F-4/A

As filed with the Securities and Exchange Commission on June 28,  2006

Registration No. 333-134004

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Amendment No. 1 to

FORM F-4

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

	Canadian Satellite Radio Holdings Inc. (Exact Name of Registrant as Specified in its Charter)
Province of Ontario, Canada (State or Other Jurisdiction of Incorporation or Organization)	4899 (Primary Standard Industrial Classification Code Number	Not Applicable (I.R.S. Employer Identification No., if Applicable)
	Suite 2300, Canada Trust Tower BCE Place, 161 Bay Street Toronto, Ontario, Canada M5J 2S1 (416) 361-1575
(Address (including postal code) and telephone number (including area code) of Registrant’s principal executive offices)
	Canadian Satellite Radio Inc. (Exact Name of Registrant as Specified in its Charter)
Canada (State or Other Jurisdiction of Incorporation or Organization)	4899 (Primary Standard Industrial Classification Code Number)	Not Applicable (I.R.S. Employer Identification No., if Applicable)
	Suite 2300, Canada Trust Tower BCE Place, 161 Bay Street Toronto, Ontario, Canada M5J 2S1 (416) 361-1575
(Address (including postal code) and telephone number (including area code) of Registrant’s principal executive offices)
	CT Corporation System 111 8th Avenue, 13th Floor New York, New York 10011 (212) 894-8700
(Address (including zip code) and telephone number (including area code) of Agent for Service in the United States)

Approximate date of commencement of proposed exchange offer: As soon as practicable after the effective date of this Registration Statement.

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

The co-registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the co-registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

PART I

INFORMATION REQUIRED IN THE PROSPECTUS

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement  filed with the Securities and Exchange commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy the securities in any state where the offer or sale is not permitted.

Subject to completion, dated June 28, 2006
 

US$100,000,000

Canadian Satellite Radio Holdings Inc.

Exchange Offer of US$100,000,000 of our

12.75% Senior Notes Due 2014

The Exchange Offer:

·   The exchange offer expires at 5:00 p.m., New York City time, on        , 2006, unless extended.

·   All initial notes that are validly tendered and not withdrawn will be exchanged. For each initial note validly tendered and not validly withdrawn under this exchange offer, the holder will receive an exchange note having a principal amount equal to that of the tendered initial note.

·   Tenders of notes may be withdrawn at any time before the expiration of the exchange offer.

·   Each broker-dealer that receives exchange notes for its own account under this exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes.

The Exchange Notes:

·   The terms of the exchange notes we will issue in the exchange offer are substantially identical to those of our initial notes, except that transfer restrictions and registration rights relating to the initial notes will not apply to the exchange notes. The exchange notes are obligations evidencing the same continuing indebtedness as our initial notes.

·   No public market currently exists for the initial notes and we cannot assure you that an active trading market will develop for the exchange notes.

·   The exchange notes will be fully and unconditionally guaranteed on a senior unsecured basis by our current restricted subsidiary and each of our future material restricted subsidiaries.

·   The exchange notes, and the exchange guarantees, are our and the guarantors’ senior unsecured obligations. They will rank equal in right of payment to any future senior indebtedness, senior in right of payment with any future subordinated indebtedness and effectively subordinated to any secured indebtedness to the extent of any collateral securing such indebtedness.

For a more detailed description of the exchange notes, please refer to the section in this prospectus entitled “Description of Exchange Notes” beginning on page 97.

Before participating in the exchange offer, please refer to the section in this prospectus entitled “Risk Factors” beginning on page 16.

Neither the Securities and Exchange Commission (the “SEC”), nor any state commission has approved the notes to be distributed in the exchange offer, nor have any of these organizations determined that this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is          , 2006.

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TABLE OF CONTENTS

Special Note Regarding Forward-Looking Statements	ii
Market And Industry Data And Forecasts	iii
Presentation of Financial Information	iii
Enforcement of Civil Liabilities	iv
Exchange Rate Information	iv
Prospectus Summary	1
Risk Factors	16
Use of Proceeds	31
Capitalization	32
Selected Historical Financial Data	33
Management’s Discussion And Analysis of Financial Condition And Results of Operations	34
Business	47
Management	72
Voting Securities and Principal Shareholders	81
Certain Relationships And Related Transactions	82
Description of the XM Credit Facility	83
The Exchange Offer	84
Description of Exchange Notes	97
Description Of Initial Notes	141
Certain Income Tax Considerations	142
Certain U.S. Federal Income Tax Considerations	142
Certain Canadian Federal Income Tax Considerations	144
Plan of Distribution	146
Legal Matters	146
Experts	146
Available Information	146
Index to Consolidated Financial Statements	F- 1

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Each broker-dealer that receives exchange notes for its own account under this exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. The letter of transmittal states that by so acknowledging and delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act of 1933 as amended, which we refer to as the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for initial notes where the initial notes were acquired by the broker-dealer as a result of its market making or other trading activities. We have agreed that, for a period of up to 180 days after the consummation of the exchange offer, or for such longer period as provided by the registration rights agreement, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

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You should rely on the information contained in, or incorporated by reference into, this prospectus. We have not authorized anyone to provide you with different information. If anyone provides you with different or additional information, you should not rely on it. We are only offering to exchange the initial notes for exchange notes in jurisdictions where the exchange offer is permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus or the date of the document incorporated by reference. Our business, financial condition, results of operations or prospects may have changed since then.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains “forward-looking statements.” All statements, other than statements of historical fact, included in this prospectus that address activities, events or developments that we expect or anticipate will or may occur in the future, including, in particular, statements about our expected subscriber numbers, financial position and operating results, our business strategy and our plans and prospects under the headings “Summary,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business,” are forward-looking statements. These forward-looking statements are based on our current expectations and our projections about future events, including our current expectations regarding:

·   our expenditures and losses;

·   our anticipated variable expenses;

·   our anticipated capital expenditures;

·   the future demand for our services;

·   increases or decreases in the cost of conducting our business;

·   our future stability and growth prospects;

·   our ability to work with Industry Canada and implement solutions to existing and future regulatory issues; 

·   our business strategies, the measures to implement those strategies and the benefits to be derived therefrom; and

·   the outlook for and other future developments in our affairs or in the satellite radio industry.

These forward-looking statements can sometimes be identified by our use of forward-looking words such as “believe,” “may,” “will,” “anticipate,” “estimate,” “expect,” “plan,” “likely,” “forecast,” “intend” or other similar words or phrases. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those contemplated by the statements. Some of these risks, uncertainties and other factors include:

·   the unproven market for our service;

·   our competitive position versus Sirius Canada Inc., or Sirius Canada, the other licensed satellite radio service provider in Canada, which may have certain competitive advantages, and versus other forms of audio and video entertainment;

·   our reliance on our exclusive relationship with XM for the provision of the satellite radio service;

·   our dependence upon third parties, including manufacturers of satellite radios, retailers, automakers and programming providers;

·   the potential need for additional financing;

·   our substantial indebtedness;

·   general economic conditions in Canada;

·   the impact of any changes in government regulation; and

·   other factors as described in “Risk Factors.”

Any forward-looking statements are subject to these factors. Although we believe that our plans, intentions, projections and expectations reflected in or suggested by these forward-looking statements are reasonable, in light of these risks, uncertainties and assumptions, the forward-looking events discussed in this prospectus may not occur. These factors and the other risk factors described in this prospectus are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our future results. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this prospectus are made only as of the date of this prospectus. We do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law.

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You should read carefully the factors described in the section entitled “Risk Factors” of this prospectus for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements.

MARKET AND INDUSTRY DATA AND FORECASTS

This prospectus includes market share information and industry data and forecasts, which we obtained from independent industry publications and surveys, surveys that we commissioned and internal company surveys. Although we believe these sources to be reliable, we have not independently verified any of the data nor ascertained the underlying economic assumptions relied upon therein. Some data is also based on our estimates, which are derived from our review of internal surveys, as well as independent sources. We cannot and do not provide any assurance as to the accuracy or completeness of this information. Market forecasts, in particular, are likely to be inaccurate, especially over long periods of time.

This prospectus also includes information relating to the U.S. satellite radio market, which was obtained from publicly available sources, including the corporate filings of XM Satellite Radio Holdings Inc., or XM, and Sirius Satellite Radio Inc., or Sirius, with the SEC, as well as press releases and corporate websites. XM and Sirius do not take any responsibility for the completeness or accuracy of such information. In compiling information relating to XM and Sirius, we have relied upon the accuracy of the information publicly filed.

In connection with this offering, XM  provided us with a letter confirming the truth and accuracy of certain specified statements relating to XM that have been included in this prospectus (the “XM Statements”). XM also provided a representation to us that certain of XM’s publicly filed disclosure documents did not, in each case when filed with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. As part of this representation letter, XM agreed to indemnify us (but not our shareholders or directors or any purchasers under this prospectus) against losses to which we may become subject under applicable securities laws, to the extent that such losses arise out of or are based upon any of the XM Statements containing a misrepresentation or omission.

PRESENTATION OF FINANCIAL INFORMATION

The financial statements included in this prospectus are presented in Canadian dollars. In this prospectus, references to “$” or “dollars” are to Canadian dollars and references to “US$” or “U.S. dollars” are to United States dollars. See “Exchange Rate Information” below.

The financial statements included in this prospectus have been prepared in accordance with generally accepted accounting principles in Canada, or Canadian GAAP. Canadian GAAP differs in some respects from U.S. generally accepted accounting principles, or U.S. GAAP, and so these financial statements may not be comparable to the financial statements of U.S. companies. For a discussion of the principal differences between Canadian GAAP and U.S. GAAP as they relate to us, see note 12 to our annual audited financial statements and note 15 to our interim unaudited financial statements, each of which are included elsewhere in this prospectus.

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ENFORCEMENT OF CIVIL LIABILITIES

The enforcement by investors of civil liabilities under applicable U.S. federal and state securities laws may be affected adversely by the fact that Holdings is incorporated under the laws of the Province of Ontario, that some or all of our officers and directors are residents of Canada or other non-U.S. countries, that some or all of the experts named in the prospectus are residents of Canada or other non-U.S. countries, and that all or a substantial portion of our assets and the assets of such persons are located outside the U.S. As a result, it may be difficult or impossible for U.S. investors to effect service of process within the U.S. upon our officers and directors or to realize against them in the U.S. upon judgments of courts of the U.S. predicated upon civil liabilities of such persons under applicable U.S. federal and state securities laws. In addition, investors should not assume that courts in Canada or in the countries where such persons reside or in which our assets or the assets of such persons are located (i) would enforce judgments of U.S. courts obtained in actions against us or such persons predicated upon the civil liability provisions of applicable U.S. federal and state securities laws or (ii) would enforce, in original actions, liabilities against us, our subsidiaries or such persons predicated upon such laws. See “Description of Exchange Notes—Enforceability of Judgments.”

EXCHANGE RATE INFORMATION

In this prospectus, unless otherwise specified or the context otherwise requires, all dollar amounts are expressed in Canadian dollars. For convenience, in certain places in this prospectus, unless otherwise indicated, we have translated Canadian dollar values to U.S. dollars (or vice versa) using an assumed rate of U.S.$1.00 = $1.12, based on the noon buying rate, on June 26, 2006, in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York.

The following table sets forth, for each period indicated, the low and high exchange rates for Canadian dollars expressed in U.S. dollars, the exchange rate at the end of such period and the average of such exchange rates on the last day of each month during such period, based on the inverse of the noon buying rate in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York.

	12-month period ended August 31,			6 months ended February 28,
	2005	2004	2003	2006	2005
Low	0.7652	0.7159	0.6273	0.8361	0.7651
High	0.8493	0.7879	0.7495	0.8788	0.8493
Period end	0.8411	0.7595	0.7220	0.8788	0.8133
Average rate(1)	0.8160	0.7520	0.6769	0.8629	0.8168

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Notes:

(1) Average of month-end noon spot rates.

Listed below, for each month during the previous six months, are the low and high exchange rates for Canadian dollars expressed in U.S. dollars, based on the inverse of the noon buying rate in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York. On June 26, 2006, the inverse of the noon buying rate was $1.00 per U.S.$0.8896.

		One month period ended,
	May 31, 2006	April 30, 2006	March 31, 2006	February 28, 2006	January 31, 2006	December 31, 2005
Low	0.8903	0.8534	0.8531	0.8638	0.8528	0.8521
High	0.9100	0.8926	0.8834	0.8788	0.8744	0.8690

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PROSPECTUS SUMMARY

The following summary highlights certain significant aspects of our business and this exchange offer. This is only a summary of this prospectus and may not contain all of the information that you consider important in making your investment decision. You should read the entire prospectus, including “Risk Factors” and the financial statements and related notes, and consult your legal and professional advisors having relevant experience, before making an investment decision.

The term “initial notes” refers to the 12.75% Senior Notes due 2014 that were issued on February 10, 2006 in a private offering, referred to as the “private offering.” The term “exchange notes” refers to the 12.75% Senior Notes due 2014 offered by this prospectus. The term “notes” refers to the initial notes and the exchange notes, collectively. Unless otherwise noted, the terms “we,” “us,” “our,” and “Holdings” used in this prospectus refer to Canadian Satellite Radio Holdings Inc. and its subsidiaries. “CSR Inc.” refers to Canadian Satellite Radio Inc., a wholly-owned subsidiary of Holdings.

The Company

We seek to become the market leader in providing subscription-based satellite radio entertainment to the Canadian market. We plan to do this as the exclusive Canadian licensee of XM, a pioneer in satellite radio and the leader, by total subscribers, in the U.S. satellite radio market. XM has publicly stated that it had over 6.5 million satellite radio subscribers as of the end of its first fiscal quarter 2006. We are one of only two applicants who have received approval from the Canadian Radio-television and Telecommunications Commission, or CRTC, for a broadcasting license to provide subscription-based satellite radio service in Canada, and we are the exclusive licensed provider of XM's satellite digital audio radio services, or SDARS, in Canada. Our service will leverage XM's existing satellite network and technology, its brand and distribution relationships and significant operational know-how. Through XM, we currently offer up to 100 channels, which include commercial-free music, as well as news, talk, sports and children's programming, including ten Canadian channels designed and developed by us from our studios in Toronto and Montréal, for an initial base subscription fee of $12.99 per month. We expect that distribution of our satellite radios will be primarily through automobile original equipment manufacturers, or OEMs, and national and regional consumer electronic retailers.

We have an exclusive 13-year distribution arrangement with General Motors of Canada Limited, or GMCL, which plans to install XM satellite radios in certain of its 2006 model vehicles. Under the terms of our agreement with GMCL, GMCL will use commercially reasonable efforts to offer our satellite radio service from factory-installed radios in as many vehicle lines as possible for the 2006 model year, and in at least 90% of vehicle lines for the 2007 model year and beyond. Similar to U.S. automobile OEMs, most Canadian automobile OEMs commence their model year during the summer, such that the 2007 model year starts in the summer of 2006. According to Canadian Autoworld, GMCL is the single largest seller of cars in Canada, with an approximate 29% market share of new vehicles sold in calendar year 2005.

In 2005, there were approximately 1.6 million new vehicles sold in Canada, representing a significant market opportunity. In addition to GMCL, we have exclusive agreements with Honda Canada and Nissan Canada. We have also announced distribution relationships with Subaru Canada, Harley-Davidson Motorcycles and Toyota Canada.

Together with GMCL, we currently have exclusive relationships with companies that represent approximately 44% of new vehicles sold in calandar 2005. According to Ward's Automotive Yearbook 2005, XM in the U.S. is the exclusive automobile OEM factory-installed distribution partner or preferred provider of data services to automobile OEMs representing approximately 56% of the U.S. automobile marketplace, including General Motors, Honda, Toyota, Hyundai and Nissan. We believe that XM's established relationships with these automobile manufacturers has laid the foundation to enable us to establish similar relationships with the Canadian counterparts of these automobile manufacturers for the installation of XM radios in automobiles made for the Canadian market. According to Canadian Autoworld, these five companies represented approximately 58% of the Canadian automobile OEM marketplace in 2005.

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XM radios are also available in Canada at national and regional consumer electronics retailers, such as Best Buy Canada Ltd., or Best Buy, Canadian Tire Corporation Limited, or Canadian Tire, Future Shop Canada, or Future Shop (a wholly-owned subsidiary of Best Buy), The Source by Circuit City, or The Source, and other large national and regional retailers that sell consumer electronics in Canada. These retailers represent over 2,000 stores.

On September 12, 2005, we and XM announced approximately US$100 million ten-year contract to broadcast National Hockey League, or NHL, games as part of the XM service. This ten-year contract is non-exclusive to us for the first two years and we will be the exclusive Canadian satellite radio provider of NHL games beginning with the 2007-2008 season. We believe that this agreement will have a significant positive impact on attracting subscribers to the XM service in Canada. We are responsible for a substantial portion of the fees payable to the NHL under this agreement.

Independent market research indicates that there is already high consumer awareness and demand in Canada for satellite radio. A Decima Research Inc. survey from January 2006 revealed that 77% of Canadians say that they are aware of satellite radio and that 6%, the equivalent of up to 2 million Canadians, said that they would likely subscribe to satellite radio within the next year at a price of $13 per month. Nearly 90% of Canada's population of 32 million live within 125 miles of the U.S. border, and we believe that many Canadians have become aware of satellite radio as a result of the significant marketing and advertising dollars that XM and Sirius have spent developing their respective brands and U.S. customer bases. Canada enjoys high radio listenership, as over 94% of Canadians listen to the radio at least weekly. According to a 2005 survey by BBM Canada, however, most markets in Canada have fewer than ten radio stations and limited format choices. More specifically, according to Broadcaster Magazine, of the 427 assessed commercial and non-commercial radio stations in Canada in the fall of 2004, 236 or 55.3% use one of only three general programming formats: country; news/talk/sports; or adult contemporary. As a result, we believe that Canadian listeners will be attracted to the diversity of our content. In addition, given the broad expanse of Canada's geography, we believe listeners will value our coast-to-coast digital quality coverage.

We are broadcasting our service using XM's existing satellite network, which covers the continental U.S. and the densely populated regions of Canada. We are supplementing XM's satellite coverage with a terrestrial repeater network of approximately 80 repeaters, owned and operated by us. Our repeater deployment is focused on the 16 largest Canadian cities to improve coverage and reduce interruptions by buildings or other obstacles.

We have launched our service with Audiovox Electronics Corporation, or Audiovox, Delphi Automotive Systems LLC, or Delphi, and Pioneer Electronics, or Pioneer, radios designed to serve the car, home, portable and wearable stereo markets. These radios include Delphi's SKYFi2, MyFi and RoadyXT radios and Pioneer's AirWare radio. The initial cost of these radios to the consumer ranges from approximately $70 to $400, inclusive of rebates.

The vast majority of our revenues are expected to come from subscription and associated activation fees. We expect to generate incremental advertising revenue from ad spots on the non-music channels that we program in Canada. As we grow our subscriber base, we expect that our service will become an increasingly attractive medium for advertisers to target customers on a nationwide basis.

Exclusive XM Relationship

Under our license agreement with XM, we have the exclusive right to offer XM's SDARS in Canada for a term of ten years. In addition to this exclusive right, our relationship with XM provides us with a number of significant benefits which we believe will (i) significantly lower the initial capital requirements for us to offer SDARS, (ii) lower our ongoing operating costs and (iii) enable us to leverage XM's existing satellite network and technology, brand and distribution relationships and significant operational know-how to increase our subscriber penetration rates.

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Competitive Strengths and Business Strategy

We believe that our business in Canada will benefit from a number of factors, including our affiliation with XM. In particular, we have had the benefit of observing four years of XM's operations in the U.S. before launching our service in Canada, and we plan to leverage many of the economies of scale XM has already achieved. We believe that other factors that will benefit our business include the following:

·   Market awareness already exists and is growing. We believe that there is significant existing demand for satellite radio in Canada. A Decima Research Inc. survey from January 2006 revealed that 77% of Canadians say that they are aware of satellite radio. This survey suggests that awareness of satellite radio has increased since the launch of our business, when a study conducted in Canada by Charlton Strategic Research Inc., or Charlton Research, dated October 2005, which we commissioned and paid for, suggested that 49% of Canadian adults say that they are aware of satellite radio service. According to a Charlton Research report dated July 2005, which we commissioned and paid for, 22% of respondents from the Province of Québec, which according to Statistics Canada represents approximately 24% of Canada's population, said that they would be interested in receiving satellite radio service.

·   Low capital requirements. Since XM's satellite infrastructure already covers the continental U.S. and the densely populated regions of Canada, we are not required to build, launch, maintain or manage our own satellites, which will save us significant time and capital.

·   XM programming offers a unique radio listening experience for Canadians. We believe that Canadians have an appetite for specialized radio programming and are eager to have access to the depth and choice that the XM system provides. We have broadcast studios in Toronto and Montréal. These studios are well-equipped to program and broadcast music and talk channels in both French and English.

·   Well-developed distribution channels. We will build our subscriber base through multiple distribution channels, including an exclusive factory-installation distribution arrangement with GMCL and arrangements with national and regional consumer electronics retailers which focus both on car radios and on radios for home and portable use.

·   Core management team with broadcast veterans and ownership interest. Our team includes a strong management team with experience launching entrepreneurial ventures and broadcast industry experience. Collectively, our management team directly or indirectly owns or controls approximately 60.0% of our fully diluted outstanding shares.

·   Lower cost and more variety of radios. We are entering the market when the cost of manufacturing radios is cheaper than it has been historically due to technology improvements and scale of production. This has resulted in lower cost radios to the consumer, significantly lowering a barrier to subscriptions.

·   Future growth opportunities. As we build our subscriber business through traditional automobile OEM and retail channels, we also plan to grow the business by offering specific hardware and services through non-traditional retail channels, including rental car companies, national and local businesses, hotel chains, and to boat and airplane owners, commercial airlines, truckers and others. We also anticipate that in the future our automobile OEM partners may promote additional services that we may choose to offer, such as telematics services, which include real time data, and in-vehicle traffic navigation systems such as XM NavTraffic. We expect that if adopted, these types of services will add subscription revenue to our business model.

Capital Requirements

Our controlling shareholder, Canadian Satellite Radio Investments Inc., or CSR Investments, has contributed $15 million in equity which proceeds we have used to repay affiliates of CSR Investments for funding our CRTC licensing process and our initial infrastructure and start-up costs. On December 12, 2005 we raised gross proceeds of approximately $55 million through our initial public offering in Canada. We are using the proceeds from our initial public offering to complete our initial infrastructure rollout and to fund operating expenses. The proceeds from the offering of the initial notes are being used to pay for ongoing operating expenses, including subscriber acquisition costs, marketing & advertising expenses, broadcast operations, programming costs, payments under our license agreement with XM, and for general corporate purposes.

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We have also entered into a $45 million standby credit facility with XM (the “XM Credit Facility”) for the purchase of terrestrial repeaters and for the payment of subscription royalties to XM, as well as interest on amounts outstanding under the XM Credit Facility. As at the date hereof, we have not drawn down on this facility. As we have now completed the offering of initial notes, we do not intend to access the XM Credit Facility.

Based on our current business plan and as a result of the completion of the offering of initial notes and the $50 million of net proceeds received from our initial public offering, we will have sufficient capital to fund the rollout of our service and our ongoing operations until we achieve positive cash flow. Our business plan is based on estimates regarding expected future costs and expected revenue. Our costs may exceed our estimates, and our revenues may be lower than expected. These estimates may change and may also be affected by future developments. Any of these factors may increase our need for funds, which would require us to seek additional funding. See “Risk Factors — Risks Related to the Notes.”

Regulatory

On August 19, 2003, we, through CSR Inc., filed an initial application to the Canadian Radio-television and Telecommunications Commission (“CRTC”) for a broadcasting license to provide subscription-based satellite radio service in Canada. On June 16, 2005, the CRTC approved the issuance of a broadcasting license for CSR Inc. containing certain conditions of license as outlined below:

·   CSR Inc. will be required to distribute a minimum of eight original Canadian produced channels, three of which must be French language original Canadian produced channels.

·   CSR Inc. must distribute one Canadian produced channel for every nine non-Canadian produced channels to be provided by XM and at no time shall a subscriber be able to receive a package of channels that contains less than 10% of Canadian produced channels on our service at all times.

·   A minimum of 85% of the total music selections broadcast in any given week on the Canadian-produced channels is required to be Canadian content.

·   A minimum of 85% of the total spoken word programming broadcast on all Canadian-produced channels in any given week is required to be Canadian spoken word programming.

·   On each of the three French-language Canadian produced channels, a minimum of 65% of its vocal musical selections must be French language musical selections.

·   Between 6:00 a.m. and midnight each week, each Canadian produced music channel is required to contain a minimum of 25% of new Canadian musical selections by artists who have not had a musical selection that has reached a position on one or more of the charts identified by the CRTC from time to time.

·   CSR Inc. will be required to contribute a minimum of 5% of its gross revenues in each broadcast year to eligible third parties directly associated with the development of Canadian musical and other artistic talent, or to other initiatives approved by the CRTC for the purpose of Canadian talent development, half of this amount is to be allocated to Canadian French language talent and half to Canadian English language talent.

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·   CSR Inc. is not permitted to broadcast any original local programming on a Canadian produced channel.

·   No more than six minutes of national commercial messages are permitted to be broadcast on the Canadian content channels during any clock hour and no local advertising is permitted.

·   CSR Inc. is required to comply with applicable requirements of the Radio Regulations, 1986 promulgated under the Broadcasting Act, the Canadian Association of Broadcasters, Sex-Role Portrayal Code for Television and Radio Programming and its Broadcast Code for Advertising to Children.

·   CSR Inc. is required to submit statements of account, certain reports and self-assessments to the CRTC as required by the CRTC.

On September 7, 2005, CSR Inc. applied to amend its CRTC license to allow it to continue to distribute a minimum of eight original Canadian produced channels, four of which are in the French language and four in the English language. In that application CSR Inc. proposed adding two more Canadian channels, for a total of ten, provided that certain conditions are satisfied relating to technology and to CSR Inc.’s subscription base.

On November 21, 2005, CSR Inc. was advised that the CRTC was satisfied that the conditions to the grant of its broadcast license were fulfilled, and that the license would therefore be issued when: (i) the Department of Industry notified the CRTC that certain technical requirements had been met by CSR Inc., and (ii) CSR Inc. confirmed to the CRTC that it was prepared to commence operations. The Department of Industry notified the CRTC that its technical requirements had been met on November 22, 2005. Similarly, on November 22, 2005, CSR Inc. confirmed to the CRTC that it was prepared to commence operations. As a result of the satisfaction of these conditions, we have fulfilled all regulatory conditions to launch, our broadcasting license was issued and we have been authorized to launch our service.

Recent Events

We launched our service on November 22, 2005. On January 5, 2006 we announced that we project to end our August 31, 2006 fiscal year with at least 75,000 subscribers. We also announced that we are projecting to achieve at least one million subscribers by August 31, 2010. On May 24, 2006, XM announced that it is projecting to achieve approximately 8.5 million subscribers in the U.S. by the end of 2006. We expect to leverage and benefit from numerous recent announcements by XM and hardware manufacturers. Such announcements include:

·   Samsung announced three new portable audio models that combine the content and capabilities of XM radio and an MP3 player, including the Samsung Helix and Samsung NEXUS.

·   Audiovox has introduced the XM Passport, a miniature portable tuner that delivers XM to a wide array of XM-ready products for home, auto and portable use utilizing XM Connect and Play technology.

·   Advanced Global Technology, LLC (AGT) introduced the Sportscaster (^TM), a plug and play satellite radio for enjoying XM in the car, at home or on the go. The receiver has unique functions and portable options designed for sports fans.

·   XM, working with several partners, introduced the XM Advanced Services vehicle at the 2006 Consumer Electronics Show. This concept car features in-car video (On2 Technologies), voice command (VoiceBox (^R) Technologies), weather alerts (WxWorx), parking spot locator (Nu-Metrics Inc. and InfoGation) and other innovations.

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We expect to work with XM, hardware manufacturers and retailers to bring the various technologies listed above into Canada in the future.

On February 10, 2006, the CRTC approved CSR Inc.’s application dated September 7, 2005.

On February 15, 2006, we announced a new partnership with Subaru Canada to factory-install XM satellite radios exclusively in three of Subaru Canada’s 2007 model vehicles.

On April 12, 2006, we announced an exclusive multi-year agreement with Honda Canada Inc. to factory-install XM satellite radios in Honda and Acura models starting with select 2007 model year vehicles and expanding to a wider range of products for the 2008 model year.

On April 13, 2006, we announced an exclusive partnership agreement with Nissan Canada Inc. to install XM satellite radios in select Nissan Canada vehicles starting with 2008 model vehicles. XM satellite radios will eventually be offered in a majority of Nissan Canada’s product line-up.

On April 21, 2006, we announced a multi-year distribution agreement with Harley-Davidson(^R) motorcycles to factory-install XM satellite radios in select Harley-Davidson models. The XM Canada service is currently available for Harley-Davidson 2006 models as a dealer-installed aftermarket option.

On May 30, 2006, XM reported that it has temporarily suspended shipments of the Delphi XM SKYFi2 and Audiovox Xpress satellite radios because these products were found to have exceeded transmission emission limits set by the United States Federal Communications Commission. Also, on May 30, 2006, XM announced that they are implementing a series of actions involving various radios to bring them into compliance and are working to limit the interruption in supply of certain models of XM radios to retailers. We are currently in discussions with Industry Canada relating to the implementation of a solution to address similar Canadian transmission emission limits. We currently anticipate that we will implement an action plan satisfactory to Industry Canada.

On June 5, 2006, we announced a multi-year distribution agreement with Toyota Canada Inc. to supply satellite radio service to select Toyota and Lexus vehicles equipped with XM-compatible receivers.

Additional Information

Our executive offices are at Suite 2300, PO Box 222, Canada Trust Tower, BCE Place, 161 Bay Street, Toronto, Ontario M5J 2S1 and our telephone number is (416) 361-5025. We maintain an Internet site on the World Wide Web at www.xmradio.ca. Information at our web site is not, and should not be deemed to be, part of this prospectus.

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Summary of the Exchange Offer

We are offering to exchange US$100,000,000 aggregate principal amount of our exchange notes for the same aggregate principal amount of our initial notes. In order to exchange your initial notes, you must properly tender them and we must accept your tender. We will exchange all outstanding initial notes that are validly tendered and not validly withdrawn. For a more complete description of the terms of the exchange offer, see “The Exchange Offer” in this prospectus.

Exchange Offer	We will exchange our exchange notes for the same aggregate principal amount at maturity of our initial notes.
Expiration Date	This exchange offer will expire at 5:00 p.m., New York City time, on         , 2006, unless we decide to extend it.
Conditions to the Exchange Offer	We will complete this exchange offer only if: ·there is no change in the laws and regulations which would impair our ability to proceed with this exchange offer; ·there is no change in the current interpretation by the staff of the SEC which permits resales of the exchange notes; ·there is no stop order issued by the SEC which would suspend the effectiveness of the registration statement which includes this prospectus or the qualification of the exchange notes under the Trust Indenture Act of 1939; and ·we obtain all the governmental approvals we deem necessary to complete this exchange offer. Please refer to the section in this prospectus entitled “The Exchange Offer - Conditions to the Exchange Offer.”
Procedures for Tendering Initial Notes	To participate in this exchange offer, you can tender your initial notes by book-entry delivery following the procedures described in this prospectus. If your initial notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you should contact that person promptly to tender your initial notes in this exchange offer. For more information on tendering your notes, please refer to the section in this prospectus entitled “The Exchange Offer - Procedures for Tendering Initial Notes.” In the alternative, you can complete, sign and date the letter of transmittal or a facsimile and transmit it, together with your initial notes to be exchanged and all other documents required by the letter of transmittal, to The Bank of Nova Scotia Trust Company of New York, as exchange agent, at its address indicated under “The Exchange Offer - Exchange Agent.”

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Procedures for Beneficial Owners	If you are a beneficial owner of initial notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your initial notes in the exchange offer, you should contact the registered holder promptly and instruct that person to tender on your behalf.
Guaranteed Delivery Procedures	If you wish to tender your initial notes and you cannot get the required documents to the exchange agent on time, you may tender your notes by using the guaranteed delivery procedures described under the section of this prospectus entitled “The Exchange Offer - Procedures for Tendering Initial Notes - Guaranteed Delivery Procedure.”
Withdrawal Rights	You may withdraw the tender of your initial notes at any time before 5:00 p.m., New York City time, on the expiration date of the exchange offer. To withdraw, you must send to the exchange agent (i) a computer generated notice of withdrawal by The Depository Trust Company on behalf of the holder in accordance with the standard operating procedures of The Depository Trust Company or (ii) a written or facsimile transmission notice of withdrawal before 5:00 p.m., New York City time on the expiration date at the address indicated under “The Exchange Offer - Exchange Agent.”
Acceptance of Initial Notes and Delivery of Exchange Notes	If all conditions to the completion of this exchange offer are satisfied, we will accept any and all initial notes that are properly tendered in this exchange offer on or before 5:00 p.m., New York City time, on the expiration date. We will deliver the exchange notes to you promptly after the expiration date and acceptance of your initial notes for exchange. We will return any initial notes that we do not accept for exchange to you without expense promptly after the expiration date. Please refer to the section in this prospectus entitled “The Exchange Offer - Acceptance of Initial Notes for Exchange; Delivery of Exchange Notes.”
Federal Income Tax Considerations Relating to the Exchange Offer	Exchanging your initial notes for exchange notes will not be a taxable event to you for United States or Canadian federal income tax purposes. Please refer to the section of this prospectus entitled “Certain Income Tax Considerations.”
Exchange Agent	The Bank of Nova Scotia Trust Company of New York is serving as exchange agent in the exchange offer.

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Fees and Expenses	We will pay all expenses related to this exchange offer. Please refer to the section of the prospectus entitled “The Exchange Offer - Fees and Expenses.”
Use of Proceeds	We will not receive any proceeds from the issuance of the exchange notes. We are making this exchange offer solely to satisfy our obligations under a registration rights agreement entered into in connection with the offering of the initial notes.
Consequences to Holders Who Do Not Participate in the Exchange Offer	If you do not participate in this exchange offer:                ·except as set forth in the next paragraph, you will not necessarily be able to require us to register your initial notes under the Securities Act; ·you will not be able to resell, offer to resell or otherwise transfer your initial notes unless they are registered under the Securities Act or unless you resell, offer to resell or otherwise transfer them under an exemption from the registration requirements of, or in a transaction not subject to, the Securities Act; and ·the trading market for your initial notes will become more limited to the extent other holders of the initial notes participate in the exchange offer. You will not be able to require us to register your initial notes under the Securities Act unless: ·the initial purchasers request us to register initial notes that are not eligible to be exchanged for exchange notes in the exchange offer; or ·you are not eligible to participate in the exchange offer or do not receive freely tradable exchange notes in the exchange offer. In these cases, the registration rights agreement requires us to file a registration statement for a continuous offering in accordance with Rule 415 under the Securities Act for the benefit of the holders of the initial notes described in this paragraph. We do not currently anticipate that we will register under the Securities Act any notes that remain outstanding after completion of the exchange offer. Please refer to the section of this prospectus entitled “Risk Factors - Risks Related to the Exchange Offer - Your failure to participate in the exchange offer may have adverse consequences.”

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Resales

It may be possible for you to resell the notes issued in the exchange offer without compliance with the registration and prospectus delivery provisions of the Securities Act, subject to the conditions described under “Obligations of Broker - Dealers” below. To tender your initial notes in this exchange offer and resell the exchange notes without compliance with the registration and prospectus delivery requirements of the Securities Act, you must make the following representations: ·you are authorized to tender the initial notes and to acquire exchange notes, and that we will acquire good and unencumbered title to the initial notes tendered by you; ·the exchange notes acquired by you are being acquired in the ordinary course of business; ·you have no arrangement or understanding with any person to participate in a distribution of the exchange notes and are not participating in, and do not intend to participate in, the distribution of such exchange notes; ·you are not an “affiliate”, as defined in Rule 405 under the Securities Act, of ours or, if you are, you will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; ·if you are not a broker-dealer, you are not engaging in, and do not intend to engage in, a distribution of exchange notes; and ·if you are a broker-dealer, the initial notes to be exchanged were acquired by you as a result of market-making or other trading activities and you will deliver a prospectus in connection with any resale, offer to resell or other transfer of such exchange notes. Pleas refer to the sections of this prospectus entitled “The Exchange Offer - Procedures for Tendering Initial Notes - Proper Execution and Delivery of Letters of Transmittal” and “Plan of Distribution.”

Obligations of Broker-Dealers

If you are a broker-dealer (1) that receives exchange notes, you must acknowledge that you will deliver a prospectus in connection with any resales of the exchange notes, (2) who acquired the initial notes as a result of market making or other trading activities, you may use the exchange offer prospectus, as supplemented or amended, in connection with resales of the exchange notes, or (3) who acquired the initial notes directly from the issuer in the private offering and not as a result of market making and trading activities, you must, in the absence of an exemption, comply with the registration and prospectus delivery requirements of the Securities Act in connection with resales of exchange notes.

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Summary of the Terms of the Exchange Notes

The summary below describes the principal terms of the exchange notes. Some of the terms and conditions described below are subject to important limitations and exceptions. You should carefully read the “Description of Exchange Notes” section of this prospectus for a more detailed description of the exchange notes.

Issuer	Canadian Satellite Radio Holdings Inc.
Exchange Notes	US$100,000,000 aggregate principal amount of 12.75% Senior Notes due 2014. The forms and terms of the exchange notes are the same as the forms and terms of the initial notes except that the issuance of the exchange notes is registered under the Securities Act, will not bear legends restricting their transfer and will not be entitled to registration rights under our registration rights agreement. The exchange notes will evidence the same continuing debt as the initial notes, and both the initial notes and the exchange notes will be governed by the same indenture.
Maturity Date	February 15, 2014.
Interest Payment Dates	February 15 and August 15 of each year, commencing August 15, 2006.
Guarantees	The notes will be jointly and severally and fully and unconditionally guaranteed on a senior unsecured basis by all of our current restricted subsidiaries and each of our future material restricted subsidiaries.
Ranking	The notes and related guarantees will rank: ·equal in right of payment to all of our and the guarantors’ existing and future senior unsecured indebtedness; ·senior in right of payment to all of our and the guarantors’ existing and future indebtedness that expressly provides for its subordination to the notes; and ·effectively subordinated to our and the guarantors’ secured indebtedness to the extent of the collateral securing such indebtedness.
	As of March 1, 2006, we had total indebtedness of US$100 million (approximately $114 million), all of which was represented by the notes. Under the XM Credit Facility, we have the ability to borrow up to $45 million. Currently no amounts are outstanding under this credit facility.

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Interest Reserve Account	US$35.5 million (approximately $40.5 million) of the proceeds from the offering of the initial notes was deposited into an interest reserve account in the United States. Funds in this account have been invested in U.S. government securities, of which we are the beneficial owners. Funds and other assets held in the interest reserve account have been pledged to secure the payment and performance when due of our obligations under the indenture with respect to the notes and we have also granted to the trustee for the benefit of itself and the holders of the notes, a first priority security interest in the interest reserve account. These funds will be used for the first six payments of interest on the notes. Any funds remaining in the interest reserve account after the sixth interest payment on the notes has been made, in accordance with the indenture, will be disbursed from the interest reserve account to us.
Optional Redemption	At any time on or after February 15, 2010, we may redeem all or a part of the notes at the redemption prices specified in this prospectus under “Description of Exchange Notes—Optional Redemption,” plus accrued and unpaid interest, liquidated damages, if any, and additional amounts, if any, to the date of redemption. In addition, prior to February 15, 2009, we may redeem up to 25% of the notes with the net proceeds of certain equity offerings at 112.75% of the aggregate principal amount thereof, plus accrued and unpaid interest, liquidated damages, if any, and additional amounts, if any, to the date of redemption, provided at least 75% of the aggregate principal amount of the notes remains outstanding after the redemption.
Tax Redemption	We may, at our option, redeem all, but not less than all, of the notes at any time at 100% of their aggregate principal amount, plus accrued and unpaid interest, liquidated damages, if any, and additional amounts, if any, to the redemption date, as a result of certain changes affecting withholding taxes. “See Description of Exchange Notes—Redemption for Changes in Withholding Taxes” and “Description of Exchange Notes—Additional Amounts.”
Payment of Additional Amounts	In certain circumstances, if we are required to make any deductions or withholding for any present or future taxes in respect of amounts to be paid by us under the notes, we will pay the owners of the notes such additional amounts as are necessary so that the net amounts paid to the owners of the notes, after the deduction or withholding, will not be less than the amounts to which the indenture governing the notes specifies the owners are entitled. See “Description of Exchange Notes—Additional Amounts.”

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Mandatory Repurchase Offers	If we sell certain assets or experience specific kinds of changes in control, we may be required to offer to repurchase the notes at the price and as provided under the caption “Description of Exchange Notes—Repurchase at the Option of Holders,” plus accrued and unpaid interest, liquidated damages, if any, and additional amounts, if any, to the date of repurchase.
Certain Covenants	We have issued the notes under an indenture among us, the guarantors and The Bank of Nova Scotia Trust Company of New York, who act as trustee on your behalf. The indenture governing the notes, among other things, limits our ability and the ability of our restricted subsidiaries to: ·incur additional indebtedness and issue preferred stock; ·pay dividends and make distributions in respect of the capital stock; ·repurchase stock or repay subordinated indebtedness; ·make certain investments; ·transfer, sell or make certain dispositions of assets or engage in sale and leaseback transactions; ·incur liens; ·enter into transactions with affiliates; ·create dividend or other payment restrictions affecting restricted subsidiaries; and ·merge, consolidate, amalgamate or sell all or substantially all of our assets to another person. These covenants are subject to other important exceptions and qualifications, as described under “Description of Exchange Notes—Certain Covenants.”
Registration Rights Agreement	Under a registration rights agreement, we have agreed to file a registration statement on an appropriate form with respect to this offer to exchange the initial notes for the exchange notes, which will be registered under the Securities Act. This prospectus is part of that registration statement.

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Use of Proceeds	We will not receive any proceeds from the issuance of the exchange notes in exchange for the outstanding initial notes. We are making this exchange solely to satisfy our obligations under the registration rights agreement entered into in connection with the offering of the initial notes.
Absence of a Public Market for the Exchange Notes	No public market currently exists for the initial notes and we cannot assure you that an active trading market will develop for the exchange notes. Please refer to the section of this prospectus entitled “Risk Factors - Risks Related to the Notes - The initial purchasers of the initial notes may cease their respective market making activities at any time. If there is no active trading market for the exchange notes, you may not be able to resell them.”
Form of the Exchange Notes	The exchange notes will be represented by one or more permanent global securities in registered form deposited on behalf of The Depository Trust Company with The Bank of Nova Scotia Trust Company of New York, as custodian. You will not receive exchange notes in certificated form unless one of the events described in the section of this prospectus entitled “Description of Exchange Notes - Exchange of Global Notes for Certificated Notes” occurs. Instead, beneficial interests in the exchange notes will be shown on, and transfers of these exchange notes will be effected only through, records maintained in book entry form by The Depository Trust Company with respect to its participants.
Governing Law	State of New York

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Summary Historical Financial Data

You should read the summary historical financial data set forth below in conjunction with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

The summary historical financial data for the years ended and as of August 31,2005, 2004 and 2003 are derived from our audited financial statements. The summary historical financial data for the six months ended February 28, 2006 and 2005 have been derived from our unaudited financial statements.

We prepare our consolidated financial statements in accordance with Canadian GAAP, which differs in certain respects from U.S. GAAP. For a discussion of the principal differences between Canadian GAAP and U.S. GAAP as they pertain to us, see note 12 to our audited annual financial statements and note 15 to our unaudited interim financial statements included elsewhere in this prospectus. There were no measurement differences between U.S. and Canadian GAAP for the periods presented.

	Years Ended August 31,(1)(2)						Six Months Ended February 28,(2)
	2005		2004		2003		2006		2005
			($)
Statement of Loss Data
Revenue	—		—		—		1,190,941		—
Cost of revenue	—		—		—		8,319,699		—
Net loss	(6,705,259	)	(1,688,045	)	(315,064	)	(58,568,164	)	(1,871,559)
Basic and fully diluted loss per share	(17,833	)	(4,489	)	(838	)	(2.81	)	(4,978)
Deficiency of earnings to fixed charges	(6,705,259	)	(1,688,045	)	(315,064	)	(58,568,164	)	(1,871,559)
	As at August 31,						As at February 28,
	2005		2004				2006		2005
			($)
Balance Sheet Data
Cash	20		20				78,997,450		20
Total assets	3,003,260		254,356				382,623,583		408,512
Long term debt	—		—				113,660,000		—
Long term obligations	16,987		—				546,269		—
Shareholders’ (deficiency) equity	(8,878,710)		(2,173,451)				255,114,790		(4,045,030)
Share capital	20		20				297,454,374		20
Number of common shares	200		200				—		200
Number of Class A Subordinate Voting Shares	—		—				18,970,539		—
Number of Class B Voting Shares	—		—				81,615,633		—

^{______________________}

^Notes:

⁽¹⁾ We were incorporated on July 31, 2002 and therefore only three years of financial information have been provided. The summary historical financial data provided above is prepared in accordance with Canadian GAAP.

⁽²⁾During the years ended August 31, 2005, 2004 and 2003, we were in the development stage and our revenues and expenses may not be indicative of future revenues and expenses. During the six months ended February 28, 2006, we achieved revenues from new subscribers after the launch of our services and are no longer considered a development stage company.

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RISK FACTORS

An investment in the notes involves a high degree of risk. Before you decide to tender your initial notes, you should carefully consider these risk factors as well as the other information contained in this prospectus. If any of the risks described below materialize, our business, financial condition or results of operation could be materially and adversely affected. The risks described below are not the only risks facing us and our business. Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also materially affect our business operations and financial condition.

Risks Related to the Notes

We will have substantial indebtedness and we may be unable to service our indebtedness.

We currently have substantial indebtedness and significant debt service obligations.

On March 1, 2006, we had total indebtedness of US$100 million (approximately $114 million), all of which consisted of the initial notes. In addition, we have the ability to borrow up to $45 million under the XM Credit Facility. Currently no amounts are outstanding under this credit facility.

Our substantial indebtedness could have important consequences to you. For example, it could:

•make it more difficult for us to satisfy our obligations with respect to the notes and other indebtedness;

•increase our vulnerability to adverse economic and industry conditions;

•require us to dedicate a substantial portion of our cash flow from operations to the payment of our indebtedness, thereby reducing the availability of cash to fund working capital

   and capital expenditures and for other general corporate purposes;

•limit our ability to obtain financing for working capital, capital expenditures, general corporate purposes or acquisitions;

•place us at a disadvantage compared to our competitors that have less debt; and

•limit our flexibility in planning for or reacting to, changes in our business and in the satellite radio industry.

In addition, the indenture and XM Credit Facility contain financial and other restrictive covenants that will limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants would result in an event of default which, if not cured or waived, could result in the acceleration of all of our debt.

The agreements governing our indebtedness contain significant restrictions that limit our operating and financial flexibility.

The indenture contains covenants that, among other things, limit our ability to:

•incur additional indebtedness and issue preferred stock;

•pay dividends and make distributions;

•repurchase stock or repay subordinated indebtedness;

•make certain investments;

•transfer, sell or make certain dispositions of assets or engage in sale and leaseback transactions;

•incur liens;

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•enter into transactions with affiliates;

•create dividend or other payment restrictions affecting restricted subsidiaries; and

•merge, consolidate, amalgamate or sell all or substantially all of our assets to another person.

In addition, the XM Credit Facility contains certain restrictive covenants. If we seek to draw on the XM Credit Facility, we will be required to satisfy specific financial ratios and certain financial condition tests as a condition to the advance of funds. In the event of a default under this facility, XM could seek to declare all amounts outstanding under the XM Credit Facility, together with accrued and unpaid interest, if any, to be immediately due and payable. This could result in a cross-default under the indenture governing the notes to be issued in this offering. If the indebtedness under the XM Credit Facility or the notes were to be accelerated, there can be no assurance that our assets would be sufficient to repay in full that indebtedness or any of our other indebtedness.

To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

Our ability to make interest payments on and to repay or refinance our indebtedness, including the notes, and to fund planned operating and capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

We cannot assure you, however, that our business will generate sufficient cash flow from operations to enable us to pay interest on the notes or repay them at maturity or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the notes on or before maturity.

Our ability to refinance our indebtedness or obtain additional financing will depend on, among other things:

•our financial condition at the time;

•restrictions in the indenture and the XM Credit Facility or other outstanding indebtedness; and

•other factors, including the condition of the financial markets or the satellite radio industry.

As a result, we may not be able to refinance any of our indebtedness, including the notes, on commercially reasonable terms, or at all. If we do not generate sufficient cash flow from operations, and additional borrowings or refinancings or proceeds of asset sales are not available to us, we may not have sufficient cash to enable us to meet all of our obligations, including payments on the notes.

We may be able to incur additional indebtedness, which could further exacerbate the risks associated with our substantial indebtedness.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. Although the XM Credit Facility and the indenture contain restrictions on the incurrence of additional indebtedness, debt incurred in compliance with these restrictions could be substantial. The XM Credit Facility will permit total borrowings thereunder of up to $45.0 million. In addition, the indenture and the XM Credit Facility will not prevent us from incurring obligations that do not constitute indebtedness. If we and our subsidiaries incur additional indebtedness or other obligations, the related risks that we and they face could be magnified.

We may be unable to purchase notes in the event of a change of control.

Upon the occurrence of a “change of control,” as defined in the indenture, we will be required to make an offer to repurchase all outstanding notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest and liquidated damages, if any, and additional amounts, if any, to the date of repurchase. Any such change of control would constitute a default under the XM Credit Facility. In addition, the terms of the XM Credit Facility may prevent us from repurchasing the notes prior to their maturity. We may not have sufficient funds to repay the XM Credit Facility and make the required offer to repurchase the notes at the time of such event. Any future debt that we incur may also contain restrictions on the purchase of the notes. In addition, certain level of our indebtedness, would not constitute a change of control under the indenture. See “Description of Exchange Notes—Repurchase at the Option of Holders—Change of Control.”

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Certain forward-looking information may not be accurate and may not be useful in determining whether to purchase the securities.

Forward-looking information, including in particular, our anticipated subscription numbers and operating and capital expenditure requirements that we have included in this prospectus are based upon a number of assumptions and on information that we believe are reliable as of today. However, these expectations and assumptions are inherently subject to significant business, economic and competitive uncertainties, many of which are beyond our control. Forward-looking information is necessarily speculative in nature, and you should expect that some or all of the assumptions will not materialize. Actual results will probably vary from the estimates and the variations will likely be material and are likely to increase over time. Consequently, the inclusion of the estimates in this prospectus should not be regarded as a representation by us, or any other person, that the projected results will actually be achieved. Moreover, we do not intend to update or otherwise revise the estimates to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. You, as a prospective purchaser of the notes, are cautioned not to place undue reliance on the estimates.

In preparing the estimates, we had a limited operating history on which to base our assumptions. As a result, the estimates are in large part based on assumptions derived from management’s plans rather than on our actual performance data. You are cautioned that such statements are just predictions and our beliefs and our actual results will likely differ materially from those discussed therein.

Certain bankruptcy and insolvency laws may impair the trustee’s ability to enforce remedies under the notes.

We are incorporated under the laws of the Province of Ontario and substantially all of our assets are located in Canada. Under bankruptcy laws in the U.S., courts typically have jurisdiction over a debtor’s property, wherever located, including property situated in other countries. There can be no assurance, however, that courts outside of the U.S. would recognize the U.S. bankruptcy case involving a Canadian debtor like us with property located outside of the U.S., and any orders or judgments of a bankruptcy court in the U.S. may not be enforceable in Canada against us.

The rights of the trustee to enforce remedies may be significantly impaired by the restructuring provisions of applicable Canadian federal bankruptcy, insolvency and other restructuring legislation if the benefit of such legislation is sought with respect to us. For example, both the Bankruptcy andInsolvency Act (Canada) and the Companies’ Creditors Arrangement Act (Canada) contain provisions enabling a “insolvent person” to obtain a stay of proceeding against its creditors and others and to prepare and file a proposal for consideration by all or some of its creditors to be voted on by the various classes of its creditors. Such a restructuring proposal, if accepted by the requisite majorities of creditors and approved by the court, may be binding on persons, such as holders of the notes, who may not otherwise be willing to accept it. Moreover, this provision of the legislation permits, in certain circumstances, an insolvent debtor to retain possession and administration of its property, even though it may be in default under the applicable debt instrument.

The powers of the court under the Bankruptcy and Insolvency Act (Canada) and particularly under the Companies’ Creditors Arrangement Act (Canada) have been exercised broadly to protect a restructuring entity from actions taken by creditors and other parties. Accordingly, if we were to seek protection under such Canadian bankruptcy legislation following commencement of or during such a proceeding, payments under the notes may be discontinued, the trustee may be unable to exercise its rights under the indenture and holders of the notes may not be compensated for any delays in payments, if any, of principal and interest.

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In a Canadian bankruptcy, insolvency or restructuring proceeding, the pledged funds may not be available to the holders of notes to pay the interest on the notes.

If we commence a bankruptcy, insolvency or restructuring proceeding in the Canada, or a bankruptcy, insolvency or restructuring proceeding or process is commenced against us, while the interest reserve account remains funded, Canadian bankruptcy, insolvency and restructuring laws may prevent or delay the trustee under the indenture governing the notes from using the pledged funds to pay the interest on the notes. If the security interest in the pledged funds granted to the holders of the notes is found to have priority over the Company's other creditors, the trustee may nonetheless be stayed from applying such funds to pay interest on the notes without an order of the Canadian court. If the holders of the notes are found not to have proper, perfected and priority security over the pledged funds, the rights of the holders of the notes to payment of interest under the notes will be subject to the claims of other creditors of the Company who may have priority over the holders of the notes in the pledged funds and therefore the holders of the notes may not be paid any interest from the pledged funds.

Applicable law allows courts, under specific circumstances, to void guarantees and require note holders to return payments received from guarantors.

Under the U.S. federal bankruptcy laws and comparable provisions of state fraudulent transfer laws, a guarantee could be voided, or claims in respect of a guarantee could be subordinated to all other debts of that guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee:

•incurred the debt with the intent to hinder, delay or defraud creditors;

•received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; and

•was insolvent or rendered insolvent by reason of such incurrence; or

•was engaged in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital; or

•intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature.

If a court voided a guarantee by one or more of our subsidiaries, or held it unenforceable for any reason, holders of the notes would cease to have a claim against that subsidiary based upon the guarantee and would solely be creditors of Holdings and any guarantor whose guarantee was not voided or held unenforceable.

Under Canadian federal bankruptcy laws and comparable provisions of provincial fraudulent transfer laws, payments or transfers or property made to a creditor or other third party can be attacked as a fraudulent conveyance or preference in circumstances where the party making the payment (i.e. the guarantor) was insolvent at the time it entered into the guarantee. Accordingly, any payment made by an insolvent guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor or to a fund for the benefit of the creditors of the guarantor in the event that it is determined to be a fraudulent conveyance or a fraudulent preference.

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Your ability to enforce civil liabilities in Canada under U.S. securities laws may be limited.

We are a corporation organized under the laws of Ontario, Canada. All of our directors and officers and some of the experts named in this prospectus reside principally in Canada. Because these persons are located outside the U.S., it may not be possible for you to effect service of process within the U.S. upon those persons. Furthermore, it may be possible for you to enforce against us or them, in the U.S., judgments obtained in U.S. courts, because all or a substantial portion of our assets and the assets of those persons are located outside the U.S. We have been advised by Stikeman Elliott LLP, our Canadian counsel, that there are defenses that can be raised to the enforceability, in original actions in Canadian courts, of liabilities based upon the U.S. federal securities laws and to the enforceability in Canadian courts of judgments of U.S. courts obtained in actions based upon the civil liability provisions of U.S. federal securities laws, such that the enforcement in Canada of such liabilities and judgments is not certain. Therefore, it may not be possible to enforce those actions against us, our directors and officers or the experts named in this prospectus.

We have appointed CT Corporation System of New York, New York, as our agent for service of process, in any U.S. federal state court brought against us under the U.S. securities laws as a result of this offering or any purchase or sale of the notes.

The initial purchasers of the initial notes may cease their respective market-making activities at any time. If there is no active trading market for the exchange notes, you may not be able to resell them.

There is no obligation for any party to conduct market-making activities to ensure that an active trading market currently exists for the exchange notes and, while the exchange notes are eligible for trading on The PORTAL^SM Market, an active trading market may not exist in the future. The exchange notes are not, and will not be, listed on any securities exchange. If an active trading market does not exist, you may not be able to resell your exchange notes at their fair market value or at all. Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the exchange notes. The market for the exchange notes, if any, may be subject to similar disruptions. The trading price may depend upon prevailing interest rates, the market for similar securities, and other factors, including general economic conditions and our financial condition, performance and prospects. These factors could adversely affect you as a holder of exchange notes.

Risks Related to the Exchange Offer

The issuance of the exchange notes may adversely affect the market for the initial notes.

To the extent the initial notes are tendered and accepted in the exchange offer, the trading market for any untendered or tendered but unaccepted initial notes could be adversely affected. Because we anticipate that most holders of the initial notes will elect to exchange their initial notes for exchange notes in order to benefit from the absence of restrictions on the resale of exchange notes under the Securities Act, we anticipate that the liquidity of the market for any initial notes remaining after the completion of this exchange offer may be substantially limited. Please refer to the section in the prospectus entitled “The Exchange Offer - Your Failure to Participate in the Exchange Offer May Have Adverse Consequences.”

If you do not properly tender your initial notes for exchange notes, you will continue to hold unregistered notes that are subject to transfer restrictions.

The initial notes were not registered under the Securities Act or under the securities laws of any state and you may not resell them or offer them for resale or otherwise transfer them unless they are subsequently registered or resold under an exemption from the registration requirements of the Securities Act and applicable state securities laws. If you do not exchange your initial notes for exchange notes pursuant to this exchange offer, or if you do not properly tender your initial notes in this exchange offer, you will not be able to resell, offer to resell or otherwise transfer the initial notes unless they are registered under the Securities Act or unless you resell them, offer to resell or otherwise transfer them under an exemption from the registration requirements of, or in a transaction not subject to, the Securities Act. If a large number of initial notes are not tendered or are tendered improperly, the limited amount of exchange notes that would be issued and outstanding after we complete the exchange offer could lower the market price of the exchange notes. In addition, you may no longer be able to obligate us to register the initial notes under the Securities Act. Please refer to the section in the prospectus entitled “The Exchange Offer - Your Failure to Participate in the Exchange Offer May Have Adverse Consequences.”

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Risks Related to Our Business

We have recently emerged from the development stage, with limited operating history and negative cash flow which makes it difficult to evaluate our prospects.

Our business emerged from the development stage during our second quarter of fiscal 2006 and we have limited operating history. From our inception, we have incurred net losses and we expect such losses to increase. We will require expenditures of significant funds for marketing, building out our subscriber management systems, deploying and testing our terrestrial repeater network, programming and distribution contracts, royalty fees and the construction of our broadcast and office facilities. In addition, we expect our losses and negative cash flow to continue, and possibly increase, following our launch as we incur expenses to build our subscriber base. If we are unable ultimately to generate sufficient revenues to become profitable and have positive cash flow, you could lose your investment.

We rely on our exclusive relationship with XM for the provision of the satellite radio service.

We have an exclusive agreement with XM to provide XM's SDARS in Canada. Our success as a business will depend on XM's cooperation and its programming content, satellite network and underlying technology, as well as XM's operational and marketing efficacy, competitiveness, finances, regulatory status and overall success in the U.S. Because of our dependency on XM, should XM's business suffer as a result of increased competition, increased costs of programming, satellite malfunctions, regulatory changes, adverse effects of litigation or other factors, our business would suffer as well. Furthermore, a breach of our agreement with XM or a failure by XM to perform its part of the agreement would have detrimental financial consequences to our business. See “Operational Agreements — XM License Agreement — Termination.” Our agreement with XM is only for an initial term of ten years and we have a right to extend this exclusive agreement for an additional five years only if certain preconditions are satisfied. If we are unable to renew or extend our agreement with XM at the conclusion of the ten-year term, it could be impossible to operate our business. Please see below for additional risks related to our relationship with XM.

Damage to XM's satellite network or failure by XM to timely replace its existing satellites could damage our business.

We rely on XM's satellite network for the delivery of our service. XM has publicly disclosed a progressive power degradation problem with two of the three satellites that it currently has in orbit. As a result of this degradation problem, XM has indicated that the estimated useful life of these two satellites will extend only through the first quarter of 2008. Although XM has publicly indicated that it has taken steps to address these power degradation problems by launching a third satellite and planning for the launch of additional satellites, there can be no assurance that the actions they have taken or will take will enable them to maintain adequate broadcast signal strength. There is no guarantee that the third satellite or any subsequent satellite will not experience similar problems, or other performance issues. If any of XM's existing satellites fail or suffer performance problems, degradation or otherwise, it would likely affect the quality of our service, interrupt the continuation of our service and significantly harm our business.

A number of other factors could decrease the useful lives of XM's satellites, including:

•defects in construction;

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•loss of on board-station keeping system;

•failure of satellite components that are not protected by back-up units;

•electrostatic storms;

•collisions with other objects in space; or

•natural catastrophes affecting the satellites.

Our network of terrestrial repeaters communicates principally with one of XM's satellites. If this satellite fails, we would have to repoint all of our repeaters to communicate with another of XM's satellites. This would result in a degradation of service that could last several days and could harm our business.

Demand for our service may be insufficient for us to become profitable.

Because we offer a new service, we cannot estimate with any certainty the potential consumer demand for such a service or the degree to which we will meet that demand. Among other things, consumer acceptance of our satellite radio service in Canada will depend upon:

•whether we obtain, produce and market high quality programming consistent with consumers' tastes;

•the willingness of consumers to pay subscription fees to obtain satellite radio service;

•the cost and availability of XM radios;

•the acceptance of our subscriber management systems; and

•the marketing and pricing strategies that we employ and that are employed by our competitors.

Any success experienced by satellite radio companies in the U.S. does not guarantee that we will attract and retain customers in Canada. Canadian subscribers will have diverse preferences that may not be sufficiently addressed by ten originally produced Canadian channels. If demand for our service does not develop as expected, we may not be able to generate enough revenues to generate positive cash flow or become profitable.

Possible delay in implementing our strategy and increased cost could hurt our business.

Many of the problems, delays and expenses encountered by an enterprise in our business' nascent stage of development may be beyond our control. These may include, but are not limited to, problems related to technical development of the broadcasting and repeater system, testing, regulatory policy and regulatory compliance, the competitive and regulatory environment in which we will operate, marketing problems, customer acceptance and costs and expenses that may exceed current estimates. Delay in the timely design, construction, deployment and commercial operation of our business, and consequently the achievement of positive cash flow, could result from a variety of causes, including many causes that are beyond our control. These include delays in the integration of our terrestrial repeaters into the land-based network, changes in the technical specifications of our broadcast system made to correct or enhance its features, performance or marketability in response to regulatory developments or otherwise, delays encountered in the construction, integration or testing of the XM system, unsuccessful commercial launches, delays in or inability to obtain financing, insufficient or ineffective service provider marketing efforts, slower-than-anticipated consumer acceptance of our satellite radio service and other events beyond our control. Substantial delays in any of the foregoing matters would delay or prevent our achievement of profitable operations.

We will be required to pay royalty fees, which may be more costly than expected.

We must negotiate and enter into music programming royalty arrangements with the Society of Composers, Authors and Music Publishers of Canada/Société canadienne des auteurs, compositeurs et éditeurs de musique (SOCAN), The Society for the Reproduction Rights of Authors, Composers and Publishers in Canada Inc./Société du droit de reproduction des auteurs, compositeurs, et éditeurs au Canada (SODRAC) Inc. and The Canadian Musical Reproduction Rights Agency Ltd. (CMRRA). We anticipate that as our number of subscribers increases, these agencies may seek to increase the percentage of royalty fees we are required to pay. Royalty fees payable under these agreements may be more costly than anticipated and may be significant. As well, we will have to re-negotiate these arrangements once they come up for renewal. Re-negotiated fees may also be more expensive than anticipated.

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Pursuant to our licensing arrangements, we must contribute based on a prescribed amount of money each year to the development of Canadian talent and capabilities. We may not be able to meet these contribution requirements and, consequently our license may be revoked and we would lose our ability to continue to legally operate in Canada.

We will be responsible for the negotiation of music programming royalty arrangements with a number of Canadian copyright collectives. The royalties payable to Canadian copyright collectives for the public performance of music and transfer of music to digital form, will be certified by the Copyright Board of Canada, or adjudicated by the Copyright Board in the event that we are not able to come to a negotiated arrangement with the Canadian collectives. There are not pre-existing tariffs in Canada that govern our satellite radio services. The Copyright Board generally adjudicates copyright royalties in arrears. This means that a decision could be issued by the Copyright Board, one or more years after we commenced broadcasting, and such fees would be retroactive to the commencement of the service in Canada. Copyright royalties in Canada are generally payable on the basis of a percentage of gross revenue of the broadcasting service, or might be negotiated as a “per subscriber” fee. Decisions of the Copyright Board are subject to appeal in the Federal Court of Canada, which could further delay finalization of copyright fees. In Canada, copyright tariffs are filed with the Copyright Board before March 31 of each year, and become effective the January of the following calendar year.

We need to obtain rights to programming, which could be more costly than anticipated.

Third-party content is an important part of the marketing of our satellite radio service. In addition to the content provided to us by XM, we must develop or acquire content for all Canadian-produced channels on our service. Obtaining third-party content can be expensive. We may not be able to obtain the third-party content we need at all or within the costs contemplated by our business plan. In addition, XM may be unable to initially or consistently obtain third-party content at a reasonable cost or that is appealing to our customers, which may adversely affect our marketing efforts, our reputation and brand, our revenues and our business.

Higher than expected subscriber acquisition costs could adversely affect our financial performance.

We anticipate spending substantial funds on advertising, marketing, subsidizing costs of radio devices and in transactions with car and radio manufacturers, retailers and other parties to obtain or as part of the expense of attracting new subscribers. Our ability to achieve cash flow breakeven depends on our ability to achieve and maintain over time lower acquisition costs. If the costs of attracting new subscribers and retaining subscribers are greater than expected, our financial performance and results of operations could be adversely affected.

Our inability to retain future customers, including those who purchase or lease vehicles that include a subscription to our service, could adversely affect our financial performance.

We expect that there will be subscriber turnover, or churn, among our customers. We cannot reliably predict the amount of churn we will experience over the long term. To the extent our churn is greater than we currently anticipate, it may be more costly for us to acquire a sufficient customer base to generate revenues that will enable us to become profitable and reach positive cash flow.

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In particular, we cannot predict how successful we will be at retaining customers who purchase or lease vehicles that include a subscription to our service, beyond the promotional period. We anticipate that these customers will constitute a substantial portion of our subscriber base and if we are unable to retain a significant portion of them, our financial performance could be adversely affected.

Competition from Sirius Canada and other traditional and emerging audio entertainment providers could adversely affect our revenues.

In seeking market acceptance, we will encounter competition for both listeners and advertising revenues from many sources, including Sirius Canada, other Canadian subscription radio services, Internet based audio providers, direct broadcast satellite television audio service, MP3 players, digital cable systems that carry audio service and traditional AM/FM radio.

Our direct competitor in satellite radio service will be Sirius Canada, the only other licensee for satellite radio service in Canada. Sirius Canada is a joint venture between CBC-Radio Canada, Standard Broadcasting and Sirius, the second largest, by number of subscribers, satellite radio provider in the U.S.

Sirius Canada's application for a satellite radio service was approved at the same time as ours. Sirius Canada launched its satellite radio service on December 1, 2005. Sirius Canada broadcasts channels and offers programming that we do not offer, and Sirius Canada's satellite radio service may be offered as an option on various Canadian car model brands, certain of which may not offer our service. Like CSR Inc., Sirius Canada has filed an application to amend its conditions of license. The CRTC has also approved CHUM's application for a license to operate a terrestrial subscription radio service. Sirius Canada and/or CHUM may offer a more attractive service or enhanced features, may have stronger marketing or distribution channels, and either or both may gain a competitive advantage over us.

In addition, unlike satellite radio, traditional AM/FM radio already has a well-established and dominant market presence for its services and generally offers free broadcast reception supported by commercial advertising, rather than by a subscription fee. Many radio stations offer information programming of a local nature, such as traffic and weather reports, which we are not permitted to offer under our satellite radio license. To the extent that consumers place a high value on these features of traditional AM/FM radio, we are at a competitive disadvantage to the dominant providers of such audio entertainment services. In the U.S., some radio stations have begun reducing the number of commercials per hour, expanding the range of music played on the air and experimenting with new formats in order to compete more directly with satellite radio. Further, we expect that radio companies will launch an advertising campaign designed to assert the benefits of traditional AM/FM radio, as compared with satellite radio service.

Internet radio broadcasts have no geographic limitations and can provide listeners with radio programming from around the country and the world. We expect that improvements from higher bandwidths, faster modems and wider programming selections will make Internet radio increasingly competitive as well.

Our relationship with auto manufacturers for installing and distributing satellite radios to consumers may not result in as many subscribers.

We have entered an exclusive arrangement with GMCL for  installation  by GMCL  of  XM radios  in many of GMCL's models, starting with the 2006 model year. We expect that we will spend a significant amount of money on marketing expenditures towards GMCL initiatives, and that purchasers of GMCL vehicles will represent a substantial proportion of our subscriber base. We have also reached agreements with Honda Canada, Nissan Canada, Harley - Davidson Motorcycles and Toyota Canada and  anticipate that we will reach agreements with other auto manufacturers to install XM radios. To the extent we are unable to reach agreements with such manufacturers, our business may be adversely affected. The customers of auto manufacturers with which we reach agreements may not subscribe or be attracted by our service. If GMCL, or other manufacturers that we reach arrangements with, lose market share to manufacturers with whom we do not have distribution arrangements or the market in general experiences a downturn, then our business may also be adversely affected.

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We may be required to install more terrestrial repeaters than expected, which would impact our capital requirements.

We are in the process of completing our terrestrial repeater rollout. As we complete more detailed testing and receive direct consumer feedback, we may find that we require more repeaters than originally planned in order to provide a level of signal availability that will be acceptable to our customers. To the extent we need a more robust repeater network than currently planned, our capital requirements may be higher than we anticipate and we may need to seek additional funding either through bank, equity or debt financing. Such financing may not be available and, if available, may not be available on commercially reasonable terms. Given our current negative cash flow, if we obtain additional financing we will be further leveraged and we may be less likely to generate sufficient revenue to repay our debts. As such, you could lose your investment.

We may need additional funding for our business plan and additional financing might not be available.

We may need additional financing due to future developments, changes in our business plan or failure of our business plan to succeed, including increasing marketing, distribution or programming costs. Our actual funding requirements could vary materially from our current estimates. If additional financing is needed, we may not be able to raise sufficient funds on favorable terms or at all. If we fail to obtain any necessary financing on a timely basis, our ability to execute our current business plan may be limited, and our business could be adversely affected. As a result, we could default on our commitments to creditors or others and may have to seek a purchaser for our business or assets. See “Risk Factors — Risks Related to the Notes.”

Weaker than expected market and advertiser acceptance of our satellite radio service in Canada could adversely affect our advertising revenue and results of operations.

Because we expect to derive a portion of our future revenues from advertising, market and advertiser acceptance of our satellite radio service will be important to the success of our business. Our ability to generate advertising revenues will be directly affected by the number of subscribers to our satellite radio service and the amount of time subscribers spend listening to our various channels. Our ability to generate advertising revenues will also depend on several other factors, including the level and type of market penetration of our service, competition for advertising dollars from other media and changes in the advertising industry and economy generally. We will compete directly for audiences and advertising revenues with Sirius Canada, the other approved Canadian satellite radio licensee, and traditional AM/FM radio stations, some of which maintain longstanding relationships with advertisers and possess greater resources than we do. In addition, our license restricts us from broadcasting more than six minutes of national advertisements per clock hour on each of our Canadian-produced channels. Because CRTC regulations limit our ability to offer our satellite radio service other than to subscribers on a pay-for-service basis, certain advertisers may be less likely to advertise on our satellite radio service.

We believe that advertising is a discretionary business expense for many business organizations and industries. Consequently, a potential slowdown in the Canadian economy or in a particular business sector that represents a significant share of our advertising revenues, could adversely affect our advertising revenues and, therefore, our results of operations. Also, advertising on the radio, whether through our satellite service or traditional radio, may fall out of favor with the advertisers.

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Our service network, national broadcast studios or other facilities could be damaged by natural catastrophes.

Since our ground-based network of terrestrial repeaters will be attached to towers, buildings and other structures around the country, an earthquake, tornado, flood, power outage or other catastrophic event anywhere in Canada could damage our network, interrupt our service and harm our business in the affected area. We do not have replacement or redundant facilities that can be used to assume the functions of our repeater network or of our central production and broadcast facility in the event of a catastrophic event. Any damage to our repeater network would likely result in degradation of our service for some subscribers and could result in complete loss of service in affected areas. Damage to our central production and broadcast facility would also restrict our production of programming and require us to obtain programming from third parties to continue our service.

Our service could be interrupted in areas where there is no direct line of sight access to a satellite.

Our service may be unavailable or interrupted from time to time at specific locations where radios cease to have direct line of sight access to a satellite (e.g., in tunnels, parking garages, or within or next to buildings). Our service could also be subject to occasional interference from other broadcasting sites.

Failure of third parties to perform could affect our revenues.

We will need to assure proper manufacturing and distribution of XM radios and the development and provision of programming in connection with our service. Many of these tasks will be dependent on the efforts and performance of third parties that are outside of our control. If one or more of these requirements are not performed in a satisfactory manner, our revenues could be less than expected and our business may suffer.

We will rely on third party manufacturers and their distributors to manufacture and distribute XM radios. If Audiovox, Delphi or Pioneer, our initial manufacturers of XM radios, or going forward, other manufacturers with whom we enter into agreements for the manufacture of XM radios, fail to develop XM radios, that comply with regulatory requirements, for timely commercial sale, at an affordable price and for mass market nationwide distribution, our revenues would be less than expected and our business would suffer. In addition to Audiovox, Delphi and Pioneer, we expect that we may rely on Alpine, Grundig, Polk Audio, Sony and others to develop, manufacture and market XM radios for car, home and portable use.

A bankruptcy of a third party with whom we have a significant relationship could harm our results of operations.

In the event that any of the third parties with whom we have significant relationships, including any distributor, licensor, OEM or radio supplier, files a petition in or is assigned into bankruptcy or becomes insolvent, or makes any assignment for the benefit of creditors or makes any arrangements or otherwise becomes subject to any proceedings under applicable bankruptcy laws or insolvency laws with a trustee, or receiver appointed in respect of a substantial portion of its property, or in the event that such a third party liquidates or winds up its daily operations for any reason whatsoever, then our business and results of operations would likely be materially and adversely affected.

On October 8, 2005, Delphi announced that it had filed voluntary petitions for business reorganization under Chapter 11 of the U.S. Bankruptcy Code in New York City. Delphi announced that it expects to complete its U.S. based restructuring and emerge from Chapter 11 business reorganization in early to mid-2007, and that their global operations, both U.S. and non-U.S., will continue without interruption. However, we cannot estimate with any reasonable assurance the impact, if any, on us that may ultimately result from Delphi's petition for reorganization under Chapter 11.

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We need people with special skills to develop and maintain our new service. If we cannot find and keep these people, our business could suffer.

We depend on the continued efforts of our executive officers and key employees, who have specialized technical knowledge regarding our repeater network, broadcast facilities, information technology systems and radio systems and business knowledge regarding the radio industry and subscription services. If we lose the services of one or more of these employees, or fail to attract qualified replacement personnel, it could harm our business and our future prospects.

We expect that our business will depend upon certain on-air talent, the loss of whom could reduce the attractiveness of our XM service to subscribers and advertisers and could adversely affect our business.

We expect to employ or independently contract with certain on-air talent who maintain significant loyal audiences in or across various demographic groups. The fame of our on-air talent and their ability to retain and grow their respective audiences will be a factor in our ability to sell subscriptions and advertising. Our on-air talent may not attract and/or retain the number of subscribers that we anticipate and, further, on-air talent may offend or alienate subscribers that are outside of the target audience of such on-air talent. We cannot be certain that our on-air talent will remain with us or will be able to retain their respective audiences. If we lose the services of one or more of these individuals, and fail to attract comparable on-air talent with similar audience loyalty, the attractiveness of our service to subscribers and advertisers could decline, and our business could be adversely affected.

Consumers could steal our service.

Like all radio transmissions, the XM radio signal in Canada will be subject to interception. Pirates may be able to obtain or rebroadcast XM radio without paying the subscription fee. If widespread, signal theft could harm our business.

Rapid technological and industry changes could make our service obsolete.

The satellite radio industry and the audio entertainment industry are both characterized by rapid technological change, frequent new product innovations, changes in customer requirements and expectations, and evolving industry standards. There is no assurance that one or more of the technologies that will be utilized by us may not become obsolete, or that our services will be in demand by the time they are offered. If we are unable to keep pace with these changes, our business may be unsuccessful. Products using new technologies, or emerging industry standards, could make our technologies obsolete. In addition, we may face unforeseen problems in operating the XM system in Canada that could harm our business. Because XM in Canada will depend on third parties to develop technologies used in key elements of the XM radio system, more advanced technologies that we may wish to use may not be available to us on reasonable terms or in a timely manner. Further, our competitors may have access to technologies not available to us, which may enable them to produce entertainment products of greater interest to consumers, or at a more competitive cost.

If we fail to implement effective internal controls meeting the requirements of Section 404 of the Sarbanes-Oxley Act, it could have a material adverse effect on our business in the future.

Although we are not currently subject to the requirements of Section 404 of the Sarbanes-Oxley Act, we are in the process of documenting and assessing our internal control procedures so that we can satisfy those requirements in the future, which will entail making certain adjustments to our internal control procedures, including adjustments related to our computer and accounting systems. We cannot assure you that this process will not be time-consuming or costly. If we fail to maintain an effective internal control environment, there could be a material adverse effect on our business, results of operations or financial condition.

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Risks Related To Regulatory Matters

Failure to comply with CRTC requirements could damage our business.

As a licensee under the Broadcasting Act (Canada), CSR Inc. is subject to CRTC policies and regulations, and the specific conditions of our broadcasting license. See Section entitled “Business —Regulatory Matters” for a more thorough explanation of such policies, regulations and conditions. Those conditions of license require, amongst other things, that we provide: a minimum of eight original Canadian produced programming channels, three of which must be programmed in the French language; a minimum of 85% of the total music selections broadcast in any given week on each Canadian produced channel are to be Canadian selections and a minimum of 85% of the total spoken word programming content broadcast on all Canadian-produced channels must be Canadian spoken word programming; a maximum of nine non-Canadian-produced channels for each original Canadian-produced channel that CSR Inc. broadcasts; a contribution each year equal to a minimum of 5% of our gross revenues must be made to eligible third parties who are associated with the development of Canadian musical and other artistic talent, and of such contributions must be divided equally between initiatives in support of English language and French language Canadian talent. In addition CSR Inc. must not provide any original local programming on any of its Canadian-produced channels, and is restricted to the broadcast of no more than six minutes per hour of national commercial messages on each Canadian-produced channel and is not permitted to broadcast any local advertising. CSR Inc. is also required to comply with the provisions of the Sex-Role Portrayal Code for Television and Radio Programming and the Broadcast Code for Advertising to Children, as well as certain applicable sections of the Radio Regulations, 1986, promulgated pursuant to the Broadcast Act (Canada). Compliance with these conditions of license will be monitored by the CRTC and non-compliance could result in a mandatory order to comply or license revocation.

The CRTC may not renew our license, which could force us to discontinue operations.

The license granted by the CRTC will be valid for a period of six years and must be renewed prior to August 31, 2011. The CRTC has no obligation to renew the license and if the license is renewed it may be on conditions different than those existing today. If we are unable to renew this license, then we will be unable to continue legally to carry on a satellite radio business.

CRTC content regulations may impact our ability to acquire and retain subscribers.

Given the conditions of our license imposed by the CRTC, we may not be able to offer a service that is sufficiently competitive to other audio offerings, both in Canada and the U.S. If the XM service in Canada is substantially different from XM's offering in the U.S., or if there are specific channels that are offered in the U.S. but are not offered by us in Canada, Canadians may choose to subscribe via the U.S. services (XM or Sirius in the U.S.) instead of with us. A significant gray market for U.S. based XM radio has already developed in Canada and its continued strength may have a material adverse effect on our business.

Fees payable by us may increase.

Broadcasting license fees are payable by us to the CRTC, based on the broadcasting regulatory costs incurred each year by the CRTC and other federal departments or agencies, including spectrum management costs. A failure to pay these fees on a timely basis or at all could result in the loss of our license. Fees may vary from year to year based on increasing broadcasting regulatory costs incurred by the CRTC and other federal departments or agencies.

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Interference from other users could damage our business.

We may be subject to interference from adjacent radio frequency users, such as recently licensed WCS telecommunications services. Further, we may be restricted by Industry Canada in the transmitting power levels or the location(s) of the terrestrial repeater facilities that we will require to serve urban areas.

Interference with other users could limit our operations.

Industry Canada may require us to correct any interference, at our cost, to existing broadcasting or land-mobile services (including WCS licensees) occasioned through the operation of our terrestrial repeaters. We may also be required to bear the costs of relocating some incumbent Fixed Service (FS) Operators within the 2320-2356 MHz band, whose stations are within 300 kilometers of the terrestrial repeater transmitter sites. We do not see this as a significant concern as there are currently a small number of these operators.

We will be required to adhere to Safety Code 6 “Limits of Human Exposure to Radiofrequency Electromagnetic Fields in the Frequency Range from 3 kHz to 300 GHz” (“Safety Code 6”) prepared by the Radiation Protection Bureau of Health Canada in 1999, as amended from time to time. We may be required to conduct Radio Frequency surveys, at repeater facilities, in order to verify compliance with Safety Code 6, and if such facilities do not comply with Safety Code 6, we may be required by Industry Canada to reduce power levels or curtail the transmissions from the terrestrial transmitters. This could result in service interruption to our subscribers in areas where structures impede direct reception of the signals from the XM satellites.

Industry Canada issues technical operating certificates for the terrestrial repeaters. The length of time that is required for technical certification of the terrestrial repeaters is dependent upon the workload of Industry Canada, and the ability of its staff in its regional offices to process and analyze technical information submitted by our engineers. Industry Canada also imposes requirements upon broadcasters with respect to testing and certification of repeater facilities, after such facilities are constructed and prior to commencement of full time broadcast operations. Transport Canada also has jurisdiction over the clearance of site and antenna structures. It is anticipated that Industry Canada and Transport Canada will experience a significant increase in the workload of their staff, due to the number of terrestrial repeaters that will be constructed by us, Sirius Canada and possibly by CHUM. This could lead to delays in implementation of service in certain localities, or could result in initial temporary deficiencies in service to mobile subscribers in certain localities.

Risks Related To Our Relationship with XM

We rely heavily on our relationship with XM for continued service.

We have entered into an exclusive license arrangement with XM, pursuant to which it provides our service. We will therefore rely heavily on the services and relationships provided by XM. A breach of this agreement or a failure by us or XM to perform our respective parts of the agreement could have serious financial consequences to our business. The agreement with XM is only for an initial term of ten years and we have a right to extend this exclusive agreement for an additional five years only if certain preconditions are satisfied. If we are unable to renew or extend the agreement with XM at the conclusion of the ten-year term, it could be impossible to operate our business.

Additional costs to the business may result based on the outcome of XM's negotiations with third party programmers.

We are responsible for the costs of Canadian distribution rights of third party programming content. XM, however, has the responsibility for negotiating distribution arrangements with third party programmers. XM has disclosed that third-party content is an important part of marketing the XM service and obtaining third-party content can be more expensive than formerly anticipated, given the growth of the satellite radio industry and amounts paid for other programming. As a result, agreements that XM enters into with third-party suppliers of programming, including the amendment or renewal of existing agreements, could involve substantial costs to us. It is difficult to anticipate what the additional costs will be, how often they will need to be paid and how frequently these third party contracts will need to be re-negotiated. These payment obligations could significantly delay our becoming profitable.

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Our business may be impaired by third party intellectual property rights.

We have the exclusive right and license to commercially offer and provide to Canadian subscribers certain XM channels that are offered by XM in the U.S. as part of its satellite digital audio radio services, in combination with those Canadian channels we supply to XM, as transmitted by the XM satellite system or as retransmitted within Canada using terrestrial repeaters located in Canada. We do not have a direct interest in the technology comprising the XM system. However, we have agreed to bear a pro rata share of the cost of licensing necessary third party intellectual property incurred by XM, and this cost could be significant to us. Further, other parties may have patents or pending patent applications which will later mature into patents or inventions which may block XM's ability to operate its system or may negatively affect our ability to license our technology from XM. The loss of necessary technologies by XM could require XM to obtain substitute technology of lower quality performance standards, at greater cost or on a delayed basis, which could harm both of our businesses. Litigation that is successfully brought by a third party against XM could require us to seek alternative licenses from third parties which may offer services of an inferior quality which could adversely affect our business.

Risk Related to Our Principal Shareholders

A small number of shareholders own a significant percentage of our voting shares and could significantly affect matters requiring a shareholder vote.

Because a small number of shareholders own a significant percentage of our Subordinate Voting Shares and Class B Voting Shares, they may influence all major corporate decisions and our other shareholders may not be able to affect these corporate decisions. In addition, under the terms of a shareholders agreement, each of CSR Investments and XM has certain board nomination rights and certain consent rights with respect to fundamental corporate actions. As a result, these shareholders will be able to directly impact our ability to undertake certain actions. See “Principal Shareholders” and “Certain Relationships and Related Transactions.”

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USE OF PROCEEDS

We will not receive any proceeds from the issuance of the exchange notes in exchange for the outstanding initial notes. We are making this exchange solely to satisfy our obligations under the registration rights agreement entered into in connection with the offering of the initial notes. The proceeds from the offering of the initial notes are being used to pay for ongoing operating expenses, including subscriber acquisition costs, marketing & advertising expenses, broadcast operations, programming costs, payments under our license agreement with XM, and for general corporate purposes.

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CAPITALIZATION

The following table sets forth our cash, restricted investments and capitalization as of February 28, 2006. This table should be read in conjunction with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of XM Credit Facility” and the historical financial statements and related notes appearing elsewhere in this prospectus.

	As of February 28, 2006
	(dollars in thousands)
Cash	$	78,997
Restricted Investments (1)	$	40,469
Debt (including current portion):
Revolving credit facility(2)		-
Notes(3)		113,660
Total debt		-
Shareholders’ equity(4)		255,115
Total capitalization		368,775

Notes:

(1) Reflects interest reserve account which will be used to cover the first six interest payments on the notes.

(2) We have also entered into the XM Credit Facility, which provides a $45 million facility for the purpose of financing our purchase of terrestrial repeaters and payments under our license agreement with XM. Advances under this facility are subject to certain conditions including a maximum amount of additional debt and minimum annual cash flow requirements. We do not intend to access the XM Credit Facility.

(3) Balances related to the notes have been converted at the period end exchange rate of $1.1366 per US$1.00.

(4)  Includes share capital, contributed surplus and accumulated deficit. There have been no material shareholders' equity transactions since February 28, 2006, except for the issuance of 1,424,250 shares from escrow to certain automobile original equipment manufacturers that have entered into distribution agreements with us. See note 5 to our interim unaudited financial statements which are included elsewhere in this prospectus for a discussion of these arrangements. We continue to incur losses which will reduce our shareholders' equity and we have not yet determined the loss for the third quarter of 2006. 

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SELECTED HISTORICAL FINANCIAL DATA

You should read the selected historical financial data set forth below in conjunction with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. Our selected consolidated historical financial data for the years ended and as of August 31,2005, 2004 and 2003 has been extracted from our audited financial statements. The summary historical financial data for the six months ended February 28, 2006 and 2005 have been derived from our unaudited financial statements.

We prepare our financial statements in accordance with Canadian GAAP, which differs in certain respects from U.S. GAAP. For a discussion of the principal differences between Canadian GAAP and U.S. GAAP as they pertain to us, see note 12 to our audited annual financial statements and note 15 to our unaudited interim financial statements included elsewhere in this prospectus. There were no measurement differences between U.S. and Canadian GAAP for the periods presented.

	Years Ended August 31,(1)(2)			Six Months Ended February 28,(2)
	2005	2004	2003	2006	2005
		($)
Statement of Loss Data
Revenue	—	—	—	1,190,941	—
Cost of revenue	—	—	—	8,319,699	—
Net loss	(6,705,259)	(1,688,045)	(315,064)	(58,568,164)	(1,871,559)
Basic and fully diluted loss per share	(17,833)	(4,489)	(838)	(2.81)	(4,978)
Deficiency of earnings to fixed charges	(6,705,259)	(1,688,045)	(315,064)	(58,568,164)	(1,871,559)
	As at August 31,			As at February 28,
	2005	2004		2006	2005
		($)
Balance Sheet Data
Cash	20	20		78,997,450	20
Total assets	3,003,260	254,356		382,623,583	408,512
Long term debt	—	—		113,660,000	—
Long term obligations	16,987	—		546,269	—
Shareholders’ (deficiency) equity	(8,878,710)	(2,173,451)		255,114,790	(4,045,030)
Share capital	20	20		297,454,374	20
Number of common shares	200	200		—	200
Number of Class A Subordinate Voting Shares	—	—		18,970,539	—
Number of Class B Voting Shares	—	—		81,615,633	—

^{______________________}

^Notes:

⁽¹⁾ We were incorporated on July 31, 2002 and therefore only three years of financial information have been provided. The summary historical financial data provided above is prepared in accordance with Canadian GAAP.

⁽²⁾During the years ended August 31, 2005, 2004 and 2003, we were in the development stage and our revenues and expenses may not be indicative of future revenues and expenses. During the six months ended February 28, 2006, we achieved revenues from new subscribers after the launch of our services and are no longer considered a development stage company.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of financial condition and results of operations is based upon and should be read in conjunction with “Selected Historical Financial Data” and our financial statements and accompanying notes included elsewhere in this prospectus. Those financial statements have been prepared in accordance with Canadian GAAP, which differs in certain respects from U.S. GAAP. For a discussion of the principal differences between Canadian GAAP and U.S. GAAP as they relate to us, see note 12 to our annual audited consolidated financial statements and note 15 to our unaudited interim financial statements which are included elsewhere in this prospectus. This discussion contains forward-looking statements. Please see “Forward-Looking Statements” for a discussion of the risks, uncertainties and assumptions relating to these statements. Our results of operations, business prospects and financial condition will be affected by certain risks described elsewhere in this prospectus. See “Risk Factors.”

Overview

We, through our wholly-owned subsidiary, CSR Inc., are the exclusive licensed provider of XM satellite digital audio radio services, or SDARS, in Canada. We launched the first SDARS in Canada on November 22, 2005 and emerged from the development stage during our second quarter of fiscal 2006. Our service leverages XM’s existing satellite network and technology, its brand and distribution relationships and significant operational know-how. Through XM, we offer up to 100 channels, which include commercial-free music as well as news, talk, sports and children’s programming, and ten Canadian channels designed and developed from studios in Toronto and Montréal, for an initial base subscription fee of $12.99 per month.

On December 12, 2005, we completed an initial public offering which yielded net proceeds of $50 million. Immediately prior to the closing of our initial public offering, CSR Investments provided additional capital of $15 million. On February 10, 2006 we raised gross proceeds of US$100 million (approximately $114 million) from the issuance of 12.75% Senior Notes due 2014, in a private placement (the initial notes). The indenture governing the initial notes required that we establish an interest reserve account in the amount of US$35.5 million to cover the first six interest payments due under the notes.

Our business plan is based on estimates regarding expected future costs and expected revenue. Our costs may exceed our estimates, and our revenues may be lower than expected. These estimates may change and may also be affected by future developments. Any of these factors may increase our need for funds, which would require us to seek additional funding.

National Hockey League Broadcast Rights

On September 12, 2005, we and XM announced an approximately US$100 million ten-year contract to broadcast National Hockey League, or NHL, games as part of the XM service. The ten-year contract is non-exclusive for the first two years, but XM will be the exclusive satellite radio provider beginning with the 2007-2008 season. We will fund a substantial portion of the fees payable to the NHL under this agreement.

XM Agreements

On November 17, 2005, we agreed to terms on a number of agreements with XM which provide us with exclusive rights to offer XM SDARS in Canada. These rights include the exclusive non-transferable right and license to sell the XM basic channels package to Canadian subscribers, access to the programming on the XM channels, rights to the use of the XM related trademarks and information and expertise related to matters such as the acquisition of content distribution rights, promotion, marketing, distribution and computer software and system support.

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The license agreement requires payment of a fee of 15% on recognized subscriber revenue for the basic service. We will also pay to XM an additional fee for any premium services sold to subscribers, an activation charge, monthly payments for technical support, and will provide XM with the right to use our trademarks and the right to license and transmit to XM subscribers the channels created by us.

We have also obtained a $45 million standby credit facility from XM which can be utilized to finance purchases of terrestrial repeaters or for the payment of license fees. The facility matures on December 31, 2012 and bears an interest rate of 9%. XM has a right to convert unpaid principal amounts into our Class A Subordinate Voting Shares. Currently no amounts are outstanding under this facility.

Immediately prior to the initial public offering, we issued to XM 11,077,500 Class A Subordinate Voting Shares representing a 23.3% equity interest in us.

Agreements with Original Equipment Manufacturers

On November 30, 2005, we entered into a 13-year distribution agreement with General Motors of Canada Limited (“GMCL”) to install satellite radios in certain GMCL vehicles and to market our services. In exchange, we will pay consideration to GMCL that includes one-time installation commissions, subscriber commissions, a share of subscription fees for GMCL subscribers and funds to be used on joint advertising opportunities.

Immediately prior to the closing of our initial public offering, 3,323,250 Class A Subordinate Voting Shares were issued to GMCL representing a 7% equity interest in us following completion of the initial public offering. An additional 1,424,250 Class A Subordinate Voting Shares were issued in escrow for another automobile original equipment manufacturer (OEM) that enters into a distribution agreement on specific terms.

Subsequent to February 28, 2006, we entered into distribution agreements with Honda Canada and Nissan Canada. The escrowed shares were released from escrow to these OEMs at the end of March 2006.

Stock Options

In 2003, CSR Investments provided options to acquire shares of CSR Investments to one of our officers. In 2005, CSR Investments provided options to acquire shares of CSR Investments to two consultants, one of our officers, and two other employees of companies related to CSR Investments in return for services provided to us. The exercise prices of the options were not significant. The compensation charges related to these option grants were included in our indirect expenses for the periods ending August 31, 2005 and November 30, 2005. Upon our amalgamation with 2087609 Ontario Inc. (see note 11 of the interim consolidated financial statements), the holders of the options described above received 1,007,289 Class A Subordinate Voting Shares in exchange for approximately half of their options in CSR Investments. This exchange resulted in an additional compensatory charge of approximately $3.0 million to us.

In December 2005, CSR Investments provided options to acquire shares of CSR Investments to one of our officers. The exercise prices of the options were not significant and the vesting may be accelerated if the employee ceases to be employed by us. The options have a total estimated fair market value of approximately $1.0 million and this has been included as a compensatory charge for the three months ended February 28, 2006.

In November 2005, our Board of Directors approved a stock option plan for our employees, directors and senior officers. Under this plan, we granted certain employees and senior officers options to purchase 1,100,000 Class A Subordinate Voting Shares with an exercise price of $0.01 and 1,100,000 Class A Subordinate Voting Shares with an exercise price return equal to the initial public offering price. As these options were conditional upon the completion of our initial public offering, no stock based compensation was incurred until the three months ended February 28, 2006. In December 2005, we also issued 75,000 options for Class A Subordinate Voting Shares to certain of our directors that will vest in equal one-fifth annual amounts beginning on the first anniversary of the date of grant and ending on the fifth anniversary thereof. The exercise price of these options is equal to the initial public offering price.

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Reorganization of Share Capital

Prior to the closing of the initial public offering, our authorized capital consisted of an unlimited number of common shares. Prior to the closing of the initial public offering we completed a reorganization that involved our amalgamation with 2087609 Ontario Inc., a newly incorporated company owned by CSR Investments and by certain other current holders of equity interests in CSR Investments. As part of this reorganization: (i) the existing “private company” restrictions in our articles were deleted, (ii) we were authorized to issue an unlimited number of Class A Subordinate Voting Shares, Class B Voting Shares and Non-Voting Shares, (iii) our existing common shares were converted into Class B Voting Shares, and (iv) the common shares were deleted as an authorized class of shares. At the time of the closing of the initial public offering, and without giving effect to the initial public offering, there were 16,832,289 Class A Subordinate Voting Shares of which 1,424,250 were held in escrow, 81,615,633 Class B Voting Shares and no Non-Voting Shares issued and outstanding or held in escrow. At the time of the closing of the initial public offering, there were also options and other rights to acquire a further 2,587,500 Class A Subordinate Voting Shares issued and outstanding. CSR Investments holds 81,615,633 Class B Voting Shares, representing approximately 57.3% of the outstanding equity capital immediately following the closing of the initial public offering. On December 12, 2005, we completed our initial public offering for 3,437,500 Class A Subordinate Voting Shares.

CRTC License

On August 19, 2003, we, through CSR Inc., filed an initial application to the Canadian Radio-television and Telecommunications Commission (“CRTC”) for a broadcasting license to provide subscription-based satellite radio service in Canada. On June 16, 2005, the CRTC approved the issuance of a broadcasting license for CSR Inc. containing certain conditions of license as outlined below:

•CSR Inc. will be required to distribute a minimum of eight original Canadian produced channels, three of which must be French language original Canadian produced channels.

•CSR Inc. must distribute one Canadian produced channel for every nine non-Canadian produced channels to be provided by XM, and at no time shall a subscriber be able to

   receive a package of channels that contains less than 10% of Canadian produced channels.

•A minimum of 85% of the total music selections broadcast in any given week on the Canadian-produced channels is required to be Canadian content.

•A minimum of 85% of the total spoken word programming broadcast on all Canadian-produced channels in any given week is required to be Canadian spoken word

   programming.

•On each of the three French-language Canadian produced channels, a minimum of 65% of its vocal musical selections must be French language musical selections.

•Between 6:00 a.m. and midnight each week, each Canadian produced music channel is required to contain a minimum of 25% of new Canadian musical selections by artists who

   have not had a musical selection that has reached a position on one or more of the charts identified by the CRTC from time to time.

•CSR Inc. will be required to contribute a minimum of 5% of its gross revenues in each broadcast year to eligible third parties directly associated with the development of

   Canadia  musical and other artistic talent, or to other initiatives approved by the CRTC for the purpose of Canadian talent development, half of this amount is to allocated to

   Canadian  French language talent and half to Canadian English language talent.

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•CSR Inc. is not permitted to broadcast any original local programming on a Canadian produced channel.

•No more than six minutes of national commercial messages are permitted to be broadcast on the Canadian content channels during any clock hour and no local advertising is

       permitted.

•CSR Inc. is required to comply with applicable requirements of the Radio Regulations, 1986 promulgated under the Broadcasting Act, the Canadian Association of

   Broadcasters,  Sex-Role Portrayal Code for Television and Radio Programming and its Broadcast Code for Advertising to Children.

•CSR Inc. is required to submit statements of account, certain reports and self-assessments to the CRTC as required by the CRTC.

On September 7, 2005, CSR Inc. applied to amend its CRTC license to allow it to continue to distribute a minimum of eight original Canadian produced channels, four of which are in the French language and four in the English language. In that application CSR Inc. proposed adding two more Canadian channels, for a total of ten, provided that certain conditions were satisfied relating to technology and to CSR Inc.’s subscription base.

On November 21, 2005, CSR Inc. was advised that the CRTC was satisfied that the conditions to the grant of its broadcasting license were fulfilled, and that the license would therefore be issued when: (i) the Department of Industry notified the CRTC that certain technical requirements had been met by CSR Inc., and (ii) CSR Inc. confirmed to the CRTC that it was prepared to commence operations. The Department of Industry notified the CRTC that its technical requirements had been met on November 22, 2005. Similarly, on November 22, 2005, CSR Inc. confirmed to the CRTC that it was prepared to commence operations. As a result of the satisfaction of these conditions, we have fulfilled all regulatory conditions to launch, our broadcasting license was issued and we have been authorized to launch our service.

On November 22, 2005, we announced the launch of our service.

On February 10, 2006, the CRTC approved CSR Inc.’s application dated September 7, 2005.

Significant External Factors

Our results of operations, business prospects and financial condition are subject to a number of risks and uncertainties, and are affected by a number of factors outside of the control of our management.

Our future success will depend in large part on our ability to market and sell subscriptions. Successful commercialization of the XM satellite radio system will depend on a number of factors, including achieving sufficient demand among Canadian subscribers and our ability to successfully market and distribute the service at its projected selling price. The emergence of new or existing products as competition will also affect our future success.

We rely on XM for the provision of our satellite radio service. Our success will depend on XM’s cooperation and programming content, satellite network and underlying technology, as well as XM’s operational and marketing efficiency, competitiveness, finances, regulatory status and overall success in the U.S. Because of our dependency on XM, should XM’s business suffer as a result of increased competition, increased costs of programming, satellite malfunctions, regulatory changes, adverse effects of litigation or other factors, our business would suffer as well.

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Vision and Strategy

Our vision is to be the leading satellite radio provider in Canada. Our strategy is founded on the principles of acquiring subscribers in the near and long term in the most cost effective manner. We will accomplish this through building awareness for this new and emerging category and converting that interest into subscribers utilizing the OEM, retail, direct and other ancillary sales channels. We will utilize advertising and promotional platforms both on a mass market and on a highly targeted basis through point of sale (POS) in our distribution channels. We will also utilize our unique programming assets, such as our English language Home Ice hockey channel and French language Sports Plus channel and our English and French music channels to promote XM in communities across the country. These XM Canada originally-produced, owned and controlled channels will provide unique programming and marketing opportunities both from our studio facilities in Montréal and Toronto and on a mobile remote basis, thus allowing sampling opportunities in the marketplace. We are focused on achieving EBITDA as quickly as possible by maximizing our revenues through subscriptions, advertising and other ancillary opportunities as well as maintaining effective cost controls, managing subscriber acquisition costs and by creating a long-term customer base through quality service. We believe that a premium service will attract a premium customer.

Operating Definitions

Subscribers - Subscribers are those who are receiving and have agreed to pay for our satellite radio service through a credit card, prepaid card or invoice. Radio receivers that are revenue generating are counted individually as subscribers.

OEM Promotional Subscribers - OEM Promotional Subscribers are subscribers who receive a portion or their entire subscription fee free for a fixed period following the initial purchase or lease of the vehicle. At the time of sale, vehicle owners generally receive a three month prepaid trial subscription. We will measure the success of these promotional programs based on the percentage that elect to receive the XM service and convert to self-paying subscribers after the initial promotion period. We refer to this as the “conversion rate”. We will measure conversion rate three months after the period in which the service ends.

Subscription Revenue - Our revenue consists primarily of monthly subscription fees for our satellite audio service charged to consumers, commercial establishments and fleets, which are recognized as the service is provided. Promotions and discounts are treated as a reduction to revenue during the period of the promotion. Revenue from equipment sold with service are allocated to equipment and service based on the relative fair values of delivered items. Subscription revenue growth is predominantly driven by the growth in our subscriber base but is affected by fluctuation in the percentage of subscribers in our various discount plans and rate changes. Additionally, the timing of subscriber additions affects comparability between years.

Subscriber Acquisition Costs - Subscriber acquisition costs include subsidies and distribution costs and negative margins from direct sales of merchandise. Subscriber acquisition costs are divided by the appropriate per unit gross additions or units manufactured to calculate what we refer to as “SAC”. Subscriber Acquisition Cost is a measure of operational performance and not a measure of financial performance under generally accepted accounting principles. In our financial statements, most of our SAC costs are captured in marketing.

Cost Per Gross Addition (“CPGA”) - CPGA costs include the amounts in SAC, as well as advertising and marketing, which includes advertising, media and other discretionary marketing expenses. CPGA costs do not include the costs of marketing staff. Cost Per Gross Addition is a measure of operational performance and not a measure of financial performance under generally accepted accounting principles. CPGA costs are primarily captured by the combination of subsidies & distribution, advertising & marketing, plus the negative margins from equipment sales. These costs are divided by the gross additions for the period to calculate average CPGA.

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Average Monthly Subscription Revenue Per Subscriber (“ARPU”) - Average monthly subscription revenue per subscriber is derived from the total of earned subscription revenue (net of promotions and rebates) divided by the monthly weighted average number of subscribers for the period reported. Average monthly revenue per subscriber is a measure of operational performance and not a measure of financial performance under generally accepted accounting principles. Average monthly subscription revenue per subscriber will fluctuate based on promotions, changes in our rates, as well as the adoption rate of annual and multi-year prepayment plans, multi-radio discount plans (such as the family plan), commercial plans and premium services.

EBITDA - Net loss before interest income, interest expense, income taxes, depreciation and amortization is commonly referred to in our business as “EBITDA.” EBITDA is not a measure of financial performance under generally accepted accounting principles. We believe EBITDA is often a useful measure of a company’s operating performance and is a significant basis used by our management to measure the operating performance of our business. EBITDA is frequently used as one of the bases for comparing businesses in our industry, although our measure of EBITDA may not be comparable to similarly titled measures of other companies. EBITDA does not purport to represent operating activities, as those terms are defined under generally accepted accounting principles, and should not be considered as an alternative to those measurements as an indicator of our performance.

Selected Financial Information

The following selected financial information for the years ended and as of August 31, 2005, 2004 and 2003 are  derived  from  our  audited consolidated financial statements and the selected financial information for the six months ended February 28, 2006 and 2005 has been derived from our unaudited interim consolidated financial statements. The summary information should be read in conjunction with our audited and unaudited consolidated financial statements and notes included elsewhere in this prospectus.

	Years Ended August 31,						Six Months Ended February 28,
	2005		2004		2003		2006		2005
	(dollars in thousands, except as otherwise noted)
Revenue	—		—		—		1,191		—
Cost of Revenue	—		—		—		8,320		—
Indirect costs	3,529		908		158		827		993
General and administrative	3,172		780		158		9,600		877
Net loss for the period	(6,705	)	(1,688	)	(315	)	(58,568	)	(1,872	)
Basic and fully diluted loss per share (in dollars)	(17,833	)	(4,489	)	(838	)	(2.81	)	(4,978	)
Total assets	3,003		254		—		382,623		409
Total shareholders’ (deficiency) equity	(8,879	)	(2,173	)	(485	)	255,115		(4,045	)

Results of Operations for the Three  Months Ended February 28, 2006 and Six Months Ended February 28, 2006

We launched our service on November 22, 2005 and as at February 28, 2006 we had 44,000 subscribers. Subscribers are the primary source of our revenues. We have seen a steady rate of subscriber activations and expect this to trend upwards during the remainder of fiscal 2006 as we expect to increase subscriber levels to greater than 75,000 by August 31, 2006. Our target market is the over 25 million registered vehicles, 1.5 million vehicles sold annually and over 12 million households in Canada. OEM Promotional Subscribers commenced trial service on March 1, 2006. We expect subscribers in OEM promotional periods to become a significant contributor to our self-paying subscriber base. In addition, our existing OEM partner agreement includes an increase in the number of models offering our services which will increase the production of XM enabled vehicles.

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We priced the basic monthly subscription at $12.99 per subscriber and the family plan (up to four additional radios for the same household) at $9.99 per subscriber. ARPU for the second quarter was $12.01 due to approximately 2,200subscribers on the family plan as of February 28, 2006. We expect ARPU to decline slightly during the balance of fiscal 2006 as we introduce Multi-Year Plans to existing and new subscribers. Multi-Year Plans offer subscribers the option to prepay for the service for a duration of one year and longer at a slight discount to the basic monthly subscription plan. Multi-Year plan discounts will not be offered on a family plan.

Revenue

                Revenue for the second quarter was $1.1 million, of which Subscriber Revenue comprised $1.0 million and the balance came from activation fees and the sale of merchandise through our direct fulfillment channel. Year to date revenue was $1.2 million.

Cost of Revenue

For the second quarter we incurred $5.2 million in cost of revenue. Year to date we incurred $8.3 million in cost of revenue. These expenses are comprised of the following:

Revenue Share & Royalties- Revenue share & royalties includes CRTC fees, Canadian Talent Development fees, performance rights obligations to composers, artists, and copyright owners for public performances of their creative works broadcast on XM Canada, and fees paid to XM, including a 15% monthly royalty on all subscriber revenue. These costs are driven by our subscriber base. For the quarter, revenue share & royalties totaled $0.3 million. Year to date we incurred $0.3 million. We expect these costs to continue to increase with the growth in revenues and subscribers, and will fluctuate based on future agreements.

Customer Care and Billing Operations- Customer care & billing costs consist primarily of personnel and related costs associated with the ongoing operations of a call center to activate and bill satellite radio subscribers. These costs are primarily driven by the volume and rate of growth of our subscriber base. For the quarter, customer care and billing operations totaled $0.7 million. Year to date we incurred $0.8 million. We expect customer care & billing operations expenses to increase as we add subscribers but decrease on an average cost per subscriber basis.

Cost of Merchandise- We sell merchandise direct to employees, friends and family through our Direct Fulfillment Channel. Cost of merchandise consists primarily of the cost of radios and accessories and related fulfillment costs associated with the direct sale of this merchandise. For the quarter, merchandise totaled $0.2 million. Year to date we incurred $0.5 million. These costs are primarily driven by the volume of radios sales, which is mostly affected by promotional programs.

Broadcast & Operations- Broadcast and operations includes costs associated with operating our terrestrial repeater network, the management and maintenance of systems and facilities as well as information technology expense related to our studios. Broadcast expenses include costs associated with the management and maintenance of the systems, software, hardware, production and performance studios used in the creation and distribution of our Canadian-produced channels. Operations expense includes facilities, operations costs for the repeater network and information technology expenses related to the broadcast facilities. For the quarter, broadcast and operations totaled $0.4 million. Year to date we incurred $1.2 million. We do not expect Broadcast expenses to increase in the future. We expect Operations expenses to increase once we sign a third party monitoring and maintenance agreement for our repeater network.

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Programming & Content - Programming & content include the creative, production and licensing costs associated with our Canadian-produced channels, which includes third party content acquisition. We view programming and content expenses as a cost of attracting and retaining subscribers. This includes costs of programming staff and fixed payments for third party content. These costs are primarily driven by programming initiatives. National Hockey League^® was launched on the XM Service in October 2005. NHL seasons run for the nine month period beginning in October of each year and we have amortized these costs over the same period. For the quarter, programming and content totaled $3.7 million. Year to date we incurred $5.6 million.

Marketing- Total marketing expenses for the second quarter were $9.4 million. Year to date costs were $14.0 million. Marketing costs consist of the direct cost to acquire a subscriber, which include subsidization to drive hardware price points, distribution commissions and discretionary costs consisting of advertising and brand development and promotion of the launch of our service. Marketing also includes the cost of marketing staff. These expenses are comprised of the following:

Subsidies & Distribution - For the second quarter, we incurred $3.4 million in subsidies and distribution costs. Year to date we incurred $3.4 million in subsidies and distribution costs. These direct costs include the subsidization of radios, commissions for the sale and activation of radios, and certain promotional costs.

Subscriber Acquisition Costs (SAC) - We expect these costs, in absolute dollars, to increase as we increase sales of radios through our retail channels. Subscriber acquisition costs for the three month period ending February 28, 2006 was approximately $69 per subscriber. We expect this cost, on a per subscriber basis, to decline slightly with the increase in planned production of XM enabled vehicles.

Advertising & Marketing - For the second quarter, we incurred $5.1 million in advertising and marketing costs. Year to date we incurred $9.2 million in advertising and marketing costs. We incurred marketing costs in the first quarter to promote the November 22, 2005 launch of the service. We achieve success in these areas through coordinated marketing campaigns that include retail advertising through various media, cooperative advertising with our distribution partners, sponsorships, and ongoing market research. These costs fluctuate based on the timing of these activities.

Costs Per Gross Addition (CPGA) - Costs per gross addition for the three month period ending February 28, 2006 was approximately $194. We expect CPGA to decrease for the balance of fiscal 2006 as we progress from the launch period.

General & Administrative - During the quarter approximately $4.0 million were incurred in general and administrative expenses. Year to date, general and administrative expense totaled $9.6 million. General and administrative expense primarily includes management’s salaries and benefits, professional fees, general business insurance as well as other corporate expenses. These costs have been predominantly driven by personnel costs and infrastructure expenses to support our growing subscriber base.

Stock based compensation - During the second quarter we incurred $22.2 million in stock option expense related to the issuance of stock options at the time of and prior to the initial public offering.

             &# 160;                  Net Non-operating Expenses

For the second quarter we incurred $0.9 million in net non-operating expenses. Year to date we incurred $0.9 million in net non-operating expenses. These expenses are comprised of the following:

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Interest Expense- Interest expense includes costs associated with our notes, reduced by interest earned on cash balances. For the quarter, we incurred $0.2 million in interest expense. Year to date we incurred $0.2 million.

Foreign Exchange Gain- Includes costs or gains associated with our notes and cash balances. For the quarter, we gained $0.7 million from foreign exchange. Year to date we gained $0.7 million.

Results of Operations for the Six Months Ended February 28, 2005

On June 16, 2005 we received approval of our application for a broadcast license from the CRTC, subject to certain conditions. Prior to that time, our focus was working toward obtaining license approvals from the CRTC. For the six months ended February 28, 2005, we were considered to be in the development stage and our revenues and expenses may not be indicative of future revenues and expenses.

We incurred $1.0 million of indirect costs owed to a company controlled by our Chairman, Chief Executive Officer and controlling shareholder, John I. Bitove, related to managing and funding our operations during the period ended February 28, 2005.

Results of Operations for the Years Ended and as of August 31, 2005, 2004 and 2003

Over the three years ending August 31, 2005, we have been in a development stage, focused on obtaining license approvals from the CRTC. This was accomplished on June 16, 2005 and our activities have changed to focus on the setting up of a terrestrial repeater network, studios in Toronto and Montréal and the systems required in order to accept subscribers.

As at August 31, 2005, no revenues had been generated. Revenues are expected to be more significant in fiscal 2006 once our service is fully launched in November 2005, with revenues increasing throughout the year as subscriber levels increase. We project to end our August 31, 2006 fiscal year with at least 75,000 subscribers.

Significant costs have been incurred to August 31, 2005 relating to obtaining license approvals from the CRTC and addressing the requirements of launching our service. Expenses in fiscal 2003 and 2004 were relatively low as the focus of our operations in those years was working toward obtaining license approvals from the CRTC. Expenses in the year ended August 31, 2005 increased significantly over the previous years as once license approvals were obtained on June 16, 2005, our focus changed to address the requirements of launching the service. These requirements included increased staff and facility expenses in order to begin program management and operations.

We expect total expenses to be significantly higher in fiscal 2006 as we fully launch and operate our service. The total amount of expenses in 2006 and the timing of these expenses will vary depending on our subscriber levels and how quickly we attract subscribers to our service as certain of our expenditures will vary directly with subscriber levels. Other aspects of our cost structure will be relatively fixed as described below.

We expect to incur significant costs of revenues during fiscal 2006 as our subscriber levels and revenues increase during the year. We will incur significant costs related to license fees, customer care, terrestrial and broadcast operations and programming and content costs. A significant portion of the costs associated with terrestrial and broadcast operations and programming and content costs will not vary directly with subscriber levels. Costs such as those related to the maintenance of our terrestrial repeater network, broadcasting on our Canadian stations and programming costs such as the amounts incurred related to our NHL agreement will be relatively fixed during the year. Other costs, such as our license fees to XM, customer care and performance rights royalties, will vary directly with our subscriber and revenue levels.

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General and administrative costs will be higher in fiscal 2006 as we increase staffing levels in our administrative and finance functions and as we continue operation of our service. In addition, we will have significant costs related to our subscriber management system as this system is developed and maintained. These costs are not expected to vary significantly in relation to subscriber levels.

We expect to incur significant marketing costs in fiscal 2006. In particular, marketing costs will be high in the first quarter of 2006 as we advertise and promote the launch of our service. Marketing costs are then expected to continue to be significant throughout the remainder of fiscal 2006, although at lower levels than the first quarter. A significant portion of our expected marketing costs will consist of subsidies and distribution costs which include commissions to radio manufactures and distribution partners that are based on the number of radios or vehicles manufactured or the number of new subscribers added in the period, as well as hardware subsidies to reduce the price of the radio to the consumer. These costs will vary in relation to the number of new subscribers added in a period. Marketing costs related to advertising, media and events, as well as marketing material for retail and automotive dealer points of presence, will not have a direct relationship to our subscriber levels and will be incurred based on our overall marketing strategy.

As of August 31, 2005, we had incurred $4.6 million of indirect costs owed to a company controlled by the Chairman, Chief Executive Officer and controlling shareholder, John I. Bitove, related to managing and funding our operations. These costs will continue in the first three months of fiscal 2006, but no additional indirect costs are expected to be incurred after November 30, 2005.

Liquidity and Capital Resources

Based on our current business plan, we expect to have sufficient capital to substantially fund the rollout of our service and our ongoing operations until we achieve positive cash flow.

Cumulative losses to February 28, 2006 have been approximately $67.4 million. Most of our capital expenditures were incurred in the six months ended February 28, 2006 as we addressed the requirements of launching the service after obtaining approval for our license in June 2005. Significant expenditures to February 28, 2006  have included the initial costs of building broadcasting studios in Toronto and Montréal, establishing a terrestrial repeater network, and building the technology infrastructure that will allow us to provide service to subscribers based on our current business plan. Since inception we have incurred $28.7 million for these expenditures. These amounts have been funded through the proceeds from our initial public offering and the offering of initial  notes and the $15 million of additional equity provided by CSR Investments.

Our business plan is based on estimates regarding expected future costs and expected revenues. The forward-looking information that is the basis for our business plan, including the estimate of variable expenses as a percentage of revenue, our estimated acquisition cost per subscriber, our expected annual fixed costs, our annual expected capital expenditures, and our estimates as to when we will become cash flow positive and profitable, is based on various factors and was derived using numerous assumptions. Although we believe that our assumptions and expectations in such forward-looking statements are reasonable, these assumptions and expectations are inherently subject to significant business, economic and competitive inconsistencies, many of which are beyond our control, and we cannot promise that our expectations will turn out to be correct. Our actual results could be materially different from and worse than our expectations. For instance, our costs may exceed our estimates, and revenues may be lower than expected. If we are unable to ultimately generate sufficient revenues to become profitable and have positive cash flow, you could lose your investment. Important factors that could cause our actual results to be materially different from our expectations include those disclosed in this prospectus under the caption “Risk Factors” and elsewhere throughout this prospectus.

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We generate revenue from the following sources:

·   Subscription Fees. Distribution of our product will be primarily through automobile OEMs and consumer electronic retailers. We charge an average monthly subscriber fee of $12.99, or approximately US$11.60, for basic service with additional family subscriptions for $9.99 per subscription, or approximately US$8.92. We may offer promotions to certain subscribers, as well as discounts for pre-payment of service.

·   Subscriber Activation Fee. We charge an activation fee for each new subscriber activating their SDARS service account.

·   Merchandise Revenue. Our merchandise revenue is comprised of revenues from direct sales of radios and accessories as they become available.

·   Advertising Revenue on the Canadian Produced Channels. We plan to sell national advertising spots on some of our non-music, Canadian produced channels.

As we generate revenue, we will incur variable expenses that consist of license fees, customer care and billing costs and advertising expenses. In particular, the license fees include amounts payable to XM, CRTC related fees, performance rights royalties and Canadian talent development, as mandated by our CRTC license. Performance rights royalties are difficult to predict and may be more expensive than anticipated. See “Risk Factors—We will be required to pay royalty fees, which may be more costly than expected.” In addition, we outsource our customer care functions and incur costs for such services on a per subscriber basis. We anticipate advertising expenses will include internal and external costs directly associated with selling advertisements on our Canadian produced channels. In aggregate, we currently anticipate that our variable expenses will represent approximately 30% to 40% of our total revenue, before performance rights royalties. However, while certain of these anticipated variable expenses are based on current contracts to which we are a party, these contracts may not be renewed. In addition, there may be other variable costs we do not currently anticipate having to incur and certain of the variable costs we do anticipate, which are not currently contractually set, may be much higher than we currently estimate.

In addition to these variable expenses, we also will incur certain fixed costs, which we believe are scalable and which we expect will not increase as a result of growth in our revenues. These expenses include terrestrial and broadcast operations, programming and content costs, marketing expenses and general and administrative expenses. Terrestrial and broadcast operations consist primarily of costs associated with operating and maintaining our terrestrial repeater network. Programming and content costs consist of personnel and related costs associated with the Canadian produced channels broadcast on the XM network and content acquisition. Marketing expenses are expected to consist of general advertising, media and events, as well as marketing materials for retail and automotive dealer points of presence. General and administrative expenses consist primarily of personnel and related costs within our administrative and finance functions, subscriber management systems and other general corporate and professional fees. We currently anticipate that these primarily fixed and discretionary costs will total approximately $42 million to $48 million annually, excluding amortization and depreciation, with modest growth over time.

We will also incur customer acquisition costs related directly to the generation of new subscribers. We anticipate that our customer acquisition costs include subsidies and distribution expenses consisting of commissions to radio manufacturers and distribution partners based on the number of radios or vehicles manufactured or the number of new subscribers added in the period, as well as hardware subsidies to reduce the price of the radio to the consumer. We believe that given our OEM and retail distribution agreements, our acquisition cost per customer will be comparable to that of XM.

In order to provide the XM service in Canada, we have and will continue to incur capital expenditures related to maintenance of our studios in Toronto and Montréal, to build our subscriber management systems and to purchase and deploy our repeater network. We expect the initial cost for these assets to be approximately $30 million dollars. We anticipate that over the next several years our annual capital expenditures basis will be less than $4 million per year.

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Contractual Commitments

We have entered into a number of leases and other contractual commitments. The following table summarizes our outstanding contractual commitments as of February 28, 2006 (in thousands of dollars):

	Total(1)		Less than 1 Year		1 - 3 Years		4 - 5 Years		More than 5 Years
NHL Agreement		78,425		6,251		14,208		15,912		42,054
Principal and Interest payments on 12.75% Senior Notes		229,593		14,492		28,983		28,983		157,135
Operating leases		4,414		574		1,145		1,126		1,569
Marketing & Advertising(2)		36,931		7,423		11,265		3,230		15,013
Information Technology		15,056		4,015		4,975		6,066		0
		364,420		32,756		60,575		55,318		215,771

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Notes:

⁽¹⁾In connection with our CRTC License, amended February 10, 2006, we are required to contribute or make variable royalty payments based on a minimum of 5% of revenues over the six year license term. In addition, the company will be required to make certain music programming royalty payments to Canadian copyright collectives. The specific amounts payable under these arrangements are negotiated on a periodic basis. These arrangements have not been included in the table above due to the variability of the commitments.

⁽²⁾We have committed to purchase for cash $7 million of the $12 million of advertising from an entity over a three period commencing on the closing of the initial public offering, subject to a per annum minimum of $1.5 million.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Arrangements, Relationships and Transactions with Related Parties

A description of related party transactions and disclosure of the transaction and amounts due to related parties is included in note 8 to the interim consolidated financial statements. John I. Bitove, our Chairman, Chief Executive Officer and controlling shareholder, provided, through companies he controls, all the initial funding for our activities. As at November 30, 2005, we owed approximately $16.8 million to companies controlled by John I. Bitove for all direct and indirect costs including the application and appeal process for the license, preparing the service for national launch and other administrative services. On January 10, 2006, the remaining amount was repaid.

As at December 12, 2005, XM had a 23.3% ownership interest in us. As described under recent events above, we have entered into certain agreements with XM. In addition, as at February 28, 2006, we owed XM $614,000 for terrestrial repeaters acquired from XM.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. We believe that the accounting estimates used to assess the carrying value of intangibles and long-lived assets and stock based compensation are critical accounting estimates. We believe the estimates for royalties to artists will be a critical estimate in future periods.

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Intangibles and Long-Lived Assets

We review the carrying value of our amortizable intangible assets and capital assets whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. Significant management judgment is required in the forecasting of future operating results, which are used in the preparation of the projected cash flows. Any change in estimate which causes the undiscounted expected future cash flows to be less than the carrying value would result in an impairment loss being recognized equal to the amount by which the carrying value of the asset exceeds the fair value of the asset.

Stock Based Compensation

We measure the fair value of stock options at the time of grant using the Black-Scholes valuation model which requires the input of highly subjective assumptions, and changes to these subjective assumptions can materially affect the fair market value estimate. Fair value determined using Black-Scholes varies based on assumptions used for the expected life, expected share price volatility and risk-free interest rates. During the current financial year, we will refine the assumptions used in estimating fair value in response to changing market conditionsand our estimate of forfeitures. Our assumptions may change in future periods.

Recent Accounting Pronouncements

Financial Instruments, Comprehensive Income, Hedges - On January 27, 2005, the Accounting Standards Board issued CICA Handbook section 1530 Comprehensive Income (“Section 1530”), Handbook Section 3855 Financial Instruments - Recognition and Measurement (“Section 3855”) and Handbook Section 3865 Hedges (“Section 3865”). Section 3855 expands on CICA Handbook section 3860 Financial Instruments - Disclosure and Presentation by prescribing when a financial instrument is to be recognized on the balance sheet and at what amount. It also specifies how financial instrument gains and losses are to be presented. Section 3865 is optional. It provides alternative treatments to Section 3855 for entities that choose to designate qualifying transactions as hedges for accounting purposes and specifies how hedge accounting is applied and what disclosures are necessary when it is applied. Section 1530 introduced a new requirement to present temporarily certain gains and losses outside net income in a new component of shareholders’ equity entitled Comprehensive Income. These standards are effective for us beginning September 1, 2007. Based on our current financial position, we do not expect these standards to have a material impact on our consolidated financial statements.

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BUSINESS

Overview

Introduction and History

On August 19, 2003, CSR Inc. filed its initial application to the CRTC for a broadcasting license to provide subscription-based satellite radio service in Canada. On June 16, 2005, the CRTC granted CSR Inc. a broadcasting license, based on certain conditions outlined in this prospectus. On September 7, 2005, CSR Inc. applied to amend the CRTC broadcasting license, as outlined in this prospectus.

On November 21, 2005, the CRTC advised us that it was satisfied that the conditions to the grant of our broadcasting license were fulfilled, and that the license would therefore be issued when: (i) the Department of Industry notified the CRTC that its technical requirements had been met, and (ii) we confirmed to the CRTC that we were prepared to commence operations. The Department of Industry notified the CRTC that its technical requirements had been met on November 22, 2005. Similarly, on November 22, 2005, we confirmed to the CRTC that we were prepared to commence operations. As a result of the satisfaction of these conditions, we have fulfilled all regulatory conditions to launch, and we have been authorized to launch our service.

On November 22, 2005, we announced the launch of our service.

On December 12, 2005, we completed our initial public offering in Canada.

On February 10, 2006, the CRTC approved CSR Inc.’s license application dated September 7, 2005.

With the support of our strategic partner, XM,we have signed or negotiated agreements with various suppliers and distributors, including retailers, an automotive manufacturer, hardware manufacturers, infrastructure implementation suppliers, and programming content providers. As we grow the business, we will continue to pursue relationships with other distribution, supplier and programming partners.

Our Business

We seek to become the market leader in providing subscription-based satellite radio entertainment to the Canadian market. We plan to do this as the exclusive Canadian licensee of XM, a pioneer in satellite radio and the leader, by total subscribers, in the U.S. satellite radio market. XM has publicly stated that it had over 6.5 million satellite radio subscribers as of the end of its first quarter 2006. We are the exclusive licensed provider of XM satellite digital audio radio services, or SDARS, in Canada, and our service will leverage XM's existing satellite network and technology, its brand and distribution relationships and significant operational know-how. Through XM, we currently offer up to 100 channels, which will include commercial-free music, as well as news, talk, sports and children's programming, including ten Canadian channels designed and developed by us from our studios in Toronto and Montréal, for an initial base subscription fee of $12.99 per month. We expect that distribution of our satellite radios will be primarily through automobile OEMs and consumer electronic retailers.

We have an exclusive 13-year distribution arrangement with GMCL, which has begun installing XM satellite radios in certain of its 2006 model vehicles. Under the terms of our agreement with GMCL, GMCL will use commercially reasonable efforts to offer our satellite radio service from factory-installed radios in as many vehicle lines as possible for the 2006 model year, and in at least 90% of vehicle lines for the 2007 model year and beyond. Similar to U.S. automobile OEMs, most Canadian OEMs commence their model year during the summer, such that the 2007 model year starts in the summer of 2006. According to Canadian Autoworld, GMCL is the single largest seller of cars in Canada, with an approximate 29% market share of new vehicles sold in calendar year 2005.

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In 2005, there were approximately 1.6 million new vehicles sold in Canada, representing a significant market opportunity. In addition to GMCL, we have exclusive agreements with Honda Canada and Nissan Canada. We have also announced distribution relationships with Subaru Canada, Harley-Davidson Motorcycles and Toyota Canada. 

Together with GMCL, we currently have exclusive relationships with companies that represent approximately 44% of new vehicles in calendar 2005. XM radios are also available in Canada at national and regional consumer electronics retailers, such as Best Buy, Canadian Tire, Future Shop, The Source, and other large national and regional retailers that sell consumer electronics in Canada. These retailers represent over 2,000 stores.

On September 12, 2005, we and XM announced an approximately US$100 million ten-year contract to broadcast National Hockey League, or NHL, games as part of the XM service. This ten-year contract is non-exclusive to us for the first two years and we will be the exclusive Canadian satellite radio provider of NHL games beginning with the 2007-2008 season. We believe that this deal will have a significant positive impact on attracting subscribers to the XM service in Canada. We are responsible for a substantial portion of the fees payable to the NHL under this agreement.

We are one of only two applicants who have received approval from the CRTC, for a Canadian broadcasting license to provide subscription-based satellite radio service in Canada. The other approved satellite license applicant is Sirius Canada Inc., or Sirius Canada, a joint venture between CBC-Radio Canada, Standard Broadcasting and Sirius. A third applicant, CHUM Limited, or CHUM, also received approval from the CRTC for a broadcasting license to provide a subscription-based radio service in Canada, but only through terrestrial transmitters.

We believe that there is a significant market opportunity for satellite radio in Canada. A Decima Research Inc. survey from January 2006 revealed that 77% of Canadians say that they are aware of satellite radio and that 6%, the equivalent of up to 2 million Canadians, said that they would likely subscribe to satellite radio within the next year at a price of $13 per month. Nearly 90% of Canada's population of 32 million live within 125 miles of the U.S. border, and we believe that many Canadians have become aware of satellite radio as a result of the significant marketing and advertising dollars that XM and Sirius have spent developing their respective brands and U.S. customer bases. According to a Charlton Research report dated July 2005, which we commissioned and paid for, 22% of respondents from the Province of Québec, which according to Statistics Canada represents approximately 24% of Canada's population, said that they would be interested in receiving satellite radio service. Canada enjoys high radio listenership, as over 94% of Canadians listen to the radio at least weekly. According to a 2005 survey by BBM Canada, however, most markets in Canada have fewer than ten radio stations and limited format choices. More specifically, according to Broadcaster Magazine, of the 427 assessed commercial and non-commercial radio stations in Canada in the fall of 2004, 236 or 55.3% use one of only three general programming formats: country; news/talk/sports; or adult contemporary. As a result, we believe that Canadian listeners will be attracted to the diversity of our content. In addition, given the broad expanse of Canada's geography, we believe listeners will value our coast-to-coast digital quality coverage.

We are broadcasting our service using XM's existing satellite network, which covers the continental U.S. and the densely populated regions of Canada. We are supplementing XM's satellite coverage with a terrestrial repeater network of approximately 80 repeaters, owned and operated by us. Our repeater deployment is focusing on the 16 largest Canadian cities to improve coverage and reduce interruptions by buildings or other obstacles.

We have launched our service with Audiovox Electronics Corporation, or Audiovox, Delphi Automotive Systems LLC, or Delphi, and Pioneer Electronics, or Pioneer, radios designed to serve the car, home, portable and wearable stereo markets. These radios include Delphi's SKYFi2, MyFi and RoadyXT radios and Pioneer's AirWare radio. The initial cost of these radios to the consumer ranges from approximately $70 to $400, inclusive of rebates.

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Nearly all of our revenues are expected to come from subscription and associated activation fees. We expect to generate incremental advertising revenue from ad spots on the non-music channels that we program in Canada and U.S. focused advertisements that we will place on our National Hockey League Talk Channel. As we grow our subscriber base, we expect that our service will become an increasingly attractive medium for advertisers to target customers on a nationwide basis.

Exclusive XM Relationship

XM offers innovative and diverse radio programming in digital quality sound with over 170 channels in the U.S. featuring music, news, talk, sports, traffic and weather and a variety of other content. We have an initial ten-year agreement with XM providing us with the exclusive rights to sell XM's SDARS in Canada. XM has a significant equity interest in our business.

Our service currently includes up to 100 channels, including commercial-free music, as well as news, talk, sports and children's programming, including at least 72 XM channels and ten Canadian channels developed by us. We believe the content that will be provided on these channels will be well suited to Canada's diverse listening population.

We will leverage XM's existing content and existing satellite network, which will significantly lower our capital requirements to enter the satellite radio market. In addition to XM's satellite network, we will utilize XM's established programming and broadcasting facilities and benefit from the significant capital invested by XM to date in research and development and on developing its satellite network. XM has agreed to provide us with technical expertise as we deploy our terrestrial repeater network across Canada and build our information technology platform and broadcasting operations.

According to Ward's Automotive Yearbook 2005, XM in the U.S. is the exclusive automobile OEM factory-installed distribution partner or preferred provider of data services to automobile OEMs representing approximately 56% of the U.S. automobile marketplace, including General Motors, Honda, Toyota, Hyundai and Nissan. We believe that XM's established relationships with these automobile manufacturers has laid the foundation to enable us to establish similar relationships with the Canadian counterparts of these automobile manufacturers for the installation of XM radios in automobiles made for the Canadian market. According to Canadian Autoworld, these five companies represented approximately 58% of the Canadian automobile OEM marketplace in 2005.

We have had, and will continue to have, the benefit of utilizing XM's experience when launching our business and when making broadcasting, advertising and other arrangements with third parties. In developing our information technology and business processes, including our call center, we have utilized XM's experiences, and will continue to leverage its relationships. We have worked closely with XM's management to identify key success factors in both marketing to the consumer and training our distribution forces.

A summary of the key terms of the operational agreements between us and XM are contained below under the heading “Business — Operational Agreements.”

Satellite Radio Industry Overview

Based on our understanding of the Canadian marketplace, which is based, in part, on market research that we have conducted, we believe that there is a market opportunity in Canada for our satellite radio service. According to Statistics Canada, as of December 31, 2004 there were more than 25 million registered vehicles in Canada. In addition, according to Statistics Canada, as of May, 2004, there were more than 12.3 million Canadian households and a Canadian population of 32 million. We expect consumer response to be positive in Canada as we perceive that there is an existing demand for the product and a significant level of awareness for SDARS amongst Canadians.

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Marketplace Results in the United States

Consumer response to date to SDARS in the U.S. has been positive. XM and Sirius have individually reported having over 6.5 million (61%) and approximately 4.1 million (39%) satellite radio subscribers, respectively, as of March 31, 2006, for an aggregate subscriber base of approximately 10.6 million subscribers. According to the U.S. Department of Transportation, as of October 2004, there were approximately 230 million registered vehicles in the U.S. In addition, according to the U.S. Census Bureau, there were approximately 111 million U.S. households in 2003.

XM reports having received positive feedback for its service from its subscribers. According to XM's 2004 Annual Report, in three recent studies, 90% or more of XM's subscribers report being “extremely” or “very” satisfied with XM. XM has also reported a broad appeal for its service across various age groups, with people in their twenties, thirties, forties and fifties representing comparable percentages of total XM subscribers.

In 2005, after approximately 3.6 years of service, there was an aggregate of five million U.S. SDARS subscribers, making SDARS one of the fastest growing mass-market technology products to achieve five million individual consumers in the U.S., according to Greystone Communications. This U.S. adoption rate is faster than other mass-market consumer technology products such as MP3 players, wireless phones, satellite television, the Internet and cable television.

Canadian Satellite Radio Market

We believe that awareness of satellite radio among Canadians is already significant. A Decima Research Inc. survey from January 2006 revealed that 77% of Canadians say that they are aware of satellite radio. This Decima Research data was based on a sample size of 2,018 adult Canadians, with a margin of error of 2.2%, 19 times out of 20. Also, according to a Charlton Research report dated July 2005, which we commissioned and paid for, 22% of respondents from the Province of Québec said that they would be interested in receiving the satellite radio service. This data was based on a sample size of 501 people from Québec, with a margin of error of 4.38%, 19 times out of 20.

Canadian consumers have demonstrated their ability and willingness to pay for services that dramatically expand programming choice or enhance quality. According to the Canadian Cable Telecommunications Association, or CCTA, there were approximately 10 million Canadian satellite and cable television subscribers as of September, 2004, of which approximately 4.5 million (or 45%) were digital television subscribers. In a survey conducted by the CCTA in 2004, 32% of respondents said that the main reason why they subscribe to digital cable is because it offers more channels with better content, while 23% said better quality and 21% said more choice.

Canadians have also previously demonstrated a willingness to accept new technology, as evidenced by recent Internet broadband and wireless cellular statistics. Statistics show that in 2004, 67% of Canadian households that use the Internet are accessing the Internet through broadband services, as compared to 46% in the U.S. in the same year (Nielsen/NetRatings and Ipsos Reid). According to the Canadian Wireless Telecommunications Association, there are also approximately 15 million wireless cellular telephone subscribers in Canada, representing 47% of the total Canadian population. This is slightly lower than the U.S. wireless telephone subscriber penetration of approximately 56% based on approximately 169 million U.S. wireless subscribers in June 2004, according to CTIA—The Wireless Association.

Canadians spend a significant amount of time in their cars. According to Statistics Canada, Canadian drivers spend an average of 62 minutes commuting. This is higher than the U.S. average daily commute of 24 minutes, according to the U.S. Census Bureau.

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Market studies show strong demand for radio service in Canada. Market data shows that over 94% of adult Canadians aged 18 and above listen to the radio on a weekly basis and the average adult listener tunes in for 22.1 hours per week, which is comparable to statistics in the U.S. Market data shows that over 94% of Americans aged 12 and over listen to the radio on a weekly basis, with the average listener tuning in for 19.8 hours per week. Both listenership and weekly hours tuned for teens and young adults (18-24) have declined significantly over the past five years. We perceive this decline to be an opportunity and intend to take advantage of it by offering innovative and diverse radio programming to the Canadian market through satellite radio.

In many markets, traditional AM/FM audio programming choices are limited to mass appeal formats. We believe our national subscription satellite radio service will complement traditional local radio. We believe that there is significant demand for a satellite radio service that expands the current programming choices available to these potential listeners. According to Broadcaster Magazine, of the 427 assessed commercial and non-commercial radio stations in Canada in the fall of 2004, 236 (55.3%) use one of only three general programming formats: country; news/talk/sports; or adult contemporary. The small number of available programming choices means that artists representing niche music formats are likely to receive little or no airtime in many markets. Given their respective advertising mandates, which are targeted primarily towards adults aged 25 to 54; radio stations seek to be very broadly based, featuring artists that they believe will be the most attractive to a broader market. We believe that this creates a market opportunity for the innovative and diverse radio programming offered by satellite radio.

The number of radio stations available to many Canadian consumers in their local market is very low in comparison to the up to 100 channels we offer on a nationwide basis. BBM Canada estimates that as of the fall 2004 there were only 23 AM/FM BBM Canada-rated radio stations broadcast in Toronto, Ontario, the largest radio market in Canada. Most of those radio stations adhere to one of the three general programming formats: country, news/talk/sports, or adult contemporary. The second largest market, Montréal, Québec, has only 19 BBM Canada-rated stations to cover both anglophones and francophones. Only five Canadian markets have 15 or more AM and FM stations rated by BBM Canada. Outside the largest nine Canadian markets, all have 10 or fewer stations rated by BBM Canada. Of the total national listener base of approximately 25.7 million people tracked by BBM Canada, we estimate that our service will reach over approximately 12.4 million listeners age 12 and over outside of the largest nine Canadian markets.

Competitive Strengths and Business Strategy

We believe that our business will benefit from a number of factors as the result of our affiliation with XM and the later launch of our service in Canada. In particular, we have had the benefit of observing four years of XM's operations in the U.S. before the launch of our service in Canada and we will be able to leverage many of the economies of scale XM has already achieved. We believe that other factors that will benefit our business include the following:

    •Market awareness already exists and is growing. We believe that there is significant existing demand for satellite radio in Canada. A Decima Research Inc. survey from January 2006 revealed that 77% of Canadians say that they are aware of satellite radio. This survey suggests that awareness of satellite radio has increased since the launch of our business, when a study conducted in Canada by Charlton Strategic Research Inc., or Charlton Research, dated October 2005, which we commissioned and paid for, suggested that 49% of Canadians are aware of satellite radio service. Since nearly 90% of Canadians live within 125 miles of the U.S. border, many Canadians receive television and radio programming spillover from the U.S., which includes advertising spots for satellite radio.

    •Low funding requirements. Since XM's satellite infrastructure already covers the continental U.S. and the densely populated regions of Canada, we are not required to build, launch, maintain or manage our own satellites, which will save us significant time and funding. In addition, as we build our information technology systems, we intend to leverage XM's experience and existing broadcasting licenses. This will be less expensive, and require less time than building our own set of systems. We also believe that our relationship with XM, and XM's experience in rolling out its U.S. service, will allow us to design an efficient network of terrestrial repeaters. We have had the benefit of designing our repeater network and coverage testing Canadian cities with the XM satellites already in place, and can therefore model optimal repeater sites more effectively.

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     •XM continues to change programming in response to its listenership and offers a unique radio listening experience for Canadians. XM reports that it has a wider variety of programming than it did when it originally launched in the U.S. With the addition of the National Hockey League and other sports channels as well as well-known talk show personalities, XM has continued to refine its programming lineup. We believe that Canadians have an appetite for specialized radio programming and are eager to have access to the depth and choice that the XM system provides. We will have fully functional broadcast studios in Toronto and Montréal. These studios will be well equipped to program and broadcast music and talk channels in both French and English.

     •Well-developed distribution channels. According to Ward's Automotive Yearbook 2005, XM is the exclusive automobile OEM factory-installed distribution partner or preferred provider of data services to automobile OEMs in the U.S. representing approximately 56% of the U.S. automobile marketplace, including General Motors, Honda, Toyota, Hyundai and Nissan. As a result of our relationship with XM, we believe we will be able reach comparable Canadian automobile OEM penetration rates. Also, we believe that given the increased market awareness of satellite radio in Canada, retailers in Canada will be more willing to carry and display satellite radio devices on their shelves.

     •Core management team with broadcasting veterans. Our team includes a strong management team with broadcasting veterans. Our Chairman and Chief Executive Officer, John I. Bitove, is an experienced, successful Canadian entrepreneur. Mr. Bitove has a distinguished record of accomplishment in business and community service. In 1993, he founded the Toronto Raptors Basketball Club and helped to launch what has now become Raptors TV almost eleven years ago. Mr. Bitove has also been associated in various broadcasting ventures for more than a decade. Our President and Chief Operating Officer, Stephen Tapp, has a background in new technology and product launches. Mr. Tapp served as Vice President and General Manager of Citytv and CHUM International and has overseen several international joint ventures and channel launches. Prior to joining CHUM, he held the role of Executive Vice President and General Manager of Viewer's Choice Canada Pay Per View, where he was responsible for launching the service and managing all areas of network operations. Mr. Tapp also held senior programming roles at Canada's first subscriber-based Pay Television sports channel, TSN, The Sports Network, from its launch until 1991. In addition, our Vice President, Programming, Ross Davies, has more than 30 years experience in the programming industry. Prior to heading up his own consulting firm from 2002 to 2005, Mr. Davies served more than 20 years at CHUM, most recently as Vice President, Programming, CHUM Group Radio, where he was directly responsible for all programming aspects of the CHUM radio division.

     •Lower cost and more variety of radios. We will be entering the market when the cost of manufacturing radios is cheaper than it has been historically due to technology improvements and improved scale of production. This has resulted in lower cost radios to the consumer, significantly lowering a barrier to entry. This trend also has dramatically reduced subsidies provided by satellite radio service providers, significantly lowering their cost to acquire new subscribers. Lower costs also have resulted in a proliferation of stationary, portable and wearable radios and other technological devices equipped for the playing and recording of music and other audio files. We believe that this expansion of devices has dramatically expanded the market opportunity for satellite radio beyond car stereos.

     •Future growth opportunities. As we build our subscriber business through traditional retail and automobile OEM channels, we also plan to grow the business by offering specific hardware and services through non-traditional retail channels, including rental car companies, national and local businesses, hotel chains, and to boat and airplane owners, commercial airlines, truckers and others. Subscribers through these channels will have distinct hardware and service packages, including weather information for marine and aviation. We expect that subscriber fees may be different for each of these channels. We currently plan to focus on these other distribution channels once our traditional distribution model is operational. XM also reports that XM's telematics service offerings are becoming more widespread in the U.S. Telematics, which includes real time data and traffic information through vehicle navigation systems such as XM NavTraffic, is being integrated into select Honda/Acura and General Motor models, and plans are in place for Toyota and Nissan models. XM NavTraffic is the U.S. first real-time satellite traffic data service and is available in approximately 20 major metropolitan cities across the U.S. for a monthly fee. We anticipate that the Canadian partners of these automobile OEMs will promote telematics when and if we launch those services in Canada. XM, working with several partners, introduced the XM Advanced Services vehicle at the 2006 Consumer Electronics Show. This concept car features in-car video (On2 Technologies), voice command (VoiceBox (R) Technologies), weather alerts (WxWorx), parking spot locator (Nu-Metrics Inc. and InfoGation) and other innovations.

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Our Product

Channel Line-Up

We currently offer up to 100 channels including commercial-free music, as well as news, talk, sports and children's programming, including at least 72 XM channels and ten Canadian channels designed and developed by us from our studios in Toronto and Montréal, for a base subscription fee of $12.99 per month and additional family subscriptions for $9.99 per subscription.

Our service offers a broad range of music genres that are popular but currently unavailable in many Canadian markets. Hallmarks of our channel lineup in Canada includes music from a variety of genres, including:

•Decades— individual channels that broadcast music hits specific to each decade from the '40s through to the '90s;

•Rock— more than a dozen channels of different kinds of rock music, as well as exclusive artist interviews and live performances;

•Country— old-time, classic, contemporary, bluegrass and alternative country;

•Pop & Hits— dedicated channels for pop hits from around the world, love songs, movie soundtracks, show tunes and chart toppers;

•Urban— rhythm & blues, rap and hip hop;

•Jazz and Blues— classical jazz, as well as contemporary and future fusion hits;

•Classical— complete coverage of the classical spectrum, from the renaissance to today;

•Dance— dance music from around the world; and

•Lifestyle— an eclectic mix of classical, jazz and rock.

Our digital signal transmitted via satellite and our terrestrial repeater network provide coast-to-coast coverage, which is a particular benefit for music formats that have strong widespread demand on a nationwide basis but have been relegated to AM stations with weaker signals.

In addition to music genres, we also offer a broad array of sports, news, comedy and talk entertainment channels. These types of programming are not available in many radio markets and we believe this makes our service appealing to dedicated sports fans and listeners whose tastes are not served by existing AM/FM radio stations. On September 12, 2005, we and XM announced a US$100 million (approximately $114 million) ten-year contract to broadcast National Hockey League, or NHL, games as part of the XM service. The ten-year contract is non-exclusive for the first two years and we will be the exclusive Canadian satellite radio provider of NHL games beginning with the 2007-2008 season. We believe that the exclusivity of this deal will have a significant positive impact on attracting subscribers to the XM service in Canada. We are responsible for a substantial portion of the fees payable to the NHL under this agreement.

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In addition to at least 72 XM channels, we also offer ten Canadian channels designed and developed by us. These ten channels, of which six are English and four are French, are:

English Channels

•Home Ice— an all-hockey talk channel. The channel will provide Canadians with live, play-by-play coverage from more than 1,000 games each season starting in the 2005-2006

  season, and will feature coverage from well-known commentators and former National Hockey League stars;

•The Verge— a 24/7 rock music channel featuring new, emerging and recently established Canadian rock artists;

•Laugh Attack— a comedy channel spotlighting Canadian comedians; and

•Canada 360— a 24/7 national news and information channel focused on the latest news, weather, sports, business and entertainment information and issues of importance to

   Canadians.

• Home Ice Info— a 24/7 channel that provides continuously updated hockey information from scores and highlights to upcoming game schedules.

• Home Plate Info— a 24/7 channel that provides continuously updated baseball information from scores and highlights to upcoming game schedules.

French Channels

•Quoi de Neuf— a 24/7 arts and entertainment news and information channel covering new movie releases, DVD releases, concerts, shows and theatre activity, information on

   new technology and more;

•Sport Plus— a 24/7 news, talk and information channel with an emphasis on sports (including French language National Hockey League games), featuring  news and

   sports along with talk shows hosted by well-known commentators and former National Hockey League stars;

•Air Musique— an original trend-oriented music station playing a fusion of punk, hip-hop, metal, electronic and alternative rock music; and

•Sur La Route— a music station featuring a blend of modern and classic pop, folk, rock and roll, “chanson” and soul featuring yesterday's, today's and tomorrow's stars.

Our channels are either completely commercial-free or have a reduced amount of advertising relative to terrestrial radio. We believe that a significant portion of the listening market will pay to subscribe to a radio service that provides commercial-free channels and channels with reduced advertising, as demonstrated by the appeal of limited periods of non-stop music used by some traditional AM/FM stations. Of the ten Canadian content channels that we program, those that have advertising will not broadcast more than six minutes of national commercial messages during any hour.

We believe that our service is an appealing alternative to traditional AM/FM radio in Canada as well as other in-vehicle audio entertainment options. Local radio stations, even those that are part of national networks, focus on maximizing listener share within local markets. This limits the types of programming they can profitably provide to mass appeal formats. In contrast, our coast-to-coast coverage and ability to initially provide up to 100 channels in each radio market will allow us to aggregate listeners from markets across the country, expanding the types of programming we can provide. The following chart indicates some of the principal differences between XM radio in Canada and traditional AM/FM radio.

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	XM Radio in Canada	Traditional AM/FM Radio
Programming quality and choice	Up to 100 channels with an extensive variety of programming	Limited formats in many markets
Coverage	Coast-to-coast coverage in the densely populated regions of Canada	Local area coverage
Audio quality	Digital quality sound	Analog AM/FM quality sound
Commercial Advertising	Features 100% commercial-free music channels. Six minutes or less of commercials per hour on our programmed talk channels	Up to 18 minutes of commercials per hour
Radio Displays	Text display with title/name of song/artist, as well as sports scores and stock ticker on certain radios	Limited visual display

XM creates most of its music channels at its studio facilities in Washington, District of Columbia; New York City, New York; and at the Country Music Hall of Fame and Museum in Nashville, Tennessee. We are building broadcasting studios in both Toronto and Montréal that have the same technological capabilities as those of XM's studios in the U.S. We are creating our own unique Canadian channels at these Canadian broadcasting facilities. To that end, we have hired key programming and production staff and on-air talent to prepare our content for broadcast on our Canadian channels. There is a large pool of Canadian talent, and we will be very selective in order to ensure that our programming meets the high standards established by XM.

Accompanying the audio portion of the broadcast, the digital display of our radios indicates the channel name, number and category. It also can be adjusted to indicate the name of the song and artist, or the name of the talk show being aired. A personal stock ticker, sports ticker and clock are also displayed on certain radios.

XM has announced that it will continue to implement its technology plan, which aims to reduce the cost of XM radios while increasing their functionality. We intend to leverage any cost reductions achieved by XM.

Other Offerings

XM radio online allows listeners to experience the XM service over the Internet. We intend to offer the XM radio online service to our subscribers and to Canadian non-subscribers in the future. Located on our website, XM radio online may in the future be included as part of the basic subscriber package and may be made available to non-subscribers for free for a brief trial period, or for a monthly fee.

Marketing

Our marketing strategy will be aimed at educating and building awareness and demand among potential subscribers in Canada of XM's SDARS as the leader in the new satellite radio category, with XM offering appealing features compared to traditional radio.

Our commercial launch of XM's service in Canada has been and will continue to be supported by both traditional and non-traditional advertising programs including radio, print, outdoor and direct marketing and television, some of which may be co-branded (and potentially co-funded) with our distribution, programming and hardware manufacturer partners. We will focus on educating consumers about XM and satellite radio through hands-on experiences at sites such as retail outlets, automotive dealerships and various entertainment venues. We have and will continue to offer promotional programs geared to the consumer when the timing and opportunity is appropriate. These opportunities may include discounts on hardware pricing or multi-year subscription fees, or bundling XM with other related services. We also anticipate distributing sample programming and marketing materials at retail outlets, concert venues and on the Internet to generate consumer interest.

We have allocated significant funds to GMCL to be utilized for mutually agreed upon advertising opportunities, dealer promotions, on-site activities, training and vehicle literature. Some examples of these co-branded opportunities may include: direct mail and outbound call programs to new GMCL vehicle owners with information on how to subscribe to the XM service through us once the three-month trial period is complete; Canadian Auto Show presence; GMCL website representation; and various consumer promotions.

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Distribution

We market our satellite radio service through several distribution channels including automotive manufacturers, national and regional electronics retailers, car audio dealers and mass retailers. During our commercial launch we are focusing on distribution of radios through retail distributors and automotive manufacturers to promote rapid market penetration.

Automobile OEMs

According to Statistics Canada and R.L. Polk, as of 2004 there were more than 25 million registered vehicles in Canada, with 1.6 million new vehicles sold during 2004, GMCL sold approximately 446,000 new vehicles in 2004, representing an approximate 28% market share and making it the single largest seller of new vehicles in Canada. We have agreed to the terms of an exclusive 13-year distribution arrangement with GMCL, which plans to install XM satellite radios in certain of its 2006 model vehicles. Under the terms of our arrangement with GMCL, GMCL will use commercially reasonable efforts to offer our satellite radio service from factory-installed radios in as many vehicle lines as possible for the 2006 model year, and in at least 90% of vehicle lines for the 2007 model year and beyond. Similar to U.S. automobile OEMs, most Canadian OEMs commence their model year during the summer, such that the 2007 model year starts in the summer of 2006. We expect that together with GMCL, we will offer a three-month free trial to all new purchasers of GMCL vehicles that are XM enabled. XM has indicated that its experience to date in the U.S. has been that approximately 56 out of 100 OEM trial customers convert to self-paying subscribers after the trial period.

We have exclusive distribution agreements with Honda Canada and Nissan Canada. We have also announced distribution agreements with Subaru Canada, Harley-Davidson Motorcycles and Toyota Canada and are in discussions with a number of other automobile OEMs. We expect to launch XM's SDARS in Canada with several automobile manufacturers by the 2007 model year. We also expect that many of these automobile manufactures will agree to install XM radios in Canada at the factory level in the future. According to Ward's Automotive Yearbook 2005, XM in the U.S. is the exclusive OEM factory-installed distribution partner or preferred provider of data services to automobile OEMs representing approximately 56% of the U.S. automobile marketplace, including General Motors, Honda, Toyota, Hyundai and Nissan. We believe that XM's established relationships with these automobile manufacturers has laid the foundation to enable us to establish similar relationships with the Canadian counterparts of these automobile manufacturers for the installation of XM radios in automobiles made for the Canadian market. According to Canadian Autoworld, these five companies represented approximately 58% of the Canadian automobile OEM marketplace in 2005.

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National and Regional Consumer Electronics Retailers

XM radios are available at national and regional consumer electronics retailers, such as Best Buy, Canadian Tire, Future Shop, The Source and other large national and regional retailers that sell consumer electronics in Canada. These retailers represent over 2,000 stores in Canada. We develop in-store merchandising materials, including fully functional displays for several retailers, and train the sales forces of all major retailers.

The XM Radio System

Overview

The XM radio system broadcasts satellite radio signals over Canada and its coastal waters using radio frequencies. These radio frequencies are within a range of frequencies called the S-Band. XM reports that its radio system is capable of providing high quality satellite services to XM radios in automobiles, trucks, recreation vehicles and pleasure craft, as well as to fixed or portable XM radios and personal portable devices. XM reports that the XM radio system uses a network consisting of high-power satellites in two orbital slots, an uplink facility, and ground-based repeaters in the U.S. primarily in dense urban areas to provide coverage where the satellite signal is obstructed.

Consumer Hardware

Subscribers access our service through specialized satellite radios that may also receive traditional AM/FM channels. We launched our service with a focus on three XM radio categories. The XM2go radios are the only portable units available that receive the live satellite feeder and memory functionality that can be used in the home, in the car or on the go, and are currently available under the Delphi MyFi and Pioneer AirWare brand names. Second, Plug-n-Play radios allow subscribers to listen to XM radio in the car, or at home through their home stereo system or portable boom box. We launched with Delphi's SKYFi2 and as well as the Delphi RoadyXT radios. Finally, permanent in-car and home radios allow subscribers to upgrade their existing radios to include XM's service, and are supported by a variety of radio manufacturers including Alpine, Audiovox, Pioneer, Polk Audio, Sony, Yamaha and others. The initial cost of these radios to the consumer ranges from approximately $70 to $400, inclusive of rebates. XM radios are available in Canada at national and regional consumer electronics retailers such as Best Buy, Canadian Tire, Future Shop, The Source and other large national and regional retailers.

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Advanced Satellite Radio Technology

Since the introduction of the first XM radio in 2001, XM reports that there has been significant advancement in the selection and features of XM hardware. Delphi introduced the XM SKYFi2, a plug-and-play device that offers an enhanced display and attractive pricing, in the summer of 2004.We consider the introduction of the SKYFi product a significant milestone, marking the launch of the third generation of XM radios at a lower cost to consumers than the first and second-generation products, with an enhanced display and true portability capabilities from the car to home stereo systems to a boom box. Delphi also introduced the XM MyFi, the industry's first personal XM radio that a subscriber can use anytime, anywhere. We consider the MyFi another significant milestone, marking the launch of personal audio devices for satellite radio. On August 9, 2005, XM unveiled the Delphi RoadyXT and Audiovox Xpress, the smallest satellite radios ever. Additionally, at the 2006 Consumer Electronics Show in Las Vegas, XM introduced several new radios with increased functionality, including MP3 capability. We intend to distribute a selection of these products in Canada in 2006.

On May 30, 2006, XM reported that it has temporarily suspended shipments of the Delphi XM SKYFi2 and Audiovox Xpress satellite radios because these products were found to have exceeded transmission emission limits set by the United States Federal Communications Commission. Also, on May 30, 2006, XM announced that they are implementing a series of actions involving various radios to bring them into compliance and are working to limit the interruption in supply of certain models of XM radios to retailers. We are currently in discussions with Industry Canada relating to the implementation of a solution to address similar Canadian transmission emission limits. We currently anticipate that we will implement an action plan satisfactory to Industry Canada.

Terrestrial Repeaters

The terrestrial repeater system that we have deployed in 16 major cities across Canada supplements the coverage of the XM satellites in Canada. In some areas, satellite signals may be subject to blockages from tall buildings and other obstructions. XM reports that due to the satellites' longitudinal separation, in most circumstances where reception is obscured from one satellite, XM radio's signal will still be available from another XM satellite. XM has indicated, however, that in some urban areas with a high concentration of tall buildings, line-of-sight obstructions to all satellites may be more frequent. Of the approximately 80 terrestrial repeaters required to facilitate signal reception in such areas, a substantial portion of the terrestrial repeaters have been installed in the 16 major cities in Canada. Terrestrial repeaters are ground-based electronics equipment installed on rooftops or existing tower structures that receive the signal from one of the satellites, amplify it and retransmit it at a significantly higher signal strength to overcome any satellite signal obstruction. XM's network operating center monitors the terrestrial repeater network to ensure that the XM radio system is operating properly. We utilize XM's fault detection diagnostics systems to detect various system failures before they significantly impact our quality of service.

Satellite Network

XM has reported that it transmits its radio signal throughout the U.S. and Canada from its two satellites XM Rock and XM Roll, collocated in one of its two orbital slots, and its third satellite (XM-3), which was launched in February 2005, and was placed into XM's other orbital slot. XM has indicated that it plans to launch another satellite in mid to late 2006 to replace the collocated XM Rock and XM Roll satellites.

Competition

We face competition for both listeners and advertising dollars. In addition to pre-recorded music purchased for playing in cars, homes and using portable players, we compete most directly with the following providers of radio or other audio services:

Sirius Canada. Our direct competitor in satellite radio service is Sirius Canada, the only other CRTC licensee for satellite radio service in Canada. Sirius Canada is a joint venture between CBC-Radio Canada, Standard Broadcasting and Sirius, the second largest, by number of subscribers, satellite radio provider in the U.S. Sirius Canada launched its satellite radio service on December 1, 2005. Sirius Canada broadcasts channels and offers programming that we do not offer, and Sirius Canada's satellite radio service may be offered as an option on various Canadian car model brands, certain of which may not offer our service.

CHUM. CHUM, in conjunction with Astral Media Ltd., received CRTC approval to receive a broadcasting license at the same time that we and Sirius Canada received approvals for broadcasting licenses. CHUM's business plan is, however, different from our business plan, as CHUM's system would broadcast channels of audio programming via terrestrial transmission towers in the L-band. CHUM has applied to the CRTC to amend its license conditions to more closely match the conditions of our broadcasting license. Should it launch its service, we expect CHUM to become one of our competitors. Astral Media Ltd. has announced that it has agreed to provide certain content to Sirius.

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Traditional AM/FM Radio. Our competition also includes traditional AM/FM radio. Unlike XM's SDARS, traditional AM/FM radio already has a well-established market for its services and generally offers free broadcast reception paid for by commercial advertising rather than by a subscription fee. Also, many radio stations offer information programming of a local nature, such as detailed local traffic and weather reports. The AM/FM radio broadcasting industry is highly competitive. Radio stations compete for listeners and advertising revenues directly with other radio stations within their markets on the basis of a variety of factors, including program content, on-air talent, transmitter power, clarity or fidelity of sound, audience characteristics, local program acceptance, and the number and characteristics of other radio stations in the market.

Internet Radio. A number of Internet radio broadcasts provide listeners with radio programming from across the country and around the world. Although we believe that the current sound quality of Internet radio is below standard and may vary depending on factors that can distort or interrupt the broadcast, such as network traffic, we expect that improvements from higher bandwidths, faster modems and wider programming selection may make Internet radio a more significant competitor in the future. There are a number of Internet-based audio formats in existence or in development that could compete directly with XM's SDARS. For example, Internet users with the appropriate hardware and software can download sound files for free or for a nominal charge and play them from their personal computers or from specialized portable players or compact disc players. Music in the public MP3 audio standard is readily available and growing with sound files available on the websites of online music retailers, artists and record labels and through numerous file sharing software programs. These MP3 files can be played instantly, burned to a compact disc or stored in various portable players available to consumers.

Recently, podcasting has become a popular method of publishing sound files to the Internet, allowing users to subscribe to a feed and receive new audio files automatically. Podcasting has enabled independent producers to create self-published, syndicated radio shows, and has given broadcast radio programs a new distribution channel.

Although presently available formats have drawbacks such as hardware requirements and download bandwidth constraints, which we believe would make XM radio a more attractive option to consumers, Internet-based audio formats may become increasingly competitive as quality improves and costs are reduced.

MP3 Devices. MP3 has become a popular format for saving and storing music files. Portable MP3 players have become equally commonplace, and are now mass-produced by a wide variety of electronics manufacturers, and have reduced in price significantly in recent years. MP3 players can store thousands of music files, and can play music in a high quality format to headphones or over speakers. Some recently introduced XM radio devices in the U.S. have the ability to store and play MP3 files.

Cellphones. Cellular telephones have increased in functionality over the past few years. Many cell phone providers offer personalized musical ring tones. Some providers also offer streaming music and video services. These streaming services are relatively new to Canadian consumers.

Direct Broadcast Satellite and Cable Audio. A number of companies provide specialized audio service through either direct broadcast satellite or cable audio systems. These services are targeted to fixed locations, mostly in-home. The radio service offered by direct broadcast satellite and cable audio is often included as part of a package of digital services with video service, and video customers therefore generally do not pay an additional monthly charge for the audio service. In addition, cable audio systems typically offer a limited number of channels with little to no live content and a high level of repetitive program content, however, this could change.

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Recent Events

We launched our service on November 22, 2005. On January 5, 2006 we announced that we project to end our August 31, 2006 fiscal year with at least 75,000 subscribers. We also announced that we are projecting to achieve at least one million subscribers by August 31, 2010. On May 24, 2006, XM announced that it is projecting to achieve approximately 8.5 million subscribers in the U.S. by the end of 2006. We expect to leverage and benefit from numerous recent announcements by XM and hardware manufacturers. Such announcements include:

·   Samsung announced three new portable audio models that combine the content and capabilities of XM radio and an MP3 player, including the Samsung Helix and Samsung NEXUS.

·   Audiovox has introduced the XM Passport, a miniature portable tuner that delivers XM to a wide array of XM-ready products for home, auto and portable use utilizing XM Connect and Play technology.

·   Advanced Global Technology, LLC (AGT) introduced the Sportscaster (TM), a plug and play satellite radio for enjoying XM in the car, at home or on the go. The receiver has unique functions and portable options designed for sports fans.

·   XM, working with several partners, introduced the XM Advanced Services vehicle at the 2006 Consumer Electronics Show. This concept car features in-car video (On2 Technologies), voice command (VoiceBox (R) Technologies), weather alerts (WxWorx), parking spot locator (Nu-Metrics Inc. and InfoGation) and other innovations.

We expect to work with XM, hardware manufacturers and retailers to bring the various technologies listed above into Canada in the future.

On February 15, 2006, we announced a new partnership with Subaru Canada to factory-install XM satellite radios exclusively in three of Subaru Canada’s 2007 model vehicles.

On April 12, 2006, we announced an exclusive multi-year agreement with Honda Canada Inc. to factory-install XM satellite radios in Honda and Acura models starting with select 2007 model year vehicles and expanding to a wider range of products for the 2008 model year.

On April 13, 2006, we announced an exclusive partnership agreement with Nissan Canada Inc. to install XM satellite radios in select Nissan Canada vehicles starting with 2008 model vehicles. XM satellite radios will eventually be offered in a majority of Nissan Canada’s product line-up.

On April 21, 2006, we announced a multi-year distribution agreement with Harley-Davidson(^R) motorcycles to factory-install XM satellite radios in select Harley-Davidson models. The XM Canada service is currently available for Harley-Davidson 2006 models as a dealer-installed aftermarket option.

On May 30, 2006, XM reported that it has temporarily suspended shipments of the Delphi XM SKYFi2 and Audiovox Xpress satellite radios because these products were found to have exceeded transmission emission limits set by the United States Federal Communications Commission. Also, on May 30, 2006, XM announced that they are implementing a series of actions involving various radios to bring them into compliance and are working to limit the interruption in supply of certain models of XM radios to retailers. We are currently in discussions with Industry Canada relating to the implementation of a solution to address similar Canadian transmission emission limits. We currently anticipate that we will implement an action plan satisfactory to Industry Canada.

On June 5, 2006, we announced a multi-year distribution agreement with Toyota Canada Inc. to supply satellite radio service to select Toyota and Lexus vehicles equipped with XM-compatible receivers.

Operational Agreements

XM License Agreement

We and CSR Inc. have entered into a license agreement with XM (the “License Agreement”). The following is a summary of certain material terms of the License Agreement, and is not intended to be complete. Reference is made to the License Agreement for the full text of its provisions.

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Overview

The License Agreement gives us an exclusive, non-transferable right and license, on the terms set forth in the License Agreement: (i) to offer and provide to subscribers in Canada at least 72 programming channels, as selected mutually by XM and us, that are offered by XM as part of its basic services in the U.S., in combination with the XM Canada Channels (as defined below), (ii) to offer and provide to subscribers in Canada certain premium channels, as selected mutually by XM and us, that are offered by XM as part of its premium services in the U.S., as applicable, (iii) to sell subscriptions in Canada to our basic Canadian services and, as applicable, our premium Canadian services, and (iv) to retransmit the signal received within Canada from XM's satellites through our terrestrial repeater network.

Under the License Agreement, we and XM have agreed that we and they will work together to develop and implement commercially reasonable methods to minimize the number of Canadian gray market subscribers who subscribe to XM's satellite radio service.

Term

The License Agreement has an initial term of 10 years. We may, at our option to be exercised at least one year prior to the termination of the initial term, extend the License Agreement for a further five years, provided that: (i) CSR Inc.'s broadcasting license from the CRTC has been renewed at the end of the current CRTC license term without any adverse modification (as described below); and (ii) we are not at such time in breach of any provision of the License Agreement and have not failed to cure any breach of a provision of the License Agreement in accordance with its terms.

If CSR Inc.'s license from the CRTC is renewed at the end of its current term, but as part of such renewal is modified by the CRTC in a material manner, including without limitation any manner that adversely affects our ability or the ability of XM to carry out the arrangements made under the License Agreement, or that increases the Canadian content requirements or imposes additional conditions of license beyond those specified in CSR Inc.'s current CRTC license (as modified to reflect the September 7, 2005 application to the CRTC submitted by CSR Inc. and the CRTC’s subsequent approval of the application dated February 10, 2006) that, in XM's reasonable determination, make it technically less feasible or economically less attractive in any significant respect to perform under the License Agreement, then such modification will be an “adverse modification,” and in such event we shall not have the right to automatically extend the License Agreement. If there is such an adverse modification, then under the terms of the License Agreement we and XM have agreed to negotiate in good faith whether to extend the term of the License Agreement.

Fees

In consideration for the license granted to us by XM, we must, among other charges, pay a monthly fee to XM equal to 15% of all subscriber fees earned by us in such month in respect of our basic service, and 50% of the net revenues earned by us in such month in respect of our premium service (if any), in each case as determined in accordance with GAAP, consistently applied. If in any month we are, on a per subscriber basis, based on the number of cumulative activations and deactivations, and less any short-term promotional subscribers, providing our basic service for less than 70% of the amount that XM charges its subscribers for our basic services (as converted into Canadian dollars based on the average exchange rate for such month), then for such month we must pay our ongoing subscriber fee as if we had received 70% of the amount charged by XM for its basic services in such month. The monthly basic and premium fees must be paid by us on a monthly basis in arrears, with payment for each month to be due by the tenth business day of the following month.

Under the License Agreement, we must pay XM an activation charge each time XM activates a subscriber's radio identification at our request.

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All payments that must be made by us under the License Agreement must be made without any deduction for taxes. To the extent that we are required to withhold any amount in respect of taxes, other than net income or capital taxes, then we must pay such additional amounts as are necessary to ensure that XM receives a net amount equal to the full amount which it would have received had payment not been made subject to such tax.

Channel Determination and Content Costs

We and XM will mutually select the XM SDARS channels that will form part of the basic services and premium services (if any) to be offered by us. XM has the right to determine the format, nature, content and quality of the channels chosen by XM and us. The parties have agreed, however, that approximately 50 of the 72 XM SDARS channels will be music channels.

Under the License Agreement, XM has sole responsibility for maintaining relationships and negotiating agreements with third party programming providers to acquire Canadian distribution rights for the XM SDARS channels to be broadcast in Canada as part of our basic and premium services. We must reimburse XM for costs relating to such Canadian distribution rights.

We are responsible for all costs and expenses incurred to obtain, maintain, and report on all Canadian performance rights for the XM SDARS, including required payments for the XM SDARS channels to be broadcast to Canadian subscribers as part of our basic and premium services.

Subscriber Activation and Deactivation

XM, from time to time, activates and deactivates subscribers to our basic service upon our request. XM has agreed that it will process activation and deactivation requests consistent with the level of effort and with the timing that XM uses for its own subscribers. XM will not, however, have any liability to us for failures to activate or deactivate subscribers within any specified period.

Third Party Relationships

Under the License Agreement, we have primary responsibility, in consultation with XM, for maintaining relationships and negotiating distribution agreements for Canada with U.S. based retailers that sell XM's satellite radio services within the U.S. and that have retail operations in Canada, as well as for U.S. based airlines, hotels, cable companies and similar entities that wish to incorporate XM's satellite radio services within the services offered by such entities to their patrons or customers in Canada. Before entering into such relationships, however, we and XM must discuss the commission, revenue share or other payment to be paid to each such retailer for generating any new subscribers.

The License Agreement provides that we will, upon XM's written instructions, authorize one or more automobile manufacturer, radio manufacturer and other OEM to distribute our services within Canada. XM will have primary responsibility for maintaining relationships and negotiating distribution agreements for Canada with such third parties, and we will have primary responsibility for negotiating joint or co-marketing arrangements with such third parties in consultation with XM. Prior to authorizing any such third party to distribute our services, we and XM must mutually agree with respect to the revenue share or other payment to be paid to each such third party for generating any new subscribers, such payments to be set by reference to then-prevailing market practices with respect to sales of similar types of services and to the payments paid by XM with respect to sales of its satellite radio services within the U.S.

We have agreed that with respect to common relationships that we will have with XM and with radio manufacturers, retail distributors, strategic marketing entities, technology providers and others, we will cooperate and coordinate with XM to the extent and in the manner reasonably requested by XM to enable XM to maintain a successful relationship with such person or entity for the benefit of both our and XM's service, and to coordinate the terms and conditions for our services with those of XM's service so as to obtain volume discounts and consistent arrangements for particular technologies, joint advertising and marketing, and the like.

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Restrictions

The License Agreement provides that our license is subject to certain restrictions, including the following:

(a)    we may only offer our basic service package in its entirety to our subscribers, and may only offer premium services to customers who are subscribers to our basic  service;

(b)    we may not, without XM's prior written consent, deliver our basic or premium services via any method of transmission (such as terrestrial or wireless transmission, via the Internet or otherwise) other than as transmitted by XM's satellites or as rebroadcast through our terrestrial repeater network;  

(c)    we may not provide satellite radio services or digital terrestrial radio services in Canada by means of any other satellite radio or other transmission system without the prior written consent of XM; and 

(d)    we must offer our services on a Canada-wide basis, within the coverage of the XM satellites and our terrestrial repeater network. 

XM Representations, Warranties and Covenants

Under the License Agreement, XM represents, warrants and covenants to us that:

(a)    XM owns or has sufficient rights in and to its satellites, its satellite transmission spectrum and the associated regulatory licenses, permits and regulatory approvals needed to operate its satellites in order to grant the license under the License Agreement; 

(b)    XM has the full power and authority and has obtained all necessary rights and/or permissions to grant the license contemplated by the License Agreement,  including without limitation all necessary rights from talent or other third parties in order to grant us the license to use the XM SDARS channels to be broadcast in Canada as part of our basic and premium services, and advertising included therein;

(c)    XM will use reasonable commercial  efforts to make the XM SDARS  channels to  be  broadcast  in Canada as part of our basic  and premium services, as well as the XM Canada Channels, available to us for distribution to our subscribers via broadcast over XM's satellites throughout the footprint of XM's satellites within Canada twenty-four hours a day, seven days a week, provided that XM shall have no obligations or liability with respect to any satellite or other failures that cause the services to be unavailable within Canada for any period; and  

(d)    XM will use reasonable commercial efforts to make the signal quality and strength for the XM SDARS channels to be broadcast in Canada as part of our basic and  premium services, as well as the XM Canada Channels, transmitted between XM's satellites and the ground of high quality throughout the coverage beam of such satellites within Canada 24 hours a day, seven days a week.  

XM has also agreed that if at any time there is a disruption in the satellite transmission of our services in the Canadian footprint of XM's satellites for a period of greater than five minutes as a result of an error, problem or failure with or originating with XM's satellites or XM's satellite network system (and not our terrestrial repeater network), XM will keep us advised of XM's efforts to resolve such service disruption.

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XM has agreed to indemnify and hold us harmless from any and all loss, liability, cost, damages and expenses suffered, including reasonable legal fees and expenses, with respect to any third party claim based on (i) any breach or violation by XM or any of its agents of any of its obligations contained in the License Agreement, or (ii) any negligence or willful misconduct by XM in connection with the License Agreement that results in personal injury, death or tangible property damage. There is no indemnity for any loss of XM service, other than as a result of negligence or willful misconduct.

Termination

XM may, in its sole discretion, terminate the License Agreement by written notice to us in the event that:

(a)    we  materially  breach  the  License   Agreement,  other  than  a  payment   breach,  and  such   breach,  if  capable of being remedied, is not remedied within 60 days after we receive from XM a written notice identifying the breach and requiring it to be remedied or longer if the nature of the cure requires longer, provided we are diligently pursuing the cure; 

  (b)      we  fail  to  pay   any material  amount payable   under  the  License  Agreement when due  and such failure is not remedied within 30 days after we receive from XM a written notice identifying the failure and requiring it to be remedied, unless we have, in good faith, disputed in writing to XM the obligation to pay such amount and deposited the amount specified in such notice in escrow, and such dispute has not been finally resolved; 

  (c)        any  of the Programming  Agreement, Technical Services Agreement or  Trademark License Agreement expire  or  are  terminated for any reason (other than material  default by XM or expiration in accordance   with its terms after performance by us has been completed), or we materially breach our share issuance agreement with XM or the Shareholders Agreement;

(d)    we fail to  obtain  distribution rights as  needed  to meet  our XM  Canada Channel commitments by the date that our service is launched, or subsequent to that date during the term of the License Agreement, and such failure is not remedied within 60 days (120 days in the case of a failure to meet such commitments by the date that our service is launched) after we receive from XM a written notice identifying such failure and requiring it to be remedied;

(e)    we do not launch our service by March 1, 2006;  

  (f)      we  fail  to capture  and maintain  during  the  one year period commencing on the later to occur of the  second anniversary of the date of the  License Agreement  and  the OEM Condition Date  (being  the first date on which we with the assistance of XM have entered into, have been offered the opportunity to enter into or are a party to agreements with automobile manufacturers with an aggregate 33% market share in Canada for the installation of satellite radios in automobiles) and each subsequent one year period during the term of the License Agreement (each, a “Contract Year”), on average during such Contract Year, at least: (i) the specified percentage of actual SDARS subscribers within Canada, which percentage will vary depending upon the number of subscription radio providers within Canada, or (ii) if less, 15 percentage points less than the percentage of actual SDARS subscribers within the U.S. held by XM on average during such Contract Year, provided, however, that with respect to the first (and only the first) time we fail to meet the applicable subscriber requirements, we shall have a period of one Contract Year to seek to cure such default, and if during the immediately succeeding Contract Year our subscribers exceed the applicable threshold in this paragraph, XM shall not have the right to terminate for the prior failure;

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(g)    Holdings    undergoes  a  change  of control, which   shall  mean   either of: (i) CSR Investments  holding or beneficially owning less than 15% of the  voting  shares  or equity  of Holdings; (ii) Holdings owning less than 100% of the equity of CSR Inc.; or (iii) John I. Bitove holding, directly or indirectly, less than 50.01% of the voting rights or less than the lower of: (x) 33 1/3% of the equity of CSR Investments, or (y) 50% of the number of shares of CSR Investments currently held by John I. Bitove;

(h)    XM  is  no longer  transmitting its SDARS  channels  within  Canada  due to (i) loss or damage (including natural end of life) or technical problems with respect to XM's satellites or any  other element of XM's satellite network system (including space and/or ground segments) reasonably needed to make such transmissions, (ii) loss of applicable governmental licenses or other required regulatory approvals needed for XM to continue operating its satellite network system and/or to continue transmitting within Canada, or (iii) a decision by XM to discontinue, in whole or in substantial part, offering SDARS; 

  (i)      any  CRTC  or  Industry  Canada  license, or  any  portion  thereof, that  is  required  for us   to provide  our  services  within Canada expires or  is terminated, or  is challenged and overturned by  the Governor in council or the Federal Court of Canada or any other governmental or regulatory authority with jurisdiction over such matters, or is modified by the CRTC or Industry Canada in any material manner, including without limitation any manner that adversely affects our or XM’s ability to carry out the arrangements made under the License Agreement, or that increases the Canadian content requirements or imposes additional conditions of license beyond those specified in the license award received by CSR Inc. from the CRTC in June 2005 (as modified to reflect the September 7, 2005 application to the CRTC submitted by CSR Inc. and the CRTC’s subsequent approval of the application dated February 10, 2006) that, in XM's reasonable determination, makes it technically less feasible or economically less attractive in any significant respect to perform under the License Agreement, provided that before terminating under this paragraph following such a modification, XM must seek to conduct good faith negotiations with us to address any such modification that primarily has economic consequences with appropriate changes to the License Agreement;

  (j)      our   business    operations   are curtailed  by  decisions   or   rulings  under  applicable  law  in  Canada  and  in  consequence  we  cease  carrying  on  or are compelled to  discontinueall  or substantially  all of our business in Canada within a period of sixty (60) days or less; or

  (k)      we  have  filed a  petition in or have  been assigned into bankruptcy or become an insolvent person within the meaning of any applicable bankruptcy or insolvency  legislation, or make any assignment for the benefit of creditors or make any arrangements or otherwise become subject to any proceedings under applicable bankruptcy laws or insolvency laws with a trustee, or receiver appointed in respect of a substantial portion of our property, or in the event we liquidate or wind up our daily operations for any reason whatsoever.  

Other Services

Under the License Agreement XM has agreed that it shall not license any other person or entity to provide XM's satellite radio services in Canada, or provide Canada-focused marketing or promotion of XM's satellite radio services, without our prior written consent. We and XM have also agreed that we shall have a right of first refusal with respect to any new non-SDARS introduced by XM in Canada.

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XM Programming Agreement

We have entered into a programming agreement with XM (the “Programming Agreement”). The following is a summary of certain material terms of the Programming Agreement, and is not intended to be complete. Reference is made to the Programming Agreement for the full text of its provisions.

Under the Programming Agreement, we will, at our own expense, develop, produce, deliver and license certain programs to be distributed by XM over audio channels in its satellite system and terrestrial repeater network (the “XM Canada Channels”) in the satellite footprint and over the Internet. There are ten XM Canada Channels, with each XM Canada Channel programmed 24 hours per day, seven days per week. So long as we remain in compliance with the Programming Agreement and the License Agreement, XM will carry the XM Canada Channels as part of its SDARS service made available to subscribers in both the U.S. and Canada. We will not receive a fee or other payment for the broadcast of the XM Canada Channels to XM subscribers.

We will maintain creative control with respect to the XM Canada Channels. We have agreed to consult with XM regarding general creative direction, concerns and issues in connection with the nature, subject and production of the XM Canada Channels. Any name branding of the programs on the XM Canada Channels and the XM Canada Channels themselves and any related slogans (“Channel Brand Names”) will be subject to approval by XM, not to be unreasonably withheld. We will have the rights to the Channel Brand Names with respect to Canada and XM will have the rights to the Channel Brand Names with respect to all areas outside of Canada. We and XM have licensed the Channel Brand Names to each other under the Trademark License Agreement.

We are entitled to retain substantially all advertising revenues collected on the XM Canada Channels. In selling advertisements, we have agreed to comply with certain XM and CRTC policies regarding the amount of advertising that can be included in each broadcast hour on non-music channels and will not include any advertisements on any music-oriented XM Canada Channel. In addition, advertising included on the XM Canada Channels may not be used to (i) advertise or promote goods or services that are intended to be used or consumed primarily in the U.S., its territories or possessions without coordinating with XM in advance and obtaining XM's approval to do so, or (ii) advertise or promote other satellite radio broadcasters, or goods or services that could reasonably be deemed detrimental to the image of our services or XM. We shall, however, be entitled to place U.S. focused advertisements relating to the National Hockey League Talk Channel (Home Ice) without the consent or approval of XM.

The Programming Agreement has the same term as the License Agreement, and will automatically be extended if the License Agreement is extended. Either party may terminate the Programming Agreement upon written notice to the other in the event that the defaulting party has materially breached its obligations under the Programming Agreement and such breach has not been cured within 60 days after written notice thereof is given by the other party. In addition, the Programming Agreement will terminate if the License Agreement terminates.

Under the Programming Agreement, we and XM have agreed to indemnify each other for any losses or damages relating to the development, production or supply of their respective programming and the content of such programming.

Other Agreements

We and XM have also entered into a: (i) repeater purchase agreement (the “Repeater Purchase Agreement”); (ii) technical services agreement (the “Technical Services Agreement”); and (iii) trademark license agreement (the “Trademark License Agreement”). The following are summaries of certain material terms of these agreements, and are not intended to be complete.

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Repeater Purchase Agreement

Under the Repeater Purchase Agreement we and XM have identified an expectation that approximately 87 repeaters will be required by us to rollout our terrestrial repeater network. A total of 60 standard and 20 high power terrestrial repeaters have already been delivered by XM. We and XM have agreed that we and they will jointly conduct and complete a transmission due diligence review to confirm the actual number of terrestrial repeaters required to provide full coverage for SDARS throughout Canada, and will make agreed adjustments to our repeater purchase plan.

The Repeater Purchase Agreement provides that we may at our option purchase additional terrestrial repeaters from XM from time to time, provided that XM has terrestrial repeaters in inventory available for sale. The agreement is not exclusive, and we are not precluded from ordering repeaters from alternative sources (subject to XM's technical approval) if XM does not have sufficient quantities available or if widespread defects in repeater quality are encountered. Any terrestrial repeaters delivered by XM under the Repeater Purchase Agreement are delivered “as is” and without warranty and will be deemed to be finally accepted by us if we have failed to notify XM of any material defects in the terrestrial repeaters within the earlier of (i) 60 business days following the date of delivery or (ii) ten business days after completion of the installation and testing of the applicable terrestrial repeaters.

The Repeater Purchase Agreement will be in effect until the earlier of the second anniversary of the date of the agreement and the date that XM notifies us that its inventory of terrestrial repeaters available to be sold to us has been exhausted.

Technical Services Agreement

Under the Technical Services Agreement, XM has agreed that it will from time to time provide design, engineering, support and technical services for our terrestrial repeater system, as well as information technology and broadcast operations. In consideration for these services, we have agreed to pay a monthly fee, initially set at US$100,000 commencing September 2005. The parties are currently re-evaluating whether a different monthly rate should apply.

In addition to the general services contemplated by the Technical Service Agreement, we may request from time to time that XM provide services for specific projects not included in the monthly services. These project requests will be subject to a specific work order made by us to XM and will become binding upon acceptance of the specific work order by XM. In connection with any such projects, we will pay XM based on a time and materials basis at hourly rates as agreed between the parties.

Trademark License Agreement

Under the Trademark License Agreement, each of XM and we have granted a non-transferable license to use within the XM satellite footprint our and XM’s respective trademarks to the other party in association with our and XM’s respective SDARS. In addition to granting a license to our and XM’s respective trademarks, each of XM and we have also granted each other a non-transferable license to use any trade name, service mark, logo, design, domain name or business name derived from our and XM’s respective trademarks.

The Trademark License Agreement has the same term as the License Agreement, and will automatically be extended if the License Agreement is extended.

GMCL Distribution Arrangement

CSR Inc., XM and GMCL have entered into a distribution arrangement (the “GM Distribution Arrangement”). The following is a summary of certain material terms of the GM Distribution Arrangement, and is not intended to be complete.

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Under the GM Distribution Arrangement, GMCL will exclusively distribute XM radios configured for Canadian satellite radio subscription services, and will install these radios in certain specified General Motors branded Canadian vehicles and market our satellite radio service in Canada. GMCL will use commercially reasonable efforts to have all purchasers of enabled General Motors vehicles subscribe for our satellite radio service. The GM Distribution Arrangement has a term of 13 years.

Under the GM Distribution Arrangement, GMCL will use commercially reasonable efforts to make XM radios configured for Canadian satellite radio subscription services available as a factory-installed option in as many vehicle lines as possible in the 2006 model year, and at least ninety percent (90%) of its vehicle lines commencing with the 2007 model year.

The GM Distribution Arrangement provides for the payment of a number of specific fees by us to GMCL, including a revenue share and an incentive payment, all as described below. For the first three years of the term of the GM Distribution Arrangement following the launch of our service, all payments have been waived by GMCL with the exception of the activation portion of the incentive payment. If we breach any of our material obligations under the GM Distribution Arrangement and fail to cure such breach in accordance with the terms thereof, however, then we must pay to GMCL any amounts that were otherwise waived by GMCL.

The GM Distribution Arrangement authorizes GMCL to offer incentives to induce new vehicle purchasers to subscribe to our satellite radio service. As part of this incentive, GMCL is authorized to offer such purchasers three months of free trial service. Under this promotional program, GMCL will pay us our regular subscription fee for the second and third months of this trial service. We expect that the amounts owing by GMCL to us in respect of the second and third months of this trial service will be approximately equal to the amount owing by us to GMCL in respect of the activation portion of the incentive payment.

Under the GM Distribution Arrangement, we have agreed that we will pay GMCL an incentive payment for each purchaser of a new General Motors vehicle that is installed with an XM radio who becomes a subscriber to our satellite radio service within 12 months of the purchase of such vehicle. This incentive payment will consist of an activation charge, which is payable within 30 days after the purchase of a new General Motors vehicle that includes an activated XM Canada radio, and a loyalty payment, which is payable after a purchaser has been a subscriber for three months. The loyalty payment has been waived for the first three years of the term of the GM Distribution Arrangement following the launch of our service. We have also agreed to pay GMCL a revenue share based on the revenue billed to GMCL subscribers by us for our basic satellite radio services. This revenue share will resume after the initial three year waiver period, including in respect of purchasers who became subscribers during the waiver period but who remain subscribers following the waiver period. As an additional incentive, we have agreed to pay GMCL a one-time lump sum amount if, at the end of the third year of the term, there are a specified number of GMCL/XM Canada subscribers.

The GM Distribution Arrangement also requires us to allocate to GMCL certain amounts for market support funds, which are to be utilized for mutually agreed marketing efforts.

The GM Distribution Arrangement provides that any commercial arrangements between us and any other vehicle manufacturer will be no more favorable than the terms provided by us to GMCL, including, but not limited to, on a timing of payment basis.

Each party may terminate the GM Distribution Arrangement upon 60 days prior written notice in the event of a breach by the other party of any of its material obligations under the GM Distribution Arrangement that is not cured within such period. Each of GMCL and we shall also have the right to renegotiate certain terms of the GM Distribution Arrangement, or to be excused from certain obligations under the GM Distribution Arrangement, in certain circumstances and on the occurrence of certain events, including our failure to satisfy certain financing conditions or the occurrence of a force majeure event. In addition:

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  (a)      provided that GMCL has used commercially reasonable efforts to install radios in General Motors vehicles and market our services in Canada, GMCL may be relieved of its exclusivity obligations under the GM Distribution Arrangement if, four years following initial launch of our satellite radio services, or for any twelve month period thereafter, and subject to a three-month cure period, our share of mobile aftermarket SDARS subscribers in Canada is less than a specified percentage, based on the number of mobile aftermarket SDARS providers in Canada;

(b)    we may trigger a renegotiation of the GM Distribution Arrangement if GMCL elects to install interoperable radios in the absence of a regulatory requirement; and 

(c)    provided we maintain a high quality, cost-competitive full channel service to our subscribers, we may trigger a renegotiation (with commercially reasonable efforts to conclude a deal) of the GM Distribution Arrangement five years following launch of our full Canadian service if, at that time, the cumulative total number of our satellite radio enabled General Motors vehicles sold or leased by GMCL is less than a prescribed amount.

Under the GM Distribution Arrangement we and XM have agreed not to directly or indirectly market, promote or endorse any company that distributes radio hardware of any description on an after-market basis to GMCL's authorized motor vehicle dealers without the prior written consent of GMCL.

Regulatory Matters

CRTC License. On June 16, 2005, the CRTC approved the application of CSR Inc. for a broadcasting license to offer satellite radio services across Canada subject to certain conditions set out below. On September 7, 2005, CSR Inc. applied to amend its license as outlined below.

In its approval, the CRTC stated that a broadcasting license would be granted to CSR Inc. only when certain conditions had been fulfilled, including CRTC's approval of the operating agreements between XM and us. On November 21, 2005, the CRTC advised us that it was satisfied that the conditions to the grant of our broadcasting license were fulfilled, and that the license would therefore be issued when: (i) the Department of Industry notified the CRTC that its technical requirements had been met, and (ii) we confirmed to the CRTC that we were prepared to commence operations. The Department of Industry notified the CRTC that its technical requirements had been met on November 22, 2005. Similarly, on November 22, 2005, we confirmed to the CRTC that we were prepared to commence operations. As a result of the satisfaction of these conditions, we have fulfilled all regulatory conditions to launch, and we have been authorized to launch our service.

The satellite radio services offered by us are, inter alia, subject to the following conditions:

• CSR Inc. is required to distribute a minimum of eight original Canadian produced channels, three of which must be French language original Canadian produced channels.

•  CSR Inc. must distribute one Canadian produced channel for every nine non-Canadian produced channels to be provided by XM, and at no time shall a subscriber be able to receive a package of channels that contains less than 10% of Canadian produced channels. 

•  A minimum of 85% of the total music selections broadcast in any given week on the Canadian-produced channels is required to be Canadian content. 

•  A minimum of 85% of the total spoken word programming broadcast on all Canadian-produced channels in any given week is required to be Canadian spoken word programming. 

•  On each of the three French-language Canadian produced channels, a minimum of 65% of its vocal musical selections must be French language musical selections. 

•  Between 6:00 am and midnight each week, each Canadian produced music channel is required to contain a minimum of 25% of new Canadian musical selections by artists who have not had a musical selection that has reached a position on one or more of the charts identified by the CRTC from time to time. 

•  CSR Inc. will be required to contribute a minimum of 5% of its gross revenues in each broadcast year to eligible third parties directly associated with the development of Canadian musical and other artistic talent, or to other initiatives approved by the CRTC for the purpose of Canadian talent development, half of this amount is to be allocated to Canadian French language talent and half to Canadian English language talent. 

•  CSR Inc. is not permitted to broadcast any original local programming on a Canadian produced channel. 

•  No more than six minutes of national commercial messages are permitted to be broadcast on the Canadian content channels during any hour and no local advertising is permitted. 

•  CSR Inc. is required to comply with applicable requirements of the Radio Regulations, 1986 promulgated under the Broadcasting Act (Canada), the Canadian Association of Broadcasters, Sex-Role Portrayal Code for Television and Radio Programming and its Broadcast Code for Advertising to Children. 

•  CSR Inc. is required to submit statements of account, certain reports and self-assessments to the CRTC as required by the CRTC. 

The term of the broadcasting license is six years and the license must be renewed prior to August 31, 2011. The broadcasting license does not specifically set out the parameters of spectrum assignment and related issues, however, Industry Canada and the Department of Canadian Heritage have provided some guidance in this respect as well as in respect of repeater licensing requirements.

Amendments to CRTC Broadcast License. On September 7, 2005, CSR Inc. applied to amend its CRTC broadcasting license to allow it to continue to distribute a minimum of eight original Canadian produced channels, four of which are in the French language and four in the English language. In that application CSR Inc. proposed adding two more Canadian channels, for a total of ten, provided that certain conditions are satisfied relating to technology and to CSR Inc.'s subscription base. On February 10, 2006, the CRTC approved CSR Inc.’s application dated September 7, 2005.

 Foreign Ownership Restrictions. Holdings owns all of the outstanding shares of CSR Inc., which will hold the CRTC broadcast license under the Broadcasting Act (Canada). The Governor General in Council (i.e., the cabinet of the Canadian federal government) has, pursuant to its authority under the Broadcasting Act (Canada), issued a direction setting out the legal requirements relating to Canadian ownership and control of broadcasting undertakings entitled the Direction to the CRTC (Ineligibility of Non-Canadians) (the “Direction”). Under the Direction, non-Canadians are only permitted to own and control, directly or indirectly, up to 33 1/3% of the voting shares and 33 1/3% of the votes of a parent company which has a subsidiary operating company licensed under the Broadcasting Act (Canada). In addition, up to 20% of the voting shares and 20% of the votes of the operating licensee company may be owned and controlled, directly or indirectly, by non-Canadians. The Direction also provides that the Chief Executive Officer and 80% of the members of the board of directors of the operating company must be Canadian. In addition, where the parent company is less than 80% Canadian-owned, the parent company and its directors are prohibited from exercising any control or influence over the programming decisions of a subsidiary operating company. There are no restrictions on the number of non-voting shares that may be held by the non-Canadians at either the parent company or licensee operating company level. Under all circumstances, the licensee must not be controlled by non-Canadians. The CRTC, however, retains the discretion under the Direction to determine as a question of fact whether a given licensee is controlled by non-Canadians.

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Spectrum. In August 1998, the governments of both the U.S. and Canada signed a spectrum coordination agreement with respect to broadcasts in the 2320-2345 MHz bands. In essence, this agreement was an acknowledgement by the Canadian government that U.S. SDARS services would be broadcasting across North America in that spectrum, and that in the future, existing Canadian Mobile Aeronautical Telemetry Services, or MATS, could not claim protection from SDARS interference. As such, Canada put a moratorium on usage of the SDARS bandwidth within Canada.

Since our approval to broadcast has been granted by the CRTC, Industry Canada has indicated that the relevant portion of the SDARS bandwidth used by XM in the U.S. shall be authorized for our usage in Canada. The bandwidth allocation is pictured below:

Repeater Licensing Requirements. In response to a request from the CRTC, Industry Canada released a framework for repeater licensing and interference issues in October 2004. The framework requires an engineering brief, and sets out a number of requirements for repeater licensing, the most significant of which are as follows:

•Clearance of site and antenna structures by Transport Canada

•Power limits of 12.5kW EIRP

•Out of band emission limits of —75 dBW/MHz

•Environmental assessments and approval from municipalities

Our repeater deployment plan was based on our expectation of such requirements, and thus we are confident that our rollout of XM's service in Canada will not be delayed or adversely affected by these requirements.

U.S. SDARS Operators. Industry Canada has also mandated that we must coordinate with U.S. SDARS operators at all border sites where broadcast power is over a prescribed minimum level. We do not see this as a concern as our repeater deployment will be performed in conjunction with staff at XM.

Wireless Communication Services Operators. Industry Canada has recently auctioned off the Wireless Communications Services, or WCS, spectrum bordering 2320-2345 MHz to various telecom enterprises. These auctions were conducted under a series of policy statements highlighting the possible future existence of terrestrial repeaters, and the operating parameters of such as described above. As such, on September 21, 2004 Industry Canada issued the following policy statement, in the form of a letter written to the CRTC by the Director Broadcasting, Multi Media Planning and Technical Policy, Industry Canada:

     •SDARS terrestrial repeaters deployed during the initial phase application of implementation, i.e., the existing application to the CRTC, for the purpose of augmenting the satellite coverage within the core urban areas which meet the requirements for technical certification will not need to coordinate further with WCS operators. In all other cases SDARS terrestrial transmitters exceeding a maximum EIRP of 50 Watts (17 dBW) will need to seek an arrangement with the WCS operator licensed to operate within the coverage area of the SDARS terrestrial repeater. Written confirmation shall be provided to the Department. This power level for exemption is under review.

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The requirements for technical certification are those described above. As we do not expect any significant repeater deployment outside urban areas, we therefore do not see interference with WCS operators as a concern.

Fixed Service (FS) Operators. Industry Canada will require us to reach a working arrangement with incumbent FS operators within the 2320-2345 MHz band whose stations are within 300 km of a terrestrial repeater transmitter site. These include the MATS services described above. We do not see this as a significant concern as there are currently a small number of these operators and the band has all been vacated in the wake of strong interference from the SDARS operators. Furthermore, very few FS operators have become established in urban areas.

System Technology

We will not acquire any intellectual property rights in the satellites. We do not own the design of XM's system, including aspects of the technology used in communicating from the satellites and certain aspects of the design of, and features that may be used in, XM radios.

The XM Trademark

XM has filed an application to register the trademark “XM” and “XM Canada,” as well as the “XM” logo and certain XM slogans with the Trademarks Branch of the Canadian Intellectual Property Office. We have an exclusive license from XM to use these trademarks in Canada in connection with satellite radio service.

We are also in the process of registering the titles of our Canadian content channels, as applicable, as trademarks in Canada.

Personnel

As of February 28, 2006 we had 85 full-time equivalent employees, which included 5 members of senior management and 80 employees working in Finance, Human Resources, Sales & Marketing, Programming, Infrastructure and IT. We have also engaged Accenture Inc. to design, build, and deploy a subscriber management system that includes billing, customer care, supply chain, subscriber management and radio provisioning systems. In addition, we rely upon a number of consultants and other advisors. The extent and timing of any increase in staffing will depend on the availability of qualified personnel and other developments in our business. None of our employees are represented by a labor union, and we believe that our relationship with our employees is good.

Legal Matters

We are not aware of any litigation outstanding, threatened or pending as of the date hereof by or against us or relating to our business, which would be material to our financial condition or results of operations.

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MANAGEMENT

Directors and Executive Officers

The following table provides certain information regarding our directors and executive officers.

Name	Age	Position with the Company
John I. Bitove	45	Director, Chairman and Chief Executive Officer
Stephen Tapp	44	President and Chief Operating Officer
Michael Washinushi	37	Chief Financial Officer, Treasurer and Secretary
Ross Davies	52	Vice President, Programming
Stewart Lyons	32	Executive Vice President
Philip Evershed	45	Director
Mariette L. Wilcox	44	Director
Gary M. Parsons	55	Director
Joseph A. Verbrugge	36	Director
Michael A. Grimaldi	53	Director
Robert Storey(1)(2)	63	Director
James W. McCutcheon(1)(2)	69	Director
Pierre Boivin(1)(2)	52	Director

__________________

Notes:

(1)Denotes member of the Audit Committee.

(2)Denotes member of the Compensation and Corporate Governance Committee.

John I. Bitove. John I. Bitove is our Chairman and Chief Executive Officer and controls CSR Investments, our controlling shareholder. Mr. Bitove has also been our Director since 2003. He is also the Chairman and Chief Executive Officer of Priszm Canadian Income Fund (TSX:QSR.UN), the owner and operator of 481 KFC^TM, Pizza Hut^TM and Taco Bell^TM restaurants in seven provinces across Canada, and Chairman and Chief Executive Officer of Scott's Real Estate Investment Trust (TSX:SRQ.UN). In 1993, he founded the Toronto Raptors Basketball Club. While with the Raptors, Mr. Bitove helped to launch what is now Raptors TV almost eleven years ago. Mr. Bitove has been associated in various broadcasting ventures for more than a decade.

Stephen Tapp. Stephen Tapp is our President and Chief Operating Officer. Mr. Tapp came to us from CHUM, where he oversaw the company's television division, consisting of 26 channels including leading stations such as Citytv and MuchMusic. He has international experience, having been responsible for developing and managing CHUM's global distribution arm in his role as the vice president and general manager Citytv and ChumCity International. Mr. Tapp oversaw several international joint ventures and channel launches for both MuchMusic and Citytv in the U.S., Europe, South America and Asia. In addition, Mr. Tapp has a background in new technology and product launches. Prior to joining CHUM, he was the executive vice president and general manager of Viewer's Choice Canada Pay Per View, from 1991 to 1995, where he was responsible for launching the service and managing all areas of network operations. He held senior programming roles at Canada's first subscriber based pay television sports channel, TSN, The Sports Network, from its launch in 1984 until 1991. Stephen began his television career as production manager at CTV's CFTO in Toronto in 1983. Representing the second generation of a Canadian broadcasting family, Mr. Tapp started his media career in radio at CFQR Montréal and CFLY Kingston.

Michael Washinushi. Michael Washinushi is our Chief Financial Officer. Prior to joining us in 2005, Mr. Washinushi served as the Director of Development and Acquisitions for KIT Limited Partnership where he was responsible for managing the firm's existing real estate portfolio and identifying new real estate opportunities, from 2003 to 2005. From 2000 to 2003, Mr. Washinushi served as the Director of Finance for Priszm Brandz where he was responsible for the planning and corporate finance of the company. Mr. Washinushi holds a Bachelor of Arts degree in Economics from York University.

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Ross Davies. Ross Davies is our Vice President, Programming. Mr. Davies, previously of the Davies Company consulting firm, has over 30 years experience in the broadcast industry. Prior to heading up his own consulting firm, from 2002 to 2005, Mr. Davies worked at CHUM as Vice President, Programming, CHUM Group Radio, where he was directly responsible for all programming aspects of the CHUM radio division. Mr. Davies served as President of the Ontario Association of Broadcasters, was the inaugural Chair of the Radio Starmaker Fund in 2001, first Vice President of the Canadian Academy of Recording Arts and Sciences (“CARAS”) from 1997 to 1999 and is currently a member of the Music Education Committee of CARAS.

Stewart Lyons. Stewart Lyons is our Executive Vice President. Mr. Lyons joined us at inception and worked with XM throughout its critical launch and early growth period. Mr. Lyons joined us while he was employed at Scotia Capital Inc., where, from 2003 to 2005, he served as an interest rate derivatives trader in Global Trading. From 1999 to 2001, Mr. Lyons worked as the Director of Operations for the Toronto 2008 Olympic Bid. Mr. Lyons has an MBA from the University of Toronto and an LLB from Osgoode Hall Law School.

Philip Evershed. Philip Evershed has been our Director since 2005. Mr. Evershed is a principal of Genuity, a Canadian investment bank. Prior to co-founding Genuity, Mr. Evershed spent 14 years at CIBC World Markets, most recently as Co-Head of Investment Banking and Head of Mergers and Acquisitions. Prior to joining CIBC, Mr. Evershed was Chief of Staff to the Deputy Prime Minister of Canada. Mr. Evershed has an MA (Economics) from the University of Toronto and a BA (School of Business and Economics) from Wilfrid Laurier University.

Mariette L. Wilcox. Mariette L. Wilcox has been our Director since 2005. Ms. Wilcox oversees all operations at Wilcox Group, one of Canada's largest national, independent public relations firms with offices in Toronto and Vancouver. Ms. Wilcox has provided strategic communications advice and support to CEOs of leading Canadian companies. She has also counseled global corporations entering the Canadian marketplace and provided growth strategies as they expanded across Canada.

Gary M. Parsons. Gary M. Parsons has been our Director since 2005. Mr. Parsons has served as Chairman of the Board of Directors of XM since May 1997. Mr. Parsons is Chairman and was previously Chief Executive Officer of Mobile Satellite Ventures L.P., and serves on the board of WorldSpace, Inc. Mr. Parsons was Chairman of the Board of Directors of Motient Corporation from March 1998 to May 2002. Previously, Mr. Parsons was with MCI Communications Corporation where he served in a variety of roles from 1990 to 1996, including most recently as Executive Vice President of MCI Communications, and as Chief Executive Officer of MCI's subsidiary MCImetro, Inc. From 1984 to 1990, Mr. Parsons was one of the principals of Telecom*USA, which was acquired by MCI. Prior to the recruitment of Hugh Panero, Mr. Parsons served as XM's Chief Executive Officer.

Joseph A. Verbrugge. Joseph A. Verbrugge has been our Director since 2005. Dr. Verbrugge is Vice President, International Operations for XM, reporting directly to XM's Chief Executive Officer, Hugh Panero. During the eight years prior to joining XM, Dr. Verbrugge was a management consultant with The Dealy Strategy Group LLC, a Washington, DC-based advisory firm providing financial/negotiating/strategic consulting services and operational support primarily to satellite communications companies (including XM), as well as private equity and investment banking firms active in the satellite industry. For the past year, Dr. Verbrugge has been XM's executive working closely with our management team, leveraging XM's experience and strategic relationships to implement critical aspects of our business. Dr. Verbrugge holds an MBA from Georgetown University and a Ph.D. in Management Studies from Oxford University.

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Michael A. Grimaldi. Michael A. Grimaldi has been our Director since 2005. Mr. Grimaldi was appointed President and General Manager of GMCL, effective January 1, 2002. During the six years prior to joining GMCL, Mr. Grimaldi acted as Vice President of General Motors Corporation (“GM”) and before that had been a General Manager of field sales, service, and parts for GM's U.S. operations since 1999. Mr. Grimaldi was appointed executive director of planning for North American Operations (“NAO”) and was a member of the NAO Strategy Board in 1993. In this role, he also served as the executive in charge for GM relations with Toyota Motor Corporation. In 2002, Mr. Grimaldi was selected co-chair of the Canadian Automotive Partnership Council, with the mission to strengthen the long-term competitiveness of the Canadian automotive industry. He has also served as chair of the Canadian Vehicle Manufacturers Association and is a member of the boards of directors of Saab Automobile, the GM-Suzuki CAMI Joint Venture and the Canadian Council of Chief Executives. Mr. Grimaldi holds a bachelor's degree in Engineering from Purdue University, an MBA from Stanford University and attended the Massachusetts Institute of Technology program for senior executives. Mr. Grimaldi currently serves on the Stanford Graduate School of Business advisory board and formerly served on the School of Engineering advisory board.

Robert Storey. Robert Storey has been our Director since 2005. Mr. Storey is Chairman of the consulting company MASABE and Company and President of Teraca Communications Corporation. He has worked in the broadcasting and communications industry in Canada and abroad for more than 30 years. Mr. Storey is the founding officer of South Fraser Broadcasting Ltd. and has served on the board of several private companies with broadcast and cable interests in Canada and the U.S. Mr. Storey is a two time Olympian; President of the Fédération Internationale de Bobsleigh et de Tobogganing; director of the Association of International Olympic Winter Sports Federation; director of the Canadian Olympic Committee; a member of the Canadian Olympic Committee Hall of Fame and several International Olympic Committee commissions. Mr. Storey was the Chief International Strategist for the successful Vancouver 2010 Olympic Bid.

James W. McCutcheon, Q.C. James W. McCutcheon has been our Director since 2005. Mr. McCutcheon is counsel to McCarthy Tétrault LLP. Mr. McCutcheon was called to the Ontario Bar in 1962. He was a founding partner of Shibley, Righton & McCutcheon in 1964. For some ten years Mr. McCutcheon practiced predominantly civil litigation before Ontario courts and tribunals. His practice was diversified to include commercial real estate, insurance, trust and corporate law and he now advises on a broad variety of corporate, individual and charity issues. Mr. McCutcheon has served as a director of many public corporations, presently CAE Inc., Dominion of Canada General Insurance Company, Empire Life Insurance Company, Guardian Capital Group Limited and Noranda Inc. Mr. McCutcheon has also served on boards of the Art Gallery of Ontario Foundation, Canadian Institute of International Affairs, Eglinton St. George’s United Church, Royal Agricultural Fair, Royal Ontario Museum, University Health Network Toronto, Victoria University in the University of Toronto and World Wildlife Fund (Canada).

Pierre Boivin. Pierre Boivin has been our Director since 2005. Mr. Boivin is President of the Montréal Canadiens, L’Arena des Canadiens Inc. and Gillett Entertainment Group. In 1994, Mr. Boivin was appointed President and Chief Executive Officer of Canstar Sports Inc., a Montréal-based public company in the hockey equipment industry. In 1995, Canstar was acquired by Nike, Inc. and formed Bauer Nike Hockey Inc., and Mr. Boivin remained Chief Executive Officer of the new company until 1999. Mr. Boivin is a member of the Board of Governors of the National Hockey League. He is Chairman of the Board of Directors of Kangaroo Media Inc. and a member of the Board of Directors of Med-Eng Inc. Mr. Boivin is also Vice Chairman of the Sainte-Justine Hospital Foundation and member of the Board of Directors of Special Olympics Canada, Special Olympics Quebec as well as a member of the Centraide of Greater Montréal Campaign Committee for 2006.

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As of December 12, 2005, our directors and executive officers, as a group, own or control, directly or indirectly, an aggregate of 28,000,917 Subordinate Voting Shares representing approximately 59.0% of our outstanding Subordinate Voting Shares, assuming conversion of all Class B Voting Shares into Subordinate Voting Shares.

Committees of the Board of Directors

Our board of directors has two committees: an audit committee (the “Audit Committee”); and a compensation and corporate governance committee (the “Compensation and Corporate Governance Committee”), both of which are comprised entirely of independent directors.

Audit Committee

The Directors appointed the Audit Committee, which consists of three Directors, all of whom are independent and financially literate within the meaning of applicable Canadian securities laws. The Audit Committee is responsible for the oversight and supervision of:

•our accounting and financial reporting practices and procedures;

•the adequacy of our internal accounting controls and procedures; and

•the quality and integrity of our financial statements.

In addition, the Audit Committee is responsible for the appointment, compensation, retention and oversight of the external auditor, as well as the pre-approval of all non-audit services provided by the external auditor, and for directing the auditor's examination into specific areas of our business. The Audit Committee has a written charter and procedures to address complaints regarding accounting, internal accounting controls or auditing matters and has established a procedure to address confidential, anonymous employee submissions of concerns regarding questionable accounting or auditing matters.

Compensation Committee

The Compensation Committee reviews and makes recommendations to the board concerning the appointment of our officers and the hiring, compensation, benefits and termination of our senior executive officers and all other key employees. The committee will annually review the Chief Executive Officer's goals and objectives for the upcoming year and provide an appraisal of the Chief Executive Officer's performance. The committee administers and makes recommendations regarding the operation of our stock option plan (described below).

Our Compensation Committee Charter provides that profitable growth is fundamental to our long-term viability. In each year of profitable operation, a nominal percentage (as determined by the Compensation Committee) of our pre-tax profits for that year, shall be included as part of the overall annual compensation plan for our senior officers (as recommended by the Chief Executive Officer with concurrence by the Compensation Committee). For the purposes of determining the amount of this payment, any compensation earned by any officer in the corresponding year under any existing compensation arrangement shall be deducted from the amount otherwise payable to such officer under these profit sharing arrangements. The Compensation Committee Charter additionally provides that a nominal percentage of pre-tax profits in each profitable year shall be allocated to charitable foundations or social causes (as recommended by the Chief Executive Officer with concurrence by the Compensation Committee). The Compensation Committee, in exercising its fiduciary obligation, shall ensure that these nominal profit sharing allocations remain consistent with appropriate overall executive compensation levels and annual budget objectives and performance.

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All members of this committee are directors who are independent within the meaning of applicable securities laws.

Corporate Governance Committee

The Corporate Governance Committee is responsible for developing our approach to corporate governance issues, advising the board in filling vacancies on the board and periodically reviewing the composition and effectiveness of the board and the contribution of individual directors. All members of this committee are directors who are independent within the meaning of applicable securities laws.

Executive Compensation

Summary Compensation Table

The following table provides a summary of the compensation of our President and Chief Executive Officer and our Chief Financial Officer and our three most highly compensated individuals who served as executive officers (collectively, the “Named Executive Officers”) for the year ended August 31, 2005 whose total bonus and salary exceeded $150,000⁽¹⁾.

	Annual Compensation							Long -Term Compensation
Name and Principal Position		Year		Salary		Bonus	Other Annual		Securities Under Options Granted	All Other Compensation
John I. Bitove,
Chairman and Chief Executive Officer		2005	$	250,000		-	-		-	-
Stephen Tapp,
President and Chief Operating Officer		2005	$	183,000	(2)	-	-		-	-
Michael Washinushi,
Chief Financial Officer, Treasurer and Secretary		2005	$	77,000	(3) (4)	-	-		-	-

__________________

Notes:

(1)Based on the foregoing, the individuals were the only Named Executive Officers during our most recent completed financial year.

(2)Mr. Tapp was appointed our President and Chief Operating Officer in October, 2004. His base salary was $200,000, of which $183,000 was paid to Mr. Tapp for the fiscal year ending August 31, 2005.

(3)Mr. Washinushi was appointed Secretary, Treasurer and Chief Financial Officer in April, 2005. Prior to his appointment, we did not have a Chief Financial Officer. Mr. Washinushi's base salary was $185,000, of which $77,000 was paid to Mr. Washinushi for the fiscal year ending August 31, 2005.

(4) Mr. Washinushi received compensation relating to stock options in CSR Investments.

Option Grants During The Most Recently Completed Financial Year

No options of Canadian Satellite Radio Holdings Inc. were granted to the Named Executive Officers during our fiscal year ending August 31, 2005. Options in CSR Investments were granted to a Named Executive Officer as discussed under "Stock Options" in our "Management's Discussion and Analysis of Financial Condition and Results of Operations".

Option Grants During The Current Financial Year

During the current financial year we have issued to our directors, officers and employees a total of 1,100,000 options to acquire Subordinate Voting Shares, of which 900,000 options were issued to the Named Executive Officers, as described below. Of these 1,100,000 options, 1,075,000 options will vest in equal one-fourth annual amounts beginning on the date of the closing of our initial public offering and ending on the third anniversary thereof and will all vest immediately on a cessation of employment, unless employment is terminated for cause. Twenty-five thousand of those options vested upon the closing of our initial public offering. In December 2005, prior to the closing of our initial public offering, we issued to our directors, officers and employees a further 1,175,000 options to acquire Subordinate Voting Shares, of which 900,000 will be issued to the Named Executive Officers, as described below, and planned to issue 250,000 additional options to employees.

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Name	Subordinate Voting Shares Under Options	Per Cent of Total Options(1)(2)	Exercise Price	Market Value of Subordinate Voting Shares Underlying Options	Expiration Date
John I. Bitove,	500,000	19.80%	$0.01	N/A	December 12, 2012(3)
Chairman and Chief Exective Officer
	500,000	19.80%	$16.00	$8,000,000	December 12, 2012(3)
Stephen Tapp,	250,000	9.90%	$0.01	N/A	December 12, 2012(3)
President and Chief Operating Officer
	250,000	9.90%	$16.00	$4,000,000	December 12, 2012(3)
Michael Washinushi,	150,000	5.94%	$0.01	N/A	December 12, 2012(3)
Chief Financial Officer, Treasurer Secretary
	150,000	5.94%	$16.00	$2,400,000	December 12, 2012(3)

________________

Notes:

(1) Exludes stock options issued by CSR Investments.

(2)Assuming a total of 2,525,000 options outstanding, including 250,000 options to be granted to employees.

(3)The expiration date of these options is or will be, as applicable, seven years from the closing of our initial public offering, which occurred on December 12, 2005.

Management Arrangements

Employment Agreements

We have entered into employment agreements with the Named Executive Officers and other members of senior management, certain material terms of which are summarized below.

John I. Bitove. The employment agreement with Mr. Bitove is for an indefinite term, subject to the provisions within the agreement. The agreement provides for a current base salary of $250,000 and eligibility to receive a maximum annual bonus of up to 100% of his base salary based on the goals established pursuant to the bonus plan. The agreement contains non-solicitation and non-competition covenants in our favor, which apply during the term of Mr. Bitove's employment and for a period of 24 months following the termination of his employment, and confidentiality covenants in our favor, which apply indefinitely. In addition, if Mr. Bitove's employment is terminated for any reason other than for cause, Mr. Bitove will receive his base salary (and a pro rata share of his bonus and other forms of compensation) for a period of 24 months following the date of such termination. If Mr. Bitove's employment is terminated, or if he resigns for good reason, within 12 months following a change of control, Mr. Bitove will receive his base salary (and a pro rata share of his bonus and other forms of compensation) for a period of 24 months following the date of such termination.

Stephen Tapp. The employment agreement with Mr. Tapp is for an indefinite term, subject to the provisions within the agreement. The agreement provides for a current base salary of $400,000 and eligibility to receive a maximum annual bonus of up to 100% of his base salary based on the goals established pursuant to the bonus plan. The agreement contains non-solicitation and non-competition covenants in our favor, which apply during the term of Mr. Tapp's employment and for a period of 24 months following the termination of his employment, and confidentiality covenants in our favor, which apply indefinitely. In addition, if Mr. Tapp's employment is terminated for any reason other than for cause, Mr. Tapp will receive his base salary (and a pro rata share of his bonus and other forms of compensation) for a period of 24 months following the date of such termination. If Mr. Tapp's employment is terminated, or if he resigns for good reason, within 12 months following a change of control, Mr. Tapp will receive his base salary (and a pro rata share of his bonus and other forms of compensation) for a period of 24 months following the date of such termination.

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Michael Washinushi. The employment agreement with Mr. Washinushi is for an indefinite term, subject to the provisions within the agreement. The agreement provides for a current base salary of $250,000 and eligibility to receive a maximum annual bonus of up to 60% of his base salary based on the goals established pursuant to the bonus plan. The agreement contains non-solicitation and non-competition covenants in our favor, which apply during the term of Mr. Washinushi's employment and for a period of 12 months following the termination of his employment, and confidentiality covenants in our favor, which apply indefinitely. In addition, if Mr. Washinushi's employment is terminated for any reason other than for cause, Mr. Washinushi will receive his base salary (and a pro rata share of his bonus and other forms of compensation) for a period of 12 months following the date of such termination. If Mr. Washinushi's employment is terminated, or if he resigns for good reason, within 12 months following a change of control, Mr. Washinushi will receive his base salary (and a pro rata share of his bonus and other forms of compensation) for a period of 18 months following the date of such termination.

Ross Davies. The employment agreement with Mr. Davies is for an indefinite term, subject to the provisions within the agreement. The agreement provides for a current base salary of $250,000 and eligibility to receive a maximum annual bonus of up to 60% of his base salary based on the goals established pursuant to the bonus plan. The agreement contains non-solicitation and non-competition covenants in our favor, which apply during the term of Mr. Davies's employment and for a period of 12 months following the termination of his employment, and confidentiality covenants in our favor, which apply indefinitely. In addition, if Mr. Davies's employment is terminated for any reason other than for cause, Mr. Davies will receive his base salary (and a pro rata share of his bonus and other forms of compensation) for a period of 12 months following the date of such termination. If Mr. Davies's employment is terminated, or if he resigns for good reason, within 12 months following a change of control, Mr. Davies will receive his base salary (and a pro rata share of his bonus and other forms of compensation) for a period of 18 months following the date of such termination.

Stewart Lyons. The employment agreement with Mr. Lyons is for an indefinite term, subject to the provisions within the agreement. The agreement provides for a current base salary of $150,000 and eligibility to receive a maximum annual bonus of up to 50% of his base salary based on the goals established pursuant to the bonus plan. The agreement contains non-solicitation and non-competition covenants in our favor, which apply during the term of Mr. Lyons' employment and for a period of 12 months following the termination of his employment, and confidentiality covenants in our favor, which apply indefinitely. In addition, if Mr. Lyons' employment is terminated for any reason other than for cause, Mr. Lyons will receive his base salary (and a pro rata share of his bonus and other forms of compensation) for a period of 12 months following the date of such termination. If Mr. Lyons' employment is terminated, or if he resigns for good reason, within 12 months following a change of control, Mr. Lyons will receive his base salary (and a pro rata share of his bonus and other forms of compensation) for a period of 18 months following the date of such termination.

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Compensation of Directors

Each of the independent directors will initially be paid an annual fee of $25,000 for serving on the board, as well as $1,000 per director for each regularly scheduled meeting of the board of directors, or a committee thereof, attended in person, and $250 for each meeting of the board of directors, or a committee thereof, attended by teleconference. In addition, the chair of each committee of the board of directors will be paid an annual fee of $10,000 ($15,000 in the case of the chair of the audit committee). In December 2005, we issued 25,000 options to acquire Subordinate Voting Shares to each of the independent directors. The exercise price of these options is our initial public offering price of the Subordinate Voting Shares. These options will vest in equal one-fifth annual amounts beginning on the first anniversary of the date of grant and ending on the fifth anniversary thereof. We intend to issue a further 25,000 options to acquire Subordinate Voting Shares to each of the independent directors on the first and second anniversary of the closing of our initial public offering. The exercise price of these options will be the then current market price of the Subordinate Voting Shares. We expect that these additional options will also vest immediately.

Stock Option Plan

We have established a stock option plan (the “Plan”) for our employees, directors, senior officers and consultants and our affiliates. The Plan was established to provide additional incentives for us and our affiliates to attract and retain employees, directors, senior officers and consultants.

Under the Plan, options to purchase our Subordinate Voting Shares may be granted by the board of directors to our, and our affiliates, directors, senior officers, employees and consultants. Options granted under the Plan will have an exercise price of not less than the volume weighted average trading price of the Subordinate Voting Shares on the stock exchange on which the Subordinate Voting Shares are traded for the five trading days immediately preceding the day on which the option is granted. The maximum aggregate number of Subordinate Voting Shares which may be subject to options under the Plan is 10% of our shares outstanding from time to time. As a result, any increase in the issued and outstanding shares will result in an increase in the available number of the Subordinate Voting Shares issuable under the Plan, and any exercises of options will make new grants available under the Plan, effectively resulting in a re-loading of the number of options available to grant under the Plan. The number of shares issuable to insiders, at any time, under all our security-based compensation arrangements, cannot exceed 10% of the number of shares in the our capital that are outstanding from time to time. Similarly, the number of shares issued to insiders, within any one year period, under all security based compensation arrangements, cannot exceed 10% of the number of shares in our capital that are outstanding from time to time.

Unless the Board decides otherwise, options granted under the Plan will vest over a five-year period and may be exercised in whole or in part at any time as to one-fifth on each anniversary of the grant date for the five-year period. Unless the Board decides otherwise, options will expire on the seventh anniversary of the grant date. Any option not exercised prior to the expiry date will become null and void.

In connection with certain change of control transactions, including a take-over bid, merger or other structured acquisition, the board of directors may accelerate the vesting date of all unvested options such that all optionees will be entitled to exercise their full allocation of options and in certain circumstances where such optionee's employment is terminated in connection with such transactions, such accelerated vesting will be automatic.

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Unless the Board decides otherwise, options granted under the Plan terminate on the earlier of the expiration date of the option or 180 days following the death of the optionee, termination of the optionee's employment because of permanent disability, termination of the optionee's employment because of the retirement of an optionee or as a result of such optionee ceasing to be a director, 30 days following termination of an optionee without cause or immediately upon an optionee being terminated for cause.

We have issued to our directors, officers and employees a total of 1,100,000 options to acquire Subordinate Voting Shares. Of these 1,100,000 options, 1,075,000 options will vest in equal one-fourth annual amounts beginning on the date of the closing of our initial public offering and ending on the third anniversary thereof and will all vest immediately on a cessation of employment, unless employment is terminated for cause. Twenty-five thousand of those options vested immediately on the date of the closing of our initial public offering. In December 2005, prior to the closing of our initial public offering, we issued to our directors, officers and employees a further 1,175,000 options to acquire Subordinate Voting Shares. The following chart sets out the number of options to purchase Subordinate Voting Shares issued to the groups of individuals identified below:

Group	Number of Persons Holding Options	Number of Options	Exercise Price	Market Value on Date of Grant(3)	Expiration Dates
Executive Officers	5	1,075,000	$0.01	N/A(2)	December 12, 2012(1)
Executive Officers	5	1,075,000	$16.00	$17,200,000	December 12, 2012(1)
Directors and Former
Directors who are not Executive Officers	3	75,000	$16.00	$1,200,000	December 12, 2012(1)
Employees	1	25,000	$0.01	N/A(2)	December 12, 2012(1)
Employees	1	25,000	$16.00	$400,000	December 12, 2012(1)
Consultants	_	_	_	_	_

__________________

Notes:

(1)The expiration date of these options is or will be, as applicable, seven years from the closing of our initial public offering.

(2)The deemed fair value of the underlying shares at the date of the option grant was $16.00.

(3)“Market Value on Date of Grant” refers to the underlying shares of the Company and does not refer to the option grant.

As at the date hereof, our directors and executive officers hold options to acquire an aggregate of 2,225,000 of our Subordinate Voting Shares, our employees hold options to acquire an aggregate of 50,000 of our Subordinate Voting Shares, and no consultants hold any options. In addition, we plan to issue 250,000 of additional options to employees. The plan excludes additional incentive compensation provided to directors and executive officers as discussed under "Stock Options" in our "Management's Discussion and Analysis of Financial Condition and Results of Operations". 

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Voting Securities and Principal Shareholders

Voting Securities

As at February 28, 2006, we had outstanding 18,970,539 fully paid and non-assessable Class A Subordinate Voting Shares and 81,615,633 fully paid and non-assessable Class B Voting Shares. At all of our shareholder meetings, except meetings at which only holders of another class of shares are entitled to vote, the holders of the Class B Voting Shares will be entitled to one vote in respect of each Class B Voting Share and the holders of Subordinate Voting Shares will be entitled to one vote in respect of each Subordinate Voting Share. Since each three Class B Voting Shares are convertible into one Subordinate Voting Share and the three Class B Voting Shares have essentially the same economic rights as one Subordinate Voting Share, the Class B Voting Shares effectively have three times the voting entitlement of the Subordinate Voting Shares for comparable equity participation. We have no other classes of voting securities.

Principal Shareholders

The following table shows the name of each person or company who, as at February 28, 2006, owned of record, or who, to our knowledge, owned beneficially, directly or indirectly, more than 10% of our Subordinate Voting Shares, assuming conversion of all Class B Voting Shares into Subordinate Voting Shares.

Principal Shareholder	Type of  Ownership	Number of  Shares	Percentage of SharesOutstanding
CSR Investments(1)	Direct	27,205,211	57.30%
XM Holdings	Direct	11,077,500	23.33%

Notes:

(1) CSR Investments is controlled by John I. Bitove, our Chairman and Chief Executive Officer.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CSR Holdings, CSR Inc. and CSR Investments, which is controlled by John I. Bitove, our Chairman and Chief Executive Officer, have entered into a shareholders agreement with XM (the “Shareholders Agreement”). The Shareholders Agreement provides for matters relating to the composition of our board of directors and the board of directors of CSR Inc., and also contains certain rights and restrictions with respect to the shareholders of each of XM and CSR Investments. In addition, affiliates of CSR Investments have funded, or committed to fund, our CRTC licensing process, as well as our initial infrastructure and start-up costs up to approximately $16.8 million. See “Management's Discussion and Analysis of Financial Condition and Results of Operations.” In addition, the lease for our Toronto studio is with an affiliate of CSR Investments.

In addition, we have entered into a number of operational, credit and governance agreements with XM, one of our principal shareholders, including the License Agreement, the Programming Agreement, the XM Credit Facility, the Shareholders Agreement and a registration rights agreement providing for certain demand and piggyback registration rights in connection with our Subordinate Voting Shares. These agreements, with the exception of the Shareholders Agreement and the registration rights agreement, are described in detail elsewhere in this prospectus. See “Business — Operational Agreements” and “Description of the XM Credit Facility.”

Mr. Gary Parsons and Dr. Joseph Verbrugge, who were each appointed as directors prior to the closing of our initial public offering, are each officers and Mr. Parsons is a director of XM.

Mr. Philip Evershed is a member of our board of directors. Mr. Evershed also holds an approximate 6.7% interest in CSR Investments, which in turn holds an approximate 57.3% equity interest in the Company.

Ms. Mariette Wilcox, the principal of Wilcox Group, is a member of our board of directors. The Wilcox Group provides us with consulting services.

Mr. Michael Grimaldi, one of our directors, is an officer of GMCL. We have agreed to a distribution arrangement with GMCL, which is described in detail elsewhere in this prospectus. See “Business — GMCL Distribution Arrangement.”

Other than the foregoing, no director, executive officer or shareholder who beneficially owns, directly or indirectly, or exercises control or direction over more than 10% of the outstanding Subordinate Voting Shares or known associate or affiliate of any such person, has or had any material interest, direct or indirect, in any transaction within the last three years or in any proposed transaction, that has materially affected or will materially affect us.

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DESCRIPTION OF THE XM CREDIT FACILITY

We have a commitment for a $45 million standby credit facility from XM for the purchase of terrestrial repeaters and the payment of subscription royalties to XM and interest on outstanding debt on the credit facility as these are incurred. The following is a summary of certain material terms of the XM Credit Facility, and is not intended to be complete. Reference is made to the XM Credit Facility for the full text of its provisions.

Interest on amounts outstanding under the XM Credit Facility will accrue quarterly at a rate of 9.0% per annum and be payable through additional borrowings under the XM Credit Facility until availability under the XM Credit Facility is exhausted, and thereafter in cash. We have also guaranteed the obligations outstanding under the XM Credit Facility.

XM has the right to convert any amount outstanding under the XM Credit Facility into our Subordinate Voting Shares at any time at the initial public offering price. In addition, any amount outstanding under the XM Credit Facility shall be automatically converted into Subordinate Voting Shares upon the occurrence of: (i) our having three consecutive quarters of positive EBITDA; (ii) our shares being listed on a major U.S. or Canadian stock exchange following an initial public offering of our securities for gross proceeds in excess of $25 million; and (iii) our publicly traded shares having an average closing price over any ten consecutive trading days that is greater than 250% of the price at which our securities were issued and sold pursuant to our initial public offering. The conversion price shall be our initial public offering price.

The XM Credit Facility permits us to incur up to US$125 million of unsecured bond debt, including debt we incurred pursuant to the issuance of the initial notes. For so long as any notes issued are outstanding and unsecured (other than the lien on the interest reserve account), the XM Credit Facility will not be secured. As an alternative to unsecured bond debt, if in the future we cease to have unsecured bond debt outstanding, the XM Credit Facility permits the incurrence of senior bank indebtedness in an aggregate principal amount up to $75 million and pari passu secured indebtedness up to US$5 million (approximately $6 million). In that event, the XM Credit Facility would become secured by a first priority lien on any terrestrial repeaters purchased with funds from the credit facility and a lien on all the remaining assets of CSR Inc. (excluding the CRTC license and the stock of any subsidiary holding the CRTC license). The XM Credit Facility liens on the remaining assets of CSR Inc. would be subordinated to security for senior bank indebtedness.

The XM Credit Facility has a maturity date of December 31, 2012. The XM Credit Facility contains customary covenants and financial condition tests and periodic and episodic reporting obligations. The various covenants, financial ratios and financial condition tests are not in effect until funds have been drawn under the XM Credit Facility. These covenants include, without limitation, restrictions on our ability to pay dividends. The breach of any of these covenants could result in a breach under the XM Credit Facility.

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The Exchange Offer

Purpose and Effect of the Exchange Offer

We issued and sold US$100,000,000 in aggregate principal amount of initial notes on February 10, 2006 in a transaction exempt from the registration requirements of the Securities Act. On the date of this prospectus, US$100,000,000 in aggregate principal amount of initial notes are outstanding. In connection with the issuance of the initial notes, we entered into a registration rights agreement. The registration rights agreement requires us to file the registration statement of which this prospectus is a part for a registered exchange offer with respect to an issue of exchange notes in exchange for the initial notes. The exchange notes will evidence the same continuing indebtedness as, and will be substantially identical in all material respects to, our initial notes, except that the exchange notes will be registered under the Securities Act, will not bear legends restricting their transfer and will not be entitled to registration rights under our registration rights agreement. This summary of the registration rights agreement does not contain all the information that you should consider and we refer you to the provisions of the registration rights agreement, which has been filed as an exhibit to the registration statement of which this prospectus is a part and a copy of which is available as indicated under the heading “Available Information.”

Under the registration rights agreement, we are required to:

·   use all commercially reasonable efforts to cause the registration statement to become effective no later than November 7, 2006, which is 270 days after the completion of our offering of the initial notes; and

·   use all commercially reasonable efforts to consummate the exchange offer within 45 days after the date on which the registration statement is declared effective.

The exchange offer, if commenced and consummated within the time periods described in this paragraph, will satisfy those requirements under the registration rights agreement. For each initial note validly tendered to us in the exchange offer and not withdrawn by the holder, the holder of an initial note will receive an exchange note having a principal amount equal to the principal amount of the surrendered initial note. Interest on each exchange note will accrue from the last interest payment date on which interest was paid on the initial note surrendered in exchange for the exchange note, or if no interest has been paid on the initial note, from the date of original issuance of the initial notes.

Under the registration rights agreement, we have agreed to file a shelf registration statement, which may be an amendment to the exchange offer registration statement, on or prior to 30 days after such filing obligation arises, and to use all commercially reasonable efforts to cause such shelf registration statement to become effective on or prior to 90 days after the deadline for filing the shelf registration statement, if:

(1)we are not

(a) required to file the exchange offer registration statement; or

(b)  permitted to consummate the exchange offer if the exchange offer is not permitted by applicable law or SEC policy; or 

 (2) any holder of Transfer Restricted Securities notifies us prior to the 20th business day following consummation of the exchange offer that:

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(a) it is prohibited by law or SEC policy from participating in the exchange offer;

(b)  it may not resell the exchange notes acquired by it in the exchange offer to the public without delivering a prospectus and the prospectus contained in the exchange offer registration statement is not appropriate or available for such resales; or

 (c)  it is a broker-dealer and owns notes acquired directly from us or an affiliate of ours. 

In connection with any such required shelf registration statement, we have agreed to use all commercially reasonable efforts to keep the shelf registration statements continuously effective for a period of at least two years, or such shorter period as will terminate when all transfer restricted securities covered by the shelf registration statement have been sold pursuant to such registration. We also have agreed to take various other actions to permit unrestricted resales of the notes under the shelf registration statement. We and the selling holders may be subject to civil liability under the Securities Act in connection with resales of exchange notes under the shelf registration statement. Under the registration rights agreement, we and the selling holders have agreed to be subject to customary indemnification and contribution obligations with respect to such liability.

Under the registration rights agreement, we have agreed to pay liquidated damages if (each a default):

(1)   we fail to file any of the registration statements required by the registration rights agreement on or before the date specified for such filing;

(2)   any of such registration statements is not declared effective by the SEC on or prior to the date specified for such effectiveness (the "effectiveness target date");

(3)   we fail to consummate the exchange offer within 45 business days of the effectiveness target date with respect to the exchange offer registration statement; or

(4)   the shelf registration statement or the exchange offer registration statement is declared effective but thereafter ceases to be effective or usable in connection with resales of transfer restricted securities during the periods specified in the registration rights agreement.

Liquidated damages will accrue from the date of such default and we will pay such liquidated damages to each holder of notes, with respect to the first 90-day period immediately following the occurrence of the first such default in an amount equal to US$.05 per week per US$ 1,000 principal amount of notes held by such holder.

The amount of the liquidated damages will increase by an additional US $.05 per week per US $1,000 principal amount of notes with respect to each subsequent 90-day period until all such defaults have been cured, up to a maximum amount of liquidated damages for all such defaults of US $.50 per week per US $ 1,000 principal amount of notes.

All accrued liquidated damages will be paid by us on the next scheduled interest payment date to DTC or its nominee by wire transfer of immediately available funds or by federal funds check and to holders of certificated notes, if any, by wire transfer to the accounts specified by them or by mailing checks to their registered addresses if no such accounts have been specified.

Following the cure of all such defaults, the accrual of liquidated damages will cease.

Holders of notes will be required to make certain representations to us (as described in the registration rights agreement) in order to participate in the exchange offer and will be required to deliver certain information to be used in connection with the shelf registration statement and to provide comments on the shelf registration statement within the time periods set forth in the registration rights agreement in order to have their notes included in the shelf registration statement and benefit from the provisions regarding liquidated damages set forth above. By acquiring transfer restricted securities, a holder will be deemed to have agreed to indemnify us against certain losses arising out of information furnished by such holder in writing for inclusion in any shelf registration statement. Holders of notes will also be required to suspend their use of the prospectus included in the shelf registration statement under certain circumstances upon receipt of written notice to that effect from us.

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This prospectus, together with the letter of transmittal, is being sent to all record holders of initial notes as of          , 2006.

Resale of Exchange Notes

Based on existing interpretations of the Securities Act by the staff of the SEC in several no-action letters issued to third parties, and subject to the following paragraph, we believe that the exchange notes issued as part of the exchange offer may be offered for resale, resold and otherwise transferred by each holder of exchange notes without further compliance with the registration and prospectus delivery provisions of the Securities Act, so long as the holder:

·   is acquiring the exchange notes in the ordinary course of its business;

·   is not participating in, and does not intend to participate in, a distribution of the exchange notes within the meaning of the Securities Act and has no arrangement or understanding with any person to participate in a distribution of the exchange notes within the meaning of the Securities Act; and

·   is not an "affiliate" of ours. An affiliate is a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, us.

The previous paragraph does not apply to:

·   a broker-dealer who acquires the initial notes directly from us for resale under Rule 144A under the Securities Act or any other available exemption under the Securities Act; and

·   any holder that is our affiliate.

By tendering the initial notes in exchange for exchange notes, each holder, other than a broker-dealer, will be required to make representations that it complies with the conditions contained in the preceding two paragraphs. If a holder of initial notes is our affiliate or is participating in or intends to participate in, a distribution of the exchange notes, or has any arrangement or understanding with any person to participate in a distribution of the exchange notes to be acquired in these exchange offers, the holder may be deemed to have received restricted securities and may not rely on the applicable interpretations of the staff of the SEC. That holder will have to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction.

Each broker-dealer that acquired initial notes for its own account as a result of market-making activities or other trading activities and that receives exchange notes in connection with the exchange offer may be deemed to be an underwriter within the meaning of the Securities Act and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the exchange notes. The letter of transmittal states that by acknowledging that a prospectus must be delivered and by delivering a prospectus, a broker-dealer who has bought initial notes for market-making activities or other trading activities will not be deemed to admit that it is an underwriter within the meaning of the Securities Act. The SEC has taken the position that broker-dealers who have bought initial notes for market-making activities or other trading activities may fulfill their prospectus delivery requirements with respect to the exchange notes (other than a resale of an unsold allotment from the original sale of the initial notes) with this prospectus, as it may be amended or supplemented from time to time. We have agreed that we will make this prospectus available for this purpose to broker-dealers who have bought initial notes for market-making activities or other trading activities for a period of 180 days after the consummation of the exchange offer. Please refer to the section in this prospectus entitled “Plan of Distribution.”

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Terms of the Exchange Offer

Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept for exchange initial notes properly tendered and not withdrawn before expiration of the exchange offer. We are offering to exchange our exchange notes for the same aggregate principal amount of our initial notes. The initial notes may be tendered only in integral multiples of US$1,000.

The exchange notes that we propose to issue in this exchange offer will evidence the same continuing indebtedness as, and will be substantially identical to our initial notes except that, unlike our initial notes, the exchange notes will have no transfer restrictions or registration rights. You should read the description of the exchange notes in the section in this prospectus entitled "Description of the Exchange Notes".

We intend to conduct the exchange offer in accordance with the provisions of the exchange offer registration rights agreement, the applicable requirements of the Securities Act and, Exchange Act and the rules and regulations of the SEC. Outstanding initial notes that are not tendered for exchange in the exchange offer will remain outstanding and continue to accrue interest and will be entitled to the rights and benefits the holders have under the indenture relating to the outstanding notes, except for any rights under the exchange offer and registration rights agreement that by their terms terminate upon the consummation of the exchange offer.

We reserve the right in our sole discretion to purchase or make offers for any initial notes that remain outstanding following the expiration or termination of this exchange offer and, to the extent permitted by applicable law, to purchase initial notes in the open market or privately negotiated transactions, one or more additional tender or exchange offers, or otherwise. The terms and prices of these purchases or offers could differ significantly from the terms of this exchange offer.

Expiration Date; Delays in Acceptance; Extensions; Amendments; Termination

This exchange offer will expire at 5:00p.m., New York City time, on         , 2006, unless we extend it in our reasonable discretion. The expiration date of this exchange offer will be at least 20 business days after the commencement of the exchange offer in accordance with Rule 14e-1(a) under the Exchange Act.

We expressly reserve the right to delay acceptance of any initial notes, extend or terminate this exchange offer and not accept any initial notes that we have not previously accepted if any of the conditions described below under "—Conditions to the Exchange Offer" have not been satisfied or waived by us. We will notify the exchange agent of any extension by oral notice, promptly confirmed in writing, or by written notice. We will also notify the holders of the initial notes by a press release or other public announcement communicated before 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date unless applicable laws require us to do otherwise. During any extension, all initial notes previously tendered will remain subject to the exchange offer unless properly withdrawn.

We also expressly reserve the right to amend the terms of this exchange offer in any manner. If we make any material change, we will promptly disclose this change in a manner reasonably calculated to inform the holders of our initial notes of the change including providing public announcement or giving oral or written notice to these holders. A material change in the terms of this exchange offer could include a change in the timing of the exchange offer, a change in the exchange agent and other similar changes in the terms of this exchange offer. If we make any material change to this exchange offer, we will disclose this change by means of a post-effective amendment to the registration statement which includes this prospectus and will distribute an amended or supplemented prospectus to each registered holder of initial notes. In addition, we will extend this exchange offer for an additional five to ten business days as required by the Exchange Act, depending on the significance of the amendment, if the exchange offer would otherwise expire during that period. We will promptly notify the exchange agent by oral notice, promptly confirmed in writing, or written notice of any delay in acceptance, extension, termination or amendment of this exchange offer.

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Procedures for Tendering Initial Notes

Proper Execution and Delivery of Letters of Transmittal

To tender your initial notes in this exchange offer, you must use one of the three alternative procedures described below:

(1)     Regular delivery procedure: Complete, sign and date the letter of transmittal or a facsimile of the letter of transmittal. Have the signatures on the letter of transmittal guaranteed if required by the letter of transmittal. Mail or otherwise deliver the letter of transmittal or the facsimile together with the certificates representing the initial notes being tendered and any other required documents to the exchange agent on or before 5:00 p.m., New York City time, on the expiration date.

(2)     Book-entry delivery procedure: Send a timely confirmation of a book-entry transfer of your initial notes, if this procedure is available, into the exchange agent's account at The Depository Trust Company in accordance with the procedures for book-entry transfer described under "—Book-Entry Delivery Procedure" below, on or before 5:00 p.m., New York City time, on the expiration date. 

(3)     Guaranteed delivery procedure: If time will not permit you to complete your tender by using the procedures described in (1) or (2) above before the expiration date and this procedure is available, comply with the guaranteed delivery procedures described under "—Guaranteed Delivery Procedure" below. 

 The method of delivery of the initial notes, the letter of transmittal and all other required documents is at your election and risk. Instead of delivery by mail, we recommend that you use an overnight or hand-delivery service. If you choose the mail, we recommend that you use registered mail, properly insured, with return receipt requested. In all cases, you should allow sufficient time to assure timely delivery. You should not send any letters of transmittal or initial notes to us. You must deliver all documents to the exchange agent at its address provided below. You may also request your broker, dealer, commercial bank, trust company or nominee to tender your initial notes on your behalf.

Only a holder of initial notes may tender initial notes in this exchange offer. A holder is any person in whose name initial notes are registered on our books or any other person who has obtained a properly completed bond power from the registered holder.

If you are the beneficial owner of initial notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your notes, you must contact that registered holder promptly and instruct that registered holder to tender your notes on your behalf. If you wish to tender your initial notes on your own behalf, you must, before completing and executing the letter of transmittal and delivering your initial notes, either make appropriate arrangements to register the ownership of these notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be completed prior to the expiration date of the exchange offer.

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You must have any signatures on a letter of transmittal or a notice of withdrawal guaranteed by:

(1)	a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc.;
(2)	a commercial bank or trust company having an office or correspondent in the United States; or
(3)	an eligible guarantor institution with the meaning of Rule 17Ad-15 under the Exchange Act, unless the initial notes are tendered:

(a)   by a registered holder or by a participant in The Depository Trust Company whose name appears on a security position listing as the owner, who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the letter of transmittal and only if the exchange notes are being issued directly to that registered holder or deposited into that participant's account at The Depository Trust Company; or

(b)   for the account of a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an eligible guarantor institution within the meaning of Rule 17Ad-15 under the Exchange Act.

If the letter of transmittal or any bond powers are signed by:

(1)            the record holder(s) of the initial notes tendered: the signature must correspond with the name(s) written on the face of the initial notes without alteration, enlargement or any change whatsoever.

(2)            a participant in The Depository Trust Company: the signature must correspond with the name as it appears on the security position listing as the holder of the initial notes.

(3)            a person other than the registered holder of any initial notes: those initial notes must be endorsed or accompanied by bond powers and a proxy that authorize that person to tender the initial notes on behalf of the registered holder, in satisfactory form to us as determined in our sole discretion, in each case, as the name of the registered holder or holders appears on the initial notes.

(4)            trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity: those persons should so indicate when signing. Unless waived by us, evidence satisfactory to us of their authority to so act must also be submitted with the letter of transmittal.

To tender your initial notes in this exchange offer, you must make the following representations:

(1)           you are authorized to tender, sell, assign and transfer the initial notes tendered and to acquire exchange notes issuable upon the exchange of such tendered initial notes, and that we will acquire good and unencumbered title to such tendered initial notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by us;

(2)           any exchange notes acquired by you pursuant to the exchange offer are being acquired in the ordinary course of business, whether or not you are the holder;

(3)           you or any other person who receives exchange notes, whether or not such person is the holder of the exchange notes, has no arrangement or understanding with any person to participate in a distribution of such exchange notes within the meaning of the Securities Act and is not participating in, and does not intend to participate in, the distribution of such exchange notes within the meaning of the Securities Act;

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      (4)           you or any other person who receives exchange notes, whether or not such person is the holder of the exchange notes, is not an "affiliate," as defined in Rule 405 of the Securities Act, of ours or, if you or such other person is an affiliate, you or such other person will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable;

      (5)           if you are not a broker-dealer, you represent that you are not engaging in, and do not intend to engage in, a distribution of exchange notes; and

      (6)           if you are a broker-dealer that will receive exchange notes for your own account in exchange for initial notes, you represent that the initial notes to be exchanged for the exchange notes were acquired by you as a result of market making or other trading activities and acknowledge that you will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale, offer to resell or other transfer of such exchange notes.

 You must also warrant that the acceptance of any tendered initial notes by the issuers and the issuance of exchange notes in exchange therefor shall constitute performance in full by the issuer of its obligations under the registration rights agreement relating to the initial notes.

Book-Entry Delivery Procedure

Any financial institution that is a participant in The Depository Trust Company's systems may make book-entry deliveries of initial notes by causing The Depository Trust Company to transfer these initial notes into the exchange agent's account at The Depository Trust Company in accordance with The Depository Trust Company's procedures for transfer. To effectively tender notes through The Depository Trust Company, the financial institution that is a participant in The Depository Trust Company will electronically transmit its acceptance through the Automatic Tender Offer Program. The Depository Trust Company will then edit and verify the acceptance and send an agent's message to the exchange agent for its acceptance. An agent's message is a message transmitted by The Depository Trust Company to the exchange agent stating that The Depository Trust Company has received an express acknowledgment from the participant in The Depository Trust Company tendering the initial notes that this participant has received and agrees to be bound by the terms of the letter of transmittal, and that we may enforce this agreement against this participant. The exchange agent will make a request to establish an account for the initial notes at The Depository Trust Company for purposes of the exchange offer within two business days after the date of this prospectus.

A delivery of initial notes through a book-entry transfer into the exchange agent's account at The Depository Trust Company will only be effective if an agent's message or the letter of transmittal or a facsimile of the letter of transmittal with any required signature guarantees and any other required documents is transmitted to and received by the exchange agent at the address indicated below under "—Exchange Agent" on or before the expiration date unless the guaranteed delivery procedures described below are complied with. Delivery of documents to The Depository Trust Company does not constitute delivery to the exchange agent.

Guaranteed Delivery Procