Exhibit 10_4

$250,000,000

CREDIT AGREEMENT

dated as of

May 5, 2006

among

XM SATELLITE RADIO INC.,

XM SATELLITE RADIO HOLDINGS INC.,

The Lenders Party Hereto,

JPMORGAN CHASE BANK,

NATIONAL ASSOCIATION

as Administrative Agent,

CREDIT SUISSE SECURITIES (USA) LLC,

as Syndication Agent

and

CITICORP NORTH AMERICA, INC.,

as Documentation Agent

J.P. MORGAN SECURITIES INC. and UBS SECURITIES LLC

as Joint Bookrunners and Joint Lead Arrangers

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TABLE OF CONTENTS

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SCHEDULES:

Schedule 2.01 — Commitments

Schedule 3.05 — Litigation

Schedule 3.12 — Subsidiaries

Schedule 3.14 — Environmental Matters

Schedule 6.02 — Existing Liens

Schedule 6.08 — Existing Restrictions

Schedule 9.05 — Exceptions to Agreements of Holdings

EXHIBITS:

Exhibit A — Form of Assignment and Assumption

Exhibit B — Form of Opinion of Borrower’s Counsel

Exhibit C — Form of Guarantee Agreement

Exhibit D — Form of Solvency Certificate

Exhibit E — Form of Collateral Agreement

Exhibit F — Form of Perfection Certificate

Exhibit G — Form of Second Lien Intercreditor Agreement

Exhibit H — Form of Holdings Covenant and Collateral Release Notice

Exhibit I — Form of Non-Bank Certificate

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CREDIT AGREEMENT dated as of May 5, 2006 (this “Agreement”), among XM SATELLITE RADIO INC., XM SATELLITE RADIO HOLDINGS INC., the LENDERS party hereto, JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Administrative Agent, CREDIT SUISSE SECURITIES (USA) LLC, as Syndication Agent, CITICORP NORTH AMERICA, INC., as Documentation Agent and J.P. MORGAN SECURITIES INC. and UBS SECURITIES LLC, as Joint Bookrunners and Joint Lead Arrangers (the “Arrangers”).

The parties hereto agree as follows:

ARTICLE I.

Definitions

SECTION 1.01 Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

“ABR”, when used in reference to any Loan or Borrowing, indicates that such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

“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 or in contemplation of the acquisition of such assets by such specified Person.

“Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

“Adjustment Date” has the meaning assigned to such term in the definition of “Pricing Grid”.

“Administrative Agent” means JPMorgan Chase Bank, National Association, in its capacity as administrative agent for the Lenders hereunder, or its successors in such capacity.

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“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. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” shall have correlative meanings.

“Affiliate Transaction” has the meaning assigned to such term in Section 6.07(a).

“Agreement” has the meaning assigned to such term in the introductory paragraph of this Agreement and includes all Exhibits and Schedules hereto.

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus  ¹/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

“Ancillary XM-4 Satellite Collateral” means any assets, licenses and/or usage rights associated specifically with the XM-4 Satellite; provided, however, to the extent that any such assets, licenses and/or usage rights are also associated with one or more other satellites used or to be used by a Loan Party (prior to the Holdings Covenant and Collateral Release Date) or by the Borrower or the Subsidiary Loan Parties (after the Holdings Covenant and Collateral Release Date) or other property or assets material to the business of such party, only that portion, if any, of such assets, licenses and/or usage rights that is divisible and separately conveyable shall constitute Ancillary XM-4 Satellite Collateral.

“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.

“Applicable Rate” means, for any day, (a) with respect to any ABR Loan, 1.25% per annum, (b) with respect to any Eurodollar Revolving Loan, 2.25% per annum, and (c) with respect to the Commitment Fee, 0.50% per annum; provided that on and after the first Adjustment Date occurring after the completion of the first full fiscal quarter of the Borrower after the Closing Date, the Applicable Rate with respect to the Loans and the Commitment Fee will be determined pursuant to the Pricing Grid.

“Approved Fund” has the meaning assigned to such term in Section 9.04.

“Arrangers” has the meaning assigned to such term in the introductory paragraph of this Agreement.

“Asset Sale” means (a) the sale, lease (as lessor), license, conveyance or other disposition of any assets; and (b) the issuance of Equity Interests in any of the Borrower’s Subsidiaries or the sale of Equity Interests in any of its Subsidiaries (including in connection with the merger or consolidation of any Subsidiary with or into another Person that results in the direct or indirect ownership by the Borrower of less of the Equity Interests of such Subsidiary than prior to such merger or consolidation).

