Document:

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                                                                   Exhibit 10.40

                                                                  Execution Copy

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                        XM SATELLITE RADIO HOLDINGS INC.

                             XM SATELLITE RADIO INC.

               Up to $415,800,000 Principal Amount at Maturity of

             10% Senior Secured Discount Convertible Notes due 2009

                                   ----------

                  AMENDED AND RESTATED NOTE PURCHASE AGREEMENT

                                   ----------

                            Dated as of June 16, 2003

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                                Table of Contents

<TABLE>
<S>                                                                                                  <C>
1.   DEFINITIONS......................................................................................1

2.   PURCHASE AND SALE OF THE NOTES; CLOSING.........................................................19

3.   INTEREST AND REPAYMENT..........................................................................20
     3.1.   Interest on the Notes....................................................................20
     3.2.   Interest after Maturity..................................................................21
     3.3.   Payments and Computations................................................................21
     3.4.   Payment at Maturity or Upon Conversion...................................................21

4.   REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF XM................................................21
     4.1.   Incorporation, Standing, etc.............................................................21
     4.2.   Subsidiaries.............................................................................22
     4.3.   SEC Reports..............................................................................22
     4.4.   Qualification............................................................................22
     4.5.   Authorization of Agreement and Notes.....................................................23
     4.6.   Absence of Defaults and Conflicts........................................................23
     4.7.   Absence of Proceedings...................................................................24
     4.8.   Possession of Licenses and Permits.......................................................24
     4.9.   No Violations of Laws....................................................................24
     4.10.  Internal Accounting Controls.............................................................24
     4.11.  Tax Returns and Payments.................................................................24
     4.12.  Indebtedness.............................................................................25
     4.13.  Title to Properties; Liens...............................................................25
     4.14.  Patents, Trademarks, Authorizations, etc.................................................25
     4.15.  Governmental Consents....................................................................25
     4.16.  Restrictions.............................................................................25
     4.17.  Capitalization...........................................................................25
     4.18.  Seniority of Notes.......................................................................26
     4.19.  Material Events..........................................................................26
     4.20.  Financial Statements.....................................................................26
     4.21.  No Undisclosed Fees......................................................................27
     4.22.  No Transactions with Affiliates..........................................................27
     4.23.  Registration Rights......................................................................27
     4.24.  Private Placement........................................................................27
     4.25.  Acknowledgement Regarding Investors' Purchases of Notes..................................27

5.   REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.................................................28
     5.1.   Risks of Investment......................................................................28
     5.2.   Investment Experience....................................................................28
     5.3.   Ability to Bear Risk.....................................................................28
     5.4.   Receipt and Review of Documentation......................................................28
     5.5.   Acquisition for Own Account..............................................................28
     5.6.   No Public Market; Rule 144...............................................................28
     5.7.   Organization, Good Standing, Corporate Authority.........................................29
     5.8.   Due Authorization........................................................................29
     5.9.   Qualified Institutional Buyer, Accredited Investor.......................................29
     5.10.  Acknowledgement Regarding Investors' Purchases of Notes..................................29
</TABLE>

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<TABLE>
<S>                                                                                                  <C>
     5.11   No Net Short Positions...................................................................29

6.   RESTRICTIONS ON TRANSFER........................................................................30

7.   COVENANTS.......................................................................................30
     7.1.   Payment of Notes and Maintenance of Office...............................................30
     7.2.   Reports..................................................................................31
     7.3.   Taxes....................................................................................31
     7.4.   Stay, Extension and Usury Laws...........................................................31
     7.5    Intentionally Deleted....................................................................32
     7.6.   Intentionally Deleted....................................................................32
     7.7.   Intentionally Deleted....................................................................32
     7.8.   Intentionally Deleted....................................................................32
     7.9.   Intentionally Deleted....................................................................32
     7.10.  Intentionally Deleted....................................................................32
     7.11.  Corporate Existence......................................................................32
     7.12.  Intentionally Deleted....................................................................32
     7.13.  Intentionally Deleted....................................................................32
     7.14.  Intentionally Deleted....................................................................32
     7.15.  Intentionally Deleted....................................................................32
     7.16.  Intentionally Deleted....................................................................32
     7.17.  Certain Trading Limitations..............................................................32
     7.18.  Payments for Consent.....................................................................33
     7.19.  Hart-Scott-Rodino........................................................................33
     7.20.  Pledges of Securities....................................................................33
     7.21.  Securities Law Disclosure; Publicity.....................................................34
     7.22.  Reimbursement............................................................................34
     7.23.  Avoidance of Conflicts...................................................................34
     7.24.  Indenture Compliance.....................................................................34

8.   DEFAULTS AND REMEDIES...........................................................................34
     8.1.   Events of Default........................................................................34
     8.2.   Acceleration.............................................................................36
     8.3.   Other Remedies...........................................................................36
     8.4.   Waiver of Past Defaults..................................................................37
     8.5.   Control by Majority......................................................................37
     8.6.   Rights of Holders of Notes to Receive Payment............................................37

9.   CONVERSION PROVISIONS...........................................................................37
     9.1.   Conversion at Option of Holders..........................................................37
     9.2.   Conversion at Option of Obligors.........................................................38
     9.3.   Issuance of Certificates.................................................................38
     9.4.   No Fractional Shares.....................................................................39
     9.5.   Merger of Holdings.......................................................................39
     9.6.   Reclassification of Class A Common Stock.................................................39
     9.7.   Reservation of Class A Common Stock......................................................40
     9.8.   Taxes....................................................................................40
     9.9.   No Rights or Liabilities as Stockholders.................................................41
     9.10.  Limitation on Conversion.................................................................41

10.  REGISTRATION, TRANSFER AND SUBSTITUTION OF NOTES................................................41
</TABLE>

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<TABLE>
<S>                                                                                                  <C>
     10.1.  Note Register............................................................................41
     10.2.  Transfer and Conversion of Notes.........................................................41
     10.3.  Replacement of Notes.....................................................................42

11.  GUARANTEES......................................................................................42
     11.1.  Execution and Delivery of Agreement Guarantees...........................................42
     11.2.  Subsidiary Guarantors may Consolidate, Etc. on Certain Terms.............................43
     11.3.  Releases Following Sale of Assets........................................................43
     11.4.  Application of Certain Terms and Provisions to Holdings and the Subsidiary
               Guarantors............................................................................43

12.  SECURITY AGREEMENTS.............................................................................44
     12.1.  Security Agreements......................................................................44
     12.2.  Release of Collateral....................................................................44

13.  CONDITIONS TO CLOSING...........................................................................44
     13.1   Conditions to Obligations of the Investors...............................................44
     13.2   Conditions to the Obligations of the Obligors............................................46
     13.3   Investment Election in Absence of Closing................................................46

14.  EXPENSES........................................................................................47

15.  SURVIVAL........................................................................................47

16.  AMENDMENTS AND WAIVERS..........................................................................47

17.  NOTICES.........................................................................................48

18.  EXECUTION IN COUNTERPARTS.......................................................................48

19.  BINDING EFFECT..................................................................................49

20.  GOVERNING LAW; CHOICE OF FORUM; JURY TRIAL WAIVER...............................................49

21.  MISCELLANEOUS...................................................................................49
     21.1.  Severability.............................................................................49
     21.2.  No Waiver................................................................................49
     21.3.  Further Assurances.......................................................................49
     21.4.  Construction.............................................................................50
     21.5   Amendment and Restatement................................................................50
</TABLE>

Exhibit A      Form of Note
Exhibit B      Form of Security Agreement
Exhibit C      Form of Amended and Restated Security Agreement
Exhibit D      Form of Noteholders Agreement
Exhibit E      Form of Registration Rights Agreement
Exhibit F      Form of Agreement Guarantee
Exhibit G      Form of Voting Agreement
Exhibit H      Form of Director Agreement

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                  AMENDED AND RESTATED NOTE PURCHASE AGREEMENT

          AMENDED AND RESTATED NOTE PURCHASE AGREEMENT, dated as of June 16,
2003, by and among XM SATELLITE RADIO INC., a Delaware corporation (the
"Company"), XM SATELLITE RADIO HOLDINGS INC., a Delaware corporation and the
sole stockholder of the Company ("Holdings" and, together with the Company, the
"Obligors"), and each of the investors set forth on the signature pages hereto
(each, an "Investor," and collectively, the "Investors," and together with the
Company and Holdings, the "Parties," and each, a "Party").

                                   WITNESSETH

          WHEREAS, the Obligors are engaged in the development of a satellite
digital audio radio service in the United States;

          WHEREAS, the Obligors and the Investors are parties to a Note Purchase
Agreement, dated as of December 21, 2002 (as amended prior to the date hereof,
the "2002 Note Purchase Agreement");

          WHEREAS, at the Closing on January 28, 2003 the Obligors consummated a
financing of newly invested funds by issuing the Obligors' 10% Senior Secured
Discount Convertible Notes due 2009, substantially in the form attached hereto
as Exhibit A, pursuant to the 2002 Note Purchase Agreement;

          WHEREAS, as an inducement to the Investors to purchase the Notes at
Closing, (a) each of the Obligors entered into the General Security Agreement,
substantially in the form attached hereto as Exhibit B, (b) the Company entered
into the FCC License Subsidiary Pledge Agreement, substantially in the form
attached hereto as Exhibit C, (c) Holdings entered into the Noteholders
Agreement and Director Agreement, substantially in the forms attached hereto as
Exhibit D and Exhibit H, respectively, (d) Holdings entered into the
Registration Rights Agreement, substantially in the form attached hereto as
Exhibit E, and (e) the Company caused its subsidiary XM Equipment Leasing LLC to
enter into, on the Closing Date referred to below, such General Security
Agreement and an Agreement Guarantee, substantially in the form attached hereto
as Exhibit F, and caused certain other subsidiaries to enter into similar
agreements in the circumstances described herein;

          WHEREAS, on the terms and subject to the conditions set forth herein,
each of the Investors purchased Notes at Closing for the aggregate purchase
price set forth next to its name on Attachment 1;

          WHEREAS, the Parties desire to set forth the terms and conditions of
and to provide for the issuance by the Obligors of the Notes described herein;

          WHEREAS, the 2002 Note Purchase Agreement was amended on June 16, 2003
with the consent of the Majority Holders by means of a consent (the "Consent
Amendment"), copies of which have been provided to all Investors as of the date
hereof, which Consent Amendment provided for the deletion of certain covenants
in Article VII (the "Former Covenants"), the incorporation of such Former
Covenants into the Noteholders Agreement and the incorporation of similar
covenants from the Indenture (as defined herein); and

          WHEREAS, the Consent Amendment provided for the amendment and
restatement of the 2002 Note Purchase Agreement reflecting provisions of the
Consent Amendment without further consent of the Parties, and this document
constitutes such amendment and restatement.

          NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:

1.   Definitions

          The following terms when used in this Agreement or the Noteholders
Agreement (some of such terms being used solely in the Former Covenants, now
contained in the Noteholders Agreement, and the definitions of such terms being
retained in this Agreement solely so that they can be incorporated into the
Noteholders

<PAGE>

Agreement by reference), including the preamble and recitals hereof and thereof,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):

          "Accredited Investor" has the meaning set forth in Rule 501(a) under
the Securities Act.

          "Accreted Value" means, for a given Note, (1) as of any date prior to
January 1, 2006, an amount equal to the sum of (a) the Initial Value of such
Note plus (b) the amount which shall have accreted with respect to such Note
through such date, such accretion to occur on a daily basis and be compounded
semi-annually each June 30 and December 31 at the rate of 10% per annum from the
Closing Date through the date of determination computed on the basis of a
360-day year of twelve 30-day months, and (2) as of any date on or after January
1, 2006, the principal amount of such Note.

          "Acquired Debt" means, with respect to any specified Person, (x)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person or (y)
Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person, provided that, in each case, such Indebtedness or Lien, as applicable,
is not incurred in connection with, or in contemplation of, such other Person
merging with or into, or becoming a Subsidiary of, such specified Person.

          "Additional Interest" means interest, if any, accruing on the Notes
pursuant to Section 2.2 of the Registration Rights Agreement.

          "Adjusted Consolidated Operating Cash Flow" means, with respect to an
Obligor, the Consolidated Operating Cash Flow of such Obligor for the latest
four fiscal quarters for which consolidated financial statements of such Obligor
are available, taken as a whole. For purposes of calculating Consolidated
Operating Cash Flow for any four fiscal quarter period for purposes of this
definition, all Subsidiaries of an Obligor on the date of the transaction giving
rise to the need to calculate Adjusted Consolidated Operating Cash Flow (the
"Transaction Date") shall be deemed to have been Subsidiaries of such Obligor at
all times during such four fiscal quarter period. In addition, for purposes of
calculating Adjusted Consolidated Operating Cash Flow:

          (1) acquisitions that have been made by the specified Obligor or any
of its Subsidiaries, including through mergers or consolidations and including
any related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the calculation date
shall be given pro forma effect as if they had occurred on the first day of the
four-quarter reference period and Adjusted Consolidated Operating Cash Flow for
such reference period shall be calculated on a pro forma basis; and

          (2) the Consolidated Operating Cash Flow attributable to discontinued
operations of such Obligor or its Subsidiaries, as determined in accordance with
GAAP, and operations or businesses disposed of prior to the calculation date,
shall be excluded.

          "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.

          "Affiliate Transaction" has the meaning set forth in Section 8.5 of
the Noteholders Agreement.

          "Agreement" means this Amended and Restated Note Purchase Agreement
(including any Schedules and Exhibits hereto), as it may from time to time be
amended, supplemented or modified in accordance with its terms.

          "Agreements and Instruments" have the meaning specified in Section 4.6
of this Agreement.

                                        2

<PAGE>

          "Agreement Guarantee" means (1) the Guarantee, dated as of the Closing
Date, entered into by XM Leasing Subsidiary in favor of the Holders and (2) any
other Guarantee entered into by a Subsidiary Guarantor in favor of the Holders
pursuant to the terms of Section 11.1 hereof.

          "Asset Sale" means:

          (1) the sale, lease, conveyance or other disposition of any assets;
provided that the sale, conveyance or other disposition of all or substantially
all of the assets of an Obligor and its Subsidiaries taken as a whole will be
governed by the provisions of Sections 8.7 and 8.11(a) of the Noteholders
Agreement and not by the provisions of Section 8.4 thereof; and

          (2) the issuance or sale of new Equity Interests, or the sale or
other disposition of outstanding Equity Interests, of an Obligor's Subsidiary.

          Notwithstanding the preceding, the following items shall not be deemed
to be Asset Sales:

          (1) any single transaction or series of related transactions that
involves assets having a fair market value or that involve net proceeds of less
than $1,000,000;

          (2) a transfer of assets between or among either Obligor and any
of its Wholly Owned Subsidiaries,

          (3) an issuance of Equity Interests by a Wholly Owned Subsidiary
to an Obligor or to another Wholly Owned Subsidiary;

          (4) the sale or lease of equipment, inventory, accounts
receivable or other assets in the ordinary course of business;

          (5) the sale or other disposition of cash or Cash Equivalents;

          (6) a Restricted Payment or Permitted Investment that is
permitted by Section 8.1 of the Noteholders Agreement;

          (7) any Qualified Sale and Leaseback Transaction; and

          (8) the sale by XM Building Subsidiary of its real property located at
1500 Eckington Place, NE, Washington, DC and related improvements.

          "Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.

          "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.

          "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have corresponding meanings.

          "Board of Directors" means:

                                        3

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          (1) with respect to a corporation, the board of directors of the
corporation;

          (2) with respect to a partnership, the Board of Directors of the
general partner of the partnership; and

          (3) with respect to any other Person, the board or committee of such
Person serving a similar function.

          "Board Resolution" means, with respect to an Obligor, a resolution
duly adopted by the Board of Directors of such Obligor or a committee of the
Board of Directors in the case of Holdings, certified by the Secretary or an
Assistant Secretary of such Obligor to have been duly adopted and to be in full
force and effect on the date of such certification.

          "Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the City of New York or at a place of payment
are authorized by law, regulation or executive order to remain closed.

          "Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at that time be required to be capitalized on a balance sheet in
accordance with GAAP.

          "Capital Stock" means:

          (1) in the case of a corporation, corporate stock;

          (2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;

          (3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and

          (4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

          "Cash Equivalents" means:

          (1) United States dollars;

          (2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof (provided
that the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than six months from the date of
acquisition;

          (3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any domestic commercial bank having capital and
surplus in excess of $500,000,000;

          (4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications specified
in clause (3) above;

          (5) commercial paper having one of the two highest ratings obtainable
from Moody's Investors Service, Inc. or Standard & Poor's Rating Services and in
each case maturing within six months after the date of acquisition; and

                                        4

<PAGE>

          (6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1) through (5) of this
definition.

          "Change of Control" means the occurrence of any of the following:

          (1) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the properties or assets
of an Obligor and its Subsidiaries taken as a whole to any "person" (as that
term is used in Section 13(d)(3) of the Exchange Act) other than a Principal or
a Related Party of a Principal;

          (2) the adoption of a plan relating to the liquidation or dissolution
of an Obligor (other than a liquidation or dissolution of the Company into
Holdings);

          (3) the consummation of any transaction (including any merger or
consolidation) the result of which is that any "person", other than the
Principals and their Related Parties, becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Stock of Holdings or the Company,
measured by voting power rather than number of shares;

          (4) the first day on which a majority of the members of the Board of
Directors of an Obligor are not Continuing Directors;

          (5) an Obligor consolidates with, or merges with or into, any Person,
or any Person consolidates with, or merges with or into, an Obligor, in any such
event pursuant to a transaction in which any of the outstanding Voting Stock of
such Obligor or such other Person is converted into or exchanged for cash,
securities or other property, other than any such transaction where the Voting
Stock of an Obligor outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee Person constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person (immediately
after giving effect to such issuance); or

          (6) the first day on which the Company ceases to be a Wholly Owned
Subsidiary of Holdings.

          Notwithstanding the foregoing, neither the Concurrent Financing
Transactions nor a Parent Company Merger shall constitute a "Change of Control".

          "Class A Common Stock" means the Class A Common Stock, par value $0.01
per share, of Holdings.

          "Closing" means the consummation of the transactions contemplated by
this Agreement, including the sale and purchase of the Notes.

          "Closing Date" means January 28, 2003, the date of the Closing under
the 2002 Note Purchase Agreement.

          "Collateral" means (1) the Collateral (as defined in the General
Security Agreement), and (2) the Collateral (as defined in the FCC License
Subsidiary Pledge Agreement).

          "Collateral Agent" means the collateral agent under the applicable
Intercreditor Agreement.

          "Company" means XM Satellite Radio Inc., a Delaware corporation and
direct Wholly Owned Subsidiary of Holdings, and any and all successors thereto.

          "Concurrent Financing Transactions" means (1) the issuance to General
Motors Corporation or Affiliates thereof ("GM") of the Obligors' 10% Senior
Secured Convertible Note due 2009 (the "GM Note") in the principal amount of
$89,042,387 in lieu of certain guaranteed payments due to GM during the period
from 2003 to

                                        5

<PAGE>

2006 under the Company's Distribution Agreement with GM (the "Distribution
Agreement"), (2) the amendment of the Distribution Agreement to provide for,
among other things, the issuance of the GM Note and the payment of up to
$35,000,000 in subscriber bounty payments in the form of Class A Common Stock,
(3) the issuance of the Company's 14% Senior Secured Discount Notes due 2009,
warrants to purchase Class A Common Stock (the "Exchange Warrants") and cash in
exchange for some or all of the Company's outstanding 14% Senior Secured Notes
due 2010 (the "Existing Notes"), (4) the Obligors' entering into a $100,000,000
Senior Secured Credit Facility with GM (the "GM Credit Facility") to finance
certain revenue share payments owed to GM under the Distribution Agreement or
other amounts which may be owed to GM, (5) the issuance of a warrant to GM to
purchase 10,000,000 shares of Class A Common Stock (the "GM Warrant"), (6) the
issuance and sale on or before the Closing Date, to the extent determined to be
desirable by Holdings or after the Closing Date to the extent contemplated by
the letter agreement between Holdings and the BayStar Group, of Class A Common
Stock, with or without warrants to purchase Class A Common Stock, in accordance
with Section 4(2) of the Securities Act or pursuant to a registration statement
under the Securities Act, all of which transactions shall be on terms
substantially as previously disclosed to the Investors or otherwise on terms
reasonably satisfactory to the Majority Holders, including the proposed sale of
5,555,556 shares of Class A Common Stock to U.S. Trust Company (the "US Trust
Purchase") and warrants to purchase 900,000 shares of Class A Common Stock, and
(7) execution, delivery and performance of all agreements, documents and
instruments, including the Noteholders Agreement, Director Agreement and
Registration Rights Agreement, in substantially the form previously provided to
the Investors, evidencing the transactions described in clauses (1) through (6)
of this definition and arrangements contemplated thereby.

          "Concurrent Financing Transactions Issuances" means the issuances or
potential issuances of: (a) Class A Common Stock upon conversion of the GM Note
and the Notes; (b) the GM Warrant and Class A Common Stock upon exercise
thereof; (c) the Exchange Warrants and Class A Common Stock upon exercise
thereof; (d) Class A Common Stock as payment of interest on the GM Note in
accordance with the terms thereof; (e) Class A Common Stock as payment of
interest under the GM Credit Facility in accordance with the terms thereof; (f)
Class A Common Stock pursuant to the Distribution Agreement in accordance with
the terms thereof, and (g) Class A Common Stock and warrants issued and sold as
contemplated by clause (6) of the definition of Concurrent Financing
Transactions, including the US Trust Purchase and including Class A Common Stock
upon exercise of such warrants.

          "Consolidated Net Income" means, with respect to an Obligor for any
period, the aggregate of the Net Income of such Obligor and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that:

          (1) the Net Income (but not loss) of an Obligor's Subsidiary that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid in cash to such Obligor
or a Subsidiary thereof;

          (2) the Net Income of an Obligor's Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar distributions by
that Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its stockholders;

          (3) the Net Income of an Obligor's Subsidiary acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded; and

          (4) the cumulative effect of a change in accounting principles shall
be excluded.

          "Consolidated Net Worth" means, with respect to a specified Person as
of any date, the sum of:

          (1) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date; plus

                                        6

<PAGE>

          (2) the respective amounts reported on such Person's balance sheet as
of such date with respect to any series of preferred stock (other than
Disqualified Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of any cash received by such Person upon issuance of such preferred
stock.

          "Consolidated Operating Cash Flow" means, with respect to an Obligor
for any period, the Consolidated Net Income of such Obligor for such period,
plus:

          (1) an amount equal to any extraordinary loss plus any net loss
realized by such Obligor or any of its Subsidiaries in connection with an Asset
Sale, to the extent such losses were deducted in computing such Consolidated Net
Income; plus

          (2) any provision for taxes based on income or profits of such Obligor
and its Subsidiaries for such period, to the extent that such provision for
taxes was deducted in computing such Consolidated Net Income; plus

          (3) consolidated interest expense of such Obligor and its Subsidiaries
for such period, whether paid or accrued and whether or not capitalized
(including amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations and Attributable Debt, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net of the effect of all payments made or received pursuant to
Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income; plus

          (4) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Obligor and its Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income; minus

          (5) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue in the ordinary course of business, in
each case, on a consolidated basis and determined in accordance with GAAP.

          Notwithstanding the preceding, the provision for taxes based on the
income or profits of, and the depreciation and amortization and other non-cash
expenses of, a Subsidiary of an Obligor shall be added to Consolidated Net
Income to compute Consolidated Operating Cash Flow of such Obligor only to the
extent that a corresponding amount would be permitted at the date of
determination to be dividended to such Obligor by such Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.

          "Continuing Directors" means, with respect to an Obligor as of any
date of determination, any member of the Board of Directors of such Obligor who:

          (1) was a member of such Board of Directors on December 21, 2002; or

          (2) was nominated for election or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were members of
such Board at the time of such nomination or election.

          "Conversion" means the conversion of all or a portion of the Accreted
Value of a Note, together with accrued but unpaid premium and interest thereon,
into shares of Class A Common Stock in accordance with the provisions of Section
9 of this Agreement.

                                        7

<PAGE>

          "Conversion Price" means $3.18 per share of Class A Common Stock.

          "Conversion Stock" means the shares of Class A Common Stock that may
be issued upon any Conversion, in accordance with the provisions of Section 9 of
this Agreement.

          "Core XM Radio Assets" means XM Radio Assets reasonably necessary to
operate the XM Radio Business.

          "Cumulative Available Cash Flow" means, as at any date of
determination, the positive cumulative Consolidated Operating Cash Flow realized
during the period commencing on the beginning of the first fiscal quarter
following December 21, 2002 and ending on the last day of the most recent fiscal
quarter immediately preceding the date of determination for which consolidated
financial information of Holdings is available or, if such cumulative
Consolidated Operating Cash Flow for such period is negative, the negative
amount by which cumulative Consolidated Operating Cash Flow is less than zero.

          "Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

          "Director Agreement" means the Agreement, dated as of the Closing
Date, by and among Holdings, AEA XM Investors I LLC, AEA XM Investors II LLC,
AEA XM Investors IA LLC, AEA XM Investors IIA LLC, Columbia XM Radio Partners,
LLC, Columbia XM Satellite Partners III, LLC, Columbia Capital Equity Partners
II (QP), L.P., Columbia Capital Equity Partners III (QP), L.P., Clear Channel
Investments, Inc., Hughes Electronics Corporation, Madison Dearborn Capital
Partners III, L.P., Madison Dearborn Special Equity III, L.P., Special Advisors
Fund I, LLC and American Honda Motor Co., Inc., as such agreement may be
amended, modified or supplemented from time to time.

          "Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to April 1, 2010. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders thereof have the right to require the issuer thereof
to repurchase such Capital Stock upon the occurrence of a change of control or
an asset sale shall not constitute Disqualified Stock if the terms of such
Capital Stock provide that such issuer may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with Section 8.1 of the Noteholders Agreement.

          "Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

          "Event of Default" has the meaning set forth in Section 8.1 of this
Agreement.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Exchange Act Filings" has the meaning set forth in Section 4.3 of
this Agreement.

          "Existing Indebtedness" means Indebtedness of an Obligor and its
Subsidiaries in existence on December 21, 2002, including the Indebtedness
incurred or to be incurred pursuant to the Concurrent Financing Transactions,
until such amounts are repaid.

          "Fair Market Value" means, with respect to the Class A Common Stock,
the average, calculated to two decimal places, of the weighted average daily
trading prices of such stock over the ten Trading Day period ending on the
Trading Day prior to calculation thereof as reported on Bloomberg. If at any
time the Class A Common Stock is not listed on any national securities exchange
or quoted on the Nasdaq Stock Market or the over-the-counter market, the Fair
Market Value of the Class A Common Stock shall be the fair value thereof as
determined by the Board of Directors of Holdings in good faith.

                                        8

<PAGE>

          "FCC License Subsidiary" means XM Radio Inc., a Delaware corporation
and direct Wholly Owned Subsidiary of the Company.

          "FCC License Subsidiary Pledge Agreement" means the agreement, dated
as of the Closing Date, among the Company, the Collateral Agent and the other
parties thereto, providing for the pledge of the stock of the FCC License
Subsidiary as security for the Notes and certain other indebtedness.

          "FCC License Subsidiary Pledge Intercreditor Agreement" means the
Intercreditor and Collateral Agency Agreement, dated as of the Closing Date,
pursuant to which the collateral agent named therein will be appointed on behalf
of the various secured creditor parties to serve as collateral agent under the
FCC License Subsidiary Pledge Agreement.

          "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.

          "General Intercreditor Agreement" means the Intercreditor and
Collateral Agency Agreement, dated as of the Closing Date, pursuant to which the
collateral agent named therein will be appointed on behalf of the various
secured creditor parties to serve as collateral agent under the General Security
Agreement.

          "General Security Agreement" means the agreement, dated as of the
Closing Date, among the Obligors, XM Leasing Subsidiary, the Collateral Agent
and the Subsidiary Guarantors from time to time, providing for a grant of
security interest in certain assets of the Company as security for the Notes and
certain other indebtedness.

          "Governmental Approval" means the authorization, consent, approval,
license, ruling, permit, certification, exemption, filing or registration by or
with a Governmental Entity required by applicable requirements of law to be
obtained or held in connection herewith or with the Concurrent Financing
Transactions.

          "Governmental Entity" means any international body or any nation or
government, any state of political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government any corporation or other entity owned or controlled,
through stock or capital or otherwise, by any of the foregoing.

          "Governmental Licenses" has the meaning set forth in Section 4.8 of
this Agreement.

          "Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.

          "Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including by way of a pledge of assets or through
letters of credit or reimbursement agreements in respect thereof, of all or any
part of any Indebtedness.

          "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

          "Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:

          (1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and

          (2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates or currency values.

                                        9

<PAGE>

          "Holder" means a Person in whose name a Note is registered.

          "Holdings" means XM Satellite Radio Holdings Inc. and any and all
successors thereto.

          "Hughes Repeater Contract" means the Contract for the Design,
Development and Purchase of Terrestrial Repeater Equipment by and between the
Company and Hughes Electronics Corporation, dated February 14, 2000 as amended
from time to time provided that such amendments, taken as a whole, shall not be
materially adverse to the Company.

          "Hughes Repeater Escrow Agreement" means the agreement between the
Company and Hughes Electronics Corporation, dated as of March 2, 2000, providing
for the escrow of funds payable under the Hughes Repeater Contract.

          "Hughes Satellite Agreement" means the Satellite Purchase Agreement
between the Company and Hughes Space and Communications Inc., dated July 21,
1999, as in effect on December 21, 2002 and as it may be amended from time to
time in any respect other than with respect to the terms or scope of the
security interest granted by the Company thereunder.

          "incur" has the meaning set forth in Section 8.3 of the Noteholders
Agreement.

          "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of:

          (1) borrowed money;

          (2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);

          (3) banker's acceptances;

          (4) representing Capital Lease Obligations;

          (5) the balance deferred and unpaid of the purchase price of any
property, except any such balance that constitutes an accrued expense or trade
payable; or

          (6) representing any Hedging Obligations;

if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" shall include (a) all Indebtedness of others secured by a Lien on
any asset of the specified Person (whether or not such Indebtedness is assumed
by the specified Person), (b) to the extent not otherwise included, the
Guarantee by the specified Person of any indebtedness of any other Person and
(c) all Attributable Debt of such Person. The amount of any Indebtedness
outstanding as of any date shall be:

          (1) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and

          (2) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness.

          "Indenture" means the Indenture, dated as of the Closing Date, among
the Company, each of the Guarantors named therein, and The Bank of New York, as
Trustee, as amended or supplemented from time to time.

                                       10

<PAGE>

          "Initial Value" means, for a given Note, the amount set forth opposite
the name of the Investor purchasing such Note on Attachment 1 to this Agreement.
The aggregate Initial Value for all Notes shall be the aggregate amount set
forth opposite the names of all Investors on Attachment 1 to this Agreement.

          "Intercreditor Agreements" means the General Intercreditor Agreement
and the FCC License Subsidiary Pledge Intercreditor Agreement.

          "Interest Payment Date" means June 30 and December 31 of each year,
commencing June 30, 2006, provided that (i) if any Additional Interest shall
accrue prior to January 1, 2006, then the initial Interest Payment Date shall
occur on the June 30 or December 31 next following the date on which such
accrual begins, and (ii) if any Interest Payment Date is not a Business Day, the
Interest Payment Date will be deferred and interest will be payable through the
next Business Day.

          "Interest Rate" means a rate equal to (i) for the period from the
Closing Date through December 31, 2005, the rate of Additional Interest, if any,
accruing from time to time and (ii) from January 1, 2006 through the date on
which the Notes are paid in full, the rate of 10% per annum plus the rate of
Additional Interest, if any, accruing from time to time.

          "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.

          "Investments" means, with respect to an Obligor, all direct or
indirect investments by such Obligor in other Persons (including Affiliates) in
the form of loans (including Guarantees or other obligations), advances or
capital contributions (excluding commission, travel and similar advances to
officers, directors and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
The acquisition by an Obligor or any Subsidiary of such Obligor of a Person that
holds an Investment in a third Person shall be deemed to be an Investment by
such Obligor in such third Person in an amount equal to the fair market value of
the Investment held by the acquired Person in such third Person determined as
provided in the final paragraph of Section 8.1 of the Noteholders Agreement.

          "Investor" has the meaning set forth in the recitals to this
Agreement.

          "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

          "Majority Holders" means (1) as of any time prior to the Closing,
Investors that have agreed to purchase a majority in Initial Value of the Notes
at the Closing as set forth in Attachment 1 and (2) at any time after the
Closing, the Holders of a majority in aggregate principal amount at maturity of
the then outstanding Notes.

          "material" means individually or in the aggregate (i) material in
relation to the business, operations, affairs, assets, liabilities, financial
condition, or properties of Holdings and its Subsidiaries taken as a whole or
(ii) having a value or worth, individually, or when combined with breaches of
any other representation, warranty or covenant (without giving effect to any
materiality or Material Adverse Effect qualifiers contained therein), in excess
of $10,000,000, provided, however, that any individual breaches or violations
having a value or worth below $100,000, shall not be combined with breaches of
any other representation, warranty or covenant for purposes of calculating the
$10,000,000 threshold.

          "Material Adverse Effect" means individually or in the aggregate (i) a
material adverse effect on the business, operations, affairs, assets,
liabilities, financial condition or properties of Holdings and its Subsidiaries
taken as a whole, (ii) a material adverse effect on the ability of Holdings or
any of its Subsidiaries to perform their respective obligations under this
Agreement or any of the Transaction Documents, or (iii) an economic cost or

                                       11

<PAGE>

liability, individually, or when combined with breaches of any other
representation, warranty or covenant (without giving effect to any materiality
or Material Adverse Effect qualifiers contained therein), to Holdings or any of
its Subsidiaries in excess of $10,000,000, in each case other than continued
deferrals of vendor payments; provided, however, that any individual breaches or
violations having an economic cost or resulting in a liability below $100,000
shall not be combined with breaches of any other representation, warranty or
covenant for purposes of calculating the $10,000,000 threshold.

          "Material Subsidiary" means, with respect to an Obligor, a Subsidiary
of such Obligor (1) the business, operations, affairs, assets, liabilities,
financial condition, or properties of which are material to the business,
operations, affairs, assets, liabilities, financial condition, or properties of
the Obligors and their Subsidiaries taken as a whole, (2) owning assets having
an aggregate book value greater than $10,000,000 or (3) that has been designated
by the Board of Directors as a Material Subsidiary. Notwithstanding the
foregoing, "Material Subsidiary" shall not include the Subsidiary contemplated
by clause (10) of the definition of "Permitted Investments" herein.

          "Maturity Date" means December 31, 2009.

