knowledge, held
by such Grantor, except where any such termination or impairment could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.

          (g) With respect to each written Copyright License, written Trademark License and written
Patent License the loss of which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect: (i) such license is valid and binding and in full force and
effect and represents the entire agreement between the respective licensor and licensee with
respect to the subject matter of such license; (ii) such license will not cease to be valid and
binding and in full force and effect on terms identical to those currently in effect as a result of
the rights and interests granted herein, nor will the grant of such rights and interests constitute
a breach or default under such license or otherwise give the licensor or licensee a right to
terminate such license; (iii) such Grantor has not received any notice of termination or
cancellation under such license; (iv) such Grantor has not received any notice of a breach or
default under such license, which breach or default has not been cured; (v) such Grantor has not
granted to any other third party any rights, adverse or otherwise, under such license; and (vi)
such Grantor is not in breach or default in any material respect, and no event has occurred that,
with notice and/or lapse of time, would constitute such a breach or default or permit termination,
modification or acceleration under such license.

          (h) Except as set forth in Schedule 6 (as the same may be amended, restated,
supplemented, replaced or otherwise modified from time to time), such Grantor has performed all
acts, including, without limitation, recordation of its interests in Patents and Trademarks with
the United States Patent and Trademark Office and in corresponding national and international
patent offices, and recordation of its interests in Copyrights with the United States Copyright
Office and in corresponding national and international copyright offices, and has paid all required
fees and taxes to maintain each and every item of Intellectual Property owned by such Grantor in
full force and effect and to protect and maintain its interest therein, except, in each case, where
the failure to do so could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. Such Grantor has used proper statutory notice in connection with its use
of each material Patent, Trademark and Copyright included in the Intellectual Property owned or
held by such Grantor, except where the failure to do so could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

          (i) (i) None of the Trade Secrets of such Grantor has been used, divulged, disclosed or
appropriated to the detriment of such Grantor for the benefit of any other Person and
(ii) no employee, independent contractor or agent of such Grantor is in default or breach of
any term of any employment agreement, non-disclosure agreement, assignment of inventions agreement
or similar agreement or contract relating in any way to the protection, ownership, development, use
or transfer of such Grantor’s Intellectual Property, except where such use, divulgence,
appropriation, default or breach could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

          (j) No Grantor is subject to any settlement or consents, judgment, injunction, order, decree,
covenants not to sue, non-assertion assurances or releases that would impair the validity,
enforceability, ownership, use, registration of, or such Grantor’s rights in, any

 

 

Intellectual
Property, except, in each case, where any such settlement or other agreement or order could not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

          3.11. [Reserved].

          3.12. [Reserved].

          3.13. Commercial Tort Claims. As of the date hereof, no Grantor has any commercial tort
claims individually in excess of $5,000,000.

SECTION 4. COVENANTS

          Each Grantor covenants and agrees with the Secured Parties that, from and after the date of
this Agreement until the Secured Obligations shall have been paid in full (for avoidance of doubt,
for purposes of calculating the aggregate permitted amounts under Section 4.2 hereof if the Grantor
takes the action required by such sections with respect to any particular item of Collateral, e.g.
to deliver or establish the Collateral Agent’s control over any particular item of Collateral or
otherwise ensure the perfection and priority of the Collateral Agent’s security interest to the
extent specified therein, then such item of Collateral shall no longer be counted towards the
aggregate permitted amounts set forth therein):

          4.1. [Reserved].

          4.2. Delivery and Control of Instruments, Chattel Paper, Negotiable Documents, Investment
Property and Deposit Accounts. (a) If any of the Collateral the fair market value of which is in excess of $5,000,000
individually, or $10,000,000 in the aggregate, is or shall become evidenced or represented by any
Instrument, Certificated Security, Negotiable Document or Tangible Chattel Paper, such Instrument
(other than checks received in the ordinary course of business), Certificated Security, Negotiable
Documents or Tangible Chattel Paper shall be promptly delivered to the Collateral Agent, duly
endorsed in a manner reasonably satisfactory to the Collateral Agent, to be held as Collateral
pursuant to this Agreement.

          (b) If any of the Collateral the fair market value of which is in excess of $5,000,000
individually, or $10,000,000 in the aggregate, is or shall become “Electronic Chattel Paper” such
Grantor shall ensure that (i) a single authoritative copy exists which is unique, identifiable,
unalterable (except as provided in clauses (iii), (iv) and (v) of this paragraph), (ii) that such
authoritative copy identifies the Collateral Agent as the assignee and is communicated to and
maintained by the Collateral Agent or its designee, (iii) that copies or revisions that add or
change the assignee of the authoritative copy can only be made with the written consent of the
Collateral Agent, (iv) that each copy of the authoritative copy and any copy of a copy is readily
identifiable as a copy and not the authoritative copy and (v) any revision of the authoritative
copy is readily identifiable as an authorized or unauthorized revision.

          (c) If any of the Collateral the fair market value of which is in excess of $5,000,000,
individually or $10,000,000, in the aggregate is or shall become evidenced or represented by an
Uncertificated Security, such Grantor shall cause the Issuer thereof either (i) to register the
Collateral Agent as the registered owner of such Uncertificated Security, upon

 

 

original issue or
registration of transfer or (ii) to agree in writing with such Grantor and the Collateral Agent
that such Issuer will comply with instructions with respect to such Uncertificated Security
originated by the Collateral Agent without further consent of such Grantor, such agreement to be in
a form reasonably acceptable to the Collateral Agent.

          (d) If requested by the Collateral Agent in writing, each Grantor shall use commercially
reasonable efforts to maintain Securities Entitlements, Securities Accounts and Deposit Accounts
with values in excess of $5,000,000 in each individual account, or $10,000,000 in the aggregate,
only with financial institutions that have agreed to comply with entitlement orders and
instructions issued or originated by the Collateral Agent without further consent of such Grantor,
such agreement to be in a form reasonably acceptable to the Collateral Agent.

          (e) If any of the Collateral is or shall become evidenced or represented by a Commodity
Contract with a value in excess of $5,000,000 individually, or $10,000,000 in the aggregate, if
requested by the Collateral Agent in writing upon the direction of the Authorized Representative or
Authorized Representatives representing the Required Secured Parties, each Grantor shall use
commercially reasonable efforts to cause the Commodity Intermediary with respect to such Commodity
Contract to agree in writing with such Grantor and the Collateral Agent that such Commodity
Intermediary will apply any value distributed on account of such Commodity Contract as directed by
the Collateral Agent without further consent of such Grantor, such agreement to be in a form
reasonably acceptable to the Collateral Agent.

          (f) [Reserved].

          4.3. Maintenance of Insurance. (a) Such Grantor will maintain, with financially sound and
reputable insurance companies, insurance on the Collateral in at least such amounts and against at
least such risks as are usually insured against in the same or similar locations by companies
engaged in the same or a similar business; and furnish to the Collateral Agent with copies for each
Secured Party, upon written request by the Collateral Agent upon the direction of the Authorized
Representative or Authorized Representatives representing the Required Secured Parties, full
information as to the insurance carried; provided that, notwithstanding the foregoing,
satellite insurance shall not be required. All insurance shall provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be effective until at
least 15 days after receipt by the Collateral Agent of written notice thereof.

          (b) Such Grantor shall deliver to the Collateral Agent on behalf of the Secured Parties, (i)
on the date hereof, a certificate dated such date showing the amount and types of insurance
coverage as of such date, (ii) upon request of any Secured Party from time to time, full
information as to the insurance carried, (iii) promptly following receipt of notice from any
insurer, a copy of any notice of cancellation or material change in coverage from that existing on
the Closing Date, (iv) forthwith, notice of any cancellation or nonrenewal of coverage by such
Grantor and (v) promptly after such information is available to such Grantor, full information as
to any claim for an amount in excess of $7,500,000 with respect to any property and casualty
insurance policy maintained by such Grantor. The Collateral Agent for the benefit of the Secured
Parties shall be named as additional insured on all such liability insurance policies of

 

 

such Grantor and the Collateral Agent shall be named as loss payee on all property and casualty
insurance policies of such Grantor.

          4.4. [Reserved].

          4.5. Maintenance of Perfected Security Interest; Further Documentation. (a) Such Grantor
shall maintain the security interest created by this Agreement as a perfected security interest
having at least the priority described in Section 3.3 and shall defend such security interest
against the claims and demands of all Persons whomsoever subject to Permitted Liens.

          (b) Such Grantor will furnish to the Secured Parties from time to time statements and
schedules further identifying and describing the Collateral and such other reports in connection
with the assets and property of such Grantor as the Collateral Agent may reasonably request, all in
reasonable detail.

          (c) At any time and from time to time, upon the written request of the Collateral Agent upon
the direction of the Authorized Representative or Authorized Representatives representing the
Required Secured Parties, and at the sole expense of such Grantor, such Grantor will promptly and
duly authorize, execute and deliver, and have recorded, such further instruments and documents and
take such further actions as the Collateral Agent may reasonably request, upon the direction of the
Authorized Representative or Authorized Representatives representing the Required Secured Parties,
for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, (i) the filing of any financing or
continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any
jurisdiction with respect to the security interests created hereby, (ii) the filing of security
agreements or other documents with the United States Patent & Trademark Office, the United States
Copyright Office and the office of any similar registries, and (iii) and in the case of Investment
Property, and any other relevant Collateral, taking any actions necessary to enable the Collateral
Agent to obtain “control” (within the meaning of the applicable Uniform Commercial Code) with
respect thereto.

          4.6. Changes in Locations, Name, Jurisdiction of Incorporation, etc. Such Grantor will
not, except upon 15 days’ prior written notice to the Collateral Agent and delivery to the
Collateral Agent of duly authorized and, where required, executed copies of all additional
financing statements and other documents reasonably requested by the Collateral Agent to maintain
the validity, perfection and priority of the security interests provided for herein:

     (i) [Reserved];

     (ii) without limiting the prohibitions on mergers involving the Grantors contained in
the Indenture or any Additional Secured Debt Document, change its legal name, jurisdiction
of organization or the location of its chief executive office or sole place of business from
that referred to in Section 3.4; or

     (iii) change its legal name, identity or structure to such an extent that any financing
statement filed by the Collateral Agent in connection with this Agreement would become
misleading. 