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

(i) any single transaction or series of related transactions that involves assets having a fair market value or that involve net proceeds of less than $5,000,000;

(ii) a transfer of assets between or among the Borrower and the Borrower’s Wholly Owned Subsidiary Guarantor;

(iii) an issuance of Equity Interests by a Wholly Owned Subsidiary Guarantor to the Borrower or to another Wholly Owned Subsidiary Guarantor;

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

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

(vi) a Restricted Payment or Permitted Investment that is permitted under Section 6.06;

(viii) any Qualified Sale and Leaseback Transaction, including an XM-4 Sale and Leaseback Transaction; and

(ix) the non-exclusive license of Intellectual Property in the ordinary course of business.

“Asset Sale Offer” has the meaning assigned to such term in Section 2.10(c).

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

“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.

“Availability Period” means the period from and including the Closing Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments.

“Available Commitment”: as to any Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Commitment then in effect over (b) such Lender’s Revolving Credit Exposure then outstanding; provided, that in calculating any Lender’s Revolving Credit Exposure for the purpose of determining such Lender’s (other than the Swingline Lenders)

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Available Commitment pursuant to Section 2.11(a), the aggregate principal amount of Swingline Loans then outstanding shall be deemed to be zero.

“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 a corresponding meaning.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Board of Directors” means (a) with respect to a corporation, the board of directors of the corporation; (b) with respect to a partnership, the board of directors of the general partner of the partnership (if a corporation); and (c) with respect to any other Person, the board or committee of such Person serving a similar function.

“Borrower” means XM Satellite Radio Inc., a Delaware corporation.

“Borrower Obligations” means the Credit Agreement Obligations, the Borrower’s Cash Management Arrangement Obligations and the Borrower’s Specified Hedging Agreement Obligations.

“Borrowing” means (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect or (b) a Swingline Loan.

“Borrowing Request” means a request by the Borrower for a Revolving Borrowing in accordance with Section 2.03.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

“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.

“Cash Equivalents” means:

(a) United States dollars;

(b) 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

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and credit of the United States is pledged in support thereof) having maturities of not more than six months from the date of acquisition;

(c) 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;

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

(e) 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

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

“Cash Management Arrangement Obligations” means all obligations and liabilities of any Loan Party to any Qualified Counterparty, whether direct or indirect, absolute or contingent, due or to become due or now existing or hereafter incurred, which may arise under, out of, or in connection with, any Specified Cash Management Arrangement or any Specified Cash Management Arrangement Agreement, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including interest accruing at the then applicable rate provided in any Specified Cash Management Arrangement Agreement after the maturity of the obligations thereof and interest accruing at the then applicable rate provided in any Specified Cash Management Arrangement Agreement after the commencement of any bankruptcy case or insolvency, reorganization or like proceeding relating to such Loan Party, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding, and all reasonable fees and disbursements of counsel to the Qualified Counterparty that are required to be paid by such Loan Party pursuant to the terms of any Specified Cash Management Arrangement Agreement).

“Change in Control” means the occurrence of any of the following:

(a) Holdings shall cease to beneficially own and control at least 100% on a fully diluted basis of the economic interests and voting power in the Equity Interests of the Borrower;

(b) 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 the Borrower and its Material 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 Principal Related Party;

(c) the adoption of a plan relating to the liquidation or dissolution of the Borrower;

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(d) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person,” other than the Principals and the Principal Related Parties, becomes the Beneficial Owner, directly or indirectly, of more than 35% of the Voting Stock of Holdings or the Borrower, measured by voting power rather than number of shares; or

(e) the first day on which a majority of the members of the Board of Directors of the Borrower or Holdings are not Continuing Directors.

Notwithstanding the foregoing, a Parent Company Merger shall not constitute a Change in Control.

“Change in Control Offer” has the meaning assigned to such term in Section 2.10(d).

“Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.14(b), by any lending office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans.