          "Net Income" means, with respect to an Obligor or a Subsidiary of an
Obligor, the net income (loss) of such Person and its Subsidiaries, determined
in accordance with GAAP and before any reduction in respect of preferred stock
dividends, excluding, however:

          (1) any gain or loss, together with any related provision for taxes on
such gain or loss, realized in connection with: (a) any Asset Sale; or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries;
and

          (2) any extraordinary gain or loss, together with any related
provision for taxes on such extraordinary gain or loss.

          "Net Proceeds" means the aggregate cash proceeds received by an
Obligor or any of its Material Subsidiaries in respect of any Asset Sale or
other transaction (including any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale or other transaction, including
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof, in each case, after taking into account any available tax
credits or deductions and any tax sharing arrangements, and amounts required to
be applied to the repayment of Indebtedness secured by a Lien on the asset or
assets that were the subject of such Asset Sale or other transaction and any
reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.

          "Notes" means the Obligors' 10% Senior Secured Discount Convertible
Notes due 2009, including any additional such notes paid as interest thereon.

          "Noteholders Agreement" means the Third Amended and Restated
Shareholders and Noteholders Agreement, dated as of June 16, 2003, by and among
Holdings and the other parties named on the signature pages thereof, as such
agreement may be amended, modified or supplemented from time to time.

          "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

          "Obligors" means Holdings and the Company.

          "Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.

                                       12

<PAGE>

          "Officers' Certificate" means, with respect to any Person, a
certificate signed on behalf of such Person by two Officers of such Person.

          "Parent Company Merger" means (a) a merger or consolidation of the
Company with or into Holdings or a merger or consolidation of Holdings with or
into the Company, provided that the holders of Voting Stock of Holdings
immediately prior to such transaction own substantially all of the Voting Stock
of the surviving entity immediately after such transaction, or (b) any
assignment, transfer, conveyance or other disposition of all or substantially
all of the properties or assets of the Company to Holdings or of Holdings to the
Company.

          "Pari Passu Indebtedness" means, with respect to an Obligor,
Indebtedness of such Obligor that is pari passu in right of payment to the
Notes.

          "Permitted Business" means any of the lines of business conducted by
an Obligor and its Subsidiaries on December 21, 2002 and any business similar,
ancillary or related thereto or that constitutes a reasonable extension or
expansion thereof, including in connection with such Obligor's existing and
future technology, trademarks and patents.

          "Permitted Investments" means:

          (1) any Investment in a Wholly Owned Subsidiary of Holdings;

          (2) any Investment in Cash Equivalents;

          (3) any Investment by an Obligor or any Subsidiary of an Obligor in a
Person, if as a result of such Investment:

               (a) such Person becomes a Wholly Owned Subsidiary of such
Obligor; or

               (b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, such Obligor or a Wholly Owned Subsidiary of such Obligor;

          (4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 8.4 of the Noteholders Agreement;

          (5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of Holdings;

          (6) Hedging Obligations;

          (7) Investments in existence on December 21, 2002 and modifications
thereof (but not including any increase in the amount of such Investment);

          (8) Investments in securities of trade creditors or customers received
in compromise of obligations of such Person incurred in the ordinary course of
business, including under any plan of reorganization or similar arrangement upon
the bankruptcy or insolvency of such Person;

          (9) Investments indirectly acquired by an Obligor or any of its
Subsidiaries through a direct Investment in another Person made in compliance
with this Agreement, provided that such Investments existed prior to and were
not made in contemplation of such acquisition;

          (10) Investments in a joint venture with Sirius Satellite Radio, Inc.,
or an affiliate or successor thereof, the proceeds of which investments are used
solely to develop interoperable radio technology capable of receiving and
processing radio system signals broadcast by both the Company and Sirius
Satellite Radio Inc., for the licensing of other satellite radio technology from
the Company and Sirius Satellite Radio, Inc. in connection

                                       13

<PAGE>

therewith and for activities reasonably ancillary thereto in accordance with the
Joint Development Agreement between the Company and Sirius Satellite Radio,
Inc., as in effect on December 21, 2002 or as it may be amended in a manner not
materially adverse to the Company; and

          (11) other Investments in any Person having an aggregate fair market
value (measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (11) since December 21, 2002 that are
at the time outstanding not to exceed $10,000,000.

          "Permitted Liens" means:

          (1) Liens on any assets of an Obligor or its Material Subsidiaries
securing Pari Passu Indebtedness incurred pursuant to clause (i) of Section 8.3
of the Noteholders Agreement or Permitted Refinancing Indebtedness in respect
thereof; provided that the Notes shall be equally and ratably secured by such
assets;

          (2) Liens in favor of an Obligor;

          (3) Liens on property, or on shares of stock or Indebtedness, of a
Person existing at the time such Person is merged with or into or consolidated
with an Obligor or any Subsidiary of an Obligor; provided that such Liens were
in existence prior to the contemplation of such merger or consolidation and do
not extend to any assets other than those of the Person merged into or
consolidated with such Obligor or the Subsidiary;

          (4) Liens on property existing at the time of acquisition thereof by
an Obligor or any Subsidiary of an Obligor, provided that such Liens were not
incurred in contemplation of such acquisition;

          (5) Liens to secure the performance of bids, tenders, leases,
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business;

          (6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (vi) of the third paragraph of Section 8.3 of the
Noteholders Agreement covering only the assets acquired, constructed or improved
with such Indebtedness;

          (7) Liens existing on December 21, 2002 (including Liens arising under
the Prior Indenture in favor of the trustee thereunder and Liens under the
Hughes Repeater Escrow Agreement) and Liens securing Indebtedness incurred
pursuant to the Concurrent Financing Transactions;

          (8) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor;

          (9) Liens securing the Notes;

          (10) Liens that (a) are incidental to the conduct of an Obligor's or a
Material Subsidiary's business or the ownership of its property and assets not
securing Indebtedness, and (b) do not in the aggregate materially detract from
the value of the assets or property of such Obligor and its Subsidiaries taken
as a whole, or materially impair the use thereof in the operation of its
business;

          (11) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security;

          (12) judgment Liens which do not give rise to an Event of Default;

                                       14

<PAGE>

          (13) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of an Obligor or any
of its Subsidiaries;

          (14) any interest or title of a lessor under any Capital Lease
Obligation;

          (15) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of the Obligors and their
Subsidiaries;

          (16) Liens arising from filing Uniform Commercial Code financing
statements regarding leases;

          (17) Liens in favor of customs and revenue authorities arising as a
mater of law to secure payment of customer duties in connection with the
importation of goods;

          (18) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
that are not delinquent or remain payable without penalty;

          (19) Liens which secure Hedging Obligations that relate to
Indebtedness otherwise permitted under this Agreement;

          (20) Liens encumbering property or other assets under construction in
the ordinary course of business arising from progress or partial payments by a
customer of the Company or its Subsidiaries relating to such property or other
assets;

          (21) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by the
Company or any of its Subsidiaries in the ordinary course of business;

          (22) Liens on an Obligor's interests in satellites and its terrestrial
repeater network, including under the Hughes Satellite Agreement, subsequent
satellite procurement or launch contracts and the Hughes Repeater Contract;

          (23) Liens incurred in the ordinary course of business of the Obligors
and their Subsidiaries with respect to obligations that do not exceed
$10,000,000 (in the aggregate for both Obligors and their Subsidiaries) at any
one time outstanding;

          (24) Liens on Qualified Receivables securing Indebtedness permitted by
clause (xii) of the third paragraph of Section 8.3 of the Noteholders Agreement;
and

          (25) Liens arising out of financing provided by a satellite or
satellite launch vendor or Affiliate thereof of all or part of the cost of
construction, launch and insurance of one or more replacement satellites or
satellite launches relating to such satellites provided by such vendor or its
Affiliates;

          (26) Liens securing Indebtedness permitted under clause (vii) of
Section 8.3 of the Noteholders Agreement, provided that such Liens are no more
extensive than the Liens securing the Indebtedness refunded, refinanced or
replaced thereby; and

          (27) Liens securing Indebtedness incurred in any Qualified Sale and
Leaseback Transaction.

          "Permitted Refinancing Indebtedness" means any Indebtedness of an
Obligor or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of such Obligor or any of its Subsidiaries (other than intercompany
Indebtedness); provided that:

                                       15

<PAGE>

          (1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus all accrued interest thereon and
the amount of all expenses, consent fees and premiums incurred in connection
therewith);

          (2) (A) if such Permitted Refinancing Indebtedness has a Weighted
Average Life to Maturity shorter than that of the Notes or a final maturity date
earlier than the final maturity date of the Notes, such Permitted Refinancing
Indebtedness shall have a Weighted Average Life to Maturity no shorter than the
remaining Weighted Average Life to Maturity of the debt so extended, refinanced,
renewed, replaced, defeased or refunded and a final Stated Maturity no earlier
than the final maturity date of the debt so extended, refinanced, renewed,
replaced, defeased or refunded or (B) in all other cases, such Permitted
Refinancing Indebtedness shall have a final maturity date later than the final
maturity date of, and shall have a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Notes;

          (3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness is subordinated in right of payment to the
Notes on terms at least as favorable to the Holders of Notes as those contained
in the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and

          (4) such Indebtedness is incurred either by such Obligor or by the
Subsidiary, as applicable, that is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.

          "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.

          "Principals" means General Motors Corporation, DIRECTV Enterprises,
Inc. and Clear Channel Investments, Inc.

          "Prior Indenture" means the Indenture, dated as of March 15, 2000,
between the Company and U.S. Trust Company of New York, as Trustee, as amended
or supplemented from time to time.

          "Qualified Institutional Buyer" has the meaning set forth in Rule 144A
under the Securities Act.

          "Qualified Receivables" means the aggregate amount of accounts
receivables of an Obligor determined in accordance with GAAP that are not more
than 90 days past due.

          "Qualified Sale and Leaseback Transaction" means a sale and leaseback
transaction (1) involving one or more satellites of an Obligor or any of its
Subsidiaries and (2) the Net Proceeds of which, together with the aggregate Net
Proceeds from all other sale and leaseback transactions involving satellites
consummated after December 21, 2002 (including any subsequent replacements,
amendments or modifications thereof), do not exceed $150,000,000 (in the
aggregate for the Obligors and their Subsidiaries).

          "Reclassified Securities" has the meaning set forth in Section 9.6 of
this Agreement.

          "Registration Rights Agreement" means the Second Amended and Restated
Registration Rights Agreement, dated as of the Closing Date, by and among
Holdings and the other parties named on the signature pages thereof, as such
agreement may be amended, modified or supplemented from time to time.

          "Related Party" means:

          (1) any controlling stockholder, 80% (or more) owned Subsidiary, or
immediate family member (in the case of an individual) of any Principal; or

                                       16

<PAGE>

          (2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of any one or more Principals
and/or such other Persons referred to in the immediately preceding clause (1).

          "Restricted Payment" has the meaning set forth in Section 8.1 of the
Noteholders Agreement.

          "SEC" means the Securities and Exchange Commission.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Security Agreements" means the FCC License Subsidiary Pledge
Agreement and the General Security Agreement.

          "Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
December 21, 2002.

          "Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

          "Subordinated Indebtedness" means (i) with respect to the Company,
either (a) unsecured Indebtedness of the Company contractually subordinated in
right of payment to the Notes or (b) Indebtedness of Holdings (and not the
Company) that is structurally subordinated to the Notes and (ii) with respect to
Holdings, unsecured Indebtedness of Holdings that is contractually subordinated
in right of payment to the Notes.

          "Subscriber" means a subscriber in good standing to the XM Radio
Service that has paid subscription fees for at least one month of such service
and whose subscription payments are not delinquent.

          "Subsidiary" means, with respect to any specified Person:

          (1) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Voting Stock is at the time
owned or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of that Person (or a combination thereof); and

          (2) any partnership, trust or limited liability company (a) the sole
general partner or the managing general partner, manager or trustee of which is
such Person or a Subsidiary of such Person or (b) the only general partners or
managing members of which are such Person or one or more Subsidiaries of such
Person (or any combination thereof).

          "Subsidiary Guarantor" means any entity that enters into an Agreement
Guarantee pursuant to Section 11.

          "Supermajority Investors" means any combination of Investors and
purchasers in the US Trust Purchase that have agreed to invest at least 66-2/3%
of the amount to be invested at the Closing under this Agreement, as set forth
in Attachment 1 and the US Trust Purchase, taken collectively.

          "Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Internal Revenue
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax, fee, levy, duty, tariff,
impost and other charges of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not imposed by any governing
or taxing authority.

                                       17

<PAGE>

          "Tax Sharing Agreement" means the tax sharing agreement dated March
15, 2000 between the Obligors and XM Radio Inc., as in effect on December 21,
2002.

          "Total Consolidated Indebtedness" means, at any date of determination,
an amount equal to the aggregate amount of all Indebtedness of Holdings and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP,
outstanding as of the date of determination.

          "Total Incremental Equity" means, at any date of determination, the
sum of, without duplication: (1) the aggregate cash proceeds received by
Holdings after the Closing from the issuance or sale of Capital Stock of
Holdings (other than Disqualified Stock but including Capital Stock issued upon
the conversion of convertible Pari Passu Indebtedness or from the exercise of
options, warrants or rights to purchase Capital Stock of Holdings other than
Disqualified Stock) to any Person other than a Subsidiary of Holdings; plus (2)
an amount equal to the net reduction in Investments in any Person (other than
Permitted Investments) resulting from the payment in cash of dividends,
repayments of loans or advances or other transfers of assets, in each case to
Holdings or any Subsidiary thereof after the Closing from such Person; provided,
however, that the foregoing sum shall not exceed the amount of Investments
previously made (and treated as a Restricted Payment) by Holdings or any
Subsidiary thereof in such Person and that constitutes a Restricted Payment that
has been deducted from Total Incremental Equity pursuant to clause (3) below;
minus (3) the aggregate amount of all Restricted Payments declared or made on or
after the Closing (including the aggregate amount paid pursuant to clauses (1),
(2), (3), (4), (5) and (7) of the second paragraph of Section 8.1 of the
Noteholders Agreement).

          "Trading Day" means any day on which the Class A Common Stock is
traded on the Nasdaq National Market or such other primary national securities
exchange on which the Class A Common Stock is then listed or quoted.

          "Transaction Documents" means all documents delivered in connection
with the transactions contemplated by this Agreement, including the Security
Agreements, the Noteholders Agreement, the Director Agreement, the Intercreditor
Agreements, the Registration Rights Agreement, the Voting Agreement and the
Agreement Guarantee of XM Leasing Subsidiary.

          "Trustee" means the party named as such in the Indenture until a
successor replaces it in accordance with the applicable provisions of the
Indenture and thereafter means the successor serving thereunder.

          "Voting Agreement" means the Voting Agreement, dated as of December
21, 2002, by and among certain Investors and other parties named on the
signature pages thereof, as such agreement may be amended, modified or
supplemented from time to time.

          "Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of directors,
general partners, managers or trustees of such Person.

          "Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Disqualified Stock at any date, the number of years obtained by
dividing:

          (1) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other required
payments of principal (or liquidation preference, as applicable), including
payment at final maturity, in respect thereof, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment; by

          (2) the then outstanding principal amount (or liquidation preference)
of such Indebtedness (or Disqualified Stock, as applicable).

          "Wholly Owned" means, with respect to a Subsidiary of a specified
Person, all of the outstanding Equity Interests of such Subsidiary (other than
directors' qualifying shares) are at the time owned by such Person or by one or
more Wholly Owned Subsidiaries of such Person.

                                       18

<PAGE>

          "XM Building Subsidiary" means XM 1500 Eckington LLC, a Delaware
corporation and direct Wholly Owned Subsidiary of Holdings, and any and all
successors thereto.

          "XM Capital Subsidiary" means XM Capital Resources Inc., a Delaware
corporation and direct Wholly Owned Subsidiary of the Company, and any and all
successors thereto.

          "XM Leasing Subsidiary" means XM Equipment Leasing LLC, a Delaware
limited liability company and direct Wholly Owned Subsidiary of the Company, and
any and all successors thereto.

          "XM Radio Assets" means all assets, rights, services and properties,
whether tangible or intangible, used or intended for use in connection with an
XM Radio Business, including satellites, terrestrial repeating stations, FCC
licenses, uplink facilities, musical libraries and other recorded programming,
furniture, fixtures and equipment and telemetry, tracking, monitoring and
control equipment.

          "XM Radio Business" means the business of transmitting digital radio
programming throughout the United States by satellite and terrestrial repeating
stations to be received by subscribers, including any business in which the
Company was engaged on December 21, 2002, and any business reasonably related
thereto.

          "XM Radio Service" means digital radio programming transmitted by
satellites and terrestrial repeating stations to vehicle, home and portable
radios in the United States.

2.   Purchase and Sale of the Notes; Closing

          (a) The Obligors have duly authorized $415,800,000 in aggregate
principal amount at maturity of the 10% Senior Secured Discount Convertible
Notes due December 31, 2009, which includes additional Notes issuable after
January 1, 2006 as payment of Interest under Section 3.1, for issuance to the
Investors on the terms and subject to the conditions set forth in this
Agreement. The Notes, including any Notes issued in substitution or exchange
therefor pursuant to this Agreement, will bear interest at the Interest Rate on
the principal amount at maturity of the Notes and will mature on December 31,
2009, unless earlier repurchased, paid or Converted in accordance with the terms
hereof, and will be in substantially the form of Exhibit A attached hereto, with
such changes thereto, if any, as may be approved by the Obligors and the
Majority Holders.

          (b) Subject to the terms and conditions of this Agreement, each of the
Investors agrees, severally and not jointly, to purchase for cash from the
Obligors at the Closing, and the Obligors agree to sell and issue to each of the
Investors at the Closing, a Note with a principal amount at maturity equal to
the Accreted Value as of December 31, 2005 of a Note with the Initial Value
corresponding to each such Investor on Attachment 1 to this Agreement. Each of
the Obligors and the Investors acknowledges that the Notes are being issued with
an "original issue discount" for federal and state tax purposes. The Obligors'
agreements with each of the Investors are separate agreements, and the sale of
Notes to each of the Investors is a separate sale. The Closing shall take place
as of 10 A.M., Eastern time, on the Closing Date, which shall be the next
Business Day after the conditions set forth in Section 13 (other than delivery
of items to be delivered at the Closing and other than satisfaction of those
conditions that by their nature are to be satisfied at the Closing, it being
understood that the occurrence of the Closing shall remain subject to the
delivery of such items and the satisfaction or waiver of such conditions at the
Closing) are first satisfied or waived, provided that the date of the Closing
may be deferred (i) for up to ten Business Days after the satisfaction of such
conditions, as may be mutually agreed upon in writing by the Obligors and
Eastbourne Capital Management, L.L.C., acting in its sole discretion on behalf
of the Noteholders, or (ii) until such later date as may be mutually agreed upon
in writing by the Obligors and the Majority Holders. This Agreement shall
terminate at 5:00 p.m., Eastern standard time, on March 31, 2003, if the Closing
has not occurred, unless such date is extended by the written consent of the
Obligors and all of the Investors.

          (c) Each Note shall be governed by, and the rights and the benefits of
the Investors determined in accordance with, the terms and conditions of this
Agreement and, to the extent an Investor is party thereto, the Transaction
Documents. Each of the Investors that is a party to the Noteholders Agreement,
by accepting a Note, hereby agrees and acknowledges that the Note (and the
shares of Class A Common Stock into

                                       19

<PAGE>

which it may be Converted) may be offered, sold or otherwise transferred only in
accordance with the provisions of the Noteholders Agreement.

          (d) The Accreted Value of a Note, together with any premium or accrued
interest thereon, may be Converted at any time, in whole or in part, at the
option of the Holder thereof into Class A Common Stock in accordance with the
provisions of Section 9 of this Agreement. The stock into which such Accreted
Value, premium and interest are Converted in accordance with this Section 2(d)
shall be referred to as "Conversion Stock."

          (e) At the Closing, (i) each Party will deliver executed counterparts
of each Transaction Document to which it is a party; (ii) the Obligors shall
deliver to each Investor a Note in the principal amount at maturity calculated
in accordance with Section 2(b) of this Agreement, together with an Agreement
Guarantee of XM Leasing Subsidiary; and (iii) each Investor shall deliver by
wire transfer, to an account or accounts designated by the Obligors, immediately
available funds in an amount equal to the Initial Value set forth for such
Investor on Attachment 1 to this Agreement. The Obligors shall provide each of
the Investors with information as to such wire transfers, including information
as to the account or accounts to which funds are to be transferred and the
amount of funds to be transferred to each such account, no later than three
Business Days prior to the Closing.

          (f) The obligations of each Investor hereunder and under each of the
Transaction Documents are several and not joint with the obligations of any
other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor hereunder or under any
Transaction Document. Nothing contained herein or in any Transaction Document,
and no action taken by any Investor pursuant hereto or thereto, shall be deemed
to constitute the Investors as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Investors are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated hereby or by the Transaction Documents. Each Investor
shall be entitled to independently protect and enforce its rights, including the
rights arising out of this Agreement and out of each of the Transaction
Documents, and it shall not be necessary for any other Investor to be joined as
an additional party in any proceeding for such purpose.

3.   Interest and Repayment

          With respect to each Note:

     3.1. Interest on the Notes

          Interest will accrue on the principal amount at maturity of the Notes
at the rate of 10% per annum commencing January 1, 2006, and Additional Interest
may accrue on the principal amount at maturity of the Notes at the rates, and in
the circumstances, set forth in Section 2.2 of the Registration Rights
Agreement. All interest on the Notes will be payable in arrears on each Interest
Payment Date. Each payment of interest on the Notes will be made to the Holder
by certified or bank cashier's check or wire transfer of immediately available
funds or by the issuance of additional Notes, at such address or to such account
as the Holder specifies in writing to the Obligors at least five Business Days
before such payment is to be made. Any such written instructions may provide
that the information contained therein shall continue to be in effect with
respect to subsequent interest payments until thereafter modified by written
instructions of such Holder, which modified instructions shall take effect as of
the next Interest Payment Date occurring more than five Business Days after
delivery of such modified instructions. Any Note issued to a Holder as payment
of interest due on an Interest Payment Date will be issued in a principal amount
equal to the amount of such interest, will commence accruing interest as of the
calendar day immediately following such Interest Payment Date, will otherwise
have the same terms as the Notes issued at Closing and will be subject to the
provisions and have the benefits of this Agreement. Notwithstanding the
foregoing, no Additional Interest shall be payable at any time by the issuance
of additional Notes and no other interest shall be payable by issuance of
additional Notes if Additional Interest shall be accruing on the Notes as of the
applicable Interest Payment Date.

                                       20

<PAGE>

     3.2. Interest after Maturity

          In the event the Obligors shall fail to make any payment of the
principal amount at maturity of, or interest on, any Note when due, the Obligors
shall pay interest on such unpaid amount, payable from time to time on demand,
from the date such amount shall have become due to the date of payment thereof
(after as well as before judgment), accruing on a daily basis, at a per annum
rate of 12% plus any Additional Interest pursuant to Section 2.2 of the
Registration Rights Agreement (or such lesser maximum rate that is permitted to
be paid under applicable law).

     3.3. Payments and Computations

          (a) The Obligors will pay all sums becoming due on each Note for
interest, premium or principal, without the presentation or surrender of the
Note or the making of any notation thereon, except that if a Note is paid in
full, following such payment, the Note shall be surrendered to the Obligors at
their principal office for cancellation.

          (b) Interest on each Note shall be calculated for the actual number of
days (including the first day but excluding the last day of any relevant period)
elapsed and shall be computed on the basis of a 360-day year of twelve 30-day
months.

          (c) If a payment date is not a Business Day at a place of payment,
then (notwithstanding any other provision of this Agreement or the Notes)
payment of interest, premium or principal otherwise due on such date shall
instead be made at that place on the next succeeding Business Day and no
interest shall accrue on such payment for the intervening period.

     3.4. Payment at Maturity or Upon Conversion

          (a) The Accreted Value of each Note, together with any premium and
accrued interest thereon, shall be due and payable in full in cash on the
earlier of (i) the Maturity Date or (ii) such other date as the Note becomes due
and payable or purchasable pursuant to this Agreement. Payment of principal of
and premium, if any, on the Notes will be made to each Holder by certified or
bank cashier's check or wire transfer of immediately available funds, at such
address and to such account as the Holder shall specify in writing to the
Obligors at least five Business Days before such payment is to be made.

          (b) Upon any Conversion of any Note in accordance with the terms of
Section 9 hereunder, the Accreted Value of such Note (or any portion thereof
subject to such Conversion), together with any premium or accrued interest on
such Accreted Value or portion thereof (as the case may be), shall be Converted
into a number of shares of Class A Common Stock equal to the amount of such
Accreted Value, premium and accrued interest divided by the Conversion Price,
with any fractional shares that may result treated in the manner set forth in
Section 9.4 of this Agreement.

4.   Representations, Warranties and Agreements of XM

          Each of the Obligors hereby represents and warrants to and agrees with
the Investors as follows as of December 21, 2002:

     4.1. Incorporation, Standing, etc.

          Each of the Obligors and the Material Subsidiaries is duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as presently proposed
to be conducted, to enter into this Agreement and the other Transaction
Documents to which each is a party and to perform its obligations hereunder and
thereunder. Each of the Obligors has the corporate power and authority to issue
the Notes and

                                       21

<PAGE>

perform its obligations thereunder. Each of the Obligors and XM Leasing
Subsidiary has, by all necessary corporate action, duly authorized the execution
and delivery of this Agreement and the other Transaction Documents to which each
is a party and the performance of its obligations hereunder and thereunder. Each
of the Obligors has, by all necessary corporate action, duly authorized the
execution and delivery of the Notes and the performance of its obligations
thereunder. Each Subsidiary Guarantor has, by all necessary corporate action,
duly authorized the execution and delivery of its Agreement Guarantee and the
performance of its obligations thereunder.

     4.2. Subsidiaries

          The Company, the FCC License Subsidiary, XM Building Subsidiary, XM
Capital Subsidiary and XM Leasing Subsidiary are the only Material Subsidiaries.
The only assets of the FCC License Subsidiary consist of all of the FCC licenses
used in transmitting the XM Radio Service. The only assets of the XM Building
Subsidiary consist of real property located at 1500 Eckington Place, NE,
Washington, DC and related improvements.

          All of the outstanding Capital Stock of the Company and XM Building
Subsidiary are duly authorized, validly issued, fully paid and non-assessable,
and all such Capital Stock is owned beneficially and of record by Holdings free
and clear of any Lien. All of the outstanding Capital Stock of the FCC License
Subsidiary, XM Capital Subsidiary and XM Leasing Subsidiary are duly authorized,
validly issued, fully paid and non-assessable, and all such Capital Stock is
owned beneficially and of record by the Company free and clear of any Lien,
except as contemplated by the FCC License Subsidiary Pledge Agreement or its
predecessor agreement.

     4.3. SEC Reports

          (a) The Obligors have provided to the Investors a draft of their
Offering Circular, dated December 21, 2002, to be used in connection with the
exchange contemplated by clause (3) of the definition of Concurrent Financing
Transactions (the "Offering Circular"), which contains information about the
Obligors' business. Such draft of the Offering Circular does not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.

          (b) The Annual Reports on Form 10-K for the year ended December 31,
2001 filed by the Obligors, and all other reports filed by the Obligors pursuant
to Section 13(a) or 15(d) of the Exchange Act since December 31, 2001
(collectively, the "Exchange Act Filings") through the Closing Date, complied
and will comply (as the case may be) as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations of the SEC
thereunder and such filings, taken as a whole, do not and will not (as the case
may be) include any untrue statement of material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

          (c) Holdings is eligible to register Class A Common Stock for resale
by the Holders pursuant to a registration statement on Form S-3 under the
Securities Act.

     4.4. Qualification

          Each of the Obligors and the Material Subsidiaries is duly qualified
and in good standing as a foreign corporation authorized to do business in each
jurisdiction in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such qualification
necessary, except where the failure to be so qualified and in good standing
would not, individually or in the aggregate, result in a Material Adverse
Effect.

                                       22

<PAGE>

     4.5. Authorization of Agreement and Notes

          (a) This Agreement has been duly executed and delivered by each of the
Obligors and constitutes a valid, binding and enforceable obligation of each of
them, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

          (b) When, on the Closing Date, the Notes and the Security Agreements
have been duly executed and delivered by the Company and the Notes have been
paid for by the Investors in accordance with the terms of this Agreement, the
Notes and the Security Agreements will constitute valid, binding and enforceable
obligations of the Company, subject to applicable bankruptcy, insolvency,
moratorium and similar laws affecting creditors' rights generally, and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).

          (c) When, on the Closing Date, the Notes, the Noteholders Agreement,
the Director Agreement and the Registration Rights Agreement have been duly
executed and delivered by Holdings and the Notes have been paid for by the
Investors in accordance with the terms of this Agreement, the Notes, the
Noteholders Agreement, the Director Agreement and the Registration Rights
Agreement will constitute valid, binding and enforceable obligations of
Holdings, subject to applicable bankruptcy, insolvency, moratorium and similar
laws affecting creditors' rights generally, and subject, as to enforceability,
to general principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law).

          (d) When, on the Closing Date, the Agreement Guarantee of XM Leasing
Subsidiary has been duly executed and delivered by XM Leasing Subsidiary in
accordance with the terms of this Agreement, such Agreement Guarantee will
constitute a valid, binding and enforceable obligation of XM Leasing Subsidiary,
subject to applicable bankruptcy, insolvency, moratorium and similar laws
affecting creditors' rights generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).

     4.6. Absence of Defaults and Conflicts

          Neither of the Obligors nor any of the Material Subsidiaries is in
violation of its respective certificate of incorporation, bylaws or other
charter documents or is in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
any of them is a party or by which any of them may be bound, or to which any of
the property or assets of the Obligors or the Material Subsidiaries is subject
(collectively, "Agreements and Instruments"); and the execution, delivery and
performance of this Agreement and the Transaction Documents by the Obligors and
the Material Subsidiaries party thereto in connection with the transactions
contemplated hereby and thereby, and the consummation of the transactions
contemplated herein and therein (including the issuance of the Notes) and
compliance by the Obligors and the Material Subsidiaries with their respective
obligations hereunder and thereunder, do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default (or an event that with notice, lapse of time
or both would become a default) under, require the Obligors to conduct an offer
to repurchase any outstanding Obligations in accordance with the documents
establishing the terms under which such Obligations were incurred, give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
either of the Obligors or any of the Material Subsidiaries pursuant to such
Agreements and Instruments, nor will such action result in any violation of the
provisions of the certificate of incorporation, bylaws or other charter
documents of either of the Obligors or any of the Material Subsidiaries or any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality, stock exchange or Nasdaq Stock
Market or court, domestic or foreign, having jurisdiction over either of the
Obligors, any of the Material Subsidiaries or any of the assets or properties of
the Obligors and the Material Subsidiaries.

          There are no control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provisions, in each case, which could be

                                       23

<PAGE>

violated or triggered by the ownership level of a stockholder or group, under
Holdings' certificate of incorporation or the laws of the State of Delaware that
would be violated or triggered by the Investors and the Obligors fulfilling
their obligations or exercising their rights under the Notes or the Transaction
Documents, including the Obligors' issuance of the Notes and the Investors'
subsequent Conversion of Notes for Conversion Stock.

     4.7. Absence of Proceedings

          Except as disclosed in Schedule 4.7, there is no action, suit or
proceeding before or by any court or governmental agency or body, domestic or
foreign, now pending, or to the knowledge of the Obligors threatened, against or
affecting the Obligors, the Material Subsidiaries, any of the Officers or
directors of the Obligors or Material Subsidiaries in their capacity as such, or
any of the property or assets of the Obligors or Material Subsidiaries. There
has not been, and to the knowledge of the Obligors there is not pending or
contemplated, any investigation by the SEC involving the Obligors or any current
or former director or officer of an Obligor with respect to such Obligor or any
Subsidiary thereof. The SEC has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by an Obligor
under the Exchange Act or the Securities Act.

     4.8. Possession of Licenses and Permits

          Except as disclosed in Schedule 4.8: (i) each of the Obligors and the
Material Subsidiaries possesses such material permits, certificates, licenses,
approvals, consents, orders and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate Federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by it or planned to be conducted by it; (ii) each of the Obligors and
the Material Subsidiaries is in compliance with the terms and conditions of all
of its Governmental Licenses; (iii) all of the Governmental Licenses are valid
and in full force and effect; and (iv) neither of the Obligors nor any of the
Material Subsidiaries has received any notice of, nor do any of them have any
knowledge of any pending or threatened (or any basis therefor), proceedings
relating to the revocation, withdrawal, cancellation, modification, suspension
or non-renewal of any Governmental Licenses.

     4.9. No Violations of Laws

          Neither of the Obligors nor any of the Material Subsidiaries has
violated any law, including (i) the U.S. Communications Act of 1934, as amended,
and the rules or regulations promulgated thereunder, (ii) any applicable state
law or regulation concerning intra-state telecommunications, and (iii) any
foreign law or regulation concerning international communications, in each case
the violation of which, together with any other such violations, would have a
Material Adverse Effect.

     4.10. Internal Accounting Controls

          The books, records and accounts of each of the Obligors and the
Material Subsidiaries accurately and fairly reflect, in all material respects,
in reasonable detail, the transactions in and dispositions of the assets of the
respective Obligors and Material Subsidiaries. Each of the Obligors and the
Material Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded amount for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

     4.11. Tax Returns and Payments

          The Obligors and the Material Subsidiaries have filed all income tax
returns required by law to be filed by them and have paid all Taxes shown on
such returns and all other Taxes and other governmental charges levied upon them
and their respective properties, assets, income and franchises, to the extent
such Taxes have

                                       24

<PAGE>

become due and payable and before they have become delinquent, except for any
Taxes the amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which the
Obligors or the Material Subsidiaries, as the case may be, have established
adequate reserves in accordance with GAAP. The charges, accruals and reserves on
the books of the Obligors and the Material Subsidiaries in respect of Taxes for
all fiscal periods are adequate in the reasonable opinion of the Obligors and,
to the knowledge of the Obligors, there are no additional assessments for such
periods or any basis therefore.

     4.12. Indebtedness

          Neither of the Obligors nor any of the Material Subsidiaries is in
default, and no waiver of default is currently in effect, in the payment of any
interest or principal on any Indebtedness in aggregate principal amount in
excess of $5,000,000.

     4.13. Title to Properties; Liens

          Each of the Obligors and the Material Subsidiaries has good and
marketable title to all of its properties and assets, free and clear of all
Liens, except for Permitted Liens.

     4.14. Patents, Trademarks, Authorizations, etc.

          Except as disclosed in Schedule 4.14, each of the Obligors and the
Material Subsidiaries owns, possesses or has the right to use (without any known
conflict with the rights of others) all patents, trademarks, service marks,
trade names, copyrights, licenses and authorizations which are necessary to the
conduct of its business as currently conducted.