 

 

          4.7. Notices. Such Grantor will advise the Secured Parties promptly, in reasonable detail,
of:

          (a) any Lien with respect to an obligation in excess of $2,000,000 (other than any Permitted
Lien) on any of the Collateral;

          (b) of the occurrence of any other event which could reasonably be expected to have a Material
Adverse Effect on the aggregate value of the Collateral or on the security interests created
hereby; and

          (c) any Governmental Authority becoming party to any Material Contract, which notice shall be
delivered not more than 15 days from such occurrence thereof.

          4.8. Investment Property. (a) If such Grantor shall become entitled to receive or shall
receive any stock or other ownership certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any reclassification, increase
or reduction of capital or any certificate issued in connection with any reorganization), option or
rights in respect of the Equity Interests (including any Pledged Equity Interest) of any Issuer
that is a Subsidiary, whether in addition to, in substitution of, as a conversion of, or in
exchange for, any shares of or other ownership interests in the Pledged Securities, or otherwise in
respect thereof, such Grantor shall accept the same as the agent of the Secured Parties, hold the
same in trust for the Secured Parties and deliver the same forthwith to the Collateral Agent in the
exact form received, duly endorsed by such Grantor to the Collateral Agent, if required, together
with an undated stock power covering such certificate duly executed in blank by such Grantor and
with, if the Collateral Agent so requests, signature guaranteed, to be held by the Collateral
Agent, subject to the terms hereof, as additional collateral security for the Secured Obligations.
Any sums paid upon or in respect of the Pledged Securities upon the liquidation or dissolution of
any Issuer shall be paid over to the Collateral Agent to be held by it hereunder as additional
collateral security for the Secured Obligations, and in case any distribution of capital shall be
made on or in respect of the Pledged Securities or any property shall be distributed upon or with
respect to the Pledged Securities pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall,
unless otherwise subject to a perfected security interest in favor of the Collateral Agent, be
delivered to the Collateral Agent to be held by it hereunder as additional collateral security for
the Secured Obligations. If any sums of money or property so paid or distributed in respect of the
Pledged Securities in excess of $1,000,000 shall be received by such Grantor, such Grantor shall,
until such money or property is paid or delivered to the Collateral Agent, hold such money or
property in trust for the Secured Parties, segregated from other funds of such Grantor, as
additional collateral security for the Secured Obligations.

          (b) Without the prior written consent of the Collateral Agent, such Grantor will not (i)
Dispose of, or grant any option with respect to, any of the Investment Property or Proceeds thereof
or any interest therein (except, in each case, pursuant to a transaction permitted by the 9.75%
Indenture Documents and each Additional Secured Debt Documents), (ii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect to, any of the
Investment Property or Proceeds thereof, or any interest therein, except for the security interests
created by this Agreement or non-consensual Liens arising by operation of law,

 

 

(iii) except as
otherwise expressly permitted by the 9.75% Indenture Documents and each Additional Secured Debt
Documents, enter into any agreement or undertaking restricting the right or ability of such Grantor
or the Collateral Agent to sell, assign or transfer any of the Investment Property or Proceeds
thereof or any interest therein or (iv) with respect to any Issuer that is a Subsidiary of a
Grantor, without the prior written consent of the Collateral Agent, cause or permit such Issuer of
any Pledged Partnership Interests or Pledged LLC Interests which are not securities (for purposes
of the New York UCC or the UCC applicable in any relevant jurisdiction) on the date hereof to elect
or otherwise take any action to cause such Pledged Partnership Interests or Pledged LLC Interests
to be treated as securities for purposes of the New
York UCC or the UCC applicable in any relevant jurisdiction; provided,
however, notwithstanding the foregoing, if such Issuer of any Pledged Partnership Interests
or Pledged LLC Interests takes any such action in violation of the foregoing in this clause (iv),
such Grantor shall promptly notify the Collateral Agent in writing of any such election or action
and, in such event, shall take all steps necessary or advisable to establish the Collateral Agent’s
“control” thereof.

          (c) In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be
bound by the terms of this Agreement relating to the Pledged Securities issued by it and will
comply with such terms insofar as such terms are applicable to it, (ii) it will notify the
Collateral Agent promptly in writing of the occurrence of any of the events described in Section
4.8(a) with respect to the Pledged Securities issued by it and (iii) the terms of Sections 5.3(c)
and 5.7 shall apply to it, mutatis mutandis, with respect to all actions that may
be required of it pursuant to Section 5.3(c) or 5.7 with respect to the Pledged Securities issued
by it. In addition, each Grantor which is either an Issuer or an owner of any Pledged Security
hereby consents to the grant by each other Grantor of the security interest hereunder in favor of
the Collateral Agent and to the transfer of any Pledged Security to the Collateral Agent or its
nominee following an Event of Default and to the substitution of the Collateral Agent or its
nominee as a partner, member or shareholder of the related Issuer.

          4.9. Accounts. (a) Other than in the ordinary course of business, and consistent with
its current practices and in accordance with prudent and standard practices used in the industry in
which such Grantor is engaged, and so long as no Event of Default shall have occurred and be
continuing, such Grantor will not (i) grant any extension of the time of payment of any Receivable,
(ii) compromise or settle any Receivable for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the payment of any Receivable, (iv) allow any credit or
discount whatsoever on any Receivable or (v) amend, supplement or modify any Receivable in any
manner that could adversely affect the value thereof, in each case, if any such Accounts
individually have a value in excess of $1,000,000.

          (c) Such Grantor will deliver prompt notice to the Collateral Agent a copy of any legal claim
filed against it with respect to the validity or enforceability of more than 5% of the aggregate
amount of the then outstanding Accounts.

          4.10. [Reserved].

          4.11. Intellectual Property. (a) Except where the failure to take such action could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse

 

 

Effect, such Grantor (either itself or through
licensees) will (i) continue to use each material Trademark owned by such Grantor on each and every
trademark class of goods applicable to its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of products and services offered
under such Trademark and take all necessary steps to ensure that all licensed users of such
Trademark maintain as in the past such quality, (iii) use such Trademark with the appropriate
notice of registration and all other notices and legends required by applicable Requirements of
Law, (iv) not adopt or use any mark which is confusingly similar or a colorable imitation of such
Trademark unless the Collateral Agent, for the ratable benefit of the Secured Parties, shall obtain
a perfected security interest in such mark pursuant to this Agreement and the Intellectual Property
Security Agreement and (v) not (and not permit any licensee or sublicensee thereof to) do any act
or knowingly omit to do any act whereby such Trademark may become invalidated or impaired in any
way.

          (b) Such Grantor (either itself or through licensees) will not do any act, or omit to do any
act, whereby any material Patent owned by such Grantor may become forfeited, abandoned or dedicated
to the public, except where such forfeiture, abandonment or dedication could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

          (c) Except where the failure to take such action could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, such Grantor (either itself or through
licensees) (i) will employ each material Copyright owned by such Grantor and (ii) will not (and
will not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any such Copyright may become invalidated or otherwise impaired or placed into the public
domain.

          (d) Such Grantor (either itself or through licensees) will not do any act that infringes,
misappropriates or violates the Intellectual Property rights of any other Person, except, where any
such infringement, misappropriation or violation could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

          (e) Such Grantor (either itself or through licensees) will use proper statutory notice in
connection with the use of each material Patent, Trademark and Copyright owned by such Grantor,
except where the failure to use such notice could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

          (f) Such Grantor will notify the Secured Parties immediately if it knows, or has reason to
know, that any application or registration relating to any Intellectual Property owned by such
Grantor may become forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including, without limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office, the United States
Copyright Office or any court or tribunal in any country) regarding such Grantor’s registration or
ownership of, or the validity or enforceability of, any such
Intellectual Property or such Grantor’s right to register the same or to own and maintain the
same.

 

 

          (g) Whenever such Grantor, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Intellectual Property with the
United States Patent and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, such Grantor shall report all
such filings to the Collateral Agent annually (and, in any event within 90 days after the end of
each fiscal year of the Company). Upon request of the Collateral Agent upon the direction of the
Authorized Representative or Authorized Representatives representing the Required Secured Parties,
such Grantor shall execute and deliver, and have recorded, any and all agreements, instruments,
documents, and papers as the Collateral Agent may so request to evidence the Secured Parties’
security interest in any Copyright, Patent, Trademark or other Intellectual Property and the
goodwill and general intangibles of such Grantor relating thereto or represented thereby.

          (h) Except where the failure to take such action could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, such Grantor will take all reasonable
and necessary steps, including, without limitation, in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, to maintain and pursue each application
(and to obtain the relevant registration) and each registration of material Intellectual Property
owned by such Grantor, including, without limitation, the payment of required fees and taxes, the
filing of responses to office actions issued by the United States Patent and Trademark Office and
the United States Copyright Office, the filing of applications for renewal or extension, the filing
of affidavits of use and affidavits of incontestability, and the participation in interference,
reexamination, opposition, cancellation, infringement and misappropriation proceedings.

          (i) Such Grantor (either itself or through licensees) will not, without the prior written
consent of the Collateral Agent, discontinue use of, cancel, or otherwise abandon any Intellectual
Property owned by such Grantor, or abandon any application or any right to file an application for
any Patent, Trademark, or Copyright, unless such Grantor shall have previously determined that such
use or the maintenance of such Intellectual Property is no longer desirable in the conduct of such
Grantor’s business and that the loss thereof could not reasonably be expected to have a Material
Adverse Effect and, in such case, such Grantor shall give prompt written notice of any such
abandonment to the Collateral Agent in accordance herewith.