“Closing Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” means (a) as of the Closing Date and until the Release Date, the Existing Collateral, (b) from and after the Release Date and at all times thereafter (until, in the case of Holdings only, the Holdings Covenant and Collateral Release Date), all of the personal property (including Equity Interests and Intellectual Property) of Holdings, the Borrower and the Subsidiary Loan Parties in which Liens are purported to be granted pursuant to the Security Documents (other than the Existing Collateral Documents) and (c) with respect to Holdings only, from and after the Holdings Covenant and Collateral Release Date, the Holdings Collateral, in each case, as security for the Borrower Obligations and the Guarantor Obligations; provided that if at any time none of the Obligations in respect of the Secured Notes and the GM/OnStar Credit Facility (including if any release of such Liens with respect to the Obligations in respect of the GM/OnStar Credit Facility occurs concurrently with the automatic release referred to below) are secured by the XM-4 Satellite Collateral, then such XM-4 Satellite Collateral shall be automatically released from the Collateral without any further consent of the Administrative Agent and/or the Lenders in connection with the consummation of the XM-4 Sale and Leaseback Transaction.

“Collateral Agent” means The Bank of New York or such other Person then serving as Collateral Agent under the Existing Collateral Documents.

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“Collateral Agreement” means the Collateral Agreement, dated as of the Release Date, as amended, supplemented or otherwise modified from time to time, in the form of Exhibit E, among, the Borrower, Holdings, each Subsidiary Loan Party and the Administrative Agent.

“Collateral and Guarantee Requirement” means the requirement that:

(a) on the Closing Date, the Administrative Agent (I) shall have received from Holdings and each Material Subsidiary a counterpart of the Guarantee Agreement duly executed and delivered on behalf of such person and (II) each Lender, to the extent required pursuant to the terms thereof, shall have executed a joinder agreement to each of the Existing Intercreditor Agreements and become a “Secured Party” as defined thereunder and the Collateral Agent, for the benefit of the New Secured Parties, shall have a valid security interest in the Collateral pursuant to the Existing Collateral Documents and such security interest shall be perfected to the extent required by the Existing Collateral Documents;

(b) in the case of any person that becomes a Subsidiary Loan Party after the Closing Date, the Administrative Agent shall have received a supplement to the Guarantee Agreement, in the form specified therein, duly executed and delivered by such Subsidiary Loan Party;

(c) on the Release Date, the Administrative Agent shall have received from the Borrower, Holdings and each Subsidiary Loan Party, a counterpart of the Collateral Agreement duly executed and delivered on behalf of such Loan Party and such Collateral Agreement shall be in full force and effect and legal, valid and binding against each such Loan Party as of the Release Date;

(d) on or promptly after the Release Date, (I) all the outstanding Equity Interests of any Person that is or becomes a Subsidiary Loan Party on or after the Closing Date and (II) all the Equity Interests that are owned by a Loan Party (other than XM Investment LLC and XM 1500 Eckington LLC) shall have been pledged pursuant to the Collateral Agreement (or, in the case of Foreign Subsidiaries, at the request of the Administrative Agent, pursuant to a Foreign Pledge Agreement) (provided that (x) the Equity Interests in any Foreign Subsidiary shall be pledged unless such pledge would result in adverse tax consequences to the Borrower, in which case such pledge shall be limited to 65% of the Voting Stock and 100% of the non-Voting Stock of such Foreign Subsidiary, (y) minority Equity Interests shall be pledged unless such pledge would result in a breach or violation of contracts or agreements to which a Loan Party is party or would trigger rights of first refusal, call rights or other similar provisions thereunder or result in the loss of director appointment rights or other penalty or loss of rights under such contracts or agreements and (z) from and after the Holdings Covenant and Collateral Release Date, Holdings shall be required to pledge only those Equity Interests that constitute Holdings Collateral) and the Administrative Agent shall have received all certificates or other instruments (if any) representing such Equity Interests, together with stock powers or other instruments of transfer with respect thereto duly endorsed in blank;

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(e) on the Closing Date (in the case of the Existing Security Documents) and on or promptly after the Release Date (in the case of the Collateral Agreement) and at any time thereafter that any other Security Document shall be executed and delivered (in the case of any other Security Document), except as set forth pursuant to Section 3.15 or as otherwise contemplated by the applicable Security Document, all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered, recorded, executed or possessed to create the Liens intended to be created by the applicable Security Documents in favor of (i) prior to the Release Date, the Collateral Agent, for the benefit of the Existing Secured Parties and the New Secured Parties and (ii) after the Release Date, the Administrative Agent, for the benefit of the New Secured Parties, and to perfect such Liens to the extent required by, and with the priority required by, the applicable Security Documents and this Agreement, shall have been filed, registered, recorded (or delivered to the Administrative Agent for filing, registration or recording) or executed and delivered; and

(f) except as set forth pursuant to Section 3.03 or as otherwise contemplated by any Security Document, each Loan Party shall have obtained all consents and approvals required to be obtained by it in connection with (i) the execution and delivery of all Security Documents (or supplements thereto) to which it is a party and the granting by it of the Liens thereunder and (ii) the performance of its obligations thereunder.