     4.15. Governmental Consents

          Except as may be required to be obtained or made under the Securities
Act and applicable state securities laws in connection with the exercise of any
registration rights of a Holder provided for in the Registration Rights
Agreement or any registration rights granted to purchasers in the offering(s)
contemplated by clause (6) of the definition of Concurrent Financing
Transactions, neither of the Obligors nor any of the Material Subsidiaries is
required to procure, make or file any consent, approval or authorization of, or
any notice to, of filing, registration or qualification with, any court or
administrative or governmental body in order to execute and deliver this
Agreement and the Notes and to perform its obligations hereunder and under any
and all Transaction Documents.

     4.16. Restrictions

          Except for the restrictions contained herein or under applicable law,
there will be no restrictions upon the Notes (including any restrictions set
forth in any existing shareholder agreement), with the exception of any
restrictions contained in the Noteholders Agreement, the Director Agreement and
the Registration Rights Agreement.

     4.17. Capitalization

          The authorized, issued and outstanding Capital Stock of Holdings is as
set forth in Schedule 4.17 hereof under "Capitalization." All of the outstanding
shares of Capital Stock of Holdings are duly authorized, validly issued, fully
paid and non-assessable. Except as disclosed on Schedule 4.17, neither of the
Obligors nor any of the Material Subsidiaries has outstanding any securities
convertible into or exchangeable for any of its Capital Stock nor does it have
outstanding any rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
any of its Capital Stock or securities convertible into or exchangeable for any
of its Capital Stock. Subject to the provisions of Section 9.7, all shares of
Conversion Stock will, when issued in accordance with

                                       25

<PAGE>

the terms of this Agreement and the Notes, be duly and validly issued, fully
paid and non-assessable and free from all Liens (other than any Liens created by
Holders).

     4.18. Seniority of Notes

          The Notes shall rank equal to all Indebtedness incurred by the
Obligors pursuant to the Concurrent Financing Transactions and all Indebtedness
of the Company under the Prior Indenture. Except as disclosed on Schedule 4.18,
the Notes shall rank senior to all other existing Indebtedness of the Obligors
as of the date of issuance of the Notes.

     4.19. Material Events

          Except as disclosed in the Exchange Act Filings and the Offering
Circular, since September 30, 2002, there has not been with respect to Holdings
or any of its Material Subsidiaries:

          (a) any event which could reasonably be expected to result in a
Material Adverse Effect; or

          (b) any damages, destruction or loss to the properties or assets of
either of the Obligors or any of the Material Subsidiaries, whether or not
covered by insurance, that has or could reasonably be expected to have a
Material Adverse Effect or that in the aggregate exceeds $100,000; or

          (c) any loss or waiver by either of the Obligors or any of the
Material Subsidiaries of any right, not in the ordinary course of business, or
any material debt owed to any of them; or

          (d) other than the sales of assets in the ordinary course of business
(including pursuant to sale leaseback transactions), any sale, transfer or other
disposition of, or agreements to sell, transfer or otherwise dispose of, any
assets by either of the Obligors or any of the Material Subsidiaries in excess
of $100,000 in the aggregate, or any cancellation or agreement to cancel any
debt or claims of either of the Obligors or any of the Material Subsidiaries; or

          (e) any declaration or setting aside or payment of any dividend
(whether in cash, property or stock) or any distribution (whether in cash,
property or stock) or other payment with respect to any of the Capital Stock of
either of the Obligors or any of the Material Subsidiaries, or any repurchase,
purchase or other acquisition of, or agreement to repurchase, purchase or
otherwise acquire, any Capital Stock of either of the Obligors or any of the
Material Subsidiaries; or

          (f) any amendment or termination of any contract, agreement or license
to which either of the Obligors or any of the Material Subsidiaries is a party
or by which it is bound, except where such amendment or termination could not be
reasonably expected to have a Material Adverse Effect; or

          (g) any resignation or termination or employment of any key employee,
and there is no impending or threatened resignation or termination or
terminations of employment of any key employee; or

          (h) any labor dispute (including any negotiation, or request for
negotiation, for any labor representation or any labor contract) affecting
either of the Obligors or any of the Material Subsidiaries; or

          (i) any application of any existing (or the enactment of any new)
environmental law or personnel, product safety law or other governmental
regulation that has or which could reasonably be expected to have a Material
Adverse Effect.

     4.20. Financial Statements

          The financial statements and schedules of Holdings and its
consolidated subsidiaries included in the Exchange Act Filings comply as to form
in all material respects with applicable accounting requirements and

                                       26

<PAGE>

present fairly in all material respects the consolidated financial condition of
Holdings and its consolidated Subsidiaries as of the respective dates thereof
and the consolidated results of operations and cash flows of Holdings and its
consolidated Subsidiaries for the respective periods covered thereby, all in
conformity with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto and subject, in the
case of unaudited statements, to normal year-end audit adjustments).

          The financial statements and schedules of the Company and its
consolidated subsidiaries included in the Exchange Act Filings comply as to form
in all material respects with applicable accounting requirements and present
fairly in all material respects the consolidated financial condition of the
Company and its consolidated Subsidiaries as of the respective dates thereof and
the consolidated results of operations and cash flows of the Company and its
consolidated Subsidiaries for the respective periods covered thereby, all in
conformity with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto and subject, in the
case of unaudited statements, to normal year-end audit adjustments).

     4.21. No Undisclosed Fees

          Except as disclosed on Schedule 4.21, there are no fees or payments to
be made by either Obligor to bankers, brokers or agents with regard to the issue
and delivery of the Notes or the transactions contemplated by the Concurrent
Financing Transactions.

     4.22. No Transactions with Affiliates

          Neither of the Obligors nor any of the Material Subsidiaries is
presently party to any material transaction with an Affiliate thereof on terms
any less favorable to such Obligor or Material Subsidiary than would have been
obtainable in arm's length dealing with a Person not an Affiliate.

     4.23. Registration Rights

          Except as disclosed on Schedule 4.23, there are no contracts,
agreements or understandings between Holdings and any other Person granting such
Person the right to require Holdings to file a registration statement under the
Securities Act with respect to any securities that Holdings owned or to be owned
by such a Person or to require Holdings to include such securities in the
securities registered pursuant to any of the registration statements filed by
Holdings under the Securities Act.

     4.24. Private Placement

          Neither of the Obligors nor any Person acting on such Obligor's behalf
has sold or offered to sell or solicited any offer to buy the Notes by means of
any form of general solicitation or advertising. Neither of the Obligors nor any
of its Affiliates nor any Person acting on such Obligor's behalf has, directly
or indirectly, at any time within the past six months, made any offer or sale of
any security or solicitation of any offer to buy any security under
circumstances that would (i) eliminate the availability of an exemption from
registration under the Securities Act in connection with the offer and sale of
the Notes as contemplated hereby or (ii) cause the offering of the Notes
pursuant to this Agreement to be integrated with other securities offerings by
such Obligor (including any such offering contemplated by the Concurrent
Financing Transactions) for purposes of any applicable law, regulation or
shareholder approval provisions, including under the rules and regulations of
the Nasdaq Stock Market.

     4.25. Acknowledgement Regarding Investors' Purchases of Notes

          The Obligors acknowledge and agree that each of the Investors is
acting solely in the capacity of an arm's-length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Obligors further
acknowledge that no Investor is acting as a financial advisor or fiduciary of
the Obligors (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any advice given by any Investor or any of
their respective representatives or agents in connection with this Agreement and
the transactions

                                       27

<PAGE>

contemplated hereby is merely incidental to the Investors' purchase of the
Notes. Each Obligor further represents to each Investor that its decision to
enter into this Agreement has been based solely on its independent evaluation
and the independent evaluation of its representatives.

5.   Representations and Warranties of the Investors

          Each of the Investors, severally and not jointly and as to itself
only, represents and warrants to and agrees with each Obligor that as of
December 21, 2002:

     5.1. Risks of Investment

          Its management recognizes that the purchase of a Note and any
securities which may be issued in payment of interest on or upon the Conversion
thereof (collectively, the "Securities") involves a high degree of risk
including the following: (i) an investment in the Obligors is highly
speculative, and only investors who can afford the loss of their entire
investment should consider investing in the Obligors and purchasing the
Securities; (ii) the Investor may not be able to liquidate its investment; (iii)
transferability of the Securities is restricted; (iv) in the event of a
disposition of the Securities, the Investor could sustain the loss of its entire
investment; and (v) the Obligors do not anticipate the payment of dividends in
the foreseeable future.

     5.2. Investment Experience

          Its management has prior investment experience, including investment
in securities which are traded on the Nasdaq National Market. To the extent it
has deemed appropriate, the Investor has retained and relied upon professional
advice regarding the investment, tax and legal merits and consequences of this
Agreement and its purchase of Notes hereunder.

     5.3. Ability to Bear Risk

          By reason of its management's business or financial experience, the
Investor has the capacity to protect its own interests in connection with the
transaction contemplated hereby, and is able to bear the economic risk which it
hereby assumes.

     5.4. Receipt and Review of Documentation

          Its management has been furnished by the Obligors during the course of
this transaction with information regarding the Obligors which such Investor's
management has requested, has been afforded the opportunity to ask questions of
and receive answers from duly authorized officers or other representatives of
the Obligors concerning the terms and conditions of the Securities, and has
received any additional information which its management has requested.

     5.5. Acquisition for Own Account

          The Investor is acquiring the Securities for its own account for
investment only, and not with a view towards their distribution in violation of
applicable securities laws.

     5.6. No Public Market; Rule 144

          (a) Its management understands that there currently is no public
market for the Notes. Its management understands and hereby acknowledges that
the Obligors are under no obligation to register the Notes under the Securities
Act or any state securities or "blue sky" laws.

                                       28

<PAGE>

          (b) The Investor's management acknowledges and agrees that the shares
of Class A Common Stock the Investor may receive upon a Conversion of Notes must
be held indefinitely unless such shares are subsequently registered under the
Securities Act or an exemption from such registration is available. The Investor
has been advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about
Holdings, the resale occurring not less than one year after a party has
purchased and paid for the security to be sold, the sale being through an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Exchange Act) and the number of shares
being sold during any three-month period not exceeding specified limitations.

     5.7. Organization, Good Standing, Corporate Authority

          It (other than an individual Investor) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, with requisite corporate or partnership power and authority to
enter into this Agreement and the Transaction Documents to which it is to be a
party and to consummate the transactions contemplated hereby and thereby,
including the purchase of the Notes to be acquired by it hereunder.

     5.8. Due Authorization

          The execution and delivery of, and the performance by the Investor of
its obligations under, this Agreement and the other Transaction Documents to
which it is a party have been duly and validly authorized and, upon execution
and delivery thereof, this Agreement and the other Transaction Documents to
which it is a party will constitute the legal, valid, binding obligations of
such Investor, enforceable against such Investor in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally, and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

     5.9. Qualified Institutional Buyer, Accredited Investor

          It is:

          (a) a Qualified Institutional Buyer, an institutional Accredited
Investor, or an Accredited Investor, as will be indicated to the Obligors in
writing prior to the Closing, and

          (b) aware that the sale of Securities to it is being made in reliance
on the exemption from the registration requirements provided by Section 4(2) of
the Securities Act and the regulations promulgated thereunder.

     5.10. Acknowledgement Regarding Investors' Purchases of Notes

          It acknowledges that it is not relying upon any person, firm or
corporation other than the Obligors in making its investment or decision to
invest in the Notes. It represents to each of the other Investors that it has
been solely responsible for its own "due diligence" investigation of the
Obligors and their respective management personnel and businesses, and for its
own analysis of the merits and risks of this investment. It agrees that no
Investor nor the respective controlling persons, officers, directors,
shareholders, investors partners, agents or employees of any such Investor shall
be liable to any other Investor for any actions taken in connection with the
purchase of Notes in accordance with the terms of this Agreement.

     5.11 No Net Short Positions

          As of December 21, 2002 through the time of filing of a Current Report
on Form 8-K on the Business Day succeeding December 21, 2002 (as contemplated by
the first sentence of Section 7.21 hereof), it has

                                       29

<PAGE>

no Net Short Position (as defined in Section 7.17), without giving any effect to
the proposed purchase of Notes contemplated hereby.

6.   Restrictions on Transfer

          (a) Each of the Investors party to the Noteholders Agreement agrees,
and each subsequent Holder of the Securities by its acceptance thereof will
agree (to the extent bound by the terms of the Noteholders Agreement), to offer,
sell or otherwise transfer such Securities only in compliance with the terms and
conditions set forth in the Noteholders Agreement. Each Investor acknowledges
that each certificate representing Securities will contain a legend
substantially to the following effect:

          THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
          REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
          "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THESE
          SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE RE-OFFERED,
          SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
          OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS
          EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.

Certificates evidencing Securities shall not be required to contain such legend
(i) following any sale of such Securities pursuant to an effective registration
statement covering the resale of such Securities under the Securities Act, (ii)
following any sale of such Securities pursuant to Rule 144 under the Securities
Act, (iii) if such Securities are eligible for sale under Rule 144(k), or (iv)
if such legend is not, in the opinion of counsel to Holdings, required in the
circumstances under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the SEC).

          (b) In addition, each Investor party to the Noteholders Agreement
acknowledges that each certificate issued to such Investor to represent
Securities will contain a legend substantially to the following effect:

          THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE THE SUBJECT OF A
          CERTAIN SHAREHOLDERS AND NOTEHOLDERS AGREEMENT WHICH, AMONG OTHER
          THINGS, CONTAINS RESTRICTIONS ON THE TRANSFER OF SUCH SECURITIES. A
          COPY OF THE SHAREHOLDERS AND NOTEHOLDERS AGREEMENT IS AVAILABLE FOR
          INSPECTION AT THE PRINCIPAL OFFICE OF XM SATELLITE RADIO INC. AND XM
          SATELLITE RADIO HOLDINGS INC.

Upon termination of the Noteholders Agreement, the Obligors shall remove the
applicable legend from the certificate(s) representing such Securities promptly
upon request of the Holder thereof and shall promptly deliver replacement
certificate(s) to such Holder.

7.   Covenants

          The Obligors hereby covenant and agree with each Investor as follows,
it being understood that prior to the Closing only those covenants specified in
Sections 7.2, 7.18, 7.19, 7.21 and 7.23 shall be in effect.

     7.1. Payment of Notes and Maintenance of Office

          The Obligors will punctually pay or cause to be paid the principal,
premium (if any) and interest due in respect of each Note according to the terms
thereof and hereof and will maintain an office within the continental boundaries
of the United States of America where notices, presentations and demands in
respect of this Agreement and the Notes may be made upon them and will notify
the Holders of such Notes of any change of location of such office. Such office
is presently maintained at 1500 Eckington Place, NE, Washington, DC 20002.

                                       30

<PAGE>

     7.2. Reports

          So long as any Notes are outstanding, each of the Obligors shall file
with the SEC, within the time periods specified in the SEC's rules and
regulations, periodic reports on Forms 10-Q, 10-K and 8-K (or any successor
forms). If at any time an Obligor is not required to file such reports, such
Obligor (as the case may be) shall furnish to the Holders within such time
periods: (i) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if such
Obligor were required to file such forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and, with respect
to the annual financial statements only, a report thereon by the certified
independent accountants of such Obligor and (ii) all information that would be
required to be filed with the SEC on Form 8-K if such Obligor were required to
file such reports.

     7.3. Taxes

          Each of the Obligors shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.

     7.4. Stay, Extension and Usury Laws

          Each of the Obligors and the Subsidiary Guarantors covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Agreement;
and each of the Obligors and the Subsidiary Guarantors (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any rights of the Holders, but shall suffer and
permit the execution of every such right as though no such law has been enacted.
Notwithstanding any provision to the contrary contained in any Note or
Transaction Document, it is expressly agreed and provided that the total
liability of the Obligors under the Notes for payments in the nature of interest
shall not exceed the maximum lawful rate authorized under applicable law, and,
without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Obligors may be obligated to pay under the Notes
exceed such maximum lawful rate. It is agreed that if the maximum contract rate
of interest allowed by law and applicable to the Notes is increased or decreased
by statute or any official governmental action subsequent to December 21, 2002,
the new maximum contract rate of interest allowed by law will be the maximum
lawful rate of interest applicable to the Notes from the effective date forward,
unless such application is precluded by applicable law. If under any
circumstances whatsoever, interest in excess of the maximum lawful rate is paid
by the Obligors to any Investor with respect to indebtedness evidenced by the
Notes, such excess shall be applied by such Investor to the unpaid principal
balance of any such indebtedness or be refunded to the Obligors, the manner of
handling such excess to be at such Investor's election.

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<PAGE>

     7.5  Intentionally Deleted

     7.6. Intentionally Deleted

     7.7. Intentionally Deleted

     7.8. Intentionally Deleted

     7.9. Intentionally Deleted

     7.10. Intentionally Deleted

     7.11. Corporate Existence

          Subject to Section 8.11 of the Noteholders Agreement, each Obligor
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (i) its corporate existence, and the corporate, partnership or
other existence of each of its Material Subsidiaries, in accordance with the
respective organizational documents thereof (as the same may be amended from
time to time) and (ii) the rights (charter and statutory), licenses and
franchises thereof; provided, however, that neither Obligor shall be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Material Subsidiaries, if the Board of Directors
of such Obligor, shall determine that the preservation thereof is no longer
desirable in the conduct of the business of such Obligor, taken as a whole with
its Subsidiaries, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes; provided further, that nothing in this
Section 7.11 shall prohibit a Parent Company Merger.

     7.12. Intentionally Deleted

     7.13. Intentionally Deleted

     7.14. Intentionally Deleted

     7.15. Intentionally Deleted

     7.16. Intentionally Deleted

     7.17. Certain Trading Limitations

          For so long as an Investor holds at least $10,000,000 in principal
amount at maturity of the Notes originally purchased by such Investor under this
Agreement, such Investor agrees that it will not enter into any Short Sales. For
purposes of this Section 7.17, a "Short Sale" by an Investor means to sell,
contract to sell, grant any option to purchase, or make any short sale of Class
A Common Stock, establish a "put equivalent position" (as such term is defined
in Rule 16a-1(h) under the Exchange Act) or engage in any transaction the result
of which will involve any of the foregoing, at a time when such Investor has no
equivalent offsetting long position in Class A Common Stock or preferred stock
or indebtedness convertible into Class A Common Stock (a "Net Short Position").
For purposes of determining whether an Investor has an equivalent offsetting
long position in Class A Common Stock, all Class A Common Stock held by such
Investor, all Conversion Stock that would be issuable upon Conversion in full of
all Notes then held by such Investor (assuming that such Notes were then fully
Convertible, notwithstanding any provisions to the contrary, and giving effect
to any Conversion Price adjustments scheduled to take effect in the future) and
all shares of Class A Common Stock issuable upon conversion of Holdings'
outstanding

                                       32

<PAGE>

preferred stock and Holdings' outstanding 7.75% Convertible Subordinated Notes,
exercise of any call option or "call equivalent position" (as defined in Rule
16a-1(b) under the Exchange Act) held by such Investor (assuming that such call
position was then fully convertible or exercisable, notwithstanding any
provisions to the contrary, and giving effect to any conversion or exercise
price adjustments scheduled to take effect in the future) shall be deemed to be
held long by such Investor. For purposes of this Section 7.17, the term
"Investor" includes an Investor and its Affiliates and Related Parties.

     7.18 Payments for Consent

          Neither Obligor nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Agreement, the Noteholders Agreement, the Director Agreement or the Notes unless
such consideration is offered to be paid and is paid to all Holders of the Notes
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.

     7.19. Hart-Scott-Rodino

          (a) The Parties shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings (which
shall include any necessary filings under the HSR Act and under the competition
laws of any other jurisdiction), and to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all third parties and
Governmental Entities which are necessary or advisable to consummate the
transactions contemplated by this Agreement. The Parties agree that they will
consult with each other with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and the other Transaction Documents and each Party will keep the other
apprised of the status of significant matters relating to contemplation of the
transactions contemplated hereby and thereby.

          (b) Each of the Parties shall use its reasonable best efforts to
resolve objections, if any, which may be asserted with respect to the
transactions contemplated hereby and by the other Transaction Documents under
antitrust laws, including, if applicable, the HSR Act. In the event a suit is
threatened or instituted challenging any of the transactions contemplated hereby
and thereby as violative of antitrust laws, each of the Parties shall use its
reasonable best efforts to avoid the filing of, or resist or resolve such suit.
The Parties shall use their reasonable best efforts to take such action as may
be required by: (a) the DOJ or the FTC in order to resolve such objections as
either of them may have to such transaction under antitrust laws, or (b) any
federal or state court of the United States, in any suit brought by a private
party or Governmental Entity challenging such transactions as violative of
antitrust laws, in order to avoid the entry of, or to effect the dissolution of,
any injunction, temporary restraining order, or other order which has the effect
of preventing the consummation of such transactions. Reasonable best efforts
shall not include the willingness of an Obligor to accept an order (1) agreeing
to the divestiture, or the holding separate, of any assets of Holdings or its
Subsidiaries or (2) restricting the conduct of the Obligors in a manner that
Holdings reasonably determines to be material to Holdings and its Subsidiaries,
taken as a whole.

     7.20. Pledges of Securities

          The Obligors acknowledge and agree that a Holder may from time to time
pledge pursuant to a bona fide margin agreement or grant a security interest in
some or all of the Securities and, if required under the terms of such
arrangement, such Holder may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer shall not be subject to
approval of either of the Obligors, and no legal opinion of the pledgee, secured
party or pledgor shall be required in connection therewith except as required by
applicable law. Further, no notice shall be required of such pledge. At the
appropriate Holder's expense, the Obligors will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities,
including the preparation and filing of any required prospectus supplement under
Rule 424(b)(3) of the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of selling stockholders
thereunder.

                                       33

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     7.21. Securities Law Disclosure; Publicity

          The Obligors shall, within one Business Day after each of December 21,
2002 and the Closing Date, file a Current Report on Form 8-K disclosing material
terms of the transactions contemplated hereby. After December 21, 2002, the
Obligors shall timely file any filings and notices required by the SEC or
applicable law with respect to the transactions contemplated hereby. Neither of
the Obligors nor any Person acting on its behalf will provide any Holder (other
than in connection with service by a designee of such Holder as a director or
board observer under the Director Agreement or the Noteholders Agreement) with
material, nonpublic information about the Obligors unless such Holder consents
to receive such information in writing in advance even if otherwise required
pursuant to the terms of any Transaction Document.

     7.22. Reimbursement

          Each of the Obligors, jointly and severally, shall indemnify and hold
harmless each Holder and any of its Affiliates or Related Parties from and
against any and all losses, claims, damages, liabilities, settlement costs and
expenses, including costs of preparation of legal action and reasonable
attorneys' fees, as incurred, arising out of or relating to any breach by either
of the Obligors of any of the representations, warranties or covenants made by
either of the Obligors in this Agreement or any other Transaction Document, or
any allegation by a third party that, if true, would constitute such a breach.
The indemnification obligations of the Obligors under this Section 7.23 shall be
in addition to any liability that they may otherwise have and shall be binding
upon and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Holders and any such Related Parties. In no event shall
the liability of either of the Obligors under this Section 7.23 to a Holder or
its Related Parties exceed the total Initial Value paid by the Holder under this
Agreement. If either of the Obligors breaches its obligations under this
Agreement or any Transaction Document, then, in addition to any other
liabilities either of the Obligors may have under this Agreement or any
Transaction Document or applicable law, the Obligors shall pay or reimburse the
Holders on demand for all costs of collection and enforcement (including
reasonable attorney's fees and expenses). Without limiting the generality of the
foregoing, each of the Obligors specifically agrees to reimburse the Holders on
demand for all costs of enforcing the indemnification obligations in this
Section 7.23. The rights of the Holders under this paragraph do not transfer
automatically upon transfer of the Notes, and may be transferred only by an
Investor delivering a written notice to such effect to the Obligors at or prior
to the transfer.

     7.23. Avoidance of Conflicts

          The Parties agree that notwithstanding anything else to the contrary
set forth herein, the covenants set forth in Sections 8.1 and 8.3 of the
Noteholders Agreement shall not restrict Holdings from complying with its letter
agreement with BayStar Group included in the Concurrent Financing Transactions.

     7.24 Indenture Compliance

          The Obligors will cause the Company to comply with the covenants set
forth in Sections 4.07 through 4.12, 4.14 through 4.16, 4.18 and 5.01 of the
Indenture.

8.   Defaults and Remedies

     8.1. Events of Default

          An "Event of Default" occurs if:

          (a) the Obligors default in the payment when due of interest on the
Notes and such default continues for a period of 30 days;

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<PAGE>

          (b) the Obligors default in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise;

          (c) the Obligors default in the performance, or breach the provisions
of Section 8.11 of the Noteholders Agreement, the Obligors fail to make or
consummate a Change of Control Offer in accordance with the provisions of
Section 8.7 of the Noteholders Agreement or the Obligors fail to make or
consummate an Asset Sale Offer in accordance with the provisions of Section 8.4
of the Noteholders Agreement;

          (d) an Obligor or any of its Subsidiaries fails to observe or perform
any other covenant or other agreement in this Agreement, the Notes or either of
the Security Agreements for 60 days after notice to such Obligor by the Holders
of at least 25% in aggregate principal amount at maturity of the Notes then
outstanding;

          (e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by an Obligor or any of its Material
Subsidiaries (or the payment of which is guaranteed by an Obligor or any of its
Material Subsidiaries), whether such Indebtedness or guarantee now exists or is
created after December 21, 2002, which default results in the acceleration of
such Indebtedness prior to its Stated Maturity or is caused by a failure to pay
principal of, or interest or premium, if any, on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the date of such
default (a "Payment Default") and, in each case, the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10,000,000 or more;

          (f) a final nonappealable judgment or final nonappealable judgments
for the payment of money are entered by a court or courts of competent
jurisdiction against an Obligor or any of its Material Subsidiaries and such
judgment or judgments remain undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the aggregate of all
such undischarged judgments exceeds $10,000,000 (net of any amounts with respect
to which a reputable and creditworthy insurance company has acknowledged
liability in writing); or a final nonappealable judgment or final nonappealable
judgments for the payment of money or for the rescission of the sale of
securities of either of the Obligors are entered by a court or courts of
competent jurisdiction against either of the Obligors, or either of the Obligors
enters into a settlement arrangement that includes the redemption, repurchase or
cancellation of any securities of either of the Obligors, in either case with
respect to an action filed by a security holder of either of the Obligors (other
than a Holder of Notes in its capacity as such) alleging that such Obligor
violated Section 5 of the Securities Act in connection with the offering and
sale of the Notes hereunder or the offering and sale of any of the Concurrent
Financing Transactions Issuances;

          (g) an Obligor or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy Law:

               (i) commences a voluntary case,

               (ii) consents to the entry of an order for relief against it in
          an involuntary case,

               (iii) consents to the appointment of a custodian of it or for all
          or substantially all of its property,

               (iv) makes a general assignment for the benefit of its creditors,
          or

               (v) generally can not pay its debts as they become due;

          (h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:

                                       35

<PAGE>

               (i) is for relief against an Obligor or any of its Significant
          Subsidiaries or any group of Subsidiaries that, taken as a whole,
          would constitute a Significant Subsidiary in an involuntary case;

               (ii) appoints a custodian of an Obligor or any of its Significant
          Subsidiaries or any group of Subsidiaries that, taken as a whole,
          would constitute a Significant Subsidiary or for all or substantially
          all of the property of an Obligor or any of its Significant
          Subsidiaries or any group of Subsidiaries that, taken as a whole,
          would constitute a Significant Subsidiary; or

               (iii) orders the liquidation of an Obligor or any of its
          Significant Subsidiaries or any group of Subsidiaries that, taken as a
          whole, would constitute a Significant Subsidiary;

and the order or decree remains unstayed and in effect for 60 consecutive days;

          (i) an Obligor or Material Subsidiary shall breach any material
representation, warranty or agreement set forth in either of the Security
Agreements or shall repudiate any of its obligations under either of the
Security Agreements, or either of the Security Agreements shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect; or

          (j) any Agreement Guarantee shall be held in a judicial proceeding to
be unenforceable or invalid or shall cease for any reason to be in full force
and effect (except pursuant to its terms), or any Subsidiary Guarantor shall
deny or disaffirm its obligations under its Agreement Guarantee.

          The Obligors shall deliver written notice to the Holders within five
days after any Officer of either Obligor has knowledge of the occurrence of any
event that with the giving of notice or the lapse of time or both would become
an Event of Default under this Section 8.1.

     8.2. Acceleration

          If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 8.1 hereof with respect to an Obligor, any
Significant Subsidiary or any group of Significant Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) occurs and is continuing, the
Holders of at least 25% in principal amount at maturity of the then outstanding
Notes may declare all the Notes to be due and payable immediately. Upon any such
declaration, the Accreted Value of the Notes, together with any premium and
accrued interest thereon, shall become due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (g) or
(h) of Section 8.1 hereof occurs with respect to an Obligor, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary or any Material Subsidiary thereof,
the Accreted Value of all outstanding Notes, together with any premium and
accrued interest thereon, shall be due and payable immediately without further
action or notice. The Majority Holders may on behalf of all of the Holders
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of Accreted Value, interest or premium that has become due
solely because of the acceleration) have been cured or waived.

     8.3. Other Remedies

          If an Event of Default occurs and is continuing, the Holder may pursue
any available remedy to collect the payment of the Accreted Value of, and any
premium or accrued interest on, the Notes or to enforce the performance of any
provision of the Notes, this Agreement, the Agreement Guarantees and the
Security Agreements (subject to the Intercreditor Agreements).

          A Holder may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by any Holder of a Note in exercising any right or remedy accruing upon an Event
of Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. All remedies are cumulative to the extent
permitted by law.

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<PAGE>

     8.4. Waiver of Past Defaults

          The Majority Holders may on behalf of the Holders of all of the Notes
waive an existing Default or Event of Default and its consequences hereunder,
except a continuing Default or Event of Default in the payment of the Accreted
Value of, or any premium or accrued interest on, the Notes (including in
connection with an offer to purchase), provided, however, that the Majority
Holders may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Agreement; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.

     8.5. Control by Majority

          The Majority Holders may direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Holders or
exercising any trust or power conferred on them.

     8.6. Rights of Holders of Notes to Receive Payment

          Notwithstanding any other provision of this Agreement, the right of
any Holder of a Note to receive payment of Accreted Value of, and any premium or
accrued interest on, the Note on the Stated Maturity expressed in the Note or
this Agreement (including in connection with an offer to purchase), or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder; provided
that a Holder shall not have the right to institute any such suit for the
enforcement of payment if and to the extent that the institution or prosecution
thereof or the entry of judgment therein would, under applicable law, result in
the surrender, impairment, waiver or loss of the Lien of this Agreement upon any
property subject to such Lien.

9.   Conversion Provisions

     9.1. Conversion at Option of Holders

          Each Holder shall have the right, at its option, at any time, subject
to the terms and provisions of this Agreement, as applicable, to Convert the
Accreted Value of each of its Notes or any portion thereof held by such Holder
(together with interest accrued and any premium on such Note or portion thereof
to be Converted) into shares of Conversion Stock at the Conversion Price,
promptly after surrender of such Note, accompanied by written notice of
Conversion (with respect to such Conversion, a "Conversion Notice") specifying
the Accreted Value thereof to be Converted (together with such interest and
premium) duly executed, to Holdings at any time during usual business hours at
the office of Holdings at, and, if so required by Holdings, accompanied by a
written instrument or instruments of transfer in form satisfactory to Holdings,
duly executed by such Holder or its attorney duly authorized in writing.
Notwithstanding the foregoing, no Holder may Convert the Accreted Value of its
Notes or any portion thereof held by such Holder (together with interest accrued
and any premium on such Note or portion thereof to be Converted) if such
proposed Conversion would constitute or result in an assignment of any FCC
license of the FCC License Subsidiary or any change of control (whether de jure
or de facto) of the FCC License Subsidiary or the exercise of any voting rights
relating to the stock of the FCC License Subsidiary or the Company if such
assignment or change of control or exercise of voting rights would require,
under then existing law, the prior approval of the FCC, without first obtaining
such prior approval of the FCC. Notwithstanding any other provision of this
Agreement or the Notes, if a Conversion of a Note is to be made in connection
with a sale of Holdings or other event, such Conversion may, at the election of
any Holder tendering such Note for Conversion, be expressly conditioned upon the
consummation of such other event, in which case such conversion shall not be
deemed to be effective until the consummation or occurrence of such other event.
The date on which a Conversion Notice is delivered to Holdings (as determined in
accordance with Section 17 hereof) shall be the "Conversion Date" with respect
thereto. Subject to Section 9.7(b) hereof, but not withstanding any other
provision of this Agreement or the

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<PAGE>

Notes, a Holder may Convert its Notes into Class A Common Stock only to the
extent shares of Class A Common Stock have been reserved by Holdings for
issuance upon such Conversion.

     9.2. Conversion at Option of Obligors

          The Obligors may, at any time on or after the fourth anniversary of
the Closing Date, require the Holders to Convert the Accreted Value of all, but
not less than all, of the Notes (together with any premium and accrued interest
thereon) into shares of Conversion Stock at the Conversion Price if each of the
following conditions is met:

          (a) shares of the Class A Common Stock shall have traded on the Nasdaq
National Market or a national securities exchange during each of the 30 Trading
Days immediately preceding the Determination Date (as defined below);

          (b) on each of the 30 Trading Days immediately prior to the
Determination Date, shares of Class A Common Stock shall have traded at a price
in excess of 200% of the Conversion Price then in effect;

          (c) Holdings shall have reported earnings before interest income and
expense, other income, taxes, depreciation (including amounts related to
research and development) and amortization greater than $0 for the immediately
preceding quarterly period for which Holdings reports its financial results, as
set forth in consolidated financial statements contained in Holdings' SEC
reports for such quarterly period, which financial statements shall have been
reviewed (or audited in the case of an annual report) by the certified
independent accountants of Holdings;

          (d) immediately following such Conversion, the aggregate amount of
Indebtedness of Holdings and its Subsidiaries on a consolidated basis shall be
less than $250,000,000; and

          (e) no shares of Series C Preferred Stock shall remain outstanding.

The Obligors may require a Conversion pursuant to this Section 9.2 by delivering
irrevocable written notice of such election to the Holders (with respect to such
Conversion, such notice is referred to herein as a "Conversion Notice" and the
date on which the Conversion Notice is sent is referred to herein as the
"Determination Date"), and the fifth Trading Day after the date any such
Conversion Notice is delivered to the Holders (as determined in accordance with
Section 17 hereof) will be the "Conversion Date" for such required Conversion.
Promptly upon receipt of a Conversion Notice pursuant to this Section 9.2, each
Holder shall surrender its Note or Notes to Holdings at a time during usual
business hours at the office of Holdings, and, if so required by Holdings,
accompanied by a written instrument or instruments of transfer in form
satisfactory to Holdings, duly executed by such Holder or its attorney duly
authorized in writing.