          (j) In the event that any material Intellectual Property owned by any Grantor is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take such actions as such
Grantor shall reasonably deem appropriate under the circumstances to protect such Intellectual
Property and (ii) if such Intellectual Property is of material economic value, promptly notify the
Collateral Agent in writing after it learns thereof and, in its reasonable business judgment, sue
for infringement, misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution, except where such
infringement, misappropriation or dilution could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

          (k) Such Grantor agrees that, should it create, develop, or otherwise acquire or obtain an
ownership interest in any item of material Intellectual Property which is not now a part

 

 

of the Collateral (the “After-Acquired Intellectual Property”), (i) the provisions of
Section 2 shall automatically apply thereto, (ii) any such After-Acquired Intellectual Property,
and in the case of Trademarks, the goodwill of the business connected therewith or symbolized
thereby, shall automatically become part of the Collateral, and (iii) it shall provide the
Collateral Agent annually (and, in any event within 90 days after the end of each fiscal year of
the Company) with an amended Schedule 6 (as the same may be amended, restated,
supplemented, replaced or otherwise modified from time to time ) hereto and take the actions
specified in Section 4.11(l).

          (l) Such Grantor agrees to execute short form security agreements with respect to Intellectual
Property owned or held by such Grantor and with respect to any After-Acquired Intellectual Property
in substantially the form of Exhibits B and C hereto in order to record the security interest
granted herein to the Collateral Agent for the ratable benefit of the Secured Parties with the
United States Patent and Trademark Office, the United States Copyright Office, and any other
applicable Governmental Authority.

          (m) Such Grantor shall take all steps reasonably necessary consistent with industry standards
to protect the confidentiality of all Trade Secrets used or held in its business, including,
without limitation, entering into confidentiality agreements with employees and labeling and
restricting access to confidential and proprietary information and documents.

          4.12. Further Covenants.

          (a) Such Grantor shall not use or permit any Collateral to be used unlawfully or in violation
of any provision of this Agreement or any applicable statute, regulation or ordinance or any policy
of insurance covering the Collateral;

          (b) such Grantor shall make payment of (i) all taxes, assessments, license fees, levies and
other charges of Governmental Authorities imposed upon it which if unpaid, would be reasonably
likely to become a Lien on the Collateral that is not a Permitted Lien, and (ii) all claims
(including, without limitation, claims for labor, services, materials and supplies) for sums; and

          (c) upon such Grantor or any officer of such Grantor obtaining knowledge thereof, it shall
promptly notify Collateral Agent in writing of the levy of any legal process against the Collateral
or any portion thereof.

SECTION 5. REMEDIAL PROVISIONS

          5.1.  Certain Matters Relating to Accounts. (a)  [Reserved].

          (b) The Collateral Agent hereby authorizes each Grantor to collect such Grantor’s Accounts and
each Grantor hereby agrees to continue to collect all amounts due or to become due to such Grantor
under the Accounts and any Supporting Obligation and diligently exercise each material right it may
have under any Receivable and any Supporting Obligation, in each case, at its own expense;
provided, however, that the Collateral Agent may curtail or terminate said
authority at any time after the occurrence and during the continuance of an Event of Default. If
required by the Collateral Agent at any time after the occurrence and during the continuance of an
Event of Default, any payments of Accounts, when collected by any Grantor,

 

 

(i) shall be forthwith (and, in any event, within two Business Days) deposited by such Grantor
in the exact form received, duly endorsed by such Grantor to the Collateral Agent if required, in a
Collateral Account maintained under the sole dominion and control of the Collateral Agent, subject
to withdrawal by the Collateral Agent for the account of the Secured Parties only as provided in
Section 5.5, and (ii) until so turned over, shall be held by such Grantor in trust for the Secured
Parties, segregated from other funds of such Grantor. Each such deposit of Proceeds of Accounts
shall be accompanied by a report identifying in reasonable detail the nature and source of the
payments included in the deposit.

          (c) [Reserved].

          5.2. Communications with Obligors; Grantors Remain Liable. (a) The Collateral Agent
in its own name or in the name of others may at any time after the occurrence and during the
continuance of an Event of Default communicate with obligors under any Receivable with a value in
excess of $1,000,000, and parties to the Contracts to verify with them to the Collateral Agent’s
satisfaction the existence, amount and terms of any such Accounts or such Contracts.

          (b) After the occurrence and during the continuance of an Event of Default, the Collateral
Agent may upon written notice to the applicable Grantor, notify, or require any Grantor to notify,
the Account Debtor or counterparty to make all payments under the Accounts and/or Contracts
directly to the Collateral Agent.

          (c) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under
each of the Accounts and Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any agreement giving
rise thereto.

          5.3. Pledged Securities. (a) Unless an Event of Default shall have occurred and be
continuing and the Collateral Agent shall have given notice to the relevant Grantor of the
Collateral Agent’s intent to exercise its corresponding rights pursuant to Section 5.3(b), each
Grantor shall be permitted to receive all cash dividends paid in respect of the Pledged Equity
Interests and all payments made in respect of the Pledged Notes, in each case paid in the normal
course of business of the relevant Issuer and consistent with past practice, to the extent
permitted in the 9.75% Indenture Documents and any Additional Secured Debt Documents,
and to exercise all voting and corporate rights with respect to the Pledged Securities;
provided, however, that no vote shall be cast or corporate or other ownership right
exercised or other action taken which would materially impair the Collateral or which would result
in any violation of any provision of this Agreement, any other 9.75% Indenture Documents or any
Additional Secured Debt Documents.

          (b) If an Event of Default shall occur and be continuing: (i) all rights of each Grantor to
exercise or refrain from exercising the voting and other consensual rights which it would otherwise
be entitled to exercise pursuant hereto shall cease and all such rights shall thereupon become
vested in the Collateral Agent who shall thereupon have the sole right, but shall be under no
obligation, to exercise or refrain from exercising such voting and other consensual rights and (ii)
the Collateral Agent shall have the right, without notice to any Grantor,

 

 

to transfer all or any portion of the Investment Property to its name or the name of its
nominee or agent. In addition, the Collateral Agent shall have the right at any time, without
notice to any Grantor, to exchange any certificates or instruments representing any Investment
Property for certificates or instruments of smaller or larger denominations. In order to permit
the Collateral Agent to exercise the voting and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends and other distributions which it may be
entitled to receive hereunder each Grantor shall promptly execute and deliver (or cause to be
executed and delivered) to the Collateral Agent all proxies, dividend payment orders and other
instruments as the Collateral Agent may from time to time reasonably request and each Grantor
acknowledges that the Collateral Agent may utilize the power of attorney set forth herein.

          (c) Each Grantor hereby authorizes and instructs each Issuer of any Pledged Securities pledged
by such Grantor hereunder to (i) comply with any instruction received by it from the Collateral
Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or further instructions
from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so
complying, and (ii) unless otherwise expressly permitted hereby, if an Event of Default shall have
occurred and be continuing, pay any dividends or other payments with respect to the Pledged
Securities directly to the Collateral Agent.

          5.4. Proceeds to be Turned Over To Collateral Agent. (a) In addition to the rights of
the Secured Parties specified in Section 5.1 with respect to payments of Accounts, if an Event of
Default shall occur and be continuing, all Proceeds received by any Grantor consisting of cash,
Cash Equivalents, checks and other near-cash items shall be held by such Grantor in trust for the
Secured Parties, segregated from other funds of such Grantor, and shall, forthwith upon receipt by
such Grantor, be turned over to the Collateral Agent in the exact form received by such Grantor
(duly endorsed by such Grantor to the Collateral Agent, if required). All Proceeds received by the
Collateral Agent hereunder shall be held by the Collateral Agent in a Collateral Account maintained
under its sole dominion and control. All Proceeds while held by the Collateral Agent in a
Collateral Account (or by such Grantor in trust for the Secured Parties) shall continue to be held
as collateral security for all the Secured Obligations and shall not constitute payment thereof
until applied as provided in Section 5.5.

          (b) If any Event of Default shall occur and be continuing, upon the request of the Collateral
Agent, the Company and any Guarantor shall immediately take all actions necessary or desirable to
enable the Collateral Agent to obtain “control” (within the meaning of the applicable Uniform
Commercial Code) with respect to any Investment Property, Deposit Accounts and any other relevant
Collateral, including without limitation, executing and delivering and causing the relevant
depositary bank or securities intermediary to execute and deliver a control agreement in a form
satisfactory to the Collateral Agent in its sole discretion.

          5.5. Application of Proceeds. If an Event of Default shall have occurred and be
continuing, at any time at the Collateral Agent’s election, the Collateral Agent shall apply all or
any part of the net Proceeds (after deducting fees and expenses as provided in Section 5.6)
constituting Collateral realized through the exercise by the Collateral Agent of its remedies
hereunder, whether or not held in any Collateral Account, and any proceeds of the guarantee set

 

 

forth in the Indenture and any Additional Secured Debt Document, in payment of the Secured
Obligations in such order of application as is required by the Collateral Agency Agreement.