“Commitment” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender’s Commitment is set forth on Schedule 2.01, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable. The initial aggregate amount of the Lenders’ Commitments is $250,000,000. Unless the context shall otherwise require, after the effectiveness of any New Commitments, the term “Commitment” shall include such New Commitment.

“Commitment Fee” has the meaning assigned to such term in Section 2.11(a).

“Commitment Letter” means the amended and restated commitment letter, dated as of April 17, 2006, among the Borrower, J.P. Morgan Securities Inc., UBS Securities LLC, JPMorgan Chase Bank, National Association, UBS Loan Finance LLC, Citigroup Global Markets Inc., Credit Suisse, Bear Stearns Corporate Lending Inc. and Wells Fargo Foothill, Inc.

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Material Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:

(a) the Net Income (but not loss) of any Person that is not a Material Subsidiary or that is accounted for by the equity method of accounting shall be included

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only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Wholly Owned Subsidiary Guarantor thereof;

(b) the Net Income of any Material Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Material 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 Material Subsidiary or its stockholders;

(c) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded; and

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

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

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

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

“Consolidated Total Senior Debt” means, as at any date of determination, Consolidated Total Debt, less any Indebtedness subordinated in right of payment and interest to any other Indebtedness of Holdings and its Subsidiaries in accordance with the terms of this Agreement.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Borrower who (a) was a member of such Board of Directors on the Closing Date; or (b) 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.

“Credit Agreement Obligations” means the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and LC Disbursements and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing

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or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower to the Administrative Agent or to any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Deferred Purchase Price Agreements” means each purchase agreement between the Borrower and a satellite manufacturer for the manufacture of a satellite, the terms of which provide for a portion of the purchase price to be deferred and paid by the Borrower other than when specified milestones are achieved or in installments on or prior to the delivery of such satellite.

“Disqualified Stock” means any Equity Interest 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 the date that is 91 days after the Maturity Date. Notwithstanding the preceding sentence, any Equity Interest that would constitute Disqualified Stock solely because the holders thereof have the right to require the Borrower to repurchase such Equity Interests upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the terms of such Equity Interests provide that the Borrower may not repurchase or redeem any such Equity Interests pursuant to such provisions unless such repurchase or redemption complies with Section 6.06.

“Distribution Agreement” means the Second Amended and Restated Distribution Agreement dated on or about January 28, 2003 by and among OnStar, Holdings and the Borrower, as amended and as contemplated to be amended to be combined with the GM/OnStar Credit Facility and as further amended, supplemented or otherwise modified from time to time.

“Documentation Agent” means Citicorp North America, Inc., as documentation agent.

“dollars” or “$” refers to lawful money of the United States of America.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, common law, injunctions, notices or binding agreements issued, promulgated or entered into by or on behalf of any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the

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Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of, or non-compliance with, any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, 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, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the failure of the Borrower or any ERISA Affiliate to make any required contribution under any Multiemployer Plan; (g) the incurrence by the Borrower or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (h) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; (i) the occurrence of an act or omission which could give rise to the imposition of fines, penalties, taxes or related charges under Chapter 43 of the Code or under Section 409, Section 502(c), (i) or (k) or Section 4071 of ERISA in respect of any Plan; (j) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Code with respect to any Plan; or (k) the occurrence of any event with respect to any Plan similar to the events described in any of the subsections (a) through (j) hereof which would cause liability to arise to the Borrower or any ERISA Affiliate.

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“Eurodollar”, when used in reference to any Loan or Borrowing, indicates that such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Article VII.

“Excess Proceeds” means any Net Proceeds from any Asset Sale that are not finally applied or invested in accordance with the Borrower’s Reinvestment Right.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Entities” means, collectively, (a) any Subsidiary of Holdings (other than the Borrower or a Subsidiary of the Borrower) that has as its principal asset real estate that is leased to Holdings or the Borrower, including XM 1500 Eckington LLC and XM Investment LLC, (b) companies that are not Subsidiaries of Holdings, the Borrower or a Subsidiary of the Borrower, including WorldSpace, Inc. and Canadian Satellite Radio Holdings Inc., (c) WCS Wireless Inc. (as long as it is not a Subsidiary of the Borrower) and (d) any Subsidiary of Holdings (other than the Borrower or a Subsidiary of the Borrower) formed to hold and operate the assets of WCS Wireless Inc.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on (or measured by) its net income, including franchise taxes imposed in lieu of net income taxes, by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.18(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.16(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16(a).