     9.3. Issuance of Certificates

          Holdings and the Holder surrendering a Note for Conversion, in whole
or in part, in a transaction that would be reportable under the HSR Act or that
would require approval by any Governmental Entity, shall promptly make all
filings which may be required in connection with such Conversion under the HSR
Act and other applicable laws, rules or regulations. Holdings and any such
Holder shall provide each other with such necessary information and assistance
as may reasonably be requested in connection with such filings. As promptly as
practicable after the surrender of a Note for Conversion (or, if applicable, the
specified waiting period under the HSR Act and receipt of other required
approvals from Governmental Entities), as provided in Section 9.1 or 9.2 hereof
(but in no event later than three Trading Days after such surrender, in the
absence of any HSR waiting period or other required approvals from Governmental
Entities), Holdings at its expense shall deliver or cause to be delivered at its
principal office to or upon the written order of the Holder of such Note so
surrendered (a) certificates bearing, if required by the terms hereof, the
restrictive legends set forth in Section 6 hereof, representing the number of
fully paid and non-assessable shares of Conversion Stock into which such Note is
being Converted in accordance with the provisions hereof, and (b) a Note,
registered in the name of such Holder, representing the portion of the

                                       38

<PAGE>

principal amount, if any, of the surrendered Note that is not attributable to
the Accreted Value being Converted at such time, dated so that there will be no
loss of interest on such principal amount and otherwise of like tenor. Subject
to the following provisions of this Section 9.3, such Conversion shall be deemed
to have been made at the close of business on the Conversion Date (or, if
applicable, the expiration of the specified waiting period under the HSR Act),
so that (i) the rights of the Holder of such Note as a Holder shall cease at
such time with respect to the Accreted Value being Converted, (ii) there shall
be no loss of interest on the portion of the principal amount of any surrendered
Note that is not attributable to the Accreted Value being Converted and (iii)
the Person entitled to receive the shares of Conversion Stock upon Conversion of
such Note shall be treated for all purposes as having become the record holder
or holders of such shares of Conversion Stock at such time; provided, however,
that no such surrender on any date when the stock transfer books of Holdings
shall be closed shall be effective to constitute the Person entitled to receive
the shares of Conversion Stock upon such Conversion as the record Holder of such
shares of Conversion Stock on such date, but such surrender shall be effective
to constitute the Person entitled to receive such shares of Conversion Stock as
the record Holder thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open.

     9.4. No Fractional Shares

          If, but for the provisions of this Section 9.4, the Conversion of any
Note for Conversion Stock were to result in the issuance by Holdings of a
fraction of a share of Class A Common Stock, Holdings, at its option, shall
either (a) round up such fraction to the nearest whole share, or (b) pay an
amount in cash equal to the product of (i) such fraction, multiplied by (ii) the
Fair Market Value of a share of Class A Common Stock on the date of the
Conversion notice, computed to the nearest whole cent, in lieu of issuing a
fractional share.

     9.5. Merger of Holdings

          In case of any consolidation with or merger of Holdings with another
corporation, or in case of any sale, lease or conveyance to another corporation
of the property of Holdings as an entirety or substantially as an entirety, a
Holder shall have the right thereafter to exchange any Notes for the kind and
amount of shares of stock and other securities and property or cash receivable
upon such consolidation, merger, sale, lease or conveyance by a Holder of the
number of shares of Conversion Stock of Holdings into which such Note might have
been converted immediately prior to such consolidation, merger, sale, lease or
conveyance. Holdings shall not effect any such consolidation, merger, sale,
lease or conveyance unless prior to or simultaneously with the consummation
thereof the successor corporation (if other than Holdings) resulting from such
consolidation or merger or the corporation purchasing or otherwise acquiring
such property shall assume, by written instrument executed and mailed or
delivered to the Holders at the last address of such Holders appearing on the
books of Holdings, the obligation to deliver to such Holders such securities,
property or cash as, in accordance with the foregoing provisions, such Holders
may be entitled to acquire upon Conversion.

     9.6. Reclassification of Class A Common Stock

          In case of any reclassification, stock split, subdivision, dividend or
distribution payable in shares of Class A Common Stock (or other securities or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly shares of Class A Common Stock), or similar recapitalization or event
with respect to shares of Class A Common Stock (other than a change in par
value, or from par value to no par value, but including any change in the shares
of Class A Common Stock into two or more classes or series of shares) or in case
of any consolidation or merger of another corporation into Holdings in which
Holdings is the surviving corporation and in which there is a reclassification
or change of the shares of Class A Common Stock (other than a change in par
value, or from par value to no par value, but including any change in the shares
of Class A Common Stock into two or more classes or series of shares), Holdings
shall provide that the Holders shall have the right thereafter to Convert the
Notes into the kind and amount of shares of stock and other securities and
property or cash receivable upon such reclassification or similar
recapitalization or event or such consolidation or merger ("Reclassified
Securities") by a holder of the number of shares of Class A Common Stock into
which the Notes might have been Converted immediately prior to such
reclassification or similar recapitalization or event of such consolidation or
merger. The above provisions hereof shall similarly apply to successive
reclassifications and changes of shares of Class A

                                       39

<PAGE>

Common Stock and to successive consolidations, mergers, sales or conveyances
involving such reclassifications and changes of shares of Class A Common Stock.
Holdings shall not effect any such consolidation, merger, sale, transfer or
other disposition, unless prior to or simultaneously with the consummation
thereof the successor corporation (if other than Holdings) resulting from such
consolidation or merger or the corporation purchasing or otherwise acquiring
such properties shall assume, by written instrument executed and mailed or
delivered to the Holders at the last address of such Holders appearing on the
books of Holdings, the obligation to deliver to such Holders such Reclassified
Securities as, in accordance with the foregoing provisions, such Holders may be
entitled to acquire. The above provisions of this subparagraph shall similarly
apply to successive reorganizations, reclassifications, consolidations, mergers,
sales, transfers, or other dispositions.

     9.7. Reservation of Class A Common Stock

          (a) Holdings shall have reserved 40,000,000 shares of Class A Common
Stock for issuance as Conversion Stock as of the Closing, which will be
sufficient to allow $127,200,000 in Initial Value of Notes to be Converted, less
the number of shares needed (if any) under the letter agreement between Holdings
and BayStar Group. Holdings will seek shareholder approval at its next
shareholders meeting to amend its certificate of incorporation to increase the
number of shares of its authorized Class A Common Stock to 600,000,000. Holdings
covenants that it will, immediately following receipt of such shareholder
approval, reserve and keep available out of its authorized Class A Common Stock,
a sufficient number of shares for the purposes of issuance upon Conversion of
all or any portion of such Notes which the Holders may Convert as provided in
Section 9.2 herein. Such shareholders meeting shall in any event be held within
six months after the Closing Date. Holdings covenants that all shares of Class A
Common Stock which shall be so issuable shall be duly and validly issued and
fully paid and non-assessable, free from preemptive or similar rights on the
part of the holders of any shares of Capital Stock or securities of Holdings,
and free from all Liens or other charges with respect to the issuance thereof.
Holdings will take all such action as may be necessary to assure that such
shares of Class A Common Stock are approved for listing on the Nasdaq Stock
Market (subject to notice of issuance) and generally may be so issued without
violation by the Company of any applicable law or regulation, or of any
requirements of the Nasdaq Stock Market or any domestic securities exchange or
other public trading market upon which the Class A Common Stock may be listed or
quoted.

          (b) If, at the time any Holder requests a Conversion of any of the
Notes in compliance with Section 9.1, and Holdings does not have available a
sufficient number of authorized but unissued shares of Class A Common Stock to
effect such Conversion, within three Business Days after such notice, (i)
Holdings shall issue such number of shares of Class A Common Stock as it has
available and (ii) the Obligors shall pay to such Holder in cash, as liquidated
damages and not as a penalty, an amount equal to (A) the number of shares of
Class A Common Stock to have been issued upon such Conversion in excess of the
number of shares of Class A Common Stock actually issued upon such Conversion,
multiplied by the Fair Market Value per share of Class A Common Stock on the
date of such notice. Upon complying with the foregoing requirements, Holdings
shall have no further obligation to issue or deliver the shares of Class A
Common Stock to have been issued upon such Conversion, or to take any other
actions specified in Section 9 relating to such Conversion.

     9.8. Taxes

          The issuance of certificates for shares of Conversion Stock upon the
Conversion of any Note shall be made without charge to the Holder for any Tax in
respect of the issuance of such certificates, and such certificates shall be
issued in the name of, or in such name as may be directed by, the Holder of such
Note; provided, however, that Holdings shall not be required to pay any Tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the Holder of such
Note, and Holdings shall not be required to issue or deliver such certificates
unless or until the Person or Persons requiring the issuance thereof shall have
paid to Holdings the amount of such Tax or shall have established to the
satisfaction of Holdings that such Tax has been paid. The Holder shall be
responsible for the payment of all applicable income Taxes in connection with
the Conversion of a Note.

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     9.9. No Rights or Liabilities as Stockholders

          No Note shall entitle any Holder thereof to any of the rights of a
stockholder of Holdings. No provision of this Agreement or of any Note, in the
absence of the actual Conversion of such Note or any part thereof by the Holder
thereof into Conversion Stock issuable upon such Conversion shall give rise to
any liability on the part of such Holder as a stockholder of Holdings, whether
such liability shall be asserted by Holdings or by creditors of Holdings.

     9.10. Limitation on Conversion

          Notwithstanding the provisions of Section 9.1 hereof, the number of
shares of Class A Common Stock that may be acquired by a Holder upon any
Conversion of Notes shall be limited to the extent necessary to ensure that,
following such exercise, the total number of shares of Class A Common Stock then
beneficially owned by such Holder and its Affiliates and any other Persons whose
beneficial ownership of Class A Common Stock would be aggregated with the
Holder's for purposes of Section 13(d) of the Exchange Act, does not exceed
4.999% (the "Limiting Percentage") of the total number of issued and outstanding
shares of Class A Common Stock (including for such purpose the shares of Class A
Common Stock issuable upon such Conversion). For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations thereunder. Each delivery of a Conversion
Notice hereunder will constitute a representation by the Holder that it has
evaluated the limitation set forth in this Section 9.10 and determined that
issuance of the full number of shares of Class A Common Stock requested in such
Conversion Notice is permitted under this Section 9.10. Holdings' obligation to
issue shares of Class A Common Stock in excess of the limitation referred to in
this Section 9.10 shall be suspended (and shall not terminate or expire
notwithstanding any contrary provisions hereof) until such time, if any, as such
shares of Class A Common Stock may be issued in compliance with such limitation.
By written notice to the Obligors at any time on or after December 21, 2002, a
Holder may waive the provisions of this Section 9.10 or increase or decrease
such limitation percentage to any other percentage specified in such notice, but
not exceeding 9.999%. Any such waiver or increase will not be effective until
the sixty-first day after such notice is delivered to the Obligors, provided,
that any such waiver or increase delivered prior to or at the Closing will take
effect as of the Closing. Any such waiver, increase or decrease will apply only
to such Holder and not to any other Holder. Notwithstanding the foregoing, an
Investor may elect to have the limitations of this Section 9.10 in their
entirety not apply to such Investor and its subsequent transferees at any and
all times by delivering, or causing to be delivered, a written notice to such
effect to the Obligors at or prior to the Closing.

10.  Registration, Transfer and Substitution of Notes

     10.1. Note Register

          The Obligors will keep at their principal office a register in which
the Obligors will provide for the registration of the Notes and the registration
of transfers of the Notes. The Obligors may treat the Person in whose name the
Note is registered on such register as the owner and holder thereof (the
"Holder") for the purpose of receiving payment of the principal of and interest
on the Note and for all other purposes, whether or not the Note shall be
overdue, and the Obligors shall not be affected by any notice to the contrary.
The Obligors will provide the Collateral Agent with a copy of their Note
register semi-annually on each June 15 and December 15, or at any other time
upon the written request of the Collateral Agent.

     10.2. Transfer and Conversion of Notes

          Upon surrender of one or more Notes for registration of transfer or
for exchange to the Obligors at their principal office with evidence that all
applicable transfer taxes have been paid, the Obligors at their expense will
execute and deliver in exchange therefore one or more Notes in the aggregate
unpaid principal amount(s) of such surrendered Note(s). Each such new Note shall
be registered in the name of such Person, or its nominee, as such Holder or
transferee may request, dated so that there will be no loss of interest on such
surrendered Note and otherwise of like tenor.

                                       41

<PAGE>

     10.3. Replacement of Notes

          Upon receipt of evidence reasonably satisfactory to the Obligors of
the loss, theft, destruction or mutilation of a Note and, in the case of any
such loss, theft or destruction, upon delivery of an indemnity bond in such
reasonable amount and form as the Obligors may determine (or of an indemnity
agreement from the Holder reasonably satisfactory to the Obligors), or, in the
case of any such mutilation, upon the surrender of such Holder for cancellation
to the Company at its principal office, the Obligors at their expense will
execute and deliver, in lieu thereof, a new Note of like tenor, dated so that
there will be no loss of interest on such lost, stolen, destroyed or mutilated
Note. Any Note in lieu of which any such new Note has been so executed and
delivered by the Obligors shall not be deemed to be an outstanding Note for any
purpose of this Agreement.

11.  Guarantees

     11.1. Execution and Delivery of Agreement Guarantees

          The Obligors shall cause XM Leasing Subsidiary to execute and deliver
at the Closing to each Holder of a Note an Agreement Guarantee substantially in
the form included in Exhibit F hereto, duly executed on behalf of XM Leasing
Subsidiary by an Officer thereof. The Obligors shall further cause any Person
that becomes, as a result of its acquisition by an Obligor or by a Subsidiary of
an Obligor or otherwise, a Material Subsidiary at any time after the Closing
Date to execute and deliver reasonably promptly after such event to each Holder
of a then outstanding Note an Agreement Guarantee substantially in the form
included in Exhibit F hereto, duly executed on behalf of such Material
Subsidiary by an Officer thereof. Notwithstanding the foregoing and subject to
the provisions set forth in the succeeding paragraph, the Obligors shall cause:

          (a) XM Capital Subsidiary to execute and deliver an Agreement
Guarantee only in the event that XM Capital Subsidiary continues to constitute a
Material Subsidiary on the date six months after the Closing Date or becomes a
Material Subsidiary as of any date thereafter;

          (b) XM Building Subsidiary to execute and deliver an Agreement
Guarantee only as of the date, if any, as of which (i) XM Building Subsidiary
becomes a Material Subsidiary and the existing mortgage on the real property
located at 1500 Eckington Place, NE, Washington, DC and related improvements (or
any successor mortgage) shall not, in the reasonable opinion of the Obligors,
prohibit the grant to the Noteholders of a security interest in the Capital
Stock or assets of XM Building Subsidiary or (ii) XM Building Subsidiary
constitutes a Material Subsidiary without giving effect to its ownership of the
real property located at 1500 Eckington Place, NE, Washington, DC and related
improvements; and

          (c) FCC License Subsidiary to execute and deliver an Agreement
Guarantee only in the event that FCC License Subsidiary constitutes a Material
Subsidiary without giving effect to its ownership of the FCC licenses used in
the transmission of the XM Radio Service.

          In addition:

          (A) Promptly after completing preparation of its consolidated
financial statements for each fiscal quarter ending after the Closing Date,
Holdings shall calculate, as of the final day of such fiscal quarter and in
accordance with GAAP, the aggregate book value of the assets of all of its
Subsidiaries excluding the value of the capital stock of the Subsidiaries,
excluding (i) all assets of the Company, (ii) all assets of any Subsidiary
Guarantors, (iii) the FCC licenses of FCC License Subsidiary used in the
transmission of the XM Radio Service, (iv) the real property of XM Building
Subsidiary located at 1500 Eckington Place, NE, Washington, DC and related
improvements and (v) all assets of XM Capital Subsidiary, but only with respect
to a fiscal quarter commencing on or after July 1, 2003 and only to the extent
it is not a Subsidiary Guarantor as of such final day of such fiscal quarter. If
the amount of such aggregate book value exceeds $10,000,000, Holdings shall
cause one or more of its Subsidiaries to become additional Subsidiary Guarantors
so that the aggregate book value of the assets of all of the Subsidiaries of
Holdings, excluding assets described in the preceding clauses (i) through (v)
(except to the extent

                                       42

<PAGE>

such assets are owned by such additional Subsidiary Guarantors) as of such final
day of such fiscal quarter shall be less than $10,000,000. Any such additional
Subsidiary Guarantor will also constitute a Material Subsidiary.

          (B) If at any time a Subsidiary of either Obligor (other than a
Subsidiary that has executed and delivered an Agreement Guarantee) Guarantees
any Pari Passu Indebtedness, the Obligors shall cause such Subsidiary to become
a Subsidiary Guarantor.

     11.2. Subsidiary Guarantors may Consolidate, Etc. on Certain Terms

          (a) Nothing contained in this Agreement, in any Agreement Guarantee or
in the Notes shall prevent any consolidation or merger of a Subsidiary Guarantor
with or into an Obligor or another Subsidiary Guarantor, or shall prevent the
transfer of all or substantially all of the assets of a Subsidiary Guarantor to
an Obligor or another Subsidiary Guarantor. Upon any such consolidation, merger,
transfer or sale, the Agreement Guarantee of the Subsidiary Guarantor being
consolidated or merged or into an Obligor or such other Subsidiary Guarantor (or
the assets of which are being so transferred) shall no longer have any force or
effect.

          (b) Nothing contained in this Agreement or in any of the Notes shall
prevent any consolidation or merger of a Subsidiary Guarantor with or into a
corporation or corporations other than an Obligor or another Subsidiary
Guarantor (whether or not affiliated with the Subsidiary Guarantor), or
successive consolidations or mergers in which a Subsidiary Guarantor or its
successor or successors shall be a party or parties, or shall prevent the
transfer of all or substantially all of the assets of a Subsidiary Guarantor, to
a corporation other than an Obligor or another Subsidiary Guarantor (whether or
not affiliated with the Subsidiary Guarantor) authorized to acquire and operate
the same in the event that such consolidation, merger or transfer complies with
the terms and conditions of this Agreement, the Notes, the Noteholders Agreement
and any Agreement Guarantee.

     11.3. Releases Following Sale of Assets

          Concurrently with any sale or other disposition of all or
substantially all of the assets of any Subsidiary Guarantor or all of the
Capital Stock of any Subsidiary Guarantor, in each case, in compliance with the
terms hereof, then such Subsidiary Guarantor (in the event of a sale or other
disposition of all of the Capital Stock of such Subsidiary Guarantor) or the
corporation acquiring the property (in the event of a sale or other disposition
of all or substantially all of the assets of a Subsidiary Guarantor) shall be
released from and relieved of its obligations under its Agreement Guarantee and
this Section 11, as the case may be; provided that in the event of an Asset
Sale, the Net Proceeds from such sale or other disposition are treated in
accordance with the provisions of Section 8.4 of the Noteholders Agreement. Any
Subsidiary Guarantor not released from its obligations under its Agreement
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Subsidiary Guarantor under the
Agreement Guarantee as provided in this Section 11.

     11.4. Application of Certain Terms and Provisions to Holdings and the
Subsidiary Guarantors

          (a) For purposes of any provision of this Agreement that provides for
the delivery by any Subsidiary Guarantor of an Officers' Certificate, the
definitions of such terms in Section 1 shall apply to such Subsidiary Guarantor,
as if references therein to the Company were references to such Subsidiary
Guarantor.

          (b) Any notice or demand which by any provision of this Agreement is
required or permitted to be given or served by the Holders of Notes to or on any
Subsidiary Guarantor may be given or served as described in this Agreement as if
references therein to the Obligors were references to such Subsidiary Guarantor.

                                       43

<PAGE>

12.  Security Agreements

     12.1. Security Agreements

          The due and punctual payment of the Accreted Value of, and any premium
and interest on, the Notes when and as the same shall be due and payable,
whether on an Interest Payment Date, at maturity, by acceleration, repurchase,
redemption or otherwise, and interest on the overdue principal of and interest
on the Notes and performance of all other obligations of the Obligors to the
Holders of Notes under this Agreement and the Notes, according to the terms
hereunder or thereunder, shall be secured as provided in the Security
Agreements. The Company shall enter into at the Closing the FCC License
Subsidiary Pledge Agreement. The Obligors shall, and shall cause XM Leasing
Subsidiary to enter into at the Closing, and any other Subsidiary Guarantor to
enter into concurrently with the execution and delivery of an Agreement
Guarantee by such Subsidiary Guarantor, the General Security Agreement, the form
of which is attached as Exhibit B hereto.

          Each Holder of Notes, by its acceptance thereof, consents and agrees
to the terms of the Security Agreements and the Intercreditor Agreements
(including the provisions providing for foreclosure and release of Collateral)
as the same may be in effect or may be amended from time to time in accordance
with their terms and authorizes and directs the Collateral Agent named in the
Intercreditor Agreements to enter into the Security Agreements and to perform
its obligations and exercise its rights thereunder in accordance therewith. The
Obligors shall do or cause to be done all such acts and things as may be
required by the provisions of the Security Agreements, to assure and confirm to
the Holders and the Collateral Agent the security interest in the Collateral
contemplated hereby, by the Security Agreements or any part thereof, as from
time to time constituted, so as to render the same available for the security
and benefit of this Agreement and of the Notes secured hereby, according to the
intent and purposes herein and therein expressed.

     12.2. Release of Collateral

          (a) Collateral may be released only in accordance with the terms of
the Security Agreements and the Intercreditor Agreements.

          (b) At any time when a Default or Event of Default shall have occurred
and be continuing and the maturity of the Notes shall have been accelerated
(whether by declaration or otherwise) and the Holders shall have delivered a
notice of acceleration to the Collateral Agent, no release of Collateral
pursuant to the provisions of the Security Agreements shall be effective as
against the Holders of Notes.

          (c) The release of any Collateral from the terms of this Agreement and
the Security Agreements shall not be deemed to impair the security under this
Agreement in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to the terms of the Security Agreements.

13.  Conditions to Closing

     13.1 Conditions to Obligations of the Investors

          The obligation of each of the Investors to acquire Notes at the
Closing is subject to the fulfillment on or prior to the Closing of the
following conditions:

          (a) The representations and warranties made by the Obligors in Section
4 hereof shall be true and correct in all material respects when made, and shall
be true and correct in all material respects at the Closing Date with the same
force and effect as if they had been made on and as of said date (unless any
representation or warranty refers to a specific earlier date, in which case it
shall have been true and correct in all material respects at such date).

                                       44

<PAGE>

          (b) All covenants, agreements and conditions to be performed by either
of the Obligors or any Subsidiaries of the Obligors on or prior to the Closing
contained in this Agreement and the other Transaction Documents to which either
is a party shall have been performed or complied with in all material respects.

          (c) There shall not then be in effect any legal or other order
enjoining or restraining the transactions contemplated by this Agreement and the
other Transaction Documents.

          (d) All waiting periods, if any, under the HSR Act or foreign merger
notification requirements, if applicable, relating to the transactions
contemplated hereby and by the other Transaction Documents will have expired or
been terminated early and all material foreign antitrust approvals required to
be obtained prior to the Closing in connection with the transactions
contemplated hereby and thereby shall have been obtained.

          (e) There shall not be in effect any law, rule or regulation
prohibiting or restricting such purchase or requiring any consent or approval of
any Person which shall not have been obtained to issue the Notes (except as
otherwise provided in this Agreement).

          (f) At least 90% of the principal amount of the Company's outstanding
14% Senior Secured Notes due 2010 shall have been exchanged as contemplated in
clause (3) of the definition of Concurrent Financing Transactions.

          (g) The Concurrent Financing Transactions shall close on or prior to
the Closing in the manner contemplated in the agreements governing such
transactions (or, to the extent any such agreement has not been executed as of
the time of delivery of this Agreement, in the manner contemplated in the most
recent draft thereof provided to the Investors prior to the date of this
Agreement) with all of the conditions therein satisfied or waived, provided that
any such waiver shall be reasonably acceptable to the Supermajority Investors.

          (h) The Investors shall have received an opinion of counsel to the
Obligors with respect to the legality of the Notes and such other matters as may
be customary for transactions of this type, in form and substance reasonably
satisfactory to the Investors.

          (i) Each of the Obligors and any other Person (other than an Investor)
shall have entered into the Transaction Documents to which it is a party.

          (j) The Investors shall have received a completely executed copy of
each of the Transaction Documents to which it is a party.

          (k) The aggregate Initial Value of Notes purchased at the Closing,
together with the gross proceeds to Holdings of the sale of Class A Common
Stock, if any, issued as contemplated by clause (6) of the definition of
Concurrent Financing Transactions (collectively, the "Gross Proceeds"), shall
not be less than $200,000,000.

          (l) Since December 21, 2002, no event or series of events shall have
occurred that reasonably could be expected to have or result in a Material
Adverse Effect. Trading in the Class A Common Stock shall not have been
suspended by the SEC or the Nasdaq National Market (except for any suspension of
trading of not more than one Business Day solely to permit dissemination of
material information regarding the Obligors or a general suspension of trading
on the Nasdaq National Market) at any time since December 21, 2002, and the
Class A Common Stock shall have been at all times since December 21, 2002 listed
for trading on the Nasdaq National Market.

          (m) Each of the Obligors shall have delivered to the Investors an
Officers' Certificate, dated the Closing Date, certifying that the conditions
specified in clauses (a), (b) and (l) of this Section 13.1 have been fulfilled.

          Any of the preceding clauses (a), (b), (c), (d), (e), (h), (i), (j)
and (m) may be waived in writing by the Majority Holders to the extent permitted
by law. The written consent of the Supermajority Investors shall be

                                       45

<PAGE>

required to waive the provisions of clauses (f), (g), (k) and (l) above, it
being understood that a waiver of clause (k) shall not be cause for elimination
or reduction of any Investor's obligation to close on its purchase of the
aggregate purchase price as set forth opposite such Investor's name on
Attachment 1, nor shall any such waiver constitute a waiver by the Obligors of
any cause of action they might have against the breaching party, provided,
however, that in the event that the Gross Proceeds would be less than
$175,000,000, the provisions of clause (k) may be waived only by the consent of
all Investors.

     13.2 Conditions to the Obligations of the Obligors

          The obligation of the Obligors to issue the Notes at the Closing is
subject to the fulfillment on or prior to Closing of the following conditions,
each of which may be waived in writing by the Obligors to the extent permitted
by law:

          (a) The representations and warranties made by each of the Investors
in Section 5 hereof shall be true and correct in all material respects when
made, and shall be true and correct in all material respects at the Closing Date
with the same force and effect as if they had been made on and as of said date
(unless any representation or warrant refers to a specific earlier date, in
which case it shall have been true and correct in all material respects at such
date).

          (b) There shall not then be in effect any legal or other order
enjoining or restraining the transactions contemplated by this Agreement and the
other Transaction Documents.

          (c) All waiting periods, if any, under the HSR Act or foreign merger
notification requirements, if applicable, relating to the transactions
contemplated hereby and by the other Transaction Documents will have expired or
been terminated early and all material foreign antitrust approvals required to
be obtained prior to the Closing in connection with the transactions
contemplated hereby and thereby shall have been obtained.

          (d) Each of the Investors shall have entered into the Transaction
Documents to which it is a party, except that any Investor that purchased Notes
with an Initial Value less than $10,000,000 shall not be required to sign the
Noteholders Agreement.

          (e) The aggregate Initial Value of Notes purchased at the Closing,
together with the gross proceeds to Holdings of the sale of Class A Common
Stock, if any, issued as contemplated by clause (6) of the definition of
Concurrent Financing Transactions, shall not be less than $200,000,000.

     13.3 Investment Election in Absence of Closing

          In the event the Closing does not occur, whether due to the actions or
omissions of any Party, the failure of satisfaction of closing conditions or for
any other reason whatsoever, then each of the Investors shall have the right
(but not the obligation), during the fifteen-day period following the Business
Day on which the Obligors notify such Investor that the Closing will not occur,
to notify the Obligors of such Investor's election to purchase shares of Class A
Common Stock (subject to applicable securities law and regulatory requirements)
at a per share price equal to the Conversion Price, in the full amount of the
aggregate Initial Value of Notes set forth opposite such Investor's name on
Attachment 1. Notwithstanding the foregoing, if the Closing does not occur due
to a decision by the Board of Directors of the Obligors, acting upon their
fiduciary duties, to sell a majority interest in the Obligors by way of an
acquisition, merger, asset sale or other form of business combination (which
sale shall not be considered a breach of this Agreement), each Investor's right
to purchase shares set forth in this Section 13.3 shall be limited to one-half
of the applicable Initial Value of Notes referenced above at a price per share
equal to the Conversion Price. Such purchase of shares shall be effected within
ten Business Days after the delivery of such notice to the Obligors, on a
Business Day mutually agreed upon by the Obligors and such Investor. Upon the
request of one or more Investors exercising their respective rights under this
Section 13.3, Holdings will enter into registration rights arrangements with
such Investors affording them registration rights regarding the Class A Common
Stock purchased under this Section 13.3 that are, to the extent feasible,
substantially identical to the rights to have been afforded to Holders with
respect to a "Noteholder Shelf Registration" under the Registration Rights

                                       46

<PAGE>

Agreement. Notwithstanding the foregoing, no Investor shall be entitled to
exercise the right provided in this Section 13.3 if such Investor or any of its
Affiliates breached any of its obligations hereunder in connection with the
failed Closing. The provisions of this Section 13.3 are intended to provide for
liquidated damages and not a penalty, and each Investor agrees that (a) if such
Investor exercises its rights under this Section 13.3 and purchases shares of
Class A Common Stock as contemplated hereby, such actions shall serve as such
Investor's sole remedy against the Obligors and their Affiliates with respect to
the failed Closing and (b) if the Closing does not occur and such failure is not
due in whole or in part to an act omission of either of the Obligors, a failure
by either of the Obligors to satisfy its closing conditions or any other default
hereunder by either of the Obligors, the rights of the Investors under this
Section 13.3 constitute the Investors' sole remedy against the Obligors with
respect to such Closing.

14.  Expenses

          The Obligors will pay (a) the reasonable fees and disbursements of
Hale and Dorr LLP, as counsel for the Investors, and (b) the reasonable fees and
disbursements of one additional counsel for each Investor that purchases, at the
Closing, Notes with an Initial Value of at least $50,000,000. All such fees and
disbursements shall be paid by the Obligors even if the transactions
contemplated hereby do not close.

15.  Survival

          All express representations and warranties contained in this Agreement
or made in writing by or on behalf of Holdings or its Subsidiaries in connection
with the transactions contemplated by this Agreement shall survive the execution
and delivery of this Agreement, any investigation at any time made by the
Investors or on behalf of the Investors, the issuance of the Notes hereunder,
and any disposition, payment or Conversion of the Notes. All statements
contained in any certificate or other instrument delivered by or on behalf of
Holdings or its Subsidiaries pursuant to this Agreement or in connection with
the transactions contemplated hereby shall be deemed representations and
warranties of Holdings or its Subsidiaries under this Agreement.

16.  Amendments and Waivers

          Except as expressly provided elsewhere herein or in the Notes, any
term of this Agreement or of the Notes may be amended or modified, and the
observance of any term of this Agreement or of the Notes may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of (i) each Obligor and (ii) the Majority Holders.
Any provision of this Agreement or the Notes that expressly provides for waiver
or consent by a specified group or percentage of the Investors or Holders may be
amended or waived only by such specified group or percentage of the Investors or
Holders. Any amendment or waiver effected in accordance with this Section 16
shall be binding upon each Holder of the Notes, each future Holder of the Notes
and each Obligor. Any consent or waiver obtained under Section 7.3 of the
Noteholders Agreement or Section 4.2 of the Director Agreement that approves an
action not permitted hereunder shall be considered a waiver of the applicable
provision of this Agreement with respect to the matter as to which the consent
or waiver was obtained. Notwithstanding the foregoing, this Agreement or the
Notes may be amended or supplemented, without the consent of any Holder of a
Note, to cure any ambiguity, defect or inconsistency in a manner that does not
materially adversely affect any Holder, to make any change that would provide
any additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights of any such Holder. Further, notwithstanding
any of the foregoing, without the consent of each Holder affected, an amendment
or waiver under this Section 16 may not, with respect to any Note held by a
non-consenting Holder:

          (a) reduce the principal amount at maturity of Notes whose Holders
must consent to an amendment, supplement or waiver;

          (b) reduce the Accreted Value or principal amount of, or change the
fixed maturity of, such Note or alter or waive any of the provisions with
respect to the repurchase of such Note pursuant to Sections 8.4 and 8.7 of the
Noteholders Agreement;

                                       47

<PAGE>

          (c) reduce the Interest Rate applicable to such Note, reduce the rate
at which the Accreted Value of such Note increases, or change the time for
payment of interest, including default interest, on such Note;

          (d) waive a Default or Event of Default in the payment of interest or
premium, if any, on such Note (except a rescission of acceleration of the Notes
by the Majority Holders and a waiver of the payment default that resulted from
such acceleration);

          (e) make the principal or Accreted Value of, or interest or premium
on, such Note payable in money or assets other than that stated in this
Agreement or the Notes;

          (f) except as expressly provided herein or in the Notes, increase the
Conversion Price applicable to such Note, limit the times at which or amounts
for which such Note may be Converted into Conversion Stock, change the terms
under which the Obligor can require Conversion of such Note, or change the
nature of the consideration to be received upon a Conversion of such Note;

          (g) make any change in the provisions of this Agreement relating to
waivers of past Defaults or the rights of the Holder of such Note to receive
payments of principal of or interest or premium, if any, on such Note;

          (h) release any portion of the Collateral from the Lien of the
Security Agreements, except in accordance with the terms thereof, including the
provisions of Section 19 of the FCC License Subsidiary Pledge Agreement and
Section 8 of the General Security Agreement; or

          (i) make any change in Section 8.6 hereof.

17.  Notices

          Except as otherwise provided in this Agreement, notices and other
communications under this Agreement shall be in writing and shall be deemed
properly served if: (i) mailed by registered or certified mail, return receipt
requested, (ii) delivered by a recognized overnight courier service, (iii)
delivered personally, or (iv) sent by facsimile transmission, addressed to the
General Counsel for each Party at the address set forth below for such Party or
at such other address or to the attention of such other officers as such Party
shall have furnished in writing pursuant to this Section 17. Such notice shall
be deemed to have been received: (i) three (3) days after the date of mailing if
sent by certified or registered mail, (ii) one (1) day after the date of
delivery if sent by overnight courier, (iii) the date of delivery if personally
delivered, or (iv) the next succeeding business day after transmission by
facsimile.

          If to Holdings or the Company:

          XM SATELLITE RADIO HOLDINGS INC.
          1500 Eckington Place, NE
          Washington, D.C. 20002-2194
          Fax No.: (202) 380-4500
          Attention:  General Counsel

          If to the Investors:

          As set forth on Attachment 1 hereto.