          5.6. Code and Other Remedies. (a) If an Event of Default shall occur and be
continuing, the Collateral Agent may take all such actions and exercise all such rights and
remedies set forth in this clause (a). The Collateral Agent, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to them in this Agreement and in any
other instrument or agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the New York UCC (whether or not the New York UCC
applies to the affected Collateral) or its rights under any other applicable law or in equity.
Without limiting the generality of the foregoing, the Collateral Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other Person (all and each
of which demands, defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith Dispose of or give option or options to purchase and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker’s board or office of any Secured Party or
elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any credit risk. Each
Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby
waived and released. Each purchaser at any such sale shall hold the property sold absolutely free
from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or
may at any time in the future have under any rule of law or statute now existing or hereafter
enacted. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least
ten (10) days notice to such Grantor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification. The Collateral
Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. The Collateral Agent may sell the
Collateral without giving any warranties as to the Collateral. The Collateral Agent may
specifically disclaim or modify any warranties of title or the like. This procedure will not be
considered to adversely effect the commercial reasonableness of any sale of the Collateral. Each
Grantor agrees that it would not be commercially unreasonable for the Collateral Agent to Dispose
of the Collateral or any portion thereof by using Internet sites that provide for the auction of
assets of the types included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets. Each Grantor hereby waives any claims against the
Collateral Agent arising by reason of the fact that the price at which any Collateral may have been
sold at such a private sale was less than the price which might have been obtained at a public
sale, even if the Collateral Agent accepts the first offer received and does not offer such
Collateral to more than one offeree (it being understood and agreed that the Collateral Agent or
any Secured Party may bid at a private sale only if permitted by Section 9-610(c)(2) of the New
York UCC and Grantor reserves the right to object to commercial reasonableness of any

 

 

private sale if buyer at such private sale is the Collateral Agent or a Secured Party). Each
Grantor further agrees, at the Collateral Agent’s request, to assemble the Collateral and make it
available to the Collateral Agent at places which the Collateral Agent shall reasonably select,
whether at such Grantor’s premises or elsewhere. The Collateral Agent shall have the right to
enter onto the property where any Collateral is located and take possession thereof with or without
judicial process.

          (b) The Collateral Agent shall apply the net proceeds of any action taken by it pursuant to
this Section 5.6, after deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the Collateral or in any
way relating to the Collateral or the rights of the Secured Parties hereunder, including, without
limitation, reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the
Secured Obligations as set forth in Section 5.5 and only after such application and after the
payment by the Collateral Agent of any other amount required by any provision of law, including,
without limitation, Section 9-615(a) of the New York UCC, need the Collateral Agent account for the
surplus, if any, to any Grantor. If the Collateral Agent sells any of the Collateral upon credit,
the Grantor will be credited only with payments actually made by purchaser and received by the
Collateral Agent and applied to indebtedness of the purchaser. In the event the purchaser fails to
pay for the Collateral, the Collateral Agent may resell the Collateral and the Grantor shall be
credited with proceeds of the sale. To the extent permitted by applicable law, each Grantor waives
all claims, damages and demands it may acquire against any Secured Party arising out of the
exercise by any of them of any rights hereunder.

          (c) In the event of any Disposition of any of the Intellectual Property, the goodwill of the
business connected with and symbolized by any Trademarks subject to such Disposition shall be
included, and the applicable Grantor shall supply the Collateral Agent or its designee with such
Grantor’s know-how and expertise, and with documents and things embodying the same, relating to the
manufacture, distribution, advertising and sale of products or the provision of services relating
to any Intellectual Property subject to such Disposition, and such Grantor’s customer lists and
other records and documents relating to such Intellectual Property and to the manufacture,
distribution, advertising and sale of such products and services.

          5.7. Registration Rights. (a) If the Collateral Agent shall determine to exercise
its right to sell any or all of the Pledged Equity Interests or the Pledged Debt Securities
pursuant to Section 5.6, and the Required Secured Parties direct the Collateral Agent to have the
Pledged Equity Interests or the Pledged Debt Securities, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the relevant Grantor will cause the Issuer
thereof (if such Issuer is a direct or indirect wholly-owned Subsidiary of the Company or the
Issuer) to (i) execute and deliver, and cause the directors and officers of such Issuer to execute
and deliver, all such instruments and documents, and do or cause to be done all such other acts as
may be necessary to register the Pledged Equity Interests or the Pledged Debt Securities, or that
portion thereof to be sold, under the provisions of the Securities Act, (ii) use its best efforts
to cause the registration statement relating thereto to become effective and to remain effective
for a period of one year from the date of the first public offering of the Pledged Equity Interests
or the Pledged Debt Securities, or that portion thereof to be sold, and (iii) make all amendments
thereto and/or to the related prospectus which are necessary, all in conformity with the
requirements of the Securities Act and the rules and regulations of the SEC applicable thereto.
Each Grantor

 

 

agrees to cause such Issuer to comply with the provisions of the securities or “Blue Sky” laws
of any and all jurisdictions as required by the sale to make available to its security holders, as
soon as practicable, an earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.

          (b) Each Grantor recognizes that the Collateral Agent may be unable to effect a public sale of
any or all the Pledged Equity Interests or the Pledged Debt Securities, by reason of certain
prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and
may be compelled to resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or resale thereof. Each Grantor
acknowledges and agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that
any such private sale shall be deemed to have been made in a commercially reasonable manner. The
Collateral Agent shall be under no obligation to delay a sale of any of the Pledged Equity
Interests or the Pledged Debt Securities for the period of time necessary to permit the Issuer
thereof (is such Issuer is a direct or indirect wholly-owned Subsidiary of the Company or the
Issuer) to register such securities for public sale under the Securities Act, or under applicable
state securities laws, even if such Issuer would agree to do so.

          (c) Each Grantor agrees to use its best efforts to do or cause to be done all such other acts
as may be necessary to make such sale or sales of all or any portion of the Pledged Equity
Interests or the Pledged Debt Securities pursuant to this Section 5.7 valid and binding and in
compliance with any and all other applicable Requirements of Law. Each Grantor further agrees that
a breach of any of the covenants contained in this Section 5.7 will cause irreparable injury to the
Secured Parties, that the Secured Parties have no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this Section 5.7 shall be
specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to
assert any defenses against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred and is continuing under the Indenture or any
Additional Secured Debt Document, as applicable, or a defense of payment.

          5.8. Waiver; Deficiency. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other Disposition of the Collateral are insufficient to pay its Secured
Obligations and the fees and disbursements of any attorneys employed by any Secured Party to
collect such deficiency. Each Grantor hereby expressly waives and covenants not to assert any
appraisement, valuation, extension, redemption or similar laws, now or at any time hereafter in
force, which delay, prevent or otherwise impede the performance or enforcement of this Agreement.

          5.9. FCC Licenses. Notwithstanding anything to the contrary contained in this
Agreement, the 9.75% Indenture Documents, any Additional Secured Debt Document or in any other
agreement, instrument or document executed by any Grantor in connection with the 9.75% Indenture
Documents or any Additional Secured Debt Document, to the extent that any FCC license is included
in the Collateral, the Collateral Agent will not take any action pursuant to any document referred
to above which would constitute or result in any assignment of any FCC license or any change of
control (whether de jure or de facto) of any Grantor or subsidiary of any

 

 

Grantor if such assignment of any FCC license or change of control would require, under then
existing law, the prior approval of the FCC without first obtaining such prior approval of the FCC.
Upon the occurrence and during the continuance of an Event of Default, subject to terms and
conditions of this Agreement, each Grantor agrees to take any action that the Collateral Agent may
reasonably request in order to obtain from the FCC such approval as may be necessary to enable the
Collateral Agent to exercise and enjoy the full rights and benefits granted to the Collateral Agent
by this Agreement and the other documents referred to above, including specifically, at the cost
and expense of each Grantor, the use of its best efforts to assist in obtaining approval of the FCC
for any action or transaction contemplated by this Agreement for which such approval is or shall be
required by law, and specifically, without limitation, upon request, to prepare, sign and file with
the FCC the assignor’s or transferor’s portion of any application or applications for consent to
the assignment of license or transfer of control necessary or appropriate under the FCC’s rules and
regulations for approval of (i) any sale or other disposition of the Collateral by or on behalf of
the Collateral Agent, or (ii) any assumption by the Collateral Agent of voting rights in the
Collateral effected in accordance with the terms of this Agreement. It is understood and agreed
that all foreclosure and related actions will be made in accordance with the Communications Act of
1934, as amended from time to time, and other applicable FCC regulations and published policies and
decisions.

          5.10. Voting.

          (a) The provisions of this Section 5.10 shall apply solely after incurrence of the Additional
Secured Obligations. The provisions of the Indenture shall apply prior to the incurrence of any
such Additional Secured Obligations.

          (b) The Required Secured Parties shall have the right to direct the Collateral Agent,
following the occurrence of an Event of Default which is continuing, to foreclose on, or exercise
its other rights with respect to, the Collateral (or exercise other remedies with respect to the
Collateral). For the purposes of determining the Required Secured Parties and their directions in
accordance with this Section, each Secured Party or its Authorized Representative shall provide to
the Collateral Agent certificates, in form and substance reasonably satisfactory to the Collateral
Agent, setting forth the respective amounts of outstanding principal obligations owing to such
Secured Parties and their direction or vote and the Collateral Agent shall be fully entitled to
rely on such certificates.

          (c) Any action taken or not taken without the vote of any Secured Party or Secured Parties
under this Section 5.10 shall nevertheless be binding on such Secured Party or Secured Parties.

          (d) Except as provided in the succeeding sentence or in Section 6, in the case of an Event of
Default which is continuing, the Collateral Agent will only be permitted, subject to applicable
law, to exercise remedies and sell the Collateral under this Agreement at the direction of the
Required Secured Parties. If the Collateral Agent has asked the Secured Parties for instruction
and the applicable Secured Parties have not yet responded to such request, the Collateral Agent
shall be authorized to take, but shall not be required to take, and shall in no event have any
liability for the taking, any delay in taking or the failure to take, such actions with regard to a
Default or Event of Default which is continuing which the Collateral Agent, in good

 

 

faith, believes to be reasonably required to promote and protect the interests of the Secured
Parties and to preserve the value of the Collateral and shall give the Secured Parties appropriate
notice of such action; provided that once instructions with respect to such request have been
received by the Collateral Agent from the applicable Secured Parties, the actions of the Collateral
Agent shall be governed thereby and the Collateral Agent shall not take any further action which
would be contrary thereto.

SECTION 6. THE COLLATERAL AGENT

          6.1. Collateral Agent’s Appointment as Attorney-in-Fact, etc. (a) Each Grantor
hereby irrevocably constitutes and appoints the Collateral Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of such Grantor or in
its own name, for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Collateral Agent the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do any or all of the following:

          (i) in the name of such Grantor or its own name, or otherwise, take possession of and
endorse and collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Receivable or Contract or with respect to any other
Collateral and file any claim or take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Collateral Agent for the purpose of collecting
any and all such moneys due under any Receivable or Contract or with respect to any other
Collateral whenever payable;

          (ii) in the case of any Intellectual Property, execute and deliver, and have recorded,
any and all agreements, instruments, documents and papers as the Collateral Agent may
request to evidence the Secured Parties’ security interest in such Intellectual Property and
the goodwill and general intangibles of such Grantor relating thereto or represented
thereby;

          (iii) pay or discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or any insurance called for by the terms of this Agreement
and pay all or any part of the premiums therefor and the costs thereof;

          (iv) execute, in connection with any sale provided for in Section 5.6 or 5.7, any
endorsements, assignments or other instruments of conveyance or transfer with respect to the
Collateral; and

          (v) (1) direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due or to become due thereunder directly to the Collateral
Agent or as the Collateral Agent shall direct; (2) ask or demand for, collect, and receive
payment of and receipt for, any and all moneys, claims and other

 

 

amounts due or to become due at any time in respect of or arising out of any
Collateral; (3) sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments, verifications, notices
and other documents in connection with any of the Collateral; (4) commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any portion thereof and to enforce any other right in respect of
any Collateral; (5) defend any suit, action or proceeding brought against such Grantor with
respect to any Collateral; (6) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or releases as the Collateral
Agent may deem appropriate; (7) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark pertains),
throughout the world for such term or terms, on such conditions, and in such manner, as the
Collateral Agent shall in its sole discretion determine; and (8) generally, sell, transfer,
pledge and make any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Collateral Agent were the absolute owner thereof for
all purposes, and do, at the Collateral Agent’s option and such Grantor’s expense, at any
time, or from time to time, all acts and things which the Collateral Agent deems necessary
to protect, preserve or realize upon the Collateral and the Secured Parties’ security
interests therein and to effect the intent of this Agreement, all as fully and effectively
as such Grantor might do.

          Anything in this Section 6.1(a) to the contrary notwithstanding, the Collateral Agent agrees
that, except as provided in Section 6.1(b), it will not exercise any rights under the power of
attorney provided for in this Section 6.1(a) unless an Event of Default shall have occurred and be
continuing.

          (b) If any Grantor fails to perform or comply with any of its agreements contained herein, the
Collateral Agent, at its option, but without any obligation so to do, may perform or comply, or
otherwise cause performance or compliance, with such agreement; provided, however,
that unless an Event of Default has occurred and is continuing or time is of the essence, the
Collateral Agent shall not exercise this power without first making demand on the Grantor and the
Grantor failing to promptly comply therewith. Notwithstanding the foregoing, the Collateral Agent
may not take any of the actions set forth in Sections 5.2(a) and (b) except in compliance with
those sections.

          (c) The expenses of the Collateral Agent incurred in connection with actions undertaken as
provided in this Section 6.1, together with interest, from the date of payment by the Collateral
Agent to the date reimbursed by the relevant Grantor, shall promptly be paid by such Grantor to the
Collateral Agent.

          (d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done
by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and the security interests
created hereby are released.

          6.2. Duty of Collateral Agent. The Collateral Agent’s sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its possession, under

 

 

Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as
the Collateral Agent deals with similar property for its own account. Neither the Collateral
Agent, nor any other Secured Party nor any of their respective officers, directors, partners,
employees, agents, attorneys and other advisors, attorneys-in-fact or affiliates shall be liable
for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so
or shall be under any obligation to sell or otherwise Dispose of any Collateral upon the request of
any Grantor or any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Secured Parties hereunder are solely
to protect the Secured Parties’ interests in the Collateral and shall not impose any duty upon any
Secured Party to exercise any such powers (it being understood and agreed that the Secured Parties
will have the obligations of a secured party under the New York UCC). The Secured Parties shall be
accountable only for amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, partners, employees, agents, attorneys and
other advisors, attorneys-in-fact or affiliates shall be responsible to any Grantor for any act or
failure to act hereunder, except to the extent that any such act or failure to act is found by a
final and nonappealable decision of a court of competent jurisdiction to have resulted solely and
proximately from their own gross negligence or willful misconduct in breach of a duty owed to such
Grantor.

          6.3. No Duty of the Collateral Agent. The powers conferred on the Collateral Agent hereunder are solely to protect the interests of Collateral Agent for the ratable benefit of
the Secured Parties in the Collateral and shall not impose any duty upon Collateral Agent to exercise any such powers. The Collateral Agent shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to
act hereunder, except for their own gross negligence or willful misconduct. No provision of this Agreement shall require the Collateral Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

          6.4. Execution of Financing Statements. Each Grantor acknowledges that pursuant to Section 9-509(b) of the New York UCC and any other applicable law,
each Grantor authorizes the Collateral Agent to file or record financing or continuation statements, and amendments thereto, and other filing or recording documents or instruments with respect to
the Collateral in such form and in such offices as the Collateral Agent reasonably determines appropriate to perfect or maintain the perfection of the security interests of the Collateral Agent under this
Agreement. Each Grantor agrees that such financing statements may describe the collateral in the same manner as described in the Security Documents or as “all assets” or “all personal property”
of the undersigned, whether now owned or hereafter existing or acquired by the undersigned or such other description as the Collateral Agent, in its sole judgment, determines is necessary or
advisable; provided that such financing statements shall exclude any FCC licenses. A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other
filing or recording document or instrument for filing or recording in any jurisdiction. Notwithstanding any provision herein to the contrary, the Collateral Agent may, but shall be under no obligation to
(except at the direction of the Authorized Representative or Authorized Representatives representing the Required Secured Parties), file or record

 

 

financing or continuation statements, or amendments thereto, or any other filing or
recording document or instrument with respect to the Collateral to perfect or maintain the
perfection of the security interests in the Collateral granted under this Agreement.

          6.5. Authority of Collateral Agent. Each Grantor acknowledges that the rights and
responsibilities of the Collateral Agent under this Agreement with respect to any action taken by
the Collateral Agent or the exercise or non-exercise by the Collateral Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or resulting or arising out
of this Agreement shall, as between the Collateral Agent and the other Secured Parties, be governed
by the Collateral Agency Agreement and by such other agreements with respect thereto as may exist
from time to time among them, but, as between the Collateral Agent and the Grantors, the Collateral
Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and
valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.

          6.6. Appointment of Co-Collateral Agents. At any time or from time to time, in order to
comply with any Requirement of Law, the Collateral Agent may appoint another bank or trust company
or one of more other persons, either to act as co-agent or, with the consent of the Company, as
agents on behalf of the Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and which may be specified in the instrument of
appointment (which may, in the discretion of the Collateral Agent, include provisions for
indemnification and similar protections of such co-agent or separate agent).

SECTION 7. MISCELLANEOUS

          7.1. Amendments in Writing. None of the terms or provisions of this Agreement may be
waived, amended, supplemented or otherwise modified except by a written instrument executed by each
affected Grantor, the Collateral Agent and the Required Secured Parties in accordance with the
Collateral Agency Agreement and (ii) the Company may amend any Schedule referred to herein after
the date hereof to reflect any change in facts after the date hereof if necessary in connection
with the making of any representation set forth herein, provided the Company delivers such
revised Schedule to the Collateral Agent and any applicable Authorized Representative promptly
following such revision.

          7.2. Notices. All notices, requests and demands to or upon the Collateral Agent or any
Grantor hereunder shall be effected in the manner provided for in Section 12.01 of the Indenture;
provided that any such notice, request or demand to or upon any Grantor shall be addressed
to such Grantor at its notice address set forth on Schedule 1 (as the same may be amended,
restated, supplemented, replaced or otherwise modified from time to time).

          7.3. No Waiver by Course of Conduct; Cumulative Remedies. No Secured Party shall by any
act (except by a written instrument pursuant to Section 7.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of
any Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right,

 

 

power or privilege. A waiver by any Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which such Secured Party would otherwise have on any future occasion. The
rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by law.

          7.4. Enforcement Expenses; Indemnification. (a) Each Grantor agrees to pay or reimburse
each Secured Party for all its costs and expenses incurred in collecting against such Grantor under
the guarantee pursuant to the Indenture or otherwise enforcing or preserving any rights under this
Agreement and the other 9.75% Indenture Documents to which such Grantor is a party, including,
without limitation, the fees and disbursements of counsel to each Secured Party.

          (b) Each Grantor agrees to pay, and to save the Secured Parties harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise,
sales or other taxes which may be payable or determined to be payable with respect to any of the
Collateral or in connection with any of the transactions contemplated by this Agreement.

          (c) Each Grantor agrees to pay, and to save the Secured Parties harmless from, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the Company would be
required to do so pursuant to Section 7.07 of the Indenture.

          (d) The agreements in this Section shall survive repayment of the Secured Obligations and all
other amounts payable under the Indenture and the other 9.75% Indenture Documents.

          (e) Each Grantor agrees that the provisions of Section 7.07 of the Indenture are hereby
incorporated herein by reference, mutatis mutandis, and each Secured Party shall be
entitled to rely on each of them as if they were fully set forth herein.

          7.5. Successors and Assigns. This Agreement shall be binding upon the successors and
assigns of each Grantor and shall inure to the benefit of the Secured Parties and their successors
and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the Collateral Agent and any
such assignment, transfer or delegation without such consent shall be null and void.

          7.6. Set-Off. Subject to the requirements of the Collateral Agency Agreement, each Grantor
hereby irrevocably authorizes each Secured Party at any time and from time to time while an Event
of Default shall have occurred and be continuing, without notice to such Grantor or any other
Grantor, any such notice being expressly waived by each Grantor, to set-off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time held or

 

 

owing by such Secured Party to or for the credit or the account of such Grantor, or any part thereof in such
amounts as such Secured Party may elect, against and on account of the obligations and liabilities
of such Grantor to such Secured Party hereunder and claims of every nature and description of such
Secured Party against such Grantor, in any currency, whether arising hereunder, under the
Indenture, any other 9.75% Indenture Document, any Additional Debt Document or otherwise, as such
Secured Party may elect, whether or not any Secured Party has made any demand for payment and
although such obligations, liabilities and claims may be contingent or unmatured. Each Secured
Party shall notify such Grantor promptly of any such set-off and the application made by such
Secured Party of the proceeds thereof; provided that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of each Secured Party under
this Section are in addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Secured Party may have.

          7.7. Counterparts. This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by telecopy), and all of said
counterparts taken together shall be deemed to constitute one and the same instrument.

          7.8. Severability. Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.

          7.9. Section Headings. The Section headings used in this Agreement are for convenience of
reference only and are not to affect the construction hereof or be taken into consideration in the
interpretation hereof.

          7.10. Integration. This Agreement and the other Collateral Documents represent the agreement of the Grantors, the
Collateral Agent and the other Secured Parties with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or warranties by any Secured
Party relative to subject matter hereof and thereof not expressly set forth or referred to herein
or in the other Collateral Documents.

          7.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

          7.12. Submission to Jurisdiction; Waivers. Each Grantor hereby irrevocably and
unconditionally:

     (a) submits for itself and its property in any legal action or proceeding relating to
this Agreement and the other Collateral Documents to which it is a party, or for recognition
and enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from any thereof;

 

 

     (b) consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;

     (c) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to such Grantor at its address referred to in Section 7.2 or at such
other address of which the Collateral Agent shall have been notified pursuant thereto;

     (d) agrees that nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to sue in any other jurisdiction;
and

     (e) waives, to the maximum extent not prohibited by law, any right it may have to claim
or recover in any legal action or proceeding referred to in this Section any special,
exemplary, punitive or consequential damages.

          7.13. Acknowledgments. Each Grantor hereby acknowledges that:

          (a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Collateral Documents to which it is a party;

          (b) no Secured Party has any fiduciary relationship with or duty to any Grantor arising out of
or in connection with this Agreement or any of the other Collateral Documents, and the relationship
between the Grantors, on the one hand, and the Secured Parties, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and

          (c) no joint venture is created hereby or by the other Collateral Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Secured Parties or among the
Grantors and the Secured Parties.

          7.14. Additional Grantors. Each Subsidiary of the Company that is required to become a
party to this Agreement pursuant to Section 10.06 of the Indenture or any similar provisions of any
Additional Debt Document shall become a Grantor for all purposes of this Agreement upon execution
and delivery by such Subsidiary of an Assumption and Joinder Agreement in the form of Exhibit D
hereto.

          7.15. Additional Secured Obligations. On or after the date hereof and from time to
time, upon the compliance by any Additional Secured Debtholder with the terms of Section 6.18 of
the Collateral Agency Agreement, the Additional Secured Obligations of such Additional Secured
Debtholder shall be deemed to be Additional Secured Obligations hereunder. Each Authorized
Representative agrees that upon the satisfaction of the provisions of such Section 6.18 of the
Collateral Agency Agreement, the Collateral Agent shall act as agent under and subject to the terms
of this Agreement and the Collateral Agency Agreement for the benefit of all Secured Parties,
including any Additional Secured Debtholders that hold any such Additional Secured Obligations, and
each Authorized Representative agrees to the appointment, and

 

 

acceptance of the appointment, of the Collateral Agent as agent for the holders of such Additional Secured Obligations as set forth in
the Additional Secured Debt Notice and Joinder Agreement, and the Authorized Representative
providing such Additional Secured Debt Notice and Joinder Agreement shall, on behalf of itself and
each Additional Secured Debtholder it represents, be bound by this Agreement. For purposes of this
Agreement, all Obligations arising under or in connection with the Notes (including Additional
Notes) constitute Note Obligations rather than Additional Secured Obligations; however upon the
issuance of Additional Notes, the Company shall deliver to the Collateral Agent a certificate
signed by the chief financial officer of the Company setting forth the particulars of the
Additional Notes including the aggregate principal amount or face amount thereof and certifying
that such issuance of Additional Notes complies with the terms of the Indenture.

          7.16. [Reserved].

          7.17. Releases. (a) At such time as the Secured Obligations shall have been paid in full, the commitments (if
any) have been terminated or expired and no letters of credit shall be outstanding (or shall have
been cash collateralized in an amount equal to 100% of the aggregate face amount plus any accrued
and unpaid interest and fees that are expected to be payable until the expiration thereof on a
first priority secured basis), the Collateral shall be automatically released from the Liens
created hereby, and this Agreement and all obligations (other than those expressly stated to
survive such termination) of the Collateral Agent and each Grantor hereunder shall terminate, all
without delivery of any instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Grantors. At the request and sole expense of any Grantor following
any such termination, the Collateral Agent shall deliver to such Grantor any Collateral held by the
Collateral Agent hereunder, and execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such termination.

          (b) If any of the Collateral shall be Disposed of by any Grantor in a transaction permitted by
the Indenture and each Additional Secured Debt Document (other than a transaction in which all or
substantially all of the Collateral is Disposed of, even if so permitted by the Indenture and each
such Additional Secured Debt Document), the Liens created hereby on such Collateral shall be
automatically released. At the request and sole expense of the Company, a Subsidiary Grantor shall
be released from its obligations hereunder in the event that all the Equity Interests of such
Subsidiary Grantor shall be Disposed of in a transaction permitted by the Indenture and each
Additional Secured Debt Document.

          (c) Each Grantor acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement originally filed in
connection herewith without the prior written consent of the Collateral Agent subject to such
Grantor’s rights under Section 9-509(d)(2) of the New York UCC.

          7.18. Effects of Certain Errors or Omissions. Notwithstanding anything to the contrary
contained herein, the Company, the Guarantors, the applicable Authorized Representatives and the
Collateral Agent may amend this Agreement without the consent of any Secured Party to cure any
ambiguity, omission, defect or inconsistency or to make any change

 

 

that does not adversely affect the rights of any Secured Party and such amendment shall
become effective without any further action or consent of the Required Secured Parties.

          7.19. Existing Obligations. Any provision contained herein to the contrary
notwithstanding, this Agreement is not intended to and shall not serve to effect a novation of the
obligations under the Existing Collateral Documents (the “Existing Obligations”), but
instead constitutes an amendment and restatement of all obligations, liabilities, terms, conditions
and provisions of the Existing Collateral Documents in respect of the Existing Obligations. It is
the express intention of the parties hereto to reaffirm the obligations and liabilities created
under the Existing Collateral Documents in respect of the Existing Obligations, which continue as
Obligations hereunder in whole or in part (and without the discontinuance of any Lien granted
pursuant to the Existing Collateral Documents, which Liens continue uninterrupted under the
Collateral Documents as defined herein).

          7.20. WAIVER OF JURY TRIAL. EACH GRANTOR AND THE COLLATERAL AGENT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

[Signature pages follow]

 

 

          IN WITNESS WHEREOF, each of the undersigned has caused this Collateral Agreement to be duly
executed and delivered as of the date first above written.

	 	 	 	 	 
	 	SIRIUS XM RADIO INC.

 	 
	 	By:  	/s/ Patrick L. Donnelly
 	 
	 	 	Name:  	Patrick L. Donnelly 	 
	 	 	Title:  	Executive Vice President, 
General
Counsel and Secretary 	 
	 
	 	XM EQUIPMENT LEASING LLC

 	 
	 	By:  	/s/ Patrick L. Donnelly
 	 
	 	 	Name:  	Patrick L. Donnelly 	 
	 	 	Title:  	Secretary 	 
	 
	 	XM RADIO INC.

 	 
	 	By:  	/s/ Patrick L. Donnelly
 	 
	 	 	Name:  	Patrick L. Donnelly 	 
	 	 	Title:  	Secretary 	 
	 
	 	XM EMALL INC.

 	 
	 	By:  	/s/ Patrick L. Donnelly
 	 
	 	 	Name:  	Patrick L. Donnelly 	 
	 	 	Title:  	Secretary 	 
	 
	 	XM INNOVATIONS INC.

 	 
	 	By:  	/s/ Patrick L. Donnelly
 	 
	 	 	Name:  	Patrick L. Donnelly 	 
	 	 	Title:  	Secretary 	 
	 

 

 

	 	 	 	 	 
	 	XM CAPITAL RESOURCES INC.

 	 
	 	By:  	/s/ Patrick L. Donnelly
 	 
	 	 	Name:  	Patrick L. Donnelly 	 
	 	 	Title:  	Secretary 	 
	 
	 	EFFANEL MUSIC, INC.

 	 
	 	By:  	/s/ Patrick L. Donnelly
 	 
	 	 	Name:  	Patrick L. Donnelly 	 
	 	 	Title:  	Secretary 	 
	 
	 	XM 1500 ECKINGTON LLC

 	 
	 	By:  	/s/ Patrick L. Donnelly
 	 
	 	 	Name:  	Patrick L. Donnelly 	 
	 	 	Title:  	Secretary 	 
	 
	 	XM INVESTMENT LLC

 	 
	 	By:  	/s/ Patrick L. Donnelly
 	 
	 	 	Name:  	Patrick L. Donnelly 	 
	 	 	Title:  	Secretary 	 
	 
	 	SATELLITE CD RADIO, INC.

 	 
	 	By:  	/s/ Patrick L. Donnelly
 	 
	 	 	Name:  	Patrick L. Donnelly 	 
	 	 	Title:  	Secretary 	 
	 

 

 

	 	 	 	 	 
	 	SIRIUS ASSET MANAGEMENT COMPANY LLC

 	 
	 	By:  	/s/ Patrick L. Donnelly
 	 
	 	 	Name:  	Patrick L. Donnelly 	 
	 	 	Title:  	Secretary 	 
	 

 

 

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION,

as Collateral Agent

 	 
	 	By:  	/s/ Thomas E. Tabor
 	 
	 	 	Name:  	Thomas E. Tabor 	 
	 	 	Title:  	Vice Presidentexv4w2

Exhibit
4.2

THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK ISSUABLE
HEREUNDER, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT UNLESS EITHER (I) THE ISSUER HAS RECEIVED AN OPINION OF
COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (II) THE SALE OF SUCH
SECURITIES IS MADE PURSUANT TO RULE 144 PROMULGATED PURSUANT TO THE SECURITIES ACT.

WARRANT TO PURCHASE COMMON STOCK

OF

IMPERIAL HOLDINGS, INC.

	 	 	 

	No. W-         

	 	                     , 2011

               THIS CERTIFIES THAT, the undersigned, or his permitted registered assigns, is entitled,
subject to the terms and conditions of this Warrant (as defined below), at any time or from time to
time after the issuance date of this Warrant (the “Effective Date”), and before 5:00 p.m. Eastern
Time on the seventh anniversary of the Effective Date (the “Expiration Date”), to purchase from
IMPERIAL HOLDINGS, INC., a Florida corporation (the “Company”), the vested portion of the Shares
(as defined below) at a per-share price equal to the Purchase Price (as defined below). Both the
number of shares of Common Stock (as defined below) purchasable upon exercise of this Warrant and
the Purchase Price are subject to adjustment and change as provided herein.

1. CERTAIN DEFINITIONS. As used in this Warrant the following terms shall have the following
respective meanings:

 

 

     a. “Common Stock” shall mean the common stock of the Company.

     b. “Company’s IPO” means the Company’s initial public offering of its Common Stock
pursuant to an effective registration statement filed in compliance with the Securities Act
of 1933, as amended.

     c. “Holder” shall mean any holder in whose name this Warrant is registered upon the
books and records maintained by the Company.

     d. “IPO Price Per Share” shall mean the actual price per share which shares of Common
Stock of the Company are sold in the Company’s IPO.

     e. “Market Price” of a share of Common Stock shall mean the closing price per share of
Common Stock on the principal market on which shares of the Common Stock are traded for the
five (5) trading days immediately preceding the date of the determination of the Market
Price. If shares of Common Stock are not traded on any public market (e.g. NYSE, AMEX,
NASDAQ, OTCBB or Pink Sheets), the Market Price of the Common Stock shall be determined, in
good faith, by the Board of Directors of the Company.

     f. “Purchase Price” shall mean a per share price equal to the ________________.

     g. “Shares” shall mean ________________ shares of the Company’s Common Stock.

     h. “Warrant” as used herein shall include this warrant and any warrant delivered in
substitution or exchange therefor as provided herein.

2

 

	2.	 	EXERCISE OF WARRANT.

     a. Payment. Subject to compliance with the terms and conditions of this
Warrant, including, without limitation, the vesting schedule set forth in Section 2(d) and
applicable securities laws, this Warrant may be exercised, in whole or in part at any time
or from time to time, on or before the Expiration Date by the delivery (including, without
limitation, delivery by facsimile) of the form of notice of exercise attached hereto as
Exhibit A (the “Notice of Exercise”), duly executed by the Holder, at the principal office
of the Company, and as soon as practicable after such date, surrendering:

     i. this Warrant at the principal office of the Company, and

     ii. payment in cash (by check) or by wire transfer of an amount equal to the
product obtained by multiplying the number of shares of Common Stock being purchased
upon such exercise by the then effective Purchase Price (the “Exercise Amount”).

In addition, the Warrant may be exercised pursuant to a cashless exercise by providing
irrevocable instructions to the Company, through delivery of the Notice of Exercise and this
Warrant to the principal office of the Company with an appropriate reference to this Section
2(a) to issue the number of shares of Common Stock equal to the product of (a) the number of
shares as to which the Warrant is being exercised, multiplied by (b) a fraction, the
numerator of which is the Market Price of a share of the Common Stock on the last business
day preceding the Exercise Date less the Exercise Price therefor and the denominator of
which is such Market Price. For purposes hereof, “Exercise Date” shall

3

 

mean the date on which all deliveries required to be made to the Company upon exercise of
the Warrant shall have been made.

     b. Stock Certificates; Fractional Shares. As soon as practicable on or after
the date of any exercise of this Warrant, the Company shall issue and deliver to the person
or persons entitled to receive the same a certificate or certificates for the number of
whole shares of Common Stock issuable upon such exercise, together with cash in lieu of any
fraction of a share equal to such fraction of the current fair market value of one whole
share of Common Stock as of such date of exercise as determined by the Company. No
fractional shares or scrip representing fractional shares shall be issued upon an exercise
of this Warrant.

     c. Partial Exercise; Effective Date of Exercise. Upon every partial exercise
of this Warrant, the Company shall cancel this Warrant upon surrender hereof and shall
execute and deliver a new Warrant of like tenor and date for the balance of the shares of
Common Stock purchasable hereunder. This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of delivery of a Notice of Exercise
(provided that surrender of this Warrant and payment of the Exercise Amount occur as
provided above). The person entitled to receive the shares of Common Stock issuable upon
exercise of this Warrant shall be treated for all purposes as the holder of record of such shares as of the close of business on the date the Holder is deemed to have exercised this
Warrant.

     d. Vesting and Exercisability. This Warrant shall only be exercisable, in
whole or in part, according to the following vesting schedule.

A
portion of the warrant equal to 25% of the shares shall vest on the
day after each anniversary of the initial closing of the
Company’s IPO.

3. VALID ISSUANCE; TAXES.

     
          All shares of Common Stock issued upon the exercise of this Warrant shall be validly issued,
fully paid and non-assessable, and the Company shall pay all taxes and other governmental charges
that may be imposed in respect of the issue or delivery thereof. The

4

 

Company shall not be required to pay any tax or other charge imposed in connection with any
transfer involved in the issuance of any certificate for shares of Common Stock in any name other
than that of the Holder of this Warrant, and in such case the Company shall not be required to
issue or deliver any stock certificate or security until such tax or other charge has been paid, or
it has been established to the Company’s reasonable satisfaction that no tax or other charge is
due.

4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.

               The number of shares of Common Stock issuable upon exercise of this Warrant (or any shares of
stock or other securities or property receivable or issuable upon exercise of this Warrant) and the
Purchase Price are subject to adjustment upon occurrence of the following events but no single
event can cause more than one adjustment to be made:

          a. Adjustment for Stock Splits, Stock Subdivisions or Combinations of Shares.
The Purchase Price of this Warrant shall be proportionally decreased and the number of
 shares of Common Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities at the time issuable upon exercise of this Warrant) shall be
proportionally increased to reflect any stock split or subdivision of shares of Common
Stock. The Purchase Price of this Warrant shall be proportionally increased and the number
of shares of Common Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities at the time issuable upon exercise of this Warrant) shall be
proportionally decreased to reflect any combination or reverse split of shares of Common
Stock.

          b. Adjustment for Dividends or Distributions of Stock or Other Securities or
Property. In case the Company shall make or issue, or shall fix a record date for the
determination of eligible holders entitled to receive, a dividend or other distribution
with respect to Common Stock (or any shares of stock or other securities at the time
issuable upon exercise of this Warrant) payable in (a) securities of the Company or (b)
assets (excluding cash dividends), then, in each such case, the Holder on exercise of this
Warrant at any time after the consummation, effective date or record date of such dividend
or other distribution, shall receive, in addition to the shares of Common Stock (or such
other stock or securities) issuable on such exercise prior to such date, and without the
payment of additional consideration therefor, the securities or such other assets of the
Company to which the Holder would have been entitled upon such date if the Holder had
exercised this Warrant on the date thereof and had thereafter, during the period from the
Effective Date to and including the date of such exercise, retained such shares and all
such additional securities or other assets distributed with respect to such shares as
aforesaid during such period giving effect to all adjustments called for by this Section 4.

          c. Reclassification. If the Company, by reclassification of securities or
otherwise, shall change any of the securities as to which purchase rights under this
Warrant exist into the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire such number and kind
of securities as would have been issuable as the result of such change with respect to the

5

 

securities that were subject to the purchase rights under this Warrant immediately
prior to such reclassification or other change, and the Purchase Price therefor shall be
appropriately adjusted, all subject to further adjustment as provided in this Section 4.

          d. Adjustment for Capital Reorganization, Merger or Consolidation. In case of
any capital reorganization of the capital stock of the Company (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for herein), or any
merger or consolidation of the Company with or into another corporation, or the sale of all
or substantially all the assets of the Company (any such transaction a “Sale of the
Company”) then, and in each such case, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so that the Holder shall
thereafter be entitled to receive upon exercise of this Warrant, during the period
specified herein and upon payment of the Exercise Amount then in effect, the number of
 shares of stock or other securities or property of the successor corporation resulting from
such reorganization, merger, consolidation, sale or transfer that a holder of the shares
deliverable upon exercise of this Warrant would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Warrant had been exercised
immediately before such reorganization, merger, consolidation, sale or transfer, all
subject to further adjustment as provided in this Section 4. The foregoing provisions of
this Section 4(d) shall similarly apply to successive reorganizations, consolidations,
mergers, sales and transfers and to the stock or securities of any other corporation that
are at the time receivable upon the exercise of this Warrant. If the per-share
consideration payable to the Holder hereof for shares in connection with any such
transaction is in a form other than cash or marketable securities, then the value of such
consideration shall be determined in good faith by the Company’s Board of Directors. In all
events, appropriate adjustment (as determined in good faith by the Company’s Board of
Directors) shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the transaction, to the end that the
provisions of this Warrant shall be applicable after that event, as near as reasonably may
be, in relation to any shares or other property deliverable after that event upon exercise
of this Warrant.

5. CERTIFICATE AS TO ADJUSTMENTS.

               In each case of any adjustment in the Purchase Price, or number or type of shares issuable
upon exercise of this Warrant, the Chief Financial Officer of the Company shall compute such
adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth
such adjustment and showing in detail the facts upon which such adjustment is based, including a
statement of the adjusted Purchase Price. The Company shall promptly send (by facsimile and by
either first class mail, postage prepaid or overnight delivery) a copy of each such certificate to
the Holder.

6. LOSS OR MUTILATION.

               Upon receipt of evidence reasonably satisfactory to the Company of the ownership of and the
loss, theft, destruction or mutilation of this Warrant, and of indemnity reasonably satisfactory to
the Company, and (in the case of mutilation) upon surrender and

6

 

cancellation of this Warrant, the Company will execute and deliver in lieu thereof a new
Warrant of like tenor as the lost, stolen, destroyed or mutilated Warrant.

7. RESERVATION OF COMMON STOCK.

               The Company hereby covenants that at all times there shall be reserved for issuance and
delivery upon exercise of this Warrant such number of shares of Common Stock or other shares of
capital stock of the Company as are from time to time issuable upon exercise of this Warrant and,
from time to time, will take all steps necessary to amend its Articles of Incorporation to provide
sufficient reserves of shares of Common Stock issuable upon exercise of this Warrant. All such
shares shall be duly authorized, and when issued upon such exercise, shall be validly issued, fully
paid and non-assessable, free and clear of all liens, security interests, charges and other
encumbrances or restrictions on sale and free and clear of all preemptive rights, except
encumbrances or restrictions arising under federal or state securities laws. Issuance of this
Warrant shall constitute full authority to the Company’s officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for shares of Common
Stock upon the exercise of this Warrant.

8. TRANSFER AND EXCHANGE.

               Subject to the terms and conditions of this Warrant and compliance with all applicable
securities laws, this Warrant and all rights hereunder may be transferred to any Holder’s parent,
subsidiary or affiliate, or, if the Holder is a partnership, to any partner of such Holder, in
whole or in part, on the books of the Company maintained for such purpose at the principal office
of the Company, by the Holder hereof in person, or by duly authorized attorney, upon surrender of
this Warrant properly endorsed and upon payment of any necessary transfer tax or other governmental
charge imposed upon such transfer. Upon any permitted partial transfer, the Company will issue and
deliver to the Holder a new Warrant or Warrants with respect to the shares of Common Stock not so
transferred. Each taker and holder of this Warrant, by taking or holding the same, consents and
agrees that, when this Warrant shall have been so endorsed, the person in possession of this
Warrant may be treated by the Company, and all other persons dealing with this Warrant, as the
absolute owner hereof for any purpose and as the person entitled to exercise the rights represented
hereby, any notice to the contrary notwithstanding; provided, however, that, until a transfer of
this Warrant is duly registered on the books of the Company, the Company may treat the Holder
hereof as the owner for all purposes.

9. RESTRICTIONS ON TRANSFER.

               The Holder, by acceptance hereof, agrees that, absent an effective registration statement
filed with the Securities and Exchange Commission (the “SEC”) under the Securities Act, covering
the disposition or sale of this Warrant or shares of Common Stock issued or issuable upon exercise
hereof, as the case may be, and registration or qualification under applicable state securities
laws, the Holder will not sell, transfer, pledge, or hypothecate any or all of this Warrant or such
shares of Common Stock, as the case may be, unless either (i) the Company has received an opinion
of counsel, in form and substance reasonably satisfactory to the Company, to the effect that such
registration is not required in connection with such disposition, accompanied by such counsel’s
opinion that such transfer will be in accordance with

7

 

applicable state securities laws or (ii) the sale of such securities is made pursuant to Rule
144 promulgated by the SEC pursuant to the Securities Act (“Rule 144”).

10. COMPLIANCE WITH SECURITIES LAWS.

               By acceptance of this Warrant, the Holder hereby represents, warrants and covenants that any
shares of stock purchased upon exercise of this Warrant shall be acquired for investment only and
not with a view to, or for sale in connection with, any distribution thereof; that the Holder has
had such opportunity as the Holder has deemed adequate to obtain from representatives of the
Company such information as is necessary to permit the Holder to evaluate the merits and risks of
its investment in the Company; that the Holder is able to bear the economic risk of holding such
shares as may be acquired pursuant to the exercise of this Warrant for an indefinite period; that
the Holder understands that the shares of stock acquired pursuant to the exercise of this Warrant
will not be registered under the Securities Act (unless otherwise required pursuant to exercise by
the Holder of the registration rights, if any, granted to the Holder) and will be “restricted
securities” within the meaning of Rule 144 and that the exemption from registration under Rule 144
may not be available for at least six (6) months from the date of exercise of this Warrant, and
even then will not be available unless a public market then exists for the stock, adequate
information concerning the Company is then available to the public, and other terms and conditions
of Rule 144 are complied with; and that all stock certificates representing shares of stock issued
to the Holder upon exercise of this Warrant or upon conversion of such shares may have affixed
thereto a legend substantially in the following form:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER
THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.

11. NO RIGHTS OR LIABILITIES AS SHAREHOLDERS.

               This Warrant shall not entitle the Holder to any voting rights or other rights as a
shareholder of the Company. In the absence of affirmative action by the Holder to purchase

8

 

Common Stock by exercise of this Warrant or Common Stock upon conversion thereof, no
provisions of this Warrant, and no enumeration herein of the rights or privileges of the Holder
hereof shall cause any holder of this Warrant to be a shareholder of the Company for any purpose.

12. NOTICES.

               Except as may be otherwise provided herein, all notices, requests, waivers and other
communications made pursuant to this Warrant shall be in writing and shall be conclusively deemed
to have been duly given (a) when hand-delivered to the other party; (b) when received when sent by
facsimile at the address and number set forth below; (c) three business days after deposit in the
U.S. mail with first class or certified mail receipt requested postage prepaid and addressed to the
other party as set forth below; or (d) the next business day after deposit with a national
overnight delivery service, postage prepaid, addressed to the parties as set forth below with
next-business-day delivery guaranteed, provided that the sending party receives a confirmation of
delivery from the delivery service provider.

	 	 	 	 	 

	 

	 	To Holder:	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	To Company:	 	 
	 
	 	 	 	 
	 

	 	Imperial Holdings, Inc.	 	 
	 

	 	701 Park of Commerce Boulevard — Suite 301	 	 
	 

	 	Boca Raton, Florida 33487	 	 
	 

	 	Facsimile: 561-995-4389	 	 
	 

	 	Attn: Andrew S. Hillman — General Counsel	 	 

Each person making a communication hereunder by facsimile shall promptly confirm by telephone to
the person to whom such communication was addressed each communication made by it by facsimile
pursuant hereto but the absence of such confirmation shall not affect the validity of any such
communication. A party may change or supplement the addresses given above, or designate additional
addresses, for purposes of this Section 13 by giving the other party written notice of the new
address in the manner set forth above.

13. HEADINGS.

               The headings in this Warrant are for purposes of convenience in reference only, and shall not
be deemed to constitute a part hereof.

9

 

14. GOVERNING LAW.

               This Warrant shall be governed by and construed in accordance with the internal laws of the
State of Florida, without regard to conflicts of law principles. With respect to any matters that
may be heard before a court of competent jurisdiction, the Holder and the Company consent to the
jurisdiction and venue of the state and federal courts located in Palm Beach County, Florida.

15. NO IMPAIRMENT.

               The Company will not, by amendment of its Certificate of Incorporation or bylaws, or through
reorganization, consolidation, merger, dissolution, issue or sale of securities, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder of this Warrant against impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any shares of stock issuable upon the
exercise of this Warrant above the amount payable therefor upon such exercise, and (b) will take
all such action as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable shares of Common Stock upon exercise of this Warrant.

16. SEVERABILITY.

               If any term, provision, covenant or restriction of this Warrant is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Warrant shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.

17. COUNTERPARTS.

               For the convenience of the parties, any number of counterparts of this Warrant may be executed
by the parties hereto and each such executed counterpart shall be, and shall be deemed to be, an
original instrument.

18. SATURDAYS, SUNDAYS AND HOLIDAYS.

               If the Expiration Date falls on a Saturday, Sunday or legal holiday, the Expiration Date shall
automatically be extended until 5:00 p.m., Eastern Time, the next business day.

19. ENTIRE AGREEMENT.

               This Warrant, together with all the exhibits attached hereto, contains the sole and entire
agreement and understanding of the parties with respect to the entire subject matter of this
Warrant, and any and all prior discussions, negotiations, commitments and understandings, whether
oral or otherwise, related to the subject matter of this Warrant are hereby merged herein.

[Signature Page Follows]

10

 

          IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of the Effective Date.

	 	 	 	 	 	 	 

	 	 	IMPERIAL HOLDINGS, INC.	 	 
	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Name:

	 	 
	 	 	Its:

	 	 
	 
	 	 	 	 	 	 
	 

	 	HOLDER	 	 	 	 
	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Name:

	 	 

11

 

EXHIBIT A

NOTICE OF EXERCISE

(To be executed upon exercise of Warrant)

     The undersigned, pursuant to the provisions set for the in the attached Warrant, hereby
irrevocably elects to:

               o purchase _____ shares of Common Stock covered by such Warrant and herewith makes a
cash payment of $_____________, representing the full purchase price for such shares at the price
per share provided for in such Warrant.

               o acquire in a cashless exercise _____ shares of Common Stock pursuant to the terms of
Section 2 of such Warrant.

               Please issue a certificate or certificates representing such shares of Common Stock in the
name of the undersigned or in such other name as is specified below.

	 	 	 

	 

	 	Signature:

	 
	 	 
	 

	 	Name (print):

	 
	 	 
	 

	 	Title (if applicable):

	 
	 	 
	 

	 	Company (if
applicable):

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