“Existing 10% Notes” has the meaning assigned to such term in clause (b) of the definition of “January 2003 Financing Transactions”.

“Existing 12% Notes” has the meaning assigned to such term in clause (a) of the definition of “Secured Notes”.

“Existing 14% Notes” has the meaning assigned to such term in clause (c) of the definition of “Secured Notes”.

“Existing Collateral” means the “Collateral” under and as defined in (a) the Existing General Security Agreement and (b) the Existing FCC License Subsidiary Pledge Agreement.

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“Existing Collateral Documents” means, collectively, (a) the Existing Intercreditor Agreements, (b) the Existing General Security Agreement and (c) the Existing FCC License Subsidiary Pledge Agreement.

“Existing FCC License Subsidiary Pledge Agreement” means the Amended and Restated FCC License Subsidiary Pledge Agreement, dated as of January 28, 2003, among the Borrower, as pledgor, and The Bank of New York, as Collateral Agent, as may be amended, restated, supplemented or otherwise modified from time to time.

“Existing Floating Rate Notes” has the meaning assigned to such term in clause (d) of the definition of “Secured Notes”.

“Existing General Security Agreement” means the Security Agreement, dated as of January 28, 2003, among the Borrower, Holdings and XM Equipment Leasing LLC, as grantors, and The Bank of New York, as Collateral Agent, as may be amended, restated, supplemented or otherwise modified from time to time.

“Existing Indebtedness” means Indebtedness of the Borrower and its Material Subsidiaries in existence on the Closing Date, including the Indebtedness incurred or to be incurred pursuant to the January 2003 Financing Transactions until such amounts are repaid or, in the case of Indebtedness incurred under a facility that permits repayment and reborrowing, until the commitment(s) for such facility have terminated or are released.

“Existing Intercreditor Agreements” means, collectively, (a) the Intercreditor and Collateral Agency Agreement (FCC License Subsidiary Pledge Agreement), dated as of January 28, 2003, among the Noteholders named in schedule I thereto, The Bank of New York, as Original Trustee, The Bank of New York, as New Trustee, GM, OnStar, The Bank of New York, as Collateral Agent and the Additional Creditors from time to time party thereto and (b) the Intercreditor and Collateral Agency Agreement (General Security Agreement), dated as of January 28, 2003, among the Noteholders named in schedule I thereto, The Bank of New York, as New Trustee, GM, OnStar, The Bank of New York, as Collateral Agent and the Additional Creditors from time to time party thereto, in each case, as may be amended, restated, supplemented or otherwise modified from time to time.

“Existing Secured Parties” means the holders of the Secured Notes and other Person identified as a secured party under the Existing Collateral Documents other than any Additional Creditors (as defined in the Existing Intercreditor Agreements) that were not parties thereto immediately prior to the date hereof.

“Existing Security Interest” means the security interest of the Collateral Agent for the benefit of the holders of the Secured Notes and each Additional Creditor (as defined in the Existing Intercreditor Agreements) in the Existing Collateral pursuant to the terms of the Existing Collateral Documents.

“FCC License Subsidiary” means XM Radio Inc., a wholly owned subsidiary of the Borrower that holds all of the FCC licenses with respect to the provision of satellite digital radio service in the United States by the Borrower or any of its Subsidiaries.

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“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower.

“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia.

“Foreign Pledge Agreement” means a pledge agreement with respect to the Equity Interests of a Foreign Subsidiary, in form and substance reasonably satisfactory to the Administrative Agent.

“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“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.

“GM” means General Motors Corporation or one or more of its wholly-owned subsidiaries.

“GM Agreements” means the GM/OnStar Credit Facility, the Distribution Agreement, any GM Second Lien Collateral Document and any other agreement entered into pursuant thereto or contemplated thereby among the GM Parties and Holdings, the Borrower or any of its Subsidiaries.

“GM Second Lien Collateral Document” means any document made, delivered or given after the date hereof by any of the Loan Parties in favor of the GM Parties in connection with the GM/OnStar Liens.

“GM Credit Agreement” has the meaning assigned to such term in the definition of “GM/OnStar Credit Facility”.

“GM/OnStar Credit Facility” means (a) the Credit Agreement, dated as of January 28, 2003 (the “GM Credit Agreement”), among the Borrower, Holdings, and the GM Parties, as may be amended, restated, supplemented or otherwise modified from time to time, including the

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proposed amendment to combine the same with the Distribution Agreement, and/or (b) an additional credit facility among the Borrower, Holdings and OnStar entered into for the same purpose as the GM Credit Agreement which, when taken together with the GM Credit Agreement, shall not have principal amounts outstanding thereunder that exceed $150,000,000 in the aggregate at any time outstanding; provided that the GM/OnStar Credit Facility shall at all times be on terms and conditions not materially less favorable to the Borrower and its Subsidiaries, taken as a whole, than the terms and conditions of the GM Credit Agreement in effect on the Closing Date.

“GM/OnStar Liens” means the second priority Liens granted by the Loan Parties on all or any portion of the Collateral in support of the Borrower’s and Holdings’ Obligations in respect of the GM/OnStar Credit Facility and/or the Distribution Agreement, which Liens shall be subordinated to the Liens securing the Borrower Obligations pursuant to the Second Lien Intercreditor Agreement.

“GM Parties” means, collectively, GM and OnStar as parties to each of the GM Agreements.

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

“Guarantee Agreement” means the Guarantee Agreement, dated as of the Closing Date, as amended, supplemented or otherwise modified from time to time, in the form of Exhibit C, among Holdings, each Subsidiary Loan Party and the Administrative Agent.

“Guarantor Obligations” means with respect to any Guarantor, all obligations and liabilities of such Guarantor which may arise under or in connection with the Guarantee Agreement (including, without limitation, Section 2 thereof) or any other Loan Document to which such Guarantor is a party, and any of such Guarantor’s Cash Management Arrangement Obligations and Specified Hedging Agreement Obligations, in each case whether on account of

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guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to any Secured Party that are required to be paid by such Guarantor pursuant to the terms of any Loan Document or Specified Agreement).

“Guarantors” means, collectively, (a) Holdings and (b) each Subsidiary Loan Party.

“Hazardous Materials” means all explosive or radioactive materials, substances or wastes and all hazardous or toxic materials, substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon, infectious or medical wastes and all other materials, substances or wastes of any nature regulated pursuant to any Environmental Law.

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under (a) interest rate Swap Agreements; and (b) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency values.

“Holdings” means XM Satellite Radio Holdings Inc., a Delaware corporation.

“Holdings Collateral” has the meaning assigned to such term in the Collateral Agreement.

“Holdings Collateral Transfer” has the meaning assigned to such term in Section 9.05.

“Holdings Covenant and Collateral Release Date” has the meaning assigned to such term in Section 9.05.

“Holdings Covenant and Collateral Release Notice” has the meaning assigned to such term in Section 9.05.

“Immaterial Subsidiary” means each Subsidiary of the Borrower that is not a Material Subsidiary.

“Increased Amount Date” has the meaning assigned to such term in Section 2.19(a).

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent, (a) in respect of borrowed money; (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (c) in respect of banker’s acceptances; (d) representing Capital Lease Obligations; (e) consisting of 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 (f) 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 specific Person prepared in accordance with GAAP. In addition, the term “Indebtedness” shall include (i) 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), (ii) to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person and (iii) all Attributable Debt of such Person.

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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;

(2) the face amount thereof, in the case of letters of credit, banker’s acceptances and similar obligations;

(3) the net obligations of such Person in respect thereof, in the case of Hedging Obligations;

(4) the present value of the obligation of the lessee for net rental payments, in the case of Attributable Debt, as set forth in the definition thereof; and

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

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indivisible Ancillary XM-4 Satellite Collateral” means any assets, licenses and/or usage rights associated specifically with the XM-4 Satellite to the extent not constituting (or the portion thereof that is not) Ancillary XM-4 Satellite Collateral because not divisible or separately conveyable.

“Initial Lien” has the meaning assigned to such term in Section 6.02.

“Initial Period” means the period from and including the Closing Date to but excluding the first date on which less than $75,000,000 of the Secured Notes remain outstanding.

“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, state, multinational or foreign laws or otherwise, including (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all provisionals, reissuances, continuations, continuations-in-part, divisions, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, brand names, trade names, domain names and corporate names, together with all translations, adaptations, derivations, and com