18.  Execution in Counterparts

          This Agreement may be executed in any number of counterparts and by
different Parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

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<PAGE>

19.  Binding Effect

          This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and assigns, except that (a) the
Obligors shall not have the right to assign their respective rights or
obligations hereunder or any interest herein without the prior written consent
of all of the Holders and (b) the Investors may, prior to the Closing and with
the consent of each of the Obligors, assign their rights hereunder to purchase
all or a portion of the Initial Value of Notes set forth in Attachment 1 hereto,
in which case the assignees thereof shall be deemed to be "Investors" with
respect to the assigned Initial Value of Notes.

20.  GOVERNING LAW; CHOICE OF FORUM; JURY TRIAL WAIVER

          (a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK AND THE CORPORATE LAW OF
THE STATE OF DELAWARE, AS APPLICABLE, WITHOUT GIVING EFFECT TO ANY CONFLICT OF
LAW PROVISIONS THEREOF OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW SECTIONS
5-1401 AND 5-1402.

          (b) IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE
FORUM FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE
SUPREME COURT OF THE STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK OR THE
FEDERAL COURTS LOCATED IN SUCH STATE AND COUNTY, AND RELATED APPELLATE COURTS.
THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND
AGREE TO SAID VENUE.

          (c) THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.

21.  Miscellaneous

     21.1. Severability

          The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect. If any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions shall be deemed dependent upon any other covenant
or provision unless so expressed herein.

     21.2. No Waiver

          It is agreed that a waiver by any Party of a breach of any provision
of this Agreement shall not operate, or be construed, as a waiver of any
subsequent breach by the breaching Party.

     21.3. Further Assurances

          The Parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement,
including entering into the other Transaction Documents to which each is a
Party.

                                       49

<PAGE>

     21.4. Construction

          The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party. The word "including" as
used herein shall not be construed so as to exclude any other thing not referred
to or described.

     21.5 Amendment and Restatement

          This Agreement hereby restates, amends and supersedes the 2002 Note
Purchase Agreement.

                                       50

<PAGE>

               IN WITNESS WHEREOF, the Parties have caused this Agreement to be
     duly signed as of the date first above written.

XM SATELLITE RADIO HOLDINGS INC.            XM SATELLITE RADIO INC.

By: /s/ Joseph M. Titlebaum                 By: /s/ Joseph M. Titlebaum
    ----------------------------                --------------------------------
Name:  Joseph M. Titlebaum                  Name: Joseph M. Titlebaum
Title: Executive Vice President,            Title: Executive Vice President,
General Counsel and Secretary               General Counsel and Secretary

                      [Signature pages of Investors follow]

                               NPA Signature Page

<PAGE>

COLUMBIA XM RADIO PARTNERS, LLC             COLUMBIA CAPITAL EQUITY PARTNERS II
By Columbia Capital LLC,                       (QP), L.P.
   its Managing Member                      By: Columbia Capital Equity Partners
                                            III, L.P., its General Partner

By: /s/ Donald A. Doering                   By: /s/ Donald A. Doering
    ----------------------------                --------------------------------
Name: Donald A. Doering                     Name: Donald A. Doering
Title: Chief Financial Officer              Title: Chief Financial Officer

COLUMBIA XM SATELLITE                       COLUMBIA CAPITAL EQUITY PARTNERS III
   PARTNERS III, LLC                           (QP), L.P.
                                            By: Columbia Capital Equity Partners
                                                III, L.P., its General Partner

By: /s/ Donald A. Doering                   By: /s/ Donald A. Doering
    ----------------------------                --------------------------------
Name: Donald A. Doering                     Name: Donald A. Doering
Title: Chief Financial Officer              Title: Chief Financial Officer

                               NPA Signature Page

<PAGE>

AEA XM INVESTORS IA LLC                     AEA XM INVESTORS IIA LLC
By XM Investors IA LP, its                  By XM Investors IIA LP, its
   Sole Member                                 Sole Member
By AEA XM Investors Inc., its               By AEA XM Investors Inc., its
   General Partner                             General Partner

By: /s/ Roger Freeman                       By: /s/ Roger Freeman
    ----------------------------                --------------------------------
Name: Roger Freeman                         Name: Roger Freeman
Title: President                            Title: President

                               NPA Signature Page

<PAGE>

HUGHES ELECTRONICS CORPORATION

By: /s/ Patrick T. Doyle
    ----------------------------
Name: Patrick T. Doyle
Title: Vice President, Treasurer
       and Controller

                               NPA Signature Page

<PAGE>

BLACK BEAR FUND I, L.P.                     BLACK BEAR FUND II, L.L.C.
By Eastbourne Capital Management,           By Eastbourne Capital Management,
   L.L.C., its general partner                 L.L.C., its manager

By: /s/ Eric M. Sippel                      By:  /s/ Eric M. Sippel
    ----------------------------                 -------------------------------
Eric M. Sippel                              Eric M. Sippel
Chief Operating Officer                     Chief Operating Officer

BLACK BEAR OFFSHORE MASTER FUND LIMITED
By Eastbourne Capital Management,
   L.L.C., its investment adviser
   and attorney in fact

By: /s/ Eric M. Sippel
    -----------------------------------
Eric M. Sippel
Chief Operating Officer

                               NPA Signature Page

<PAGE>

GEORGE HAYWOOD

/s/ George Haywood
------------------

                               NPA Signature Page

<PAGE>

BAYSTAR CAPITAL II, L.P.                    BAYSTAR INTERNATIONAL II Ltd.
By BayStar Capital Management,              By BayStar Capital Management,
   LLC, its general partner                    LLC, its investment manager

By:                                         By:
   -----------------------------                --------------------------------
Name:                                       Name:
Title:                                      Title:

                               NPA Signature Page

<PAGE>

ROYAL BANK OF CANADA
By its agent, RBC Dominion Securities Corporation

By:
    ----------------------------
Name:
Title:

By
   -----------------------------
Name:
Title:

                               NPA Signature Page

<PAGE>

SUPERIUS SECURITIES GROUP, INC. MONEY PURCHASE PLAN

By:
   -----------------------------
Name:
Title:

                               NPA Signature Page

<PAGE>

SF CAPITAL PARTNERS, LTD.

By:
   -----------------------------
Name:
Title:

                               NPA Signature Page

<PAGE>

AMERICAN HONDA MOTOR CO., INC.

By: /s/ Thomas G. Elliott
   -----------------------------
Name: Thomas G. Elliott
Title: Executive Vice President

                               NPA Signature Page

<PAGE>

MICHAEL W. HARRIS

--------------------------------

                               NPA Signature Page

<PAGE>

PAUL GREENWALD

--------------------------------

                               NPA Signature Page

<PAGE>

AVDAN PARTNERS, L.P.

By:
   -----------------------------
Name:
Title:

                               NPA Signature Page

<PAGE>

HEARST COMMUNICATIONS, INC.

By: /s/ Kenneth A. Bronfin
    ----------------------------
Name:  Kenneth A. Bronfin
Title: President, Hearst Interactive Media,
       a division of Hearst Communications, Inc.

                               NPA Signature Page

<PAGE>

JOHN DEALY

/s/ John Dealy
--------------------------------

                               NPA Signature Page

<PAGE>

A.R. SANCHEZ, JR.

--------------------------------

                               NPA Signature Page

<PAGE>

NEERA SINGH and RAJENDRA SINGH JTWROS

-------------------------------------

-------------------------------------

HERSH RAJ SINGH EDUCATIONAL TRUST

By:
    ---------------------------------
Name:
Title: Trustee

-------------------------------------
Name:
Title: Trustee

SAMIR RAJ SINGH EDUCATIONAL TRUST

By:
    ---------------------------------
Name:
Title: Trustee

-------------------------------------
Name:
Title: Trustee

                               NPA Signature Page

<PAGE>

EVEREST CAPITAL MASTER FUND LP

By:  Everest Capital Limited, its General Partner

By: /s/ Malcolm Stott
    --------------------------
Name: Malcolm Stott
Title: Chief Operating Officer

By: /s/ Simon Onabowald
    --------------------------
Name: Simon Onabowald
Title: Principal

EVEREST CAPITAL SENIOR DEBT FUND LP

By: Everest Capital Limited, its General
    Partner

By:  /s/ Malcolm Stott
     -------------------------
Name: Malcolm Stott
Title: Chief Operating Officer

By: /s/ Simon Onabowald
    --------------------------
Name: Simon Onabowald
Title: Principal

                               NPA Signature Page

<PAGE>

PRISM PARTNERS OFFSHORE FUND
By: Weintraub Capital Management LLC, its
Investment Manager

By:
Name:
Title:

PRISM PARTNERS I, L.P.
By: Weintraub Capital Management LLC, its
Investment Manager

By:
Name:
Title:

PRISM PARTNERS II OFFSHORE FUND
By: Weintraub Capital Management LLC, its
Investment Manager

By:
Name:
Title:

                               NPA Signature Page

<PAGE>

US TRUST COMPANY

By: /s/ David Williams
Name: David Williams
Title: Managing Director

                               NPA Signature Page

<PAGE>

                                  ATTACHMENT 1

                                                           Aggregate Initial
Investor                                                Value of Notes Purchased
-------------------------------------------------       ------------------------
AEA
   AEA XM Investors IA LLC                                   $  838,645.50
   c/o AEA Investors Inc.
   65 E 55th Street
   New York, New York 10022
   Attention: General Counsel
   Fax: 212-702-0518

   AEA XM Investors IIA LLC                                   6,861,354.50
   c/o AEA Investors Inc.
   65 E 55th Street
   New York, New York 10022
   Attention: General Counsel
   Fax: 212-702-0518

Columbia Capital
   Columbia Capital Equity Partners II (QP), L.P.             3,085,866.46
   c/o Columbia Capital, LLC
   201 North Union Street, Suite 300
   Alexandria, VA 22314
   Attention: James B. Fleming
   Fax: 703-519-5870

   Columbia XM Radio Partners, LLC                            3,354,133.54
   c/o Columbia Capital, LLC
   201 North Union Street, Suite 300
   Alexandria, VA 22314
   Attention: James B. Fleming
   Fax: 703-519-5870

   Columbia Capital Equity Partners III (QP), L.P.            1,107,920.45
   c/o Columbia Capital, LLC
   201 North Union Street, Suite 300
   Alexandria, VA 22314
   Attention: James B. Fleming
   Fax: 703-519-5870

   Columbia XM Satellite Partners III, LLC                      952,079.55
   c/o Columbia Capital, LLC
   201 North Union Street, Suite 300
   Alexandria, VA 22314
   Attention: James B. Fleming
   Fax: 703-519-5870

<PAGE>

Hughes Electronics Corporation                                  10,000,000
200 N. Sepulveda Boulevard
El Segundo, California 90245
Attention: Graham Jenner
Fax:  310-640-1734

Eastbourne Capital Management, L.L.C.
   Black Bear Fund I, L.P.                                      11,358,000
   c/o Eastbourne Capital Management, L.L.C.
   1101 Fifth Avenue, Suite 160
   San Rafael, California 94901
   Attention:  Eric M. Sippel, Chief Operating Officer
   Fax:  415-448-1246

   Black Bear Fund II, L.L.C.                                    1,343,000
   c/o Eastbourne Capital Management, L.L.C.
   1101 Fifth Avenue, Suite 160
   San Rafael, California 94901
   Attention:  Eric M. Sippel, Chief Operating Officer
   Fax:  415-448-1246

   Black Bear Offshore Master Fund Limited                      24,599,000
   c/o Eastbourne Capital Management, L.L.C.
   1101 Fifth Avenue, Suite 160
   San Rafael, California 94901
   Attention:  Eric M. Sippel, Chief Operating Officer
   Fax:  415-448-1246

George Haywood                                                   7,000,000
c/o Cronin & Vris, LLP
380 Madison Avenue
24th Floor
New York, New York 10017
Fax:  718-832-8292

Hearst Communications, Inc.                                     12,500,000
c/o Hearst Interactive Media
959 Eighth Avenue
New York, New York 10019
Attn: President, Hearst Interactive Media
Fax:  212-582-7739

<PAGE>

BayStar Group                                                   10,830,000
   BayStar Capital II, LP
   c/o BayStar Capital Management, LLC
   80 E. Sir Francis Drake Blvd., Suite 2B
   Larkspur, California 94939
   Fax:  415-834-4681

   BayStar International II, Ltd.                                1,170,000
   c/o BayStar Capital Management, LLC
   80 E. Sir Francis Drake Blvd., Suite 2B
   Larkspur, California 94939
   Fax:  415-834-4681

Royal Bank of Canada                                            27,300,000
c/o RBC Dominion Securities Corporation
165 Broadway
One Liberty Plaza
New York NY 10006
Attention: Michael Frommer
Fax:  212-858-7439

American Honda Motor Co., Inc.                                  50,000,000
1919 Torrance Blvd.
Torrance, California 90501-2746
Attention: Shinichi Sakamoto
Fax:  310-783-2210

Superius Securities Group, Inc. Money Purchase Plan              3,000,000
94 Grand Ave.
Englewood, New Jersey 07631
Fax:  201-568-9392

John Dealy                                                         500,000
c/o XM Satellite Radio Holdings Inc.
1500 Eckington Place, NE
Washington, District of Columbia 20002-2194
Fax:  202-380-4534

Avdan Partners, L.P.                                               700,000
100 Shoreline Highway, Suite 185-A
Mill Valley, California 94941
Fax:  415-239-3946

Michael W. Harris                                                  500,000
c/o Harris & Panels
120 East Washington Street
Suite 511
Syracuse, New York 13202
Fax:  315-472-2481

<PAGE>

Paul Greenwald                                                   1,500,000
c/o Harris & Panels
120 East Washington Street
Suite 511
Syracuse, New York 13202
Fax:  315-472-2481

SF Capital Partners, Ltd.                                        5,000,000
c/o Staro Asset Management, LLC
3600 South Lake Drive
St. Francis, Wisconsin 53235
Attention: Brian H. Davidson
Fax:  414-294-7687

Neera Singh and Rajendra Singh JTWROS                            1,500,000
7925 Jones Branch Drive
Suite 6400
McLean, Virginia 22102
Attn: General Counsel
Fax:  703-873-4501

Hersh Raj Singh Educational Trust                                  750,000
7925 Jones Branch Drive
Suite 6400
McLean, Virginia 22102
Attn: General Counsel
Fax:  703-873-4501

Samir Raj Singh Educational Trust                                  750,000
7925 Jones Branch Drive
Suite 6400
McLean, Virginia 22102
Attn: General Counsel
Fax:  703-873-4501

A.R. Sanchez, Jr.                                                1,000,000
1920 Sandman
Laredo, Texas 78041
Fax:  956-722-1017

Prism                                                              800,000
 Prism Partners Offshore Fund
 c/o Weintraub Capital Management LLC
 44 Montgomery Street, Suite 4100
 San Francisco, CA 94104

 Prism Partners I, L.P.                                            100,000
 c/o Weintraub Capital Management LLC
 44 Montgomery Street, Suite 4100
 San Francisco, CA 94104

 Prism Partners II Offshore Fund                                 1,100,000
 c/o Weintraub Capital Management LLC
 44 Montgomery Street, Suite 4100
 San Francisco, CA 94104

Everest                                                          7,500,000
 Everest Capital Master Fund LP
 c/o Everest Capital Limited
 The Bank of Butterfield Building, 6th floor
 65 Front Street
 Hamilton HM 12, Bermuda
 Fax No.: (441) 292-2285

 Everest Capital Senior Debt Fund LP                             7,500,000
 c/o Everest Capital Limited
 The Bank of Butterfield Building, 6th floor
 65 Front Street
 Hamilton HM 12, Bermuda
 Fax No.: (441) 292-2285

U.S. Trust Company                                               3,000,000
P.O. Box 200
Essex Connecticut 06426
                                                               -----------
Total                                                          210,000,000

<PAGE>

                                                                       Exhibit A

                                 [Face of Note]
--------------------------------------------------------------------------------

             10% Senior Secured Discount Convertible Notes due 2009

     No. 1    $
                ----------

                        XM SATELLITE RADIO HOLDINGS INC.

                             XM SATELLITE RADIO INC.

promises to pay to
                   -------------------------------------------------------------

or registered assigns,

the principal sum of
                     -----------------------------------------------------------

Dollars on December 31, 2009.

Interest Payment Dates:          and
                         -------     -------

Record Dates:          and
              -------     -------

Dated:
       --------

                                                XM SATELLITE RADIO HOLDINGS INC.

                                                By:
                                                    ----------------------------
                                                    Name:
                                                    Title:

                                                By:
                                                    ----------------------------
                                                    Name:
                                                    Title:

                                                XM SATELLITE RADIO INC.

                                                By:
                                                      --------------------------
                                                      Name:
                                                      Title:

                                                By:
                                                      --------------------------
                                                      Name:
                                                      Title:

--------------------------------------------------------------------------------

                                       A-1

<PAGE>

                                 [Back of Note]
             10% Senior Secured Discount Convertible Notes due 2009

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES
ACT.

[THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE THE SUBJECT OF A CERTAIN
NOTEHOLDERS AND SHAREHOLDERS AGREEMENT WHICH, AMONG OTHER THINGS, CONTAINS
RESTRICTIONS ON THE TRANSFER OF SUCH SECURITIES. A COPY OF THE NOTEHOLDERS AND
SHAREHOLDERS AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF XM
SATELLITE RADIO INC. AND XM SATELLITE RADIO HOLDINGS INC.]

     Capitalized terms used herein shall have the meanings assigned to them in
the Amended and Restated Note Purchase Agreement, dated as of June 16, 2003, by
and among XM Satellite Radio Inc., XM Satellite Radio Holdings Inc. and the
investors set forth therein (the "Note Purchase Agreement").

     1. Interest. XM Satellite Radio Inc., a Delaware corporation (the
"Company"), and XM Satellite Radio Holdings Inc, a Delaware corporation (the
"Holdings" and, together with the Company, the "Obligors"), promise to pay
interest on the principal amount of this Note at 10% per annum from January 1,
2006 until maturity, together with any additional interest accruing from time to
time pursuant to Section 2.2 of the Registration Rights Agreement ("Additional
Interest"). The Obligors will pay interest semi-annually in arrears on June 30
and December 31 of each year, commencing June 30, 2006 (or, with respect to
Additional Interest accruing on an earlier June 30 and December 31 if Additional
Interest shall accrue prior to January 1, 2006, as provided in the Note Purchase
Agreement), or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from January 1, 2006, except that Additional Interest
will accrue in accordance with Section 2.2 of the Registration Rights Agreement.
The Obligors shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate of 12% per annum (plus the rate of any
applicable Additional Interest accruing from time to time); they shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest from time to time on demand
at the same rate to the extent lawful. Interest will be computed on the basis of
a 360-day year of twelve 30-day months. This Note has an Accreted Value as
determined from time to time in accordance with the Note Purchase Agreement.

     2. Method of Payment. The Obligors will pay interest on the Notes to the
Persons who are registered Holders of Notes at the close of business on the June
15 or December 15 next preceding an Interest Payment Date, even if such Notes
are canceled after such record date and on or before such Interest Payment Date.
Each payment of interest on the Notes will be made to the Holder by certified or
bank cashier's check or wire transfer of immediately available funds or by the
issuance of additional Notes, at such address or to such account as the Holder
specifies in writing to the Obligors at least five Business Days before such
payment is to be made. Any such written instructions may provide that the
information contained therein shall continue to be in effect with respect to
subsequent interest payments until thereafter modified by written instructions
of such Holder, which modified instructions shall take effect as of the next
Interest Payment Date occurring more than five Business Days after delivery of
such modified instructions. Any Note issued to a Holder as payment of interest
due on an Interest Payment Date will be issued in a principal amount equal to
the amount of such interest, will commence accruing interest as of the calendar
day immediately following such Interest Payment Date, will otherwise have the
same terms as the Notes issued at Closing and will be subject to the provisions
and have the benefits of the Note Purchase Agreement. Notwithstanding the
foregoing, no Additional Interest shall be payable at any time by the issuance
of additional Notes and no other interest shall be payable by issuance of
additional Notes if Additional Interest shall be accruing on the Notes as of the
applicable Interest Payment Date.

                                       A-2

<PAGE>

     3. Security Agreements. The Notes are secured obligations of the Obligors.
The Notes are secured by a pledge of the Collateral pursuant to the Security
Agreements.

     4. Conversion. Each Holder shall have the right, at its option, at any
time, subject to the terms and provisions of this Agreement, as applicable, to
Convert the Accreted Value of each of its Notes or any portion thereof held by
such Holder (together with interest accrued and any premium on such Note or
portion thereof to be Converted) into shares of Conversion Stock at the
Conversion Price, promptly after surrender of such Note, accompanied by written
notice of Conversion specifying the principal amount thereof to be Converted
duly executed, to Holdings at any time during usual business hours at the office
of Holdings at, and, if so required by Holdings, accompanied by a written
instrument or instruments of transfer in form satisfactory to Holdings, duly
executed by such Holder or its attorney duly authorized in writing.
Notwithstanding any other provision hereof, if a Conversion of a Note is to be
made in connection with a sale of Holdings or other event, such Conversion may,
at the election of any Holder tendering such Note for Conversion, be expressly
conditioned upon the consummation of such other event, in which case such
conversion shall not be deemed to be effective until the consummation or
occurrence of such other event. Conversions of this Note may be limited pursuant
to Sections 9.1, 9.7 or 9.10 of the Note Purchase Agreement.

     5. Conversion at the Option of Holdings.

          The Obligors may, at any time on or after the fourth anniversary of
the Closing Date, require the Holders to Convert the Accreted Value of all, but
not less than all, of the Notes (together with any premium and accrued interest
thereon) into shares of Conversion Stock at the Conversion Price if each of the
following conditions is met:

          (a) shares of the Class A Common Stock shall have traded on the Nasdaq
National Market or a national securities exchange during each of the 30 Trading
Days immediately preceding the Determination Date (as defined below);

          (b) on each of the 30 Trading Days immediately prior to the
Determination Date, shares of Class A Common Stock shall have traded at a price
in excess of 200% of the Conversion Price then in effect;

          (c) Holdings shall have reported earnings before interest income and
expense, other income, taxes, depreciation (including amounts related to
research and development) and amortization greater than $0 for the immediately
preceding quarterly period for which Holdings reports its financial results, as
set forth in consolidated financial statements contained in Holdings' SEC
reports for such quarterly period, which financial statements shall have been
reviewed (or audited in the case of an annual report) by the certified
independent accountants of Holdings;

          (d) immediately following such Conversion, the aggregate amount of
Indebtedness of Holdings and its Subsidiaries on a consolidated basis shall be
less than $250,000,000; and

          (e) no shares of Series C Preferred Stock shall remain outstanding.

The Obligors may require such a Conversion by delivering irrevocable written
notice of such election to the Holders (the date on which such notice is sent
being referred to herein as the "Determination Date"), and the fifth Trading Day
after the date any such notice is delivered to the Holders (as determined in
accordance with the notice provisions hereof) will be the "Conversion Date" for
such required conversion. Promptly upon receipt of such written notice, each
Holder shall surrender its Note or Notes to Holdings at a time during usual
business hours at the office of Holdings at, and, if so required by Holdings,
accompanied by a written instrument or instruments of transfer in form
satisfactory to Holdings, duly executed by such Holder or its attorney duly
authorized in writing.

     6. Denominations, Transfer. The Notes are in registered form without
coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered as provided in the Note Purchase Agreement.
The Obligors may require a Holder, among other things, to furnish appropriate
endorsements and

                                       A-3

<PAGE>

transfer documents and the Obligors may require a Holder to pay any taxes and
fees required by law in connection with a transfer or conversion.

     7. Persons Deemed Owners. The registered Holder of a Note may be treated as
its owner for all purposes.

     8. Amendment, Supplement and Waiver. Except as expressly provided elsewhere
herein or in the Note Purchase Agreement, any term of the Note Purchase
Agreement or of this Note may be amended, and the observance of any term of the
Agreement or of this Note may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of (i) each Obligor and (ii) the Majority Holders. Any provision of this
Note or the Note Purchase Agreement that expressly provides for waiver or
consent by a specified group or percentage of the Investors or Holders may be
amended or waived only by such specified group or percentage of the Investors or
Holders. Any amendment or waiver effected in accordance with this Section 8
shall be binding upon each Holder of the Notes, each future Holder of the Notes
and each Obligor. Any consent or waiver obtained under Section 7.3 of the
Noteholders Agreement or Section 4.2 of the Director Agreement that approves an
action not permitted hereunder shall be considered a waiver of the applicable
provision of this Agreement with respect to the matter as to which the consent
or waiver was obtained. Notwithstanding the foregoing, the Notes (including this
Note) or the Note Purchase Agreement may be amended or supplemented, without the
consent of any Holder of this Note, to cure any ambiguity, defect or
inconsistency in a manner that does not materially adversely affect any Holder
of the Notes, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights of any such Holder. Further, notwithstanding any of the foregoing,
without the consent of each Holder affected, an amendment or waiver under this
Section 8 or Section 16 of the Note Purchase Agreement may not, with respect to
any Note held by a non-consenting Holder:

          (a) reduce the principal amount at maturity of Notes whose Holders
must consent to an amendment, supplement or waiver;

          (b) reduce the Accreted Value or principal amount of, or change the
fixed maturity of, such Note or alter or waive any of the provisions with
respect to the repurchase of such Note pursuant to Sections 8.4 and 8.7 of the
Noteholders Agreement;

          (c) reduce the Interest Rate applicable to such Note, reduce the rate
at which the Accreted Value of such Note increases, or change the time for
payment of interest, including default interest, on such Note;

          (d) waive a Default or Event of Default in the payment of interest or
premium, if any, on such Note (except a rescission of acceleration of the Notes
by the Majority Holders and a waiver of the payment default that resulted from
such acceleration);

          (e) make the principal or Accreted Value of, or interest or premium
on, such Note payable in money or assets other than that stated in such Note or
the Note Purchase Agreement;

          (f) except as expressly provided in such Note or the Note Purchase
Agreement, increase the Conversion Price applicable to such Note, limit the
times at which or amounts for which such Note may be Converted into Conversion
Stock, change the terms under which the Obligor can require Conversion of such
Note, or change the nature of the consideration to be received upon a Conversion
of such Note;

          (g) make any change in the provisions of the Note Purchase Agreement
relating to waivers of past Defaults or the rights of the Holder of such Note to
receive payments of principal of or interest or premium, if any, on such Note;

          (h) release any portion of the Collateral from the Lien of the
Security Agreements, except in accordance with the terms thereof, including the
provisions of Section 19 of the FCC License Subsidiary Pledge Agreement and
Section 8 of the General Security Agreement; or

                                       A-4

<PAGE>

          (i) make any change in Section 8.6 of the Note Purchase Agreement.

     9. Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest on the Notes; (ii) default in payment
when due of principal of or premium, if any, on the Notes (including in
connection with an offer to purchase) or otherwise, (iii) failure by the
Obligors to comply with the provisions of Section 8.11 of the Noteholders
Agreement, the failure of the Obligors to make or consummate a Change of Control
Offer in accordance with the provisions of Section 8.7 of the Noteholders
Agreement, or the failure of the Obligors to make or consummate an Asset Sale
Offer in accordance with the provisions of Section 8.4 of the Noteholders
Agreement; (iv) failure by an Obligor or any of its Subsidiaries, for 60 days
after notice to such Obligor by the Holders of at least 25% in principal amount
at maturity of the Notes then outstanding, to comply with certain covenants and
other agreements in the Agreement, the Notes or either of the Security
Agreements; (v) default under certain other agreements relating to Indebtedness
of an Obligor or any of its Material Subsidiaries, which default results in the
acceleration of such Indebtedness prior to its express maturity; (vi) certain
final judgments for the payment of money that remain undischarged for a period
of 60 days and with respect to certain actions against an Obligor under Section
5 of the Securities Act; (vii) certain events of bankruptcy or insolvency with
respect to an Obligor or any of its Significant Subsidiaries and (viii) the
breach or repudiation of certain covenants in either of the Security Agreements
or any Agreement Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect. If any Event of Default occurs and is continuing, the Holders of at
least 25% in principal amount at maturity of the then outstanding Notes may
declare the Accreted Value of the Notes, together with any premium and accrued
interest thereon, to be due and payable. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, the Accreted Value of all outstanding Notes will become due and
payable without further action or notice. The Majority Holders may on behalf of
the Holders of all of the Notes waive any existing Default or Event of Default
and its consequences under the Note Purchase Agreement except a continuing
Default or Event of Default in the payment of interest on, or the principal of,
the Notes.

     10. No Recourse Against Others. A director, officer, employee, incorporator
or stockholder, of an Obligor or any Subsidiary Guarantor, as such, shall not
have any liability for any obligations of such Obligor or such Subsidiary
Guarantor under the Notes, the Note Purchase Agreement, the Agreement
Guarantees, the Security Agreements or the Intercreditor Agreements or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.

     11. Subsidiary Guarantors. Payment of principal, premium, if any, and
interest (including interest on overdue principal amount, premium, if any, and
interest, if lawful) is unconditionally guaranteed by each Subsidiary Guarantor
pursuant to Section 11 of the Note Purchase Agreement.

                                       A-5

<PAGE>

                       Option of Holder to Elect Purchase

     If you want to elect to have this Note purchased by the Company pursuant to
Section 8.4 or 8.7 of the Noteholders Agreement, check the appropriate box
below:

                      [ ] Section 8.4    [ ] Section 8.7

     If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 8.4 or Section 8.7 of the Noteholders Agreement, state the
amount you elect to have purchased:

                                     $
                                      ---------------

          Date:
                ------------------

                   Your Signature:
                                    --------------------------------------------
                    (Sign exactly as your name appears on the face of this Note)

                   Tax Identification No.:
                                           -------------------------------------

                                      A-6

<PAGE>

                                                                       Exhibit F

                           Form of Agreement Guarantee

          This Agreement Guarantee is delivered by the undersigned (the
"Subsidiary Guarantor") with respect to the 10% Senior Secured Discount
Convertible Notes issued by XM Satellite Radio Inc. and XM Satellite Radio
Holdings Inc. from time to time pursuant to the Amended and Restated Note
Purchase Agreement dated as of June 16, 2003 among XM Satellite Radio Inc., XM
Satellite Radio Holdings Inc. and the several investors named therein (the "Note
Purchase Agreement"). Capitalized terms used but not defined herein shall have
the meanings ascribed to them in the Note Purchase Agreement.

          For value received, the Subsidiary Guarantor hereby fully and
unconditionally guarantees to each Holder of a Note that: (a) the Accreted Value
of, and premium and interest on, the Notes will be duly and punctually paid in
full when due, whether at maturity, by acceleration or otherwise, and interest
on overdue principal and premium amount and (to the extent permitted by law)
interest on any interest, if any, on the Notes and all other obligations of the
Obligors to the Holders under the Note Purchase Agreement, the Notes or the
Security Agreements (including fees, expenses or other) will be promptly paid in
full or performed, all in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Notes or any of
such other obligations the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
Stated Maturity, by acceleration or otherwise.

          The Subsidiary Guarantor, and by its acceptance hereof each Holder,
hereby confirms that it is the intention of such parties that the guarantee by
such Subsidiary Guarantor pursuant to this Agreement Guarantee not constitute a
fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar federal or state law. To effectuate the foregoing intention, the Holders
and the Subsidiary Guarantor hereby irrevocably agree that the obligations of
the Subsidiary Guarantor under this Agreement Guarantee shall be limited to the
minimum extent necessary to ensure that, after giving effect to all other
contingent and fixed liabilities of the Subsidiary Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Subsidiary Guarantor in respect of the obligations of such other Subsidiary
Guarantor under this Agreement Guarantee, the obligations of the Subsidiary
Guarantor under this Agreement Guarantee do not constitute a fraudulent transfer
or conveyance under applicable law.

          Failing payment when due of any amount so guaranteed or failing
performance of any other obligation of the Obligors to the Holders, for whatever
reason, the Subsidiary Guarantor will be obligated to pay or to perform or to
cause the performance of, the same immediately without the necessity of any
action by the Holders of Notes. An Event of Default under the Note Purchase
Agreement or the Notes shall constitute an event of default under this Agreement
Guarantee, and shall entitle the Holders of Notes to accelerate the obligations
of the Subsidiary Guarantor hereunder in the same manner and to the same extent
as the obligations of the Obligors.

          The Subsidiary Guarantor hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or the Note Purchase Agreement, the absence of any
action to enforce the same, any waiver or consent by any Holder of the Notes
with respect to any thereof, the entry of any judgment against an Obligor, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of the Subsidiary
Guarantor.

          The Subsidiary Guarantor hereby waives and relinquishes: (a) any right
to require the Holders (each, a "Benefited Party") to proceed against the
Obligors, any Subsidiary thereof or any other Person or to proceed against or
exhaust any security held by or on behalf of a Benefited Party at any time or to
pursue any other remedy in any secured party's power before proceeding against
the Subsidiary Guarantor; (b) any defense that may arise by reason of the
incapacity, lack of authority, death or disability of any other Person or
Persons or the failure of a Benefited Party to file or enforce a claim against
the estate (in administration, bankruptcy or any other proceeding) of any other
Person or Persons; (c) demand, protest and notice of any kind, including but not
limited to notice of the existence, creation or incurring of any new or
additional Indebtedness or obligation or of any action or non-action on

                                       F-1

<PAGE>

the part of the Subsidiary Guarantor, the Obligors, the Material Subsidiaries,
any Benefited Party, or any creditor of the Subsidiary Guarantor, the Obligors
or the Material Subsidiaries or on the part of any other Person whomsoever in
connection with any obligations the performance of which are hereby guaranteed;
(d) any defense based upon an election of remedies by a Benefited Party,
including but not limited to an election to proceed against the Subsidiary
Guarantor for reimbursement; (e) any defense based upon any statute or rule of
law which provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal; (f) any
defense arising because of a Benefited Party's election, in any proceeding
instituted under the Bankruptcy Law, of the application of Section 1111 (b)(2)
of the Bankruptcy Code; and (g) any defense based on any borrowing or grant of a
security interest under Section 364 of the Bankruptcy Code.

          The Subsidiary Guarantor hereby covenants that this Agreement
Guarantee will not be discharged except by payment in full of all principal,
premium, if any, and interest on the Notes and all other costs provided for
under the Note Purchase Agreement, or as provided in Section 11.3 of the Note
Purchase Agreement.

          If any Holder is required by any court or otherwise to return to
either the Obligors or the Subsidiary Guarantor, or any custodian, trustee, or
similar official acting in relation to the Obligors or the Subsidiary Guarantor,
any amount paid by the Obligors or the Subsidiary Guarantor to such Holder, this
Agreement Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect. The Subsidiary Guarantor agrees that it will not be
entitled to any right of subrogation in relation to the Holders in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.

          The Subsidiary Guarantor agrees that, as between it, on the one hand,
and the Holders of Notes, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Section 8 of the Note
Purchase Agreement for the purposes hereof, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Section 8 of the Note Purchase Agreement, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Subsidiary Guarantor for the purpose of this Agreement Guarantee.

          The Subsidiary Guarantor hereby acknowledges that it shall not
consolidate or merge with or into a corporation or any other entity other than
an Obligor or another Subsidiary Guarantor (whether or not affiliated with the
Subsidiary Guarantor), or transfer all or substantially all of its assets to a
corporation or any other entity other than an Obligor or another Subsidiary
Guarantor (whether or not affiliated with the Subsidiary Guarantor), unless this
Agreement Guarantee shall be expressly assumed (in the event that the Subsidiary
Guarantor is not the surviving corporation in the merger) or a new Agreement
Guarantee shall be signed by such successor corporation or other entity and
delivered to each Holder of Notes. Any Agreement Guarantee so issued shall in
all respects have the same legal rank and benefit under the Note Purchase
Agreement as any Agreement Guarantee theretofore and thereafter issued in
accordance with the terms of the Note Purchase Agreement as though all of such
Agreement Guarantees had been issued at the date of the execution thereof.

          This Agreement Guarantee shall be governed by and construed in
accordance with the laws of the State of New York.

          IN WITNESS WHEREOF, the undersigned Subsidiary Guarantor has caused
this Agreement Guarantee to be duly executed as of           , 200 .
                                                   ----------     -

                                                  [Name of Subsidiary Guarantor]

                                                  By:
                                                      --------------------------
                                                      Name:
                                                      Title:

                                       F-2<PAGE>

Confidential treatment has been requested for portions of this contract. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as [***]. A complete version of this contract
has been filed separately with the Securities and Exchange Commission.

                                                                   Exhibit 10.53

                              AMENDED AND RESTATED

                               MAY 2003 AMENDMENT

                                     TO THE

                SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY

                                     BETWEEN

                            XM SATELLITE RADIO INC.,

                        XM SATELLITE RADIO HOLDINGS INC.

                                       and

                            BOEING SATELLITE SYSTEMS
                               INTERNATIONAL, INC.

                              CONTRACT NUMBER L0634

<PAGE>

***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                              AMENDED AND RESTATED
                               MAY 2003 AMENDMENT
                                     TO THE
                SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY

This Amended and Restated May 2003 Amendment to the Satellite Purchase Contract
for In-Orbit Delivery effective March 23, 1998 as amended, assigned, restated,
superseded and/or supplemented from time to time and in effect through and
including the date hereof (the "Contract") is made as of May 22, 2003 by and
between XM Satellite Radio Inc. and XM Satellite Radio Holdings Inc., Delaware
corporations with their principal offices located at 1500 Eckington Place, N.E.
Washington DC 20002 (hereinafter referred to together as "Customer" or "XM") and
Boeing Satellite Systems International, Inc., a Delaware corporation with its
principal offices located at 2260 E. Imperial Highway, El Segundo, California
90245 (hereinafter "Contractor" or "BSSI"). Capitalized terms used but not
otherwise defined in this Amended and Restated May 2003 Amendment shall have the
respective meanings as set forth in the Contract.

WHEREAS, the Parties entered into and executed the Contract, which Contract
provides for the procurement by Customer (or its subsidiaries) from Contractor
of three (3) Boeing 702 Satellites, two (2) of which (XM-1 and XM-2) have been
delivered in-orbit and one (1) of which (XM-3) was originally being constructed
as a ground spare, together with related items, services and activities;

WHEREAS, in December 2001, the Contract, as it relates to the Ground Spare
Satellite Bus, was assigned by XM Satellite Radio Inc. to XM Satellite Radio
Holdings;

WHEREAS, in December 2001, Customer and Contractor entered into certain
arrangements (the "December Amendment") relating to the completion and launch of
the Ground Spare Satellite;

WHEREAS, Customer and Contractor entered into the May 2003 Amendment to amend
certain provisions of the Contract to provide for basic additional terms
concerning the aforementioned completion and launch of the Ground Spare
Satellite and [***] as are more fully set forth and restated herein;

WHEREAS, this document (the "Amended and Restated May 2003 Amendment") amends
and restates the May 2003 Amendment to amend certain provisions of the Contract
to provide for conformity with the Contract, including the December Amendment;

NOW, THEREFORE, in consideration of the mutual benefits to be derived, the
Parties hereto agree that the Contract is amended as follows:

XM SATELLITE RADIO INC., XM SATELLITE RADIO          AMENDED & RESTATED MAY 2003
HOLDINGS INC. and BOEING SATELLITE SYSTEMS                             Amendment
INTERNATIONAL, INC. CONFIDENTIAL & PROPRIETARY 1                  Contract L0634

<PAGE>

1.   Amendment of Article 1.1.

     Article 1.1 is hereby amended as follows:

     The definition of "Ground Spare Satellite" as identified in paragraph (ww)
     shall be deleted in its entirety and replaced with the following:

     "The "Ground Spare Satellite" shall refer to the satellite originally
     purchased by Customer for on-ground Delivery and that now shall be Launched
     and Delivered in-orbit in accordance with the provisions of this Contract.
     The Ground Spare Satellite shall also be referred to herein as "XM-3", the
     "third Satellite" and "replacement satellite".

     In paragraph (lll) "Launch and In-Orbit Insurance" or "Launch Insurance",
     the phrase "of XM-1 and XM-2, respectively, or at least one (1) year after
     the date of Launch of XM-3" shall be added after the phrase "or five (5)
     years after the date of Launch".

     In paragraph (rrr) "Launch Vehicle", the word "either" in the second line
     shall be replaced with "any", and the phrase "either or both Satellites"
     shall be replaced with "XM-1 and/or XM-2".

     In paragraph (yyy) "Major Calendar Payment", the phrase "each Satellite"
     shall be replaced with "XM-1 and XM-2".

     In paragraph (nnn) "Launch Period", the phrase "and the three-month period
     from October 15, 2004 through January 15, 2005, with respect to the third
     Satellite" shall be added after the phrase "with respect to the second
     satellite".

2.   Amendment of Article 28 (Launch Services).

     (a) The first sentence of Article 28(f) is hereby deleted in its entirety
     and replaced with the following:

          "(f) Contractor shall provide Launch Services for Launch of XM-3, as a
          replacement satellite, to the orbital location specified in Table 7.1,
          on the Sea Launch 6000kg Launch Vehicle during the three month Launch
          Period commencing no later than October 15, 2004, as set forth below:"

     (b) Article 28(f)(1) is hereby deleted in its entirety and replaced with
     the following:

XM SATELLITE RADIO INC., XM SATELLITE RADIO          AMENDED & RESTATED MAY 2003
HOLDINGS INC. and BOEING SATELLITE SYSTEMS                             Amendment
INTERNATIONAL, INC. CONFIDENTIAL & PROPRIETARY 2                  Contract L0634

<PAGE>

***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

          "(f)(1) Customer hereby directs Contractor to schedule, and enter into
          a Launch Agreement for the same, the Launch of XM-3 to occur during
          the three month Launch Period commencing no later than October 15,
          2004. The price for said Sea Launch Launch Services for the Launch
          Period beginning October 15, 2004 shall be $[***] and the price for
          transportation to the launch site, Sea Launch Launch Campaign, Mission
          Support Services and LEOP for the XM-3 Satellite shall be [***]
          (notwithstanding Article 30.4, where the price stated therein shall
          not apply to XM-3)."

     (c)  The paragraph following Table 28.2 in Article 28(f)(3) is hereby
          deleted in its entirety and replaced with the following:

          "Payment terms for the [***] for transportation to the launch site,
          Sea Launch Launch Campaign, Mission Support Services and LEOP for XM-3
          shall be as follows: Customer shall pay Contractor in full each
          Milestone Payment set forth below within [***] after delivery, in
          accordance with the procedures and upon satisfaction of the conditions
          set forth in Article 5.1 (Requests for Payment and Invoices), of a
          Request for Payment, accompanied by a certificate in the form of Annex
          1 to Attachment A hereto, by wire transfer to Contractor's bank
          account specified in Article 5.2.

          ----------------------------------------------------------------------
          Payment                    Milestone
          ----------------------------------------------------------------------
          [***]                      [***]
          ----------------------------------------------------------------------
          [***]                      [***]
          ----------------------------------------------------------------------
          [***]                      [***]
          ----------------------------------------------------------------------

          With regard to the Sea Launch payment terms set forth in Table 28.2,
          Contractor agrees to defer such payments as follows: Customer shall
          pay [***]% of each payment amount stated in Table 28.2 when due [***]
          (see Exhibit G-2 Revision E for Schedule of Payments and Interest,
          totaling $[***]). For avoidance of doubt, (1) the Sea Launch payment
          terms set forth in Table 28.2 shall apply to the Launch Services price
          set forth in Article 28(f)(1) as follows: the amount due on any given
          payment date [***] shall be the percentage of the Sea Launch Price set
          forth in the middle column of such table multiplied by $[***] and (2)
          XM shall have the right to prepay any [***] amounts at any time with
          no penalty; [***]."

3.   Amendment of Table 7.1; Clarification of Delivery Date of XM-3. Customer
     and Contractor confirm that XM-3 shall be Available for Shipment on October
     15, 2004 and shall be Launched during a Launch Period commencing no later
     than October 15,

XM SATELLITE RADIO INC., XM SATELLITE RADIO          AMENDED & RESTATED MAY 2003
HOLDINGS INC. and BOEING SATELLITE SYSTEMS                             Amendment
INTERNATIONAL, INC. CONFIDENTIAL & PROPRIETARY 3                  Contract L0634

<PAGE>

***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

     2004. Accordingly, row 7 of Table 7.1 is deleted in its entirety and
     replaced with the following:

<TABLE>
     ------------------------------------------------------------------------------------------
<S>       <C>                         <C>                          <C>
     7A   3rd Satellite,              No later than [***]          As specified in Exhibit B
          Transportation to Launch                                 (SOW).  XM-3 shall be
          Site, Launch Campaign,                                   delivered to an orbital slot
          Launch Services and LEOP                                 within +-10 DEG. of
          (3rd Satellite to Initial                                XM-1.*
          Handover)
     ------------------------------------------------------------------------------------------
     7B   Pre-Eclipse Test Report     [***] following completion   Customer's Facilities
          with respect to XM-3        of In-Orbit Testing
     ------------------------------------------------------------------------------------------
     7C   Post-Eclipse Test Report    [***] following the end of   Customer's Facilities
          with respect to XM-3        the first full eclipse
                                      period after Launch
     ------------------------------------------------------------------------------------------
</TABLE>

* XM-3 orbital location to be subsequently modified upon agreement to scope of
collocation effort.

4.   Certain Modifications to and Capabilities of XM-3. (a) Contractor confirms
     and Customer understands that prior to Launch, XM-3 shall be modified, at
     no additional cost, from the XM-1 and XM-2 baseline as follows: [***].
     Contractor will confirm in writing prior to Launch (at the Shipment
     Readiness Review) that there are no Defects in XM-3 (taking into account
     waivers mutually agreed for XM-3 by the Parties in writing) and that any
     Defects in any Contractor manufactured satellite (either in-orbit or on
     ground) that may be applicable to XM-3 have been corrected on XM-3.

     (b) Contractor confirms that XM-3 shall have at least [***] power margin at
     EOL as specified in Section 6.3 of Exhibit A, Spacecraft Performance
     Specifications; such [***] EOL power margin shall not include solar array
     tilt.

5.   Pricing and Certain Adjustments. The price for XM-3 set forth in Article
     4.1 shall be adjusted as set forth below:

     (a) The price of XM-3 shall be reduced by [***], reflecting that XM-3 is a
     replacement satellite.

     (b) Article 12.5 is deleted in its entirety and is replaced with the
     following:

     "Existing XM-3 Incentive Amounts set forth in Exhibit G-2 Revision D (i.e.,
     the version of Exhibit G-2 in effect and applicable prior to the Amended
     and Restated May 2003 Amendment) [***]; however, Incentive Amounts not
     earned on XM-1 and XM-2 shall rollover to XM-3 on [***] and shall be earned
     and paid in equal quarterly

XM SATELLITE RADIO INC., XM SATELLITE RADIO          AMENDED & RESTATED MAY 2003
HOLDINGS INC. and BOEING SATELLITE SYSTEMS                             Amendment
INTERNATIONAL, INC. CONFIDENTIAL & PROPRIETARY 4                  Contract L0634

<PAGE>

***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

     installments over the fifteen (15) year Orbital Design Life of XM-3.
     Earning and payment of such rolled-over Incentive Amounts shall be in
     accordance with Article 12.3, and provided XM-3 is performing at the Target
     EIRP Levels per Station set forth in Attachment 1 hereto, together with
     interest on such Incentive Amounts calculated in accordance with Article
     12.6(b) and as illustrated in Exhibit G-2 Revision E (with the actual
     amount to be rolled over to be determined on [***] under the criteria
     described herein)."

     (c) The Price of XM-3 shall be increased by [***] and the Statement of Work
     shall be adjusted to incorporate Contractor construction and installation
     of the Optimized Antennas (in lieu of the Baseline Antennas currently
     installed); the Optimized Antennas shall have the same technical
     performance and configuration as the antennas originally installed on XM
     Roll (XM-1 located at 85o West); the payment schedule for this [***] shall
     be as follows: [***] within [***] of the Effective Date of this Amendment;
     [***]; [***]; [***]; and [***]. Customer shall pay Contractor in full each
     payment set forth above within [***] after delivery, in accordance with the
     procedures and upon satisfaction of the conditions set forth in Article 5.1
     (Requests for Payment and Invoices), of a Request for Payment, accompanied
     by a certificate in the form of Annex 1 to Attachment A hereto, by wire
     transfer to Contractor's bank account specified in Article 5.2.

     (d) The price of XM-3 shall be increased by [***] in consideration for
     Contractor commitments under this Amendment, including [***] payment of
     this [***] shall be made at [***]. Customer shall pay Contractor the
     payment set forth above within [***] after delivery, in accordance with the
     procedures and upon satisfaction of the conditions set forth in Article 5.1
     (Requests for Payment and Invoices), of a Request for Payment, accompanied
     by a certificate in the form of Annex 1 to Attachment A hereto, by wire
     transfer to Contractor's bank account specified in Article 5.2.

     (e)  Item 5 of Table 4.1 is hereby amended to reflect the price adjustments
          agreed to in paragraphs 2(b), 2(c), 5(a), 5(c) and 5(d), herein.
          Accordingly, the Contract Price set forth in Article 4.1 is revised to
          be [***].

     -----------------------------------------------------------------------
      "5   Ground Spare Satellite Completion and Launch Services | $ | [***]
     -----------------------------------------------------------------------

     Note: For clarification purposes, the portion of the Contract Price stated
     in Item 5 does not include [***], nor does it include the XM-1 and XM-2
     rollover Incentive Amounts. For further clarification, Item 1 of Table 4.1
     includes the XM-1 and XM-2 Incentives Amounts, including Incentive Amounts
     to be rolled over to XM-3."

     (f) Article 4.1(c)(4), 4.1(c)(5) and 4.1(c)(6) shall be amended to include
     the third satellite as follows:

          "(4) Launch Campaigns for the first, second and third Satellites;

XM SATELLITE RADIO INC., XM SATELLITE RADIO          AMENDED & RESTATED MAY 2003
HOLDINGS INC. and BOEING SATELLITE SYSTEMS                             Amendment
INTERNATIONAL, INC. CONFIDENTIAL & PROPRIETARY 5                  Contract L0634

<PAGE>

***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

          (5)  LEOP for the first, second and third Satellites;
          (6)  Mission Support Services for the first, second and third
               Satellites;"

     Note: for clarification purposes, items 1, 2, 3, 7, 8 and 9 set forth in
     Article 4.1(c) also apply to the third Satellite.

     (g) [***] for XM-3 (or mutually agreed substitutes therefore) are not
     included in the above pricing and will be treated as added scope to the
     Contract (and BSSI shall be entitled to an equitable adjustment to price
     and other affected terms) if it is subsequently determined that such
     software and services will be required.

     (h) [***] are not included and will be treated as added scope to the
     Contract (and BSSI shall be entitled to an equitable adjustment to price
     and other affected terms) if it is subsequently determined that such
     services will be required.

6.   Amendment to Article 12.6(c). Article 12.6(c) shall be deleted in its
     entirety and is replaced with the following:

"(c) Notwithstanding Article 12.6(b), the cumulative (i.e., total earned and not
     paid) BSSI principal portion of the XM-1 and XM-2 Quarterly Incentive
     Payment Amounts earned through [***] in accordance with the provisions of
     Article 12.3 shall be payable on the Deferred Payment Date. Customer shall
     pay to Contractor interest on earned amounts as set forth in Exhibit G-1
     Revision E (calculated at a rate of [***] compounded annually) which shall
     be payable quarterly in arrears, all commencing with the Initial Handover
     Date of 15 May 2001 for the first Satellite ("XM-Rock") and, all commencing
     with the Initial Handover Date of 28 June 2001 for the second Satellite
     ("XM-Roll") as set forth in Exhibit G-1 Revision E. After [***], Customer
     shall pay to Contractor interest on the total BSSI principal portion of
     earned XM-1 and XM-2 Quarterly Incentive Payment Amounts (calculated at a
     rate of [***] per annum) which shall be payable quarterly in arrears as
     illustrated in Exhibit G-1 Revision E.

     Prior to [***], the [***] of the Quarterly Incentive Payment Amounts for
     XM-1 and XM-2 shall be earned by and paid to Contractor in accordance with
     Article 12.3, Article 12.6 and as set forth in Exhibit G-1 Revision E.

     After [***], any remaining unearned XM-1 and XM-2 Incentive Amounts (both
     [***] and [***] portions) shall roll over and be available to be earned and
     paid on XM-3 in accordance with Article 12.5."

7.   Amendment to Article 12.7. Article 12.7 is deleted in its entirety and
     replaced with:

     "Article 12.7 Adjustment of Quarterly Incentive Payment Amounts to Reflect
     Actual Satellite Performance.

XM SATELLITE RADIO INC., XM SATELLITE RADIO          AMENDED & RESTATED MAY 2003
HOLDINGS INC. and BOEING SATELLITE SYSTEMS                             Amendment
INTERNATIONAL, INC. CONFIDENTIAL & PROPRIETARY 6                  Contract L0634

<PAGE>

***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

     The Payment Schedules for In-orbit Incentives (also referred to as In-orbit
     Performance Incentives and Incentive Amounts) set forth in Exhibits G-1
     Revision E (for XM-1 and XM-2) and G-2 Revision E (for XM-3) reflect a case
     where XM-1 and XM-2 earn their In-orbit Incentives through [***] and where
     XM-3 is in operation by that date and earns its In-orbit Incentives
     throughout its fifteen (15) year Orbital Design Life. Contractor and
     Customer agree that the Quarterly Incentive Payment Amounts, including
     related Quarterly Finance Charges in those Exhibits, shall be adjusted, as
     appropriate, to reflect the In-Orbit Incentives actually earned by XM-1,
     XM-2 and XM-3 under the provisions of the Contract, including the Amended
     and Restated May 2003 Amendment. For example, if XM-1 and XM-2 cease
     earning In-orbit Incentives prior to [***], the unearned In-orbit Incentive
     Amounts will not be paid on XM-1 and XM-2 and such amounts not paid will be
     added to the total In-orbit Incentive "pool" available for earning by
     XM-3."

8.   XM-3 Insurance Matters. Customer shall obtain Launch and in-orbit insurance
     for XM-3. [***]

9.   Amendment of Article 10.1(c). Article 10.1(c) is hereby amended by revising
     the first part of the first sentence to read as follows: "In the event
     Contractor fails to Deliver XM-3 on or before the [***] following its
     Delivery Date specified in Article 7.1 (i.e., [***]) (the "XM-3 Grace
     Period Expiration Date"), Contractor agrees to pay Customer with respect to
     such XM-3 Satellite as Liquidated Damages, and not as a penalty, the
     following amounts for the period beginning on the first Calendar Day
     following the XM-3 Grace Period Expiration Date and continuing for a period
     thereafter not to exceed [***] (the "XM-3 Damages Period"):"

10.  Amendment to Article 5.6(b). The phrase "proceed to Launch of a Satellite"
     shall be replaced with "ship the Satellite to the Sea Launch launch
     processing facility pursuant to Article 8.2(h) hereof" to ensure parity
     with Article 28(g).

     In addition, the following sentence will be added at the end of Article
     5.6(b):

     "Notwithstanding Articles 5.6(b) and 28(g), the Parties acknowledge that
     certain payments will still be paid subsequent to shipping the Satellite to
     the launch processing facility (e.g., the payments due on the Deferred
     Payment Date, rolled over Incentive Amounts, payments for certain services,
     e.g., LEOP, Mission Support Services)."

11.  Amendment to Article 5.1(d). The address specified in Article 5.1(d) shall
     be amended as follows:

     XM Satellite Radio Inc.
     1500 Eckington Place, NE

XM SATELLITE RADIO INC., XM SATELLITE RADIO          AMENDED & RESTATED MAY 2003
HOLDINGS INC. and BOEING SATELLITE SYSTEMS                             Amendment
INTERNATIONAL, INC. CONFIDENTIAL & PROPRIETARY 7                  Contract L0634

<PAGE>

***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

     Washington, DC 20002
     Attention: Michael Morrison, Vice President Terrestrial Network & Business
                Operations
     With a copy to: Derek de Bastos, Vice President, Engineering
                     Joseph M. Titlebaum, Executive Vice President, General
                     Counsel & Secretary

12.  Amendment to Articles 14.4(c), 14.4(e), 14.4(g) and 14.4(h).

     The phrase "delivery date" in the second line of the second paragraph of
     Article 14.4(c) shall be substituted with "Available for Shipment".

     Article 14.4(c) shall be amended to add the following at the end thereof:

     "In the event XM-3 remains in storage after the Deferred Payment Date,
     Customer shall pay Contractor for such storage costs incurred after the
     Deferred Payment Date on a quarterly in arrears basis commencing on the
     Deferred Payment Date."

     The third, fourth and fifth paragraphs of Article 14.4(e) (i.e., those
     paragraphs added to Article 14.4(e) in the December Amendment) shall be
     deleted in their entirety.

     The second paragraph (including subparagraphs (i), (ii) and (iii)) of
     Article 14.4(g) (i.e., those paragraphs added to Article 14.4(g) in the
     December Amendment) shall be deleted in its entirety and shall be replaced
     with the following:

     "Notwithstanding the foregoing, in the event the Ground Spare Satellite has
     been in such storage for [***] following the later of the Available for
     Shipment Date or the date the Ground Spare Satellite actually becomes
     Available for Shipment, as the case may be, or Customer decides prior to
     the end of such [***] period not to Launch such Satellite, the following
     shall apply:

     (i) Contractor shall be entitled to receive, within [***] after the earlier
     of receipt of de-storage notification from Customer or the end of the
     [***], all payments due and owing and not otherwise paid to Contractor
     pursuant to paragraph (e) above, including any unearned XM-1 and XM-2 roll
     over Incentive Amounts, and storage costs that may have been incurred
     subsequent to the Deferred Payment Date pursuant to Article 14.4(c), with
     the exception of (i) [***] pursuant to Article 5.8 (Payment and Deferred
     Financing for the Ground Spare Satellite), (ii) the cumulative BSSI
     principal portion of the Quarterly Incentive Payment Amounts pursuant to
     Article 12.6(c), and (iii) the storage costs deferred pursuant to Article
     14.4(c), all of which are payable on the Deferred Payment Date, and less
     all costs not incurred with respect to the Launch Campaign, LEOP, In-Orbit
     Testing, and MSS for XM-3; and

XM SATELLITE RADIO INC., XM SATELLITE RADIO          AMENDED & RESTATED MAY 2003
HOLDINGS INC. and BOEING SATELLITE SYSTEMS                             Amendment
INTERNATIONAL, INC. CONFIDENTIAL & PROPRIETARY 8                  Contract L0634

<PAGE>

     (ii)Contractor shall promptly Deliver such Satellite, at Customer's
     expense, to a storage location specified by Customer in the State of
     Florida or the State of Delaware, or in such other location as may be
     mutually agreed upon by the Parties. Customer's expenses shall include any
     applicable state sales tax for such storage.

     (iii) Title to the Ground Spare Satellite shall pass to Customer on the
     later of such time that Customer has (x) paid to Contractor the payments
     identified in 14.4(g)(i) above, including the payments due on the Deferred
     Payment Date, and (y) paid all amounts owing to BCSC in accordance with the
     Customer Credit Agreement."

     The reference to "Article 8.6" in the second paragraph of Article 14.4(h)
     shall be replaced with "Article 8.5(b)(2)".

13.  Amendment to Article 32.3(c). The phrase "and Launch Vehicle" is inserted
     after the phrase "Ground Spare Satellite".

14.  Amendment to Article 34.7 (Notices). The point of contact references in
     Article 34.7 shall be amended as follows:

     Customer:     Attention: Joseph M. Titlebaum
                              Executive Vice President, General Counsel
                                 & Secretary
                              1500 Eckington Place, N.E.
                              Washington, DC 20002

     Contractor:   Attention: Lisa Dull
                              Director, Commercial/International Business
                              Bldg W-S12, M/S W341

15.  Amendment of Exhibits B, G-1, G-2, and Attachment B. Exhibits B Revision B,
     G-1 Revision D and G-2 Revision D (and any related amendments to such
     Exhibits prior to this Amended and Restated May 2003 Amendment) of the
     Contract shall be amended and restated and superseded in their entirety by
     the new exhibits attached hereto, namely Exhibit B Revision C, Exhibit G-1
     Revision E and Exhibit G-2 Revision E. No later than seven (7) days
     following the execution of this Amended and Restated May 2003 Amendment,
     the Parties shall update and finalize Attachment B (Key Personnel) which
     shall fully conform to the provisions of this Amended and Restated May 2003
     Amendment.

16.  Amendment to Article 5.7(c). Article 5.7(c) shall be amended by adding new
     subparagraph (5) as follows:

XM SATELLITE RADIO INC., XM SATELLITE RADIO          AMENDED & RESTATED MAY 2003
HOLDINGS INC. and BOEING SATELLITE SYSTEMS                             Amendment
INTERNATIONAL, INC. CONFIDENTIAL & PROPRIETARY 9                  Contract L0634

<PAGE>

***** Certain information on this page has been omitted and filed separately
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requested with respect to the omitted portions.

     "(5) with respect to the Launch Vehicle assigned to XM-3, Contractor's
     security interest therein shall be released and terminated upon
     Contractor's receipt of all payments for said Launch Vehicle, [***]."

17.  Amendment to Article 8.6. Article 8.6 is deleted in its entirety and
     replaced with

     "RESERVED."

18.  Entire Agreement; Counterparts. There is no modification to the Contract
     except as expressly set forth in this Amended and Restated May 2003
     Amendment and all terms, provisions and conditions of the Contract shall be
     in full force and effect, provided that any provisions in the Contract that
     are inconsistent with this Amended and Restated May 2003 Amendment shall be
     construed to be consistent with this Amended and Restated May 2003
     Amendment. This Amended and Restated May 2003 Amendment may be executed in
     one or more counterparts, which together shall constitute a fully executed
     agreement.

XM SATELLITE RADIO INC., XM SATELLITE RADIO          AMENDED & RESTATED MAY 2003
HOLDINGS INC. and BOEING SATELLITE SYSTEMS                             Amendment
INTERNATIONAL, INC. CONFIDENTIAL & PROPRIETARY 10                 Contract L0634

<PAGE>

IN WITNESS WHEREOF, the Parties hereto have executed this Amended and Restated
May 2003 Amendment to the Satellite Purchase Contract No. L0634, effective as of
the date first written above (the "Effective Date").

BOEING SATELLITE SYSTEMS              XM SATELLITE RADIO INC.
INTERNATIONAL, INC.

BY:                                   BY:
    -------------------------------       --------------------------------
Name: Lisa Dull                       Name:
                                            ------------------------------
Title: Director, Comm/Intl Business   Title:
                                             -----------------------------
Date:                                 Date:
      -----------------------------         ------------------------------

                                      XM SATELLITE RADIO HOLDINGS INC.

BY:                                   BY:
    -------------------------------       --------------------------------
Name: Charles Toups                   Name:
                                            ------------------------------
Title: Vice President, Programs       Title:
                                             -----------------------------
Date:                                 Date:
      -----------------------------         ------------------------------

XM SATELLITE RADIO INC., XM SATELLITE RADIO          AMENDED & RESTATED MAY 2003
HOLDINGS INC. and BOEING SATELLITE SYSTEMS                             Amendment
INTERNATIONAL, INC. CONFIDENTIAL & PROPRIETARY 11                 Contract L0634

<PAGE>

[LOGO] XM Satellite Radio Inc.

                             XM Satellite Radio Inc.

================================================================================

                                 Exhibit B rev C

--------------------------------------------------------------------------------

Statement of Work

     Last Saved: June 12, 2003

Document Number: XM-TBD-00002

                           DOCUMENT RELEASE APPROVALS

Approved by                                            Date

Derek de Bastos
Vice President, Engineering
XM Satellite Radio Inc.

Approved by                                            Date

Terry Lamb
Program Manager: XM Spacecraft

<PAGE>

Revision Log

This log identifies those portions of this document that have been revised since
the original issue and the date of each revision.

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
               Authorizing
  Rev           Document                   Summary of Changes to Previous Version            Date              Approval
----------------------------------------------------------------------------------------------------------------------------
<S>            <C>               <C>                                                          <C>                 <C>
   -                             Contract Version                                           3/13/1998
----------------------------------------------------------------------------------------------------------------------------
   A                             Change AMRC to XM Satellite Radio Inc.                       7/14/99

                                 Change signature approval block

                                 Change Document number
----------------------------------------------------------------------------------------------------------------------------

   B                             Change to incorporate completion of ground spare            01/15/01

                                 Change to incorporate ground de-scope deleting
                                 hardware

                                 Change to reflect XM choice to have Telesat's
                                 operate of the satellites

                                 Change to incorporate approved CCN 020 for Dynamic
                                 Spacecraft Simulator (DSS)

                                 Change signature block on cover page
----------------------------------------------------------------------------------------------------------------------------

   C                             Change signature block on cover page                        06/12/03

                                 Change to reflect completion and delivery of XM 3 in
                                 orbit

                                 Update Tables  to reflect completion and delivery of
                                 XM 3 in orbit
</TABLE>

<PAGE>

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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

--------------------------------------------------------------------------------

Table of Contents

<TABLE>
<S>                                                                                <C>
Revision Log........................................................................2

Table of Contents...................................................................3

Table of Figures...................................................................11

Table of Tables....................................................................11

1  PURPOSE AND SCOPE...............................................................12

   1.1  DOCUMENT ORGANIZATION......................................................12

   1.2  DEFINITION OF WORK TO BE PERFORMED.........................................12

   1.3  APPLICABLE DOCUMENTS.......................................................13

2  EQUIPMENT, DATA, AND SERVICES...................................................14

   2.1  DELIVERABLE EQUIPMENT......................................................14

      2.1.1   FLIGHT SPACECRAFT....................................................14

      2.1.2   [****]:..............................................................14

      2.1.3   [****]...............................................................14

      2.1.4   SATELLITE CONTROL SOFTWARE [****]....................................15

      2.1.5   DELIVERY SCHEDULE....................................................15

   2.2  TEST AND HANDLING EQUIPMENT................................................15

   2.3  SHIPPING AND STORAGE CONTAINERS............................................16

   2.4  DATA.......................................................................16

   2.5  SERVICES...................................................................16
</TABLE>

XM PROPRIETARY                   EXHIBIT B REV B                         3 of 73

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<TABLE>
<S>                                                                                <C>
      2.5.1    LAUNCH SERVICES.....................................................16

         2.5.1.1    Launch Operations Planning And Coordination....................17

         2.5.1.2    Launch Support Documentation...................................17

         2.5.1.3    Launch Site Operation Plan.....................................17

         2.5.1.4    Launch Site Operations.........................................17

         2.5.1.5    XM Launch Participation........................................18

      2.5.2    [****]..............................................................18

      2.5.3    COMPATIBILITY WITH THE [****].......................................18

      2.5.4    LEOP MISSION SERVICES...............................................18

      2.5.5    TRAINING............................................................18

      2.5.6    RESERVED............................................................19

      2.5.7    LAUNCH AND IN-ORBIT INSURANCE.......................................19

      2.5.8    MISSION SUPPORT SERVICES............................................19

   2.6  DELIVERABLE DATA AND DOCUMENTATION.........................................19

   2.7  VISIBILITY OF FAILURES/PROBLEMS ON OTHER PROGRAMS..........................20

3  QUALIFICATION, REVIEWS, AND ANALYSES............................................21

   3.1  EQUIPMENT QUALIFICATION....................................................21

   3.2  DESIGN REVIEWS.............................................................21

      3.2.1    SPACECRAFT PRELIMINARY DESIGN REVIEW (SPDR).........................21

      3.2.2    SPACECRAFT CRITICAL DESIGN REVIEW (SCDR)............................22

      3.2.3    CONDUCT OF DESIGN REVIEWS...........................................23
</TABLE>

XM PROPRIETARY                   EXHIBIT B REV B                         4 of 73

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<TABLE>
<S>                                                                                <C>
         3.2.3.1    Design review board............................................23

         3.2.3.2    Design Review Notification.....................................24

         3.2.3.3    Data package...................................................24

         3.2.3.4    Presentation materials.........................................24

         3.2.3.5    Minutes........................................................24

         3.2.3.6    Notification of Review Completion..............................24

      3.2.4    DESIGN REVIEWS BY SUBCONTRACTORS....................................25

   3.3  OTHER REVIEWS..............................................................25

      3.3.1    UNIT ACCEPTANCE REVIEWS.............................................25

      3.3.2    SYSTEM TEST REVIEWS.................................................25

      3.3.3    SHIPMENT READINESS REVIEW (SRR).....................................26

      3.3.4    FLIGHT READINESS REVIEWS (FRR)/LAUNCH READINESS REVIEW (LRR)........26

      3.3.5    IN-ORBIT ACCEPTANCE TEST REVIEW (IOTR)..............................26

      3.3.6    MRR, TRR, AND TRB PARTICIPATION.....................................27

   3.4  ANALYSES...................................................................27

      3.4.1    GENERAL DESIGN AND PERFORMANCE ANALYSES REQUIREMENTS................27

      3.4.2    [****] ANALYSIS.....................................................28

      3.4.3    [****] ANALYSIS.....................................................28

      3.4.4    [****] ANALYSIS.....................................................28

      3.4.5    [****] ANALYSIS.....................................................28

      3.4.6    [****] ANALYSIS.....................................................28
</TABLE>

XM PROPRIETARY                   EXHIBIT B REV B                         5 of 73

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<TABLE>
<S>                                                                                <C>
      3.4.7    [****] ANALYSIS.....................................................28

      3.4.8    [****] ANALYSIS.....................................................29

      3.4.9    [****] ANALYSIS.....................................................29

      3.4.10   [****] PERFORMANCE..................................................29

      3.4.11   [****] ANALYSES.....................................................29

      3.4.12   [****] ANALYSIS.....................................................29

      3.4.13   [****] ANALYSES.....................................................29

      3.4.14   [****] ANALYSIS.....................................................30

      3.4.15   [****] ANALYSES.....................................................30

      3.4.16   [****] ANALYSIS.....................................................30

      3.4.17   [****] ANALYSIS.....................................................30

4  PROGRAM MANAGEMENT REQUIREMENTS.................................................31

   4.1  CONTRACTOR MANAGEMENT ORGANIZATION.........................................31

   4.2  PROGRAM CONTROL............................................................31

   4.3  CONFIGURATION CONTROL......................................................31

   4.4  XM MANAGEMENT ORGANIZATION.................................................31

   4.5  XM/CONTRACTOR RELATIONS....................................................32

   4.6  MEETINGS...................................................................33

      4.6.1    CONTRACT KICKOFF MEETING............................................33

      4.6.2    INTERIM AND QUARTERLY PROGRESS MEETINGS.............................34

      4.6.3    SENIOR MANAGEMENT MEETINGS..........................................34
</TABLE>

XM PROPRIETARY                   EXHIBIT B REV B                         6 of 73

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<TABLE>
<S>                                                                                <C>
      4.6.4    REVIEW MEETINGS.....................................................34

   4.7  PROGRAM SCHEDULE NETWORKS..................................................35

   4.8  PROGRAM MILESTONE PAYMENT STATUS...........................................35

      4.8.1    SUBMITTED INVOICES..................................................35

      4.8.2    ANTICIPATED INVOICE SUBMITTALS......................................36

      4.8.3    MILESTONE PAYMENT STATUS GRAPHS.....................................36

      4.8.4    AUDITOR'S CERTIFICATION.............................................36

   4.9  MANAGEMENT OF CONTRACT CHANGES.............................................36

      4.9.1    PRELIMINARY CHANGE ASSESSMENT.......................................37

      4.9.2    CONTRACT CHANGE NOTICE (CCN)........................................37

      4.9.3    REVIEW AND APPROVAL OF CONTRACT CHANGE NOTICE.......................38

      4.9.4    WAIVERS AND DEVIATIONS..............................................38

      4.9.5    REVIEW AND APPROVAL OF AN RDW.......................................39

5  PRODUCT ASSURANCE REQUIREMENTS..................................................40

6  INFORMATION.....................................................................41

   6.1  ACCESS TO INFORMATION......................................................41

   6.2  RELEASE OF Command Radio Frequency and AdDress Code INFORMATION............41

7  TRAINING AND OPERATION SUPPORT SERVICES.........................................42

   7.1  VERIFICATION OF [****].....................................................42

   7.2  TRAINING OF XM OPERATIONS PERSONNEL........................................42

   7.3  RESERVED...................................................................42
</TABLE>

XM PROPRIETARY                   EXHIBIT B REV B                         7 of 73

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<TABLE>
<S>                                                                                <C>
8  DATA AND DOCUMENTATION REQUIREMENTS.............................................43

   8.1  LANGUAGE...................................................................43

   8.2  UNITS AND DIMENSIONS.......................................................43

   8.3  NOMENCLATURE, ACRONYMS AND ABBREVIATIONS...................................43

   8.4  DOCUMENT REFERENCE/IDENTIFICATION SYSTEM...................................44

   8.5  CDRL ITEM DESCRIPTIONS.....................................................44

      8.5.1    SPACECRAFT DELIVERY PLAN............................................44

      8.5.2    QUARTERLY PROGRAM PROGRESS REPORTS..................................44

      8.5.3    DESIGN REVIEW PACKAGE...............................................46

         8.5.3.1    Spacecraft preliminary design review data package..............46

         8.5.3.2    Critical design review data package............................47

      8.5.4    SPACECRAFT VALIDATION PLAN..........................................48

      8.5.5    OTHER TEST PLANS....................................................48

      8.5.6    SPACECRAFT STORAGE PLAN.............................................48

      8.5.7    SPACECRAFT SYSTEMS SUMMARY..........................................49

      8.5.8    [****]..............................................................49

      8.5.9    SPACECRAFT ASSEMBLY DRAWINGS AND CIRCUIT DIAGRAMS...................49

      8.5.10   FLIGHT SOFTWARE/FIRMWARE DOCUMENTATION..............................50

      8.5.11   [****]..............................................................50

         8.5.11.1   [****] contents................................................50

         8.5.11.2   [****] contents................................................50
</TABLE>

XM PROPRIETARY                   EXHIBIT B REV B                         8 of 73

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<TABLE>
<S>                                                                                <C>
         8.5.11.3   Submission requirements........................................50

      8.5.12   SPACECRAFT OPERATIONS HANDBOOK......................................51

         8.5.12.1   [****].........................................................51

         8.5.12.2   [****].........................................................51

         8.5.12.3   [****].........................................................51

         8.5.12.4   [****].........................................................51

         8.5.12.5   [****].........................................................51

      8.5.13   [****]..............................................................52

         8.5.13.1   [****].........................................................52

         8.5.13.2   [****].........................................................52

         8.5.13.3   Data Documentation and Delivery................................52

      8.5.14   ANALYSIS............................................................52

   8.6  DETAILED CDRL..............................................................53

      8.6.1    SUBMISSION CRITERIA DEFINITIONS:....................................53

         8.6.1.1    Approval.......................................................53

         8.6.1.2    Review.........................................................53

         8.6.1.3    Information....................................................53

APPENDIX 1 TO EXHIBIT B............................................................54

1  [****]..........................................................................55

2  DESIGN REVIEWS..................................................................56

3  TEST REQUIREMENTS...............................................................57
</TABLE>

XM PROPRIETARY                   EXHIBIT B REV B                         9 of 73

<PAGE>

<TABLE>
<S>                                                                                <C>
4  DOCUMENTATION...................................................................58

5  TRAINING........................................................................59

6  WARRANTY........................................................................60

APPENDIX 2 TO EXHIBIT B............................................................61

1  COMMUNICATIONS PAYLOAD SIMULATOR INTRODUCTION...................................62

2  GENERAL DESCRIPTION.............................................................63

3  CONSTRUCTION....................................................................64

4  SYSTEM VERIFICATION.............................................................65

5  WARRANTY........................................................................66

APPENDIX 3 TO EXHIBIT B............................................................67

1  SCOPE...........................................................................68

2  DELIVERABLE EQUIPMENT, SOFTWARE, and SERVICES...................................69

   2.1  Satellite Control Software AND GROUND ENCRYPTORS...........................69

   2.2  ALIGNMENT OF PRIMARY AND BACKUP FACILITIES.................................70

   2.3  Test Equipment and Tools...................................................70

   2.4  RESERVED...................................................................70

   2.5  Product Assurance Management...............................................70

   2.6  Test Program...............................................................70

   2.7  Customer furnished equipment and services..................................71

3  SCHEDULE........................................................................72

4  WARRANTY........................................................................73
</TABLE>

XM PROPRIETARY                   EXHIBIT B REV B                        10 of 73

<PAGE>

Rider B

***** Certain information on this page has been omitted and filed separately
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requested with respect to the omitted portions.

--------------------------------------------------------------------------------

   Table of Figures
<TABLE>
<S>                                                                                <C>
         Figure 1: [****]..........................................................62
</TABLE>

--------------------------------------------------------------------------------

   Table of Tables

<TABLE>
<S>      <C>                                                                 <C>
         Table 1: Meetings Conducted or Participated in by Contractor..............33

         Table 2 [****]......................................................Attached

         Table 3: Satellite Control Software.................................Attached

         Table 4: [****].....................................................Attached
</TABLE>

XM PROPRIETARY                   EXHIBIT B REV B                        11 of 73

<PAGE>

--------------------------------------------------------------------------------
1    PURPOSE AND SCOPE
--------------------------------------------------------------------------------

1.1  DOCUMENT ORGANIZATION

          This Exhibit provides the Statement of Work (SOW) for the XM
          Spacecraft Contract. Sections 8.5 and 8.6 give the contract data and
          documentation requirements. Appendices 1, 2, and 3 describe various
          additional work which will be performed under this Contract.

1.2  DEFINITION OF WORK TO BE PERFORMED

          This Exhibit defines the work to be performed by the Contractor for
          the XM DARS Spacecraft program. This work includes deliverable
          equipment, hardware, services and documents. The Contractor shall
          complete this work in accordance with the Terms and Conditions of the
          Contract and the requirements specified herein.

          The Contractor shall be fully responsible for all tasks unless other
          wise stated. These tasks shall include the design, development,
          fabrication, and testing of two flight spacecraft. These spacecraft
          shall be designed, fabricated, and tested in accordance with the
          requirements given in Contract Exhibits A, C, D and E. The Contractor
          shall provide delivery of two spacecraft in-orbit, including
          transportation to the launch site, launch vehicle services (when
          launch vehicles are assigned to the program), launch support, Launch
          and Early Operations phase (LEOP) maneuvers and deployments, in-orbit
          test services, training on the operation of the satellites, , and
          mission support services for the life of the satellites.

          The Contractor shall also procure long-lead items for a third
          spacecraft, and complete the third spacecraft and deliver it to
          storage as a ground spare, or launch it to replace a failed
          spacecraft.

          The Contractor shall provide documentation and data delivered in
          accordance with the Contract Data Requirements List (CDRL) given in
          section 8.6 DETAILED CDRL.

XM PROPRIETARY                   EXHIBIT B REV B                        12 of 73

<PAGE>

          The Contractor shall design, manufacture, test, and deliver one
          Dynamic Spacecraft Simulator per Appendix 1 to this Exhibit.

          The Contractor shall design, manufacture, test and deliver one
          Communication Payload Simulator per Appendix 2 this Exhibit.

          The Contractor shall deliver, install and test of Spacecraft Control
          Software to the primary and back-up spacecraft control facilities and
          Ground Encryptors to the Customer's back-up spacecraft control
          facility per Appendix 3 to this Exhibit.

1.3  APPLICABLE DOCUMENTS

          The following documents shall be applicable to this Statement of Work:

          1.   Contract Instrument: Terms and Conditions of the Contract.

          2.   Exhibit A: Spacecraft Performance Specifications

          3.   Exhibit C: Product Assurance Plan

          4.   Exhibit D: Test Plan Requirements

          5.   Exhibit E: Radiation Environment

          6.   Exhibit F: Long Lead Items

          7.   Exhibit G: Payment Plan and Termination Liability Amounts

          8.   Launch vehicle Users manuals and Launch site safety rules

          9.   ITU Regulation and reference documents

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2    EQUIPMENT, DATA, AND SERVICES
--------------------------------------------------------------------------------

          The Contractor shall provide spacecraft equipment, related services,
          and data and documentation as specified in this section.

2.1  DELIVERABLE EQUIPMENT

2.1.1 FLIGHT SPACECRAFT

          The Contractor shall deliver three (3) flight Spacecraft meeting the
          performance requirements defined in Exhibit A, Spacecraft Performance
          Specifications. The Spacecraft shall be designed, manufactured, and
          in-plant tested. Two of the Spacecraft, [****] shall be launched,
          in-orbit tested, and delivered to their respective Specified Orbital
          Positions, fully operational as defined in the Contract. The third
          Spacecraft shall be launched to an orbital slot +/-10 DEG. from
          85 DEG. West orbital slot*.

          * XM 3 orbital location to be modified upon agreement to scope of
          collocation effort.

2.1.2 [****]:

          The Contractor shall deliver to the Customer's Primary Satellite
          Control Center at XM's satellite operator's, Telesat Canada
          (hereinafter referred to as "Telesat") facilities in Gloucester,
          Canada a Dynamic Spacecraft Simulator in accordance with Appendix 1,
          which shall provide software simulation of the spacecraft operating in
          geostationary orbit.

2.1.3 [****]

          The Contractor shall deliver to XM headquarters a Communications
          Payload Simulator in accordance with Appendix 2, which shall provide
          simulation of the communications channel performance.

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2.1.4 SATELLITE CONTROL SOFTWARE [****]

          The Contractor shall deliver Satellite Control Software to the
          Customer's Primary Satellite Conrol Center facilitiy at Telesat and
          Backup Satellite Control Center at XM's Headquarters in accordance
          with Appendix 3. Each set of equipment shall provide for control of
          both XM satellites.

2.1.5 DELIVERY SCHEDULE

          The delivery schedule shall be as follows:

<TABLE>
<CAPTION>
-----------------------------------------------   ---------------------------------------------------
                    Item                                                Delivery
-----------------------------------------------   ---------------------------------------------------
<S>                                               <C>
[****]:                                           In accordance with the Contract Terms & Conditions
-----------------------------------------------   ---------------------------------------------------
[****]:                                           In accordance with the Contract Terms & Conditions
-----------------------------------------------   ---------------------------------------------------
Spare satellite (Option):                         In accordance with the Contract Terms & Conditions
-----------------------------------------------   ---------------------------------------------------
Dynamic Spacecraft Simulator:                     In accordance with the Contract Terms & Conditions
-----------------------------------------------   ---------------------------------------------------
Communications Payload Simulator:                 In accordance with the Contract Terms & Conditions
-----------------------------------------------   ---------------------------------------------------
Satellite Control Software [***]                  In accordance with the Contract Terms & Conditions
-----------------------------------------------   ---------------------------------------------------
[***]                                             In accordance with the Contract Terms & Conditions
-----------------------------------------------   ---------------------------------------------------
</TABLE>

2.2  TEST AND HANDLING EQUIPMENT

          The Contractor shall provide for, in a timely manner, the necessary
          mechanical and electrical ground support equipment required for the
          assembly, handling and transportation, test, and launch. Test and
          handling equipment to be provided by the Contractor for the
          performance of work under the Contract is not deliverable.

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2.3  SHIPPING AND STORAGE CONTAINERS

          The Contractor shall make available, as necessary, shipping
          containers, which shall protect the spacecraft from damage during
          transportation. The Contractor shall make available, if necessary,
          storage containers which shall protect the spacecraft from damage
          during storage. Such shipping and storage containers shall remain the
          property of the Contractor.

2.4  DATA

          Documentation and data shall be delivered in accordance with the
          Contract Data Requirements List (CDRL) given in section 8.5 and 8.6
          herein.

2.5  SERVICES

2.5.1 LAUNCH SERVICES

          The Contractor shall acquire the designated launch vehicles and
          services that are fully compatible for the first three (3) spacecraft
          ordered that meet all of the requirements of the Contract. These
          launch services shall include launch site operations planning and
          processing, planning, flight operations up to and including spacecraft
          separation from the Launch Vehicle and post flight operations. The
          Contractor shall transport these three (3) Spacecraft to the
          Designated Launch Site, and the transportation shall include loading,
          offloading, the use of suitable shipping containers, and transit
          insurance.

          The Contractor will contract directly with the Designated Launch
          Agency for Launch Support Services and will coordinate all matters
          relating to launch operations. XM shall be notified of and have access
          to all technical discussions and meetings with the Designated Launch
          Agency.

          The Contractor shall provide the services required for the launch of
          three (3) spacecraft throughout the program.

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2.5.1.1 Launch Operations Planning And Coordination

          The Contractor shall provide technical support to all Designated
          Launch Agency coordination meetings as scheduled by the Designated
          Launch Agency, including all necessary supporting documentation and
          analyses, and attendance of qualified personnel at all meetings.

          Launch operations include launch site (range) operations, Launch
          Vehicle integration and flight operations.

2.5.1.2 Launch Support Documentation

          The Contractor shall provide all documentation required by the
          Designated Launch Agency to support launch site operations, flight
          operations, and safety certification, in accordance with the schedules
          specified by the Designated Launch Agency. The Contractor shall
          provide XM with copies of all technical documentation submitted to the
          Designated Launch Agency and provide copies of the technical
          documentation issued by the Designated Launch Agency

2.5.1.3 Launch Site Operation Plan

          The Contractor shall provide a Launch Site Operations Plan detailing
          all activities required at the Designated Launch Site, a test
          procedure summary, and schedule. The launch site operations plan shall
          also provide a launch team organization/management chart that defines
          interfaces and responsibilities. This plan may include the facilities
          requirements summary.

2.5.1.4 Launch Site Operations

          The Contractor shall provide at the Designated Launch Site, the
          necessary personnel, support equipment and supplies, e.g., propellants
          and spares, to assemble and check out the flight Spacecraft and
          establish its readiness for launch.

          The Contractor shall also provide transportation for all Contractor
          personnel and equipment to and from the Designated Launch Site, and
          accommodation and living expenses for the duration of the launch site
          operations

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          The Contractor shall provide the level of support required to perform
          integration operations in accordance with the standard Launch Vehicle
          activity schedule including multi-shift operations as required.

2.5.1.5 XM Launch Participation

          XM engineers may participate in the launch campaign and the Contractor
          shall make arrangements with the Designated Launch Agency for separate
          office accommodations and support for at least five (5) XM personnel.

          The Contractor shall arrange with the Designated Launch Agency for
          VIPs to attend the launch subject to the limitations of the Designated
          Launch Agency.

2.5.2 [****]

          The Contractor shall contract for the provision of [****] as needed to
          support the launch. The Contractor shall demonstrate the compatibility
          of the spacecraft design with this [****].

2.5.3 [****]

          The Contractor shall specify, with input from XM, the [****]

2.5.4 LEOP MISSION SERVICES

          The Contractor shall perform the Launch and Early Operations phase
          (LEOP) maneuvers, deployment of each satellite at its operating orbit
          location, and the in-orbit acceptance test (IOT). [****]

          The Contractor shall provide a qualified team and facilities for the
          conduct of LEOP services.

2.5.5 TRAINING

          The Contractor shall verify the [****] provide XM and Telesat with
          training for operation of the XM satellites in geosynchronous orbit.
          The Contractor shall be responsible for all the necessary training
          activities and related operating procedures.

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          Training shall be provided for operations staff including engineers
          and controllers, and shall cover all systems, documentation, and
          procedures. Training shall include Operational Qualification of
          engineers and controllers to perform daily operations and anomaly
          investigation.

2.5.6 RESERVED

2.5.7 LAUNCH AND IN-ORBIT INSURANCE

          All the necessary launch and in-orbit insurance services shall be
          procured by XM and shall cover Contractor's operation of the
          satellites. The scope of the Contractor effort in this regard shall be
          limited to providing the insurance agency with the support
          documentation required by the insurer, if any, and support for
          meetings with the insurers.

2.5.8 MISSION SUPPORT SERVICES

          Beginning with Handover of each XM spacecraft, respectively, and
          continuing for a period of at least 15 years, the Contractor shall
          provide on-call support to answer questions from XM's satellite
          operator, Telesat Canada, regarding the performance of any of the XM
          spacecraft, providing that these questions do not require extensive
          analysis. The Customer through its satellite operator, Telesat shall
          provide [****] for the Contractor to respond to these questions. If
          responding to the Customer's or Telesat's questions would require
          extensive analysis, the Contractor shall provide an estimate of the
          extent of effort required, and the Customer shall either agree to pay
          for this additional analysis or shall withdraw the question.

2.6  DELIVERABLE DATA AND DOCUMENTATION

          XM shall have access as needed to all non-financial data,
          documentation, and information related to the Contract that is
          generated under this Contract by the Contractor and Subcontractors
          consistent with U.S. Government regulations. Certain specific items of
          information shall be produced and formally submitted to XM or to

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          Telesat by the Contractor as specified in the CDRL and data item
          descriptions given in Section 8.5 and 8.6 herein.

2.7  VISIBILITY OF FAILURES/PROBLEMS ON OTHER PROGRAMS

          The Contractor shall provide XM with immediate and full visibility of
          all technical/programmatic aspects of failures and problems occurring
          at component (piece part), unit, subsystem, or system level on other
          programs, on ground or in orbit, that are relevant to the XM
          spacecraft, and of associated corrective actions. XM shall keep such
          information strictly confidential. The identities of other Customer
          programs do not need to be revealed to XM, either directly or by
          inference, except with the express permission of the respective
          Customers.

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3    QUALIFICATION, REVIEWS, AND ANALYSES
--------------------------------------------------------------------------------

3.1  EQUIPMENT QUALIFICATION

          Prior to spacecraft delivery for launch, all flight equipment shall be
          fully qualified for all space flight environments to which it will be
          subjected as defined in Exhibits D and E.

3.2  DESIGN REVIEWS

          Preliminary Design Reviews (PDRs) and Critical Design Reviews (CDRs)
          shall be conducted at the spacecraft system level. Each design review
          shall be comprehensive, critical audit of the design. The design
          review program shall not only encompass a thorough review of new
          hardware designs and modified designs, but shall also take into
          account those existing qualified designs that will result in the
          achievement of the XM performance and environmental requirements.

          Without relieving the Contractor of its responsibilities for efforts
          under the Contract, the XM Project Manager will co-chair system level
          design reviews. The Contractor shall provide the logistics for these
          reviews, shall make the review presentations, and shall provide
          required documentation as described within the CDRL.

          The Contractor shall compile and maintain a uniform program listing of
          all action items. The status of these action items shall be tracked
          through closure.

3.2.1 SPACECRAFT PRELIMINARY DESIGN REVIEW (SPDR)

          The purpose of the SPDR is to allow XM and the Contractor to confirm
          the baseline concept, configuration, specifications, and preliminary
          design of spacecraft system. The design review package shall be
          submitted in accordance with the CDRL. XM shall have the right to
          approve the review including completion of the review, review meeting
          minutes, and Major Action Item responses.

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          The SPDR shall comprise a comprehensive review of the requirements for
          the spacecraft and their flowdown to the major subsystems,
          particularly the communications payload. Also to be covered, shall be
          the identification of new items to be developed or items to be
          modified in order to meet requirements of the Contract. A comparison
          of specified and expected performance for the communications payload
          (repeater and antennas) shall be reviewed. An analysis of [****] shall
          be presented. A [****] shall be reviewed.

          The Contractor shall review and present the requirements on the
          spacecraft control equipment (ground segment hardware and software)
          and shall describe the operations concept.

3.2.2 SPACECRAFT CRITICAL DESIGN REVIEW (SCDR)

          The purpose of the SCDR is to allow XM and the Contractor to confirm
          the adequacy of the spacecraft system design, system performance, and
          system test plans. XM shall have the right to approve the review
          including completion of the review, review meeting minutes, and Major
          Action Item responses.

          The SCDR shall comprise a comprehensive review of all new designs, and
          any major modified existing design. The spacecraft performance shall
          be reviewed to verify compliance with contractual design and
          performance requirements. Compliance data for existing designs
          presented at the SPDR shall not need to be presented at this review.
          Compliance shall include a presentation of predicted and measured
          performance compared to contractual requirements. [****] shall be
          documented.

          A preliminary version of the Mission Sequence of Events shall be
          presented at the review.

          Changes since SPDR and recommendations from product line problem
          review teams (if any) related to XM as well as the status of their
          implementation on XM spacecraft shall be presented.

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3.2.3 CONDUCT OF DESIGN REVIEWS

3.2.3.1 Design review board

          A qualified Contractor Program Systems Engineering Manager shall,
          along with the XM Program Manager, co-chair the Design Review Board.
          Board members designated by the two co-chairmen shall include
          representatives of Program Management, Systems Engineering,
          responsible engineering activities, Manufacturing, Product Assurance,
          XM representatives, and other technical specialists as required to
          provide a comprehensive appraisal of the spacecraft design. However,
          XM may elect not to provide representatives to the Design Review
          Boards.

          The Board shall make recommendations and ask questions. In addition,
          XM may submit recommendations and questions.

          When a review is scheduled, copies of the design review package shall
          be sent to each member of the review team who shall be responsible
          for:

          Studying the data package carefully prior to the design review
          meeting.

          Notifying the responsible engineer of major discrepancies or
          oversights discovered prior to the meeting.

          Attending the meeting fully prepared to discuss the assigned areas of
          responsibility.

          If required, submitting written recommendations for improving the
          design.

          All recommendations and questions shall be evaluated by the
          Contractor, and responses to all recommendations and questions
          submitted shall be provided. Responsibility for action items shall be
          assigned and a schedule for completion of such items shall be included
          in the design review report.

          Recommendations shall be converted into action items jointly by XM and
          the Contractor.

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3.2.3.2 Design Review Notification

          Transmittal of data packages, including a detailed agenda, to XM and
          to the Design Review Board members shall constitute design review
          notification. The data packages and agenda shall be received at XM
          (ASPO and Headquarters), to Telesat for the ground segment, at least
          10 full working days in advance of the scheduled review meeting.

3.2.3.3 Data package

          Data packages shall be prepared to support the design review
          presentations. The packages for the SPDR and the SCDR shall be
          structured to be stand-alone packages. However, detailed material
          (e.g., analyses provided as appendices) provided at the SPDR which has
          not changed at the SCDR need not be resubmitted. Detailed content
          shall comply with the requirements given the CDRL descriptions for
          SPDR and SCDR.

3.2.3.4 Presentation materials

          Presentation materials used in the design reviews shall be distributed
          to the participants immediately before the start of each review.
          Presentation materials shall use updated data as applicable, but
          differences between the presentation and data packages shall be noted.

3.2.3.5 Minutes

          Minutes shall include a list of attendees, Major Action items and
          other action items with and closure dates and assignments. Minutes
          shall be distributed to XM and all attendees within 5 working days
          after the meeting.

3.2.3.6 Notification of Review Completion

          A written response to design review recommendations and action items
          approved by the Design Review Chairman and the Program Manager shall
          constitute design review closeout. Each design review report shall be
          signed by the Design Review Board Co-Chairpersons and the Contractor
          Program Manager to signify concurrence

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          with Major Action Items. Action items that affect performance or
          testing of the hardware shall be closed out prior to the start of
          protoflight testing.

3.2.4 DESIGN REVIEWS BY SUBCONTRACTORS

          XM shall be invited to attend subcontractor design reviews for
          subcontracted equipment of a new and/or modified design. These
          subcontractor design reviews may be scheduled as a session of the
          system design review meetings at the Contractor's facilities or
          separately. This requirement shall not be imposed for existing design
          ("product line") equipment.

3.3  OTHER REVIEWS

          The Contractor shall conduct other reviews as outlined in this
          section. Notification of an upcoming review and all documentation
          pertinent to the review shall be submitted to XM at least 10 working
          days prior to the review, unless provided otherwise in the Contract
          Terms and Conditions. Cognizant Contractor Engineering and management
          representatives shall attend review meetings. XM shall have the right
          to participate in all these reviews.

3.3.1 UNIT ACCEPTANCE REVIEWS

          The Contractor shall review the test data of all units prior to their
          being installed on the spacecraft. These unit reviews shall include
          failure report closures. Unit test data shall be made available for
          review by XM. However, such unit test data shall not be deliverable to
          XM. XM representatives shall have the right to participate in these
          reviews but may elect not to participate.

3.3.2 SYSTEM TEST REVIEWS

          Detailed test data reviews shall be held during the conduct of the
          system level test program, with participation by System Test, System
          Engineering, and XM representatives. The purpose of these reviews
          shall be to assure test data validity in a near real-time manner.
          There shall be pre-test and post-test reviews for each of the
          following test phases: [****].

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          The pre-test reviews shall be held prior to each major test phase.
          These reviews shall verify test readiness.

          The post-test phase reviews shall be held immediately at the
          completion of each major test These reviews, conducted by Systems
          Engineering and Systems Test, will include a brief data overview, an
          anomaly list including cause and corrective action status, and open
          issues, if appropriate. The test phase review shall serve to assure
          that the appropriate [****] has been completed and that spacecraft
          status is understood prior to leaving a test facility or major
          configuration.

3.3.3 SHIPMENT READINESS REVIEW (SRR)

          This review shall be conducted at the completion of spacecraft ground
          acceptance testing and shall cover hardware status, test data,
          deviations, and waivers to performance specifications, and status of
          all other CDRL items. The review shall also include mission operation
          readiness and launch campaign planning.

3.3.4 FLIGHT READINESS REVIEWS (FRR)/LAUNCH READINESS REVIEW (LRR)

          The Contractor, upon completion of launch site functional testing
          shall conduct a satellite flight readiness review at the launch site.
          The review shall cover the flight readiness of all spacecraft
          subsystems and launch mission plans, and the launch agency readiness.

          A mission facilities readiness review shall be conducted at the
          Contractor plant. It shall address the readiness of the satellite
          mission control equipment, including the [****].

          The Contractor shall support any required Launch Readiness Review in
          order to demonstrate that the spacecraft meets launch vehicle
          Contractor requirements for launch.

3.3.5 IN-ORBIT ACCEPTANCE TEST REVIEW (IOTR)

          At the completion of the spacecraft in-orbit testing, a spacecraft
          acceptance review shall be conducted by the Contractor where hardware
          status, in-orbit test data,

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          anomalies, and comparison with predicted performance shall be formally
          presented for transfer of ownership of the spacecraft to XM.

3.3.6 MRR, TRR, AND TRB PARTICIPATION

          XM shall have the right to participate to all the Manufacturing
          Readiness Review (MRR), Test Readiness Review (TRR), and Test Review
          Board (TRB) organized for B, C, D, and E category equipment (as
          defined in Exhibit D) per Exhibit C.

3.4  ANALYSES

          The Contractor shall perform any analyses deemed necessary to
          demonstrate compliance with Contract requirements or to substantiate
          the integrity of the spacecraft delivered under this Contract. All
          analyses shall be consistent with requirements of other applicable
          Contract exhibits.

          The Contractor may use, where relevant, results of valid and
          applicable analyses already performed for similar spacecraft or
          equipment and properly updated for this Contract. The Contractor's
          existing valid, and applicable computer/mathematical models and
          analytical/design tools used for similar spacecraft or equipment may
          also be used to perform the analyses defined herein.

3.4.1 GENERAL DESIGN AND PERFORMANCE ANALYSES REQUIREMENTS

          The Contractor shall perform all design, analytical test, and other
          efforts necessary to demonstrate that the spacecraft complies with the
          requirements of Exhibit A; that physical parameters are properly
          understood, managed, and accounted for; and that the spacecraft design
          is technically sound taking into account all earth and space flight
          environments to which the spacecraft or any of its component elements
          potentially can be exposed. These efforts shall consider all relevant
          functional, performance, interface, and environmental requirements, as
          well as interactions between the analyses and the test verifications
          of Exhibit D shall be taken into account. The format and submittal of
          analyses and studies shall be in accordance with the CDRL.

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3.4.2 [****] ANALYSIS

          The Contractor shall perform a [****] analysis which shall include a
          detailed listing of the [****]. The analysis shall address the [****]
          and included in the Mission Analysis.

3.4.3 [****] ANALYSIS

          A [****] analysis shall be performed and shall consider all critical
          phases of spacecraft life including, at least, [****]. The analysis
          shall also address the [****].

3.4.4 [****] ANALYSIS

          An analysis shall be performed for the various [****]. This analysis
          shall include the [****]. The analysis shall address the [****] shall
          be performed.

3.4.5 [****] ANALYSIS

          The Contractor shall perform an [****] analysis, taking into account
          [****]. Analyses shall be based on [****].

3.4.6 [****] ANALYSIS

          The Contractor shall analyze the [****] of the spacecraft for all
          phases of the mission. The analysis shall be based on each required
          launch vehicle's performance [****] and shall take into account all
          significant factors.

          The Contractor shall provide details of the [****] shall be provided.

3.4.7 [****] ANALYSIS

          A [****] analysis shall be provided which shall [****]. The [****]
          analysis shall take into account variables available to the Contractor
          and shall include the [****].

          The analysis shall also include but not be limited to:

          1.   [****]

               [****]

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               [****]

               [****]

          Based on the [****] analyses, the Contractor shall provide the [****].

3.4.8 [****] ANALYSIS

          The Contractor shall demonstrate by analysis that the [****].

3.4.9 [****] ANALYSIS

          An analysis shall be performed which shall demonstrate that the
          spacecraft design:

               [****]

3.4.10 [****] PERFORMANCE

          The Contractor shall analyze the performance of the [****]:

               [****]

3.4.11 [****] ANALYSES

          The Contractor shall perform all analyses necessary to verify [****].

3.4.12 [****] ANALYSIS

          An analysis and simulation of the [****] shall be performed. This
          analysis shall demonstrate that the [****]. The analysis shall
          identify all [****] shall be performed to show that the [****] during
          all phases of the mission.

3.4.13 [****] ANALYSES

          A complete and comprehensive [****] analysis shall be performed in
          which all [****].

          The Contractor shall provide to the launch agency [****] with
          supporting documentation as needed for [****].

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3.4.14 [****] ANALYSIS

          Analyses of the [****] are investigated. All [****] used in these
          analyses shall be [****] unless otherwise agreed to by XM. [****]

          The following shall be included in the [****] analyses:

               [****]

3.4.15 [****] ANALYSES

          All [****] shall be analyzed. Analyses shall include:

               [****]

3.4.16 [****] Analysis

          The Contractor shall perform an [****] analysis.

3.4.17 [****] Analysis

          The Contractor shall perform an analysis of [****].

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4    PROGRAM MANAGEMENT REQUIREMENTS
--------------------------------------------------------------------------------

4.1  CONTRACTOR MANAGEMENT ORGANIZATION

          The Contractor shall ensure that the personnel and facilities
          necessary for the performance of the Contract are assigned and made
          available at the time and places necessary to meet the performance and
          schedule established by this Contract.

4.2  PROGRAM CONTROL

          The Contractor shall establish and apply a program control system that
          provides for monitoring of all program activities and clearly
          identifies all milestones, completion and delivery dates, design
          reviews, and critical paths. This system shall cover the total period
          from the Effective Date of Contract (EDC) to the completion of the XM
          1/XM 2/ XM 3 in orbit test activities.

4.3  CONFIGURATION CONTROL

          The configuration control plan shall be provided

4.4  XM MANAGEMENT ORGANIZATION

          The XM Spacecraft Program Office (ASPO), will be the primary technical
          point of contact between the Contractor and XM for technical
          management of this Contract. Telesat will be the primary point of
          contact for operation of the satellites.

          XM shall designate a Spacecraft Program Manager who will be
          responsible for ensuring that all technical and programmatic
          requirements of the spacecraft program are satisfied and will have the
          authority (and may delegate authority) to approve for XM on Design
          Review Boards on which XM is a member and on technical and related
          programmatic documentation matters.

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          An XM Contracts Officer will be identified who is responsible for
          conducting Contract negotiations, Contract administration, and all
          modifications to the spacecraft program (including waivers,
          deviations, and Contract Change Notices).

4.5  XM/CONTRACTOR RELATIONS

          At Contract award, the Contractor shall obtain promptly the government
          approvals required to provide access to XM personnel to non-financial
          information relating to the Contract. This access shall be consistent
          with United States Government regulations governing access to
          technical data. In addition to formal contact and communication
          between XM and the Contractor, the Contractor's Program Management
          Office (CPMO) shall arrange for cooperative, open, and unimpeded
          informal contact and communication between ASPO personnel and their
          counterparts in the Contractor's organization. Technical facilities,
          data, and information used by the Contractor for the program shall be
          open to inspection and evaluation by XM representatives at all
          reasonable times and subject to the regulations noted above. XM shall
          have access by use of permanent badges to all involved facilities and
          all work in process and to technical and status reviews. The
          Contractor shall provide XM with immediate and full visibility of all
          technical/programmatic aspects of failures and problems occurring at
          component (piece part), unit, subsystem, or system level and of
          associated corrective actions. All relevant system level test data
          shall be available for XM to review at any time after the data is
          taken.

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4.6  MEETINGS

          Table 1: Meetings Conducted or Participated in by Contractor

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
              Meeting                 Date or Frequency              Place
-------------------------------------------------------------------------------------
<S>                                        <C>            <C>
Contract Kickoff Meeting                   [****]         Contractor's facility
-------------------------------------------------------------------------------------
Interim Progress Meeting                   [****]         Contractor's facility
-------------------------------------------------------------------------------------
Quarterly Progress Meeting                 [****]         Contractor's facility
-------------------------------------------------------------------------------------
Senior Management Meetings                 [****]         Contractor's facility
-------------------------------------------------------------------------------------
Progress Meeting with  Major               [****]         SubContractor facilities
SubContractors (for new and
modified design equipment)
-------------------------------------------------------------------------------------
Unit Acceptance Reviews                    [****]         Contractor's/subContractors
                                                          facilities as appropriate
-------------------------------------------------------------------------------------
Design Review Meetings                     [****]         Contractor's/subContractors
                                                          facilities as appropriate
-------------------------------------------------------------------------------------
Shipment Readiness Review                  [****]         Contractor's facility
-------------------------------------------------------------------------------------
Flight Readiness Review                    [****]         Launch site
-------------------------------------------------------------------------------------
Launch and Mission Readiness Review        [****]         As appropriate
-------------------------------------------------------------------------------------
Meetings with launch                       [****]         As appropriate
services agency
-------------------------------------------------------------------------------------
Opportunity Meetings                       [****]         As appropriate
-------------------------------------------------------------------------------------
In-orbit Acceptance                        [****]         Contractor facility
Test Review
-------------------------------------------------------------------------------------
</TABLE>

4.6.1 Contract kickoff meeting

          Within [****] after the effective Date of Contract, the Contractor
          shall conduct a contract kickoff meeting. The purpose of this meeting
          is to confirm the spacecraft technical definition and configuration
          and program requirements subsequent to contract negotiations. An
          additional purpose is to discuss and define the details of
          implementing cooperative working procedures and arrangements between
          ASPO and the Contractor. The topics shall include the following:

          1.   Formal communication requirements and formats;

          2.   Contractor's organizational charts with specific names of all key
               individuals;

          3.   Arrangements for ASPO access to facilities, documentation, work
               in progress, and informal, technical discussions;

          4.   The Contractor team organization

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          5.   System/subsystem-level budgets reflecting the performance
               commitments and predictions provided by the Contractor prior to
               contract award and demonstrating the ability of the proposed
               design to meet all Exhibit A performance requirements; and

          6.   System and subsystem-level schedules.

4.6.2 INTERIM AND QUARTERLY PROGRESS MEETINGS

          The Contractor shall organize and conduct, under the chairmanship of a
          Program Management Office (PMO) member, regular technical and program
          meetings at which XM representatives (and Telesat, as necessary) will
          participate. The purpose of these meetings shall be to review overall
          program status, schedules, planning, major technical problem areas,
          and any contractual/financial issues and any proposed Contract
          changes, and to discuss and mutually agree upon appropriate courses of
          action for maintaining the integrity of the program. The Interim
          progress meetings shall normally be less formal than the Quarterly
          progress meetings.

4.6.3 SENIOR MANAGEMENT MEETINGS

          Senior Management Meetings shall be conducted at [****] intervals
          between the Contractor and XM senior management to discuss the
          Contractor's progress and related matters. The venue of these meetings
          shall normally be the Contractor's facilities.

          The ASPO Program Manager and the PMO Program Manager may jointly
          prepare the presentation for this meeting based on the agenda
          identified by the senior management staffs of both organizations.

4.6.4 REVIEW MEETINGS

          The Contractor shall conduct reviews as specified in Section 3 of this
          Exhibit. The Contractor shall be responsible for the reviews.

          The PMO shall be responsible for ensuring the timely completion of
          Action Items and for tracking and reporting their status. A review
          shall be considered conducted when

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<PAGE>

          the review chairperson issued the minutes and XM has reviewed the
          minutes. At the conclusion of the review, a set of Major Action Items
          will be mutually agreed to. A review shall not be considered completed
          until after all Major Action Items taken at the review meeting have
          been closed and the Notification of Review Completion has been
          approved by XM. Design Review Action Items may be closed to later
          phase actions and/or plans (e.g. during test) at the mutual agreement
          of the Contractor and Customer. Review Minutes, Action Item Responses,
          and Notification of Review of Completion submittals shall be in
          accordance with the CDRL.

4.7  PROGRAM SCHEDULE NETWORKS

          The Contractor shall conduct program schedule monitoring and analysis
          in accordance with the Contractor's standard practices and procedures.
          The Contractor shall provide XM with program activity networks and
          schedule charts from those schedule activities to assist in the
          forecasting of and preparation for critical program events (reviews
          and quarterly program meetings), as well as for progress evaluation.

4.8  PROGRAM MILESTONE PAYMENT STATUS

          The Contractor shall monitor and present to XM in the Quarterly
          Progress Reports, tables and graphs of the actual and anticipated
          invoice submittals of contract payment milestones as described below:

4.8.1 SUBMITTED INVOICES

          1.   Milestone identification number

          2.   Milestone description

          3.   Value

          4.   Amount approved

          5.   Invoice date

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4.8.2 ANTICIPATED INVOICE SUBMITTALS

          The Contractor shall present a table of anticipated milestone invoice
          submittals for a period of one year from the month of issue of the
          table. The table shall contain at least the following columns:

          1.   Milestone identification number;

          2.   Milestone description;

          3.   Value;

          4.   Anticipated (realistic) invoice date as shown on current program
               schedule.

4.8.3 MILESTONE PAYMENT STATUS GRAPHS

          The Contractor shall present a graph of cumulative milestone values
          over the entire program duration, indicating the Milestone Payment
          Plan amounts, and the cumulative amounts approved to dates.

4.8.4 AUDITOR'S CERTIFICATION

          The Contractor shall have its CFO certify to XM annually that no
          improper payment has been made to any XM official in connection with
          this Contract. Social functions and providing key XM officials with a
          desktop mock-up of the XM spacecraft shall be considered an acceptable
          courtesy.

4.9  MANAGEMENT OF CONTRACT CHANGES

          The Contractor shall establish and maintain a system for managing the
          following types of changes to the XM Contract:

          1.   Change to Technical Requirements

          2.   Change to the Scope of Work (additions or deletions); and

          3.   Change to the Delivery Requirements (schedule).

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4.9.1 PRELIMINARY CHANGE ASSESSMENT

          As an answer to an XM draft change request, prior to formal request
          for change, the Contractor shall provide to XM a preliminary change
          assessment, which includes the following:

          1.   A brief description of the change;

          2.   rough order of magnitude (ROM) of the cost impact of the change;

          3.   estimated schedule impact; and

          4.   other special programmatic considerations, including time
               required for a response. XM will evaluate the preliminary change
               assessment and advise the Contractor whether to proceed with a
               detailed proposal.

4.9.2 CONTRACT CHANGE NOTICE (CCN)

          Any contract change raised by the Contractor, either on its own
          initiative or at XM's request, shall be submitted to XM for approval
          in a timely manner in accordance with the Contract. A Contract Change
          Notice form shall be used which shall include the following
          information:

          1.   A unique reference number;

          2.   Date of submittal;

          3.   Identification of organization requesting the change, as well as
               description and justification for the change;

          4.   A detailed description of the envisaged tasks in the form of a
               brief statement of work;

          5.   A statement of schedule impact;

          6.   Price breakdown in a mutually acceptable format;

          7.   Suggested contract language revisions as applicable; and

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          8.   Proposed implementation date.

4.9.3 REVIEW AND APPROVAL OF CONTRACT CHANGE NOTICE

          XM will notify the Contractor of its acceptance or rejection of a CCN
          in accordance with the Contact Terms and Conditions. Whenever the
          proposed CCN implementation date is deemed critical, XM shall be so
          notified, and a specific early response date requested of XM by the
          Contractor.

          If the Contractor implements a change prior to obtaining XM approval,
          this shall be at the Contractor's own risk.

4.9.4 WAIVERS AND DEVIATIONS

          If, during the execution of the Contract, the Contractor desires to
          depart from the requirements in the Contract for a specific item or a
          limited number of items, a Request for Deviation/Waiver (RDW) shall be
          submitted. Such requests shall comply with the definition of
          Deviations and Waivers specified herein below.

          An RDW shall contain at least the information defined as follows:

          1.   A unique RDW reference number

          2.   Title or subject of RDW

          3.   Affected equipment item name

          4.   Affected equipment item part number

          5.   Affected requirement at all levels under Contractor
               responsibility

          6.   Description of the waiver or deviation requested

          7.   Purpose or justification for request

          8.   Date of issue; and

          9.   Schedule impact, if any.

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          Waiver and deviation are defined in Exhibit C.

4.9.5 REVIEW AND APPROVAL OF AN RDW

          XM shall make its best efforts to notify the Contractor of its
          acceptance or rejection of the RDW within ten (10) working days of its
          receipt. If the reason for its rejection is lack of adequate
          supporting documentation (or other evidence), the Contractor will be
          informed within ten (10) days of receipt.

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--------------------------------------------------------------------------------
5    PRODUCT ASSURANCE REQUIREMENTS
--------------------------------------------------------------------------------

          The Contractor shall establish and implement a Product Assurance
          Program in accordance with the requirements defined in Exhibit C.

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--------------------------------------------------------------------------------
6    INFORMATION
--------------------------------------------------------------------------------

6.1  ACCESS TO INFORMATION

          XM shall have access, consistent with United States Government
          regulations and individually signed Protection of Proprietary Rights
          agreements, to any information generated on the program or other
          technical data needed to resolve technical issues associated with the
          program. Implementation of such access may be through meetings,
          technical documents or through other methods by mutual agreement.

6.2  RELEASE OF COMMAND RADIO FREQUENCY AND ADDRESS CODE INFORMATION

          The Contractor shall consider and treat all assigned command radio
          frequencies and command address codes used for the spacecraft under
          this Contract and all on-orbit performance date as proprietary to XM.
          All such proprietary information shall not be released to third
          parties without XM's prior approval in accordance with the Contract
          Terms and Conditions.

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--------------------------------------------------------------------------------
7    TRAINING AND OPERATION SUPPORT SERVICES
--------------------------------------------------------------------------------

7.1  VERIFICATION OF [****]

          The Contractor shall support a test, not to exceed [****], to verify
          [****] and the spacecraft during the Integrated System Test of the
          first flight spacecraft.

7.2  TRAINING OF XM OPERATIONS PERSONNEL

          The Contractor shall prepare and present a comprehensive training
          course for XM and Telesat satellite operations staff.

          The first part of the course shall cover [****]. This part shall be
          conducted at Contractor's facility.

          The second part of the course shall consist of a [****] prior to the
          launch of the first spacecraft, but may instead be combined in part or
          in whole with the [****] training described in Appendix 1. Each day of
          the course shall consist of two three-hour sessions. This part of the
          course shall be given at the Telesat's facility, and shall utilize
          subsystem specialists as instructors. Reasonable questions not
          answered during the course shall be responded to within one week in
          writing.

          The training material shall be submitted to XM and Telesat as noted in
          the CDRL list.

          Each training session shall be video taped, and one copy of the videos
          shall be presented at the conclusion of training.

7.3  RESERVED

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--------------------------------------------------------------------------------
8    DATA AND DOCUMENTATION REQUIREMENTS
--------------------------------------------------------------------------------

          The specific items of information which shall be produced and formally
          submitted to XM by the Contractor are specified herein.

8.1  LANGUAGE

          All deliverable documentation shall be written in the English
          language.

8.2  UNITS AND DIMENSIONS

          Unless otherwise specified, the international system (SI) of units and
          dimensions shall be used in deliverable program documentation,
          however, if the Contractor desires, documentation may contain dual
          units in the format SI (English). SI units shall be used for
          deliverable spacecraft level and unit top assembly level, documents
          and drawings except as follows:

          1.   American Standard fasteners may be used;

          2.   Launch vehicle interface information will be as defined by the
               launch vehicle supplier; and

          3.   Drawings for existing units or components for which the existing
               drawings are in English units.

          4.   Existing analyses and documents

8.3  NOMENCLATURE, ACRONYMS AND ABBREVIATIONS

          The nomenclature and terminology used to define all hardware,
          software, and data items shall be consistent throughout the program.
          The Contractor shall provide a list of acronyms and abbreviations used
          in the program documentation, along with their meanings.

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8.4  DOCUMENT REFERENCE/IDENTIFICATION SYSTEM

          All contract deliverable documents submitted to XM shall contain in
          the headings at least the following:

          1.   Date of issue;

          2.   Subject of document;

          3.   Author or issuing authority;

          4.   Program unique reference identifier and other identifier; and

          5.   Contract Documentation Requirements List (CDRL) item number.

8.5  CDRL ITEM DESCRIPTIONS

          The requirements for those CDRL items, which have specific
          requirements for their contents, are described below. Documents not
          described below may be provided in accordance with the Contractor's
          standard contents and formats.

8.5.1 SPACECRAFT DELIVERY PLAN

          The general Spacecraft Delivery Plan shall be applicable to the
          selected launch vehicles. This plan shall define the activities
          necessary to prepare the spacecraft and associated support equipment
          for shipment, the general logistical details of the shipment itself,
          the implementation of monitoring equipment to record the environment
          of the spacecraft and critical support equipment during shipment, and
          a general definition of any support required to be provided by the
          applicable launch vehicle Contractors once the spacecraft and
          associated equipment arrive at the launch site.

8.5.2 QUARTERLY PROGRAM PROGRESS REPORTS

          The Quarterly Program Progress Report is an executive summary of the
          program status showing accomplishments against progress plan
          milestones and highlighting significant events and problems in the
          schedule. This document shall provide the

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          minimum amount of material necessary for tracking the program and
          shall be provided in a form which highlights critical changes to the
          elements defined with in this section. A structure which minimizes the
          repetition of material from quarter-to-quarter shall be used.

          For the key system budgets (noted below) and the [****] achievable
          with each launch vehicle changes from the previous report shall be
          highlighted and documented, and an action plan for correcting any
          predicted specifications non-compliance shall be presented.

          The report shall contain at least the following:

          1.   A detailed status of critical performance or schedule issues and
               of corrective actions undertaken.

          2.   General descriptions of progress accomplished during the quarter
               at unit, subsystem, and spacecraft system level.

          3.   A description of progress accomplished during the quarter by each
               major subContractor; and an updated list of all major
               subContractors.

          4.   Schedule overview, in bar chart form, showing the dates of the
               subsystem and system reviews and the dates of their delivery and
               their evolution.

          5.   Summary descriptions of any significant changes to the Contract
               in terms of design, performance, schedule or work distribution
               requirements. This shall include a status summary of Requests for
               Waiver/Deviation and Contract Change Notices.

          6.   List of milestones reached during the quarter and to date, and of
               milestones forecast to be completed for the next period.

          7.   [****] Summary containing:

                    [****]

                    [****]

                    [****]

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          8.   [****] Budget containing:

                    [****]

          9.   [****] Summary for the duration of the nominal mission for the
               selected launch vehicle. The estimated [****] shall also be
               defined in each case.

          10.  A review of the Product Assurance program including a summary of
               the past quarter's significant accomplishments, problems, parts
               procurement shortages, failures and solutions, program status,
               subContractor and supplier status, trends, and statistics.
               Additionally, the plan for the next quarter shall be summarized.

8.5.3 DESIGN REVIEW PACKAGE

          As a minimum, each review package shall include adequate pertinent
          information, supporting design and performance data and any analytical
          studies that fully describe the spacecraft various hardware subsystems
          and systems performance and capability for satisfying the performance
          requirements. All packages shall contain a [****] to the documentation
          within the package.

8.5.3.1 Spacecraft preliminary design review data package

          As a minimum, the following topics/items shall be addressed in the
          Spacecraft Preliminary Design Review (SPDR) data package:

          1.   Agenda with date, time and location of the design review meeting;

          2.   Program organization and management description;

          3.   Program master schedule including identification of critical path
               items, availability of facilities and resources, and any
               potential problem areas;

          4.   Summary of [****];

          5.   [****];

          6.   The satellite design analysis including a summary description of
               spacecraft and subsystems;

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          7.   Performance predictions and statement of compliance to
               contractual requirements;

               a)   Satellite final specifications, including applicable
                    documents and the [****]

               b)   Subsystem preliminary specifications

          8.   Summary of [****];

          9.   [****];

          10.  [****];

          11.  [****]

          12.  [****];

          13.  [****];

          14.  [****];

          15.  [****]; and

          16.  A preliminary release of analyses and of the reliability
               evaluation.

8.5.3.2 Critical design review data package

          As a minimum, the following data shall be provided in the Critical
          Design Review data package:

          1.   Agenda with date, time, and location of the design review
               meeting;

          2.   Updates to Program organization and management description;

          3.   Final subsystem specifications

          4.   Program master schedule including identification of critical path
               items, availability of facilities and resources, and any
               potential problem areas;

          5.   Summary of [****];

          6.   Changes since PDR

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          7.   Summary description of spacecraft and subsystems;

                    [****]

          8.   Update of Performance predictions and Statement of Compliance.

          9.   Program Test Plan and supporting documentation;

          10.  [****];

          11.  [****];

          12.  Systems safety and hazard considerations:

          13.  [****];

          14.  [****]; and

          15.  Updated releases of analyses and of the reliability evaluation.

8.5.4 SPACECRAFT VALIDATION PLAN

          The Contractor shall conduct test activities as specified in Exhibit D
          to verify the compliance of the equipment with Exhibit A. This
          document shall be maintained to be consistent with any changes to
          Exhibits A and D made during the program.

8.5.5 OTHER TEST PLANS

          The Contractor shall develop the other test plans as listed in Table 2
          Contract Data Requirements List for XM1 and XM 2 and in Table 4
          Contract Data Requirements List for XM 3. These other test plans
          include a [****], and a SCC Test Plan. These test plans shall describe
          the verification and testing activities to be performed on the
          hardware and software delivered in accordance with Appendix 1, 2, and
          3 of this document.

8.5.6 SPACECRAFT STORAGE PLAN

          The Contractor shall develop a Spacecraft Storage Plan which shall
          describe the equipment and methods used to store the spacecraft,
          including descriptions of

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          storage containers, facilities, provisions for environmental
          monitoring and control during storage, tasks to be performed before
          placing the spacecraft in storage, tasks performed periodically during
          the storage period, and tasks to be performed when removing a
          spacecraft from storage.

          The Spacecraft Storage Plan shall cover all necessary tasks for a
          period of storage up to [****]. The Spacecraft Storage Plan shall
          clearly distinguish between tasks performed for short-term storage
          (less than [****], and tasks performed for medium term storage. If
          testing of the spacecraft is required upon removal from storage, the
          appropriate tests shall be described.

8.5.7 SPACECRAFT SYSTEMS SUMMARY

          The main objective of this document is to provide a top-level
          understanding of the spacecraft design, performance, and operation to
          XM staff not routinely associated with the XM Spacecraft Program
          Office (ASPO), and not receiving the subsystem and system design
          review packages.

          The spacecraft system summary shall contain general descriptions of
          the spacecraft equipment and performance, overall configuration
          drawings, and functional diagrams of major assemblies and subsystems.
          Current versions of the [****] shall be presented. Each revision may
          be provided as a stand-alone document or a set of change pages, as
          mutually agreed between the Contractor and Customer.

8.5.8 [****]

          [****]

8.5.9 SPACECRAFT ASSEMBLY DRAWINGS AND CIRCUIT DIAGRAMS

          A Complete set of spacecraft level assembly drawings and electrical
          circuit diagrams (from top level down to subsystem level) shall be
          provided [****]. These documents shall be available for reference at
          CDR and updates shall be made available when released. Unit level
          drawings and schematics, shall be made available for Customer review
          subject to U.S. Government regulations.

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          During the program, all released drawings for spacecraft produced
          under this Contract shall be available for XM review as soon as each
          drawing is released.

8.5.10 FLIGHT SOFTWARE/FIRMWARE DOCUMENTATION

          The Contractor's warranty of satisfactory in-orbit performance assumes
          that XM shall not modify the flight software. Documentation
          deliverables for XM specific software/flight firmware shall include
          the following:

               [****]

8.5.11 [****]

          The Contractor shall [****]. For each database, the Contractor shall
          create and maintain documentation providing detailed information on
          the structure and interpretation of the database.

8.5.11.1 [****] contents

          The  [****] Database shall contain [****].

          [****]

               [****]

8.5.11.2 [****] contents

          The [****] databases shall contain [****]

               [****]

8.5.11.3 Submission requirements

          The [****] databases shall be controlled by revision number and shall
          be maintained to accurately reflect the configuration of the
          spacecraft during testing and until shipment. XM shall be notified
          whenever the databases are revised.

          The [****] databases shall be released in a preliminary form at least
          [****]. Subsequently, the databases may be revised as necessary;
          however, XM shall be

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          notified at each revision and copies shall be delivered
          electronically. The final revision effective for each spacecraft shall
          be delivered at the Shipment Readiness Review.

8.5.12 SPACECRAFT OPERATIONS HANDBOOK

          This document shall include the satellite operational procedures
          recommended by the Contractor for use by XM and/or Telesat in all
          modes of operation from end of in-orbit acceptance test until
          satellite end-of-life. This handbook shall be designed for inclusion
          of supplemental information relating to changes in satellite design
          and operation and shall include the following information:

          1.   [****]

          This data shall include, but shall not be limited to, the following:

8.5.12.1 [****]

          [****]

8.5.12.2 [****]

          [****]

8.5.12.3 [****]

          [****]

8.5.12.4 [****]

          [****]

8.5.12.5 [****]

          [****]

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8.5.13 Spacecraft [****]

          A complete set of [****] shall be provided to XM. [****] to be used as
          a reference by XM and/or spacecraft operations personnel.

          [****]

8.5.13.1 [****]

               [****]

8.5.13.2 [****]

               [****]

8.5.13.3 Data Documentation and Delivery

          In general, unit data shall be provided to XM at least [****] before
          the spacecraft launch date. As a minimum, the following data shall be
          provided [****] before the launch date:

               [****]

          All other data shall be delivered to XM at least [****] prior to the
          launch of the spacecraft.

8.5.14 ANALYSIS

          Analyses reports shall include:

          1.   Statement of the objectives of the analysis and outline of the
               methodology.

          2.   Definitions of all symbols used in equations and statement of all
               assumed boundary conditions and values of constraints.

          3.   References, if appropriate, to reduce the amount of explanatory
               texts, or indication of sources of common equations, algorithms,
               etc.

          4.   Methodology and/or listing of computer analyses.

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          5.   Sufficient information to allow XM to verify the adequacy and
               accuracy of the analyses.

          The reports shall be updated when new information becomes available
          during the Contract period, and shall adequately describe any
          differences.

8.6  DETAILED CDRL

          The listing of data items to be submitted and their corresponding
          submittal requirements are given in Table 2 attached hereto.
          Submission requirements given in days after or before an event shall
          be defined at full working days. Submission requirements given in
          weeks or months shall be defined as calendar weeks or months. All
          submission dates refer to date of receipt at the specified
          destination. Electronic submissions shall not be considered acceptable
          unless they are submitted in a format which the Customer can access
          using commercial off-the-shelf software.

          Specific XM 3 CDRL items are listed in Table 4; all other deliveries
          were completed for XM 1 and XM 2.

8.6.1 SUBMISSION CRITERIA DEFINITIONS:

8.6.1.1 Approval

          Approval indicates that XM must provide a written indication that the
          submission is acceptable before any work which directly depends on the
          submission is begun. All deficiencies in the submission which are
          noted by XM must be resolved.

8.6.1.2 Review

          Review indicates that XM has the opportunity to review and comment on
          the submission, and Customer's reasonable comments will be
          incorporated by the Contractor. Work may proceed in parallel to the
          review activity

8.6.1.3 Information

          Information indicates that the submission is provided to aid the
          Customer in understanding.

XM PROPRIETARY                   EXHIBIT B REV B                        53 of 73

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APPENDIX 1 TO EXHIBIT B

[****] REQUIREMENTS

NOTE: REVISED PER APPROVED CCN 021

AND NEW CHANGES TO REFLECT DELIVERY TO TELESAT ARE ITALICIZED

XM PROPRIETARY                   EXHIBIT B REV B                        54 OF 73

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--------------------------------------------------------------------------------
1    [****]
--------------------------------------------------------------------------------

          [****]

XM PROPRIETARY                   EXHIBIT B REV B                        55 OF 73

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2    DESIGN REVIEWS
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          The Contractor shall conduct [****] reviews of the Spacecraft
          Simulator. All [****] shall be held at the Contractor's facility. A
          Preliminary Design Review (PDR) a Critical Design Review (CDR), a Pre
          Shipment Review (PSR) shall be held before shipment of the simulator
          to Telesat

          The PDR shall cover [****]. The CDR shall cover [****]. The PSR shall
          cover [****].

XM PROPRIETARY                   EXHIBIT B REV B                        56 OF 73

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3    TEST REQUIREMENTS
--------------------------------------------------------------------------------

          Tests of the [****] shall be performed. [****]. The final acceptance
          test (FAT) shall consist of [****].

XM PROPRIETARY                   EXHIBIT B REV B                        57 OF 73

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4    DOCUMENTATION
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          Simulator documentation shall be delivered in accordance with the
          CDRL. The following documentation shall be required:

               1.   PDR and CDR data packages;

               2.   PDR and CDR reports, including minutes and action items;

               3.   simulator user's manual;

               4.   monthly progress reports; and

               5.   Final Acceptance Test results.

          The following data shall be supplied with the simulator:

               1..  [****]

XM PROPRIETARY                   EXHIBIT B REV B                        58 OF 73

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5    TRAINING
--------------------------------------------------------------------------------

          The Contractor shall conduct a comprehensive training course to
          instruct up to ten (10) Telesat staff in the operation of the
          simulator. The course shall be conducted at the Telesat's facility
          after shipment of the simulator to Telesat and shall combine classroom
          instruction with hands-on training. The student material for the
          training course shall include, but not be limited to, the simulator
          user's manual, , and class handouts.

XM PROPRIETARY                   EXHIBIT B REV B                        59 OF 73

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6    WARRANTY
--------------------------------------------------------------------------------

          The Contractor shall warranty for [****] the DSS except for the work
          station hardware, operating system software, and peripheral units. The
          warranty period shall start in accordance with the Terms and
          Conditions of the Contract.

          As a minimum, the warranty shall cover 1) analysis of simulator
          anomaly reports issued by XM and sent to the Contractor, 2) software
          corrections including modifications and tests, 3) updates of
          documentation and of the configuration item data list, and 4)
          generation and delivery of applicable new software releases.

          All commercially available elements of the work station including work
          station hardware, its operating system software/firmware, and
          peripheral unit hardware and software/firmware shall be covered by
          their manufactures' standard warranties which shall be extended by the
          Contractor until the units are accepted by and installed at Telesat.
          The Contractor shall provide for the transfer of these manufacturers'
          warranties to XM.

          XM at its option, may continue those warranty coverages outside of the
          scope of the Contract.

XM PROPRIETARY                   EXHIBIT B REV B                        60 OF 73

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APPENDIX 2 TO EXHIBIT B

COMMUNICATIONS PAYLOAD SIMULATOR

XM PROPRIETARY                   EXHIBIT B REV B                        61 OF 73

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1    COMMUNICATIONS PAYLOAD SIMULATOR INTRODUCTION
--------------------------------------------------------------------------------

          The Contractor shall provide a Communications Payload Simulator which
          is capable of providing a [****]

XM PROPRIETARY                   EXHIBIT B REV B                        62 OF 73

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2    GENERAL DESCRIPTION
--------------------------------------------------------------------------------

          [****]

XM PROPRIETARY                   EXHIBIT B REV B                        63 OF 73

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3    CONSTRUCTION
--------------------------------------------------------------------------------

          [****]

XM PROPRIETARY                   EXHIBIT B REV B                        64 OF 73

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4    SYSTEM VERIFICATION
--------------------------------------------------------------------------------

          [****]

XM PROPRIETARY                   EXHIBIT B REV B                        65 OF 73

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5    WARRANTY
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          The Contractor shall warranty for [****] the Communications Payload
          Simulator. The warranty period shall start in accordance with the
          Terms and Conditions of the Contract.

          All commercially available elements (e.g. workstations) of the
          simulator shall be covered by their manufactures' standard warranties
          which shall be extended by the Contractor until the units are accepted
          by and installed at XM. The Contractor shall provide for the transfer
          of these manufacturers' warranties to XM.

          XM at its option, may continue those warranty coverages outside of the
          scope of the Contract.

XM PROPRIETARY                   EXHIBIT B REV B                        66 OF 73

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APPENDIX 3 TO EXHIBIT B

STATEMENT OF WORK FOR THE PRIMARY AND BACKUP SATELLITE CONTROL SOFTWARE AND
GROUND ENCRYPTORS

XM PROPRIETARY                   EXHIBIT B REV B                        67 OF 73

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1    SCOPE
--------------------------------------------------------------------------------

          This document defines the work to be performed by the Contractor for
          the Satellite Control Software for the Customer at the Primary
          Spacecraft Control Center at Telesat's facilities in Ottawa, Ontario,
          Canada (hereinafter referred to as "Primary") and the Back-up
          Spacecraft Control Center at the Customer's facilties in Washington
          D.C (hereinafter referred to as "Back-up"), and for Ground Encryptors
          at the Back-up facility. Such work shall include the provision of
          equipment, software, services and documents and execution of project
          management tasks. The Contractor shall complete this work in
          accordance with the terms of the Contract and the requirements
          specified herein.

          The Contractor shall be responsible for certain activities which are
          necessary to achieve a successful operation of the Customer's two
          satellites.These tasks shall include the design, development,
          procurement, fabrication, testing, documentation, delivery and
          installation of Satellite Control Software and Ground Encryptors.

          More specifically, Contractor shall perform the following activities,
          after the successful completion of factory acceptance testing:

               1.   Transportation of Ground Encryptors to the Backup satellite
                    control center.

               2.   Installation and integration of the supplied Software into
                    the Primary and Back-up facilties.

               3.   Coordination with Customer regarding facility requirements
                    and access.

               4.   Preparation of plans, procedures and reports.

               5.   Conduct the Site Acceptance Tests (SAT) and test reviews at
                    the Primary and Back-up facilities, as appropriate to the
                    deliverable item.

XM PROPRIETARY                   EXHIBIT B REV B                        68 OF 73

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2    DELIVERABLE EQUIPMENT, SOFTWARE, and SERVICES
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2.1  SATELLITE CONTROL SOFTWARE AND GROUND ENCRYPTORS

          The Contractor shall furnish the Customer [****].

XM PROPRIETARY                   EXHIBIT B REV B                        69 OF 73

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2.2  ALIGNMENT OF PRIMARY AND BACKUP FACILITIES

          The backup center shall be automatically aligned with the primary
          center with respect to [****].

2.3  TEST EQUIPMENT AND TOOLS

          The Contractor shall provide test equipment and tools, that are not
          provided by Customer, necessary to install and complete SAT. Such test
          equipment and tools shall remain the property of the Contractor.

2.4  RESERVED

2.5  PRODUCT ASSURANCE MANAGEMENT

          The Contractor shall perform product assurance in accordance with the
          Contractor's internal standards for commercial practices.

2.6  TEST PROGRAM

          The Satellite Control Software and Ground Encryptors shall be tested
          and the results reviewed in accordance with the program Ground System
          Test Plan.

          The acceptance tests of the Satellite Control Software and Ground
          Encryptors shall be conducted as described below:

          .    [****]

XM PROPRIETARY                   EXHIBIT B REV B                        70 OF 73

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2.7  CUSTOMER FURNISHED EQUIPMENT AND SERVICES

          The Customer shall provide beneficial access to the Customer's Primary
          and Back-up satellite control centers for the purposes of installation
          and test of the Contractor-provided Satellite Control Software and
          Ground Encryptors. The Customer shall provide [****]

          .    [****]

XM PROPRIETARY                   EXHIBIT B REV B                        71 OF 73

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3    SCHEDULE
--------------------------------------------------------------------------------

          The Satellite Control Software and Ground Encryptors installation, and
          testing for both Primary and Backup Satellite Control Centers shall be
          performed in accordance with the Contract Terms and Conditions.

XM PROPRIETARY                   EXHIBIT B REV B                        72 OF 73

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4    WARRANTY
--------------------------------------------------------------------------------

          The warranty with respect to the Ground Encryptors shall begin in
          accordance with the Terms and Conditions of the Contract and shall run
          for a period of [****] thereafter. At any time during this period the
          Contractor shall promptly correct noncompliant performance. Contractor
          shall also provide software maintenance for the life of the satellite
          to fix identified bugs. Site acceptance testing will be deemed
          complete when SATs have been performed, results have been reviewed in
          the Final Acceptance Review, a disposition plan developed and agreed
          to by the Purchaser for any remaining non-compliance's. Warranty
          service costs will be the responsibility of the Contractor.

XM PROPRIETARY                   EXHIBIT B REV B                        73 OF 73

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Attachment 1

                                      [***]

 XM SATELLITE RADIO INC., XM SATELLITE RADIO HOLDINGS INC. and BOEING SATELLITE
                          SYSTEMS INTERNATIONAL, INC.
                          CONFIDENTIAL and PROPRIETARY

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     the Securities and Exchange Commission. Confidential treatment has been
     requested with respect to the omitted portions.

                   Table 2 - Contract Data Requirements List

                                      [***}

                                Exhibit B Rev C

XM Proprietary                                                            Page 1

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     the Securities and Exchange Commission. Confidential treatment has been
     requested with respect to the omitted portions.

                                    Table 2A

                                      [***]

                                Exhibit B Rev C

XM Proprietary                                                            Page 1

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     the Securities and Exchange Commission. Confidential treatment has been
     requested with respect to the omitted portions.

                                     Table 3

                                     [***]

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     the Securities and Exchange Commission. Confidential treatment has been
     requested with respect to the omitted portions.

                  Table 4 - XM3 Contract Data Requirements List

                                      [***]

                                Exhibit B Rev C

XM Proprietary                                                            Page 1

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     the Securities and Exchange Commission. Confidential treatment has been
     requested with respect to the omitted portions.

                                    Table 4A

                                      [***]

                                Exhibit B Rev C

XM Proprietary                                                            Page 1

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     the Securities and Exchange Commission. Confidential treatment has been
     requested with respect to the omitted portions.

                                     Table 5
                        XM3 Software including Licenses

                                      [***]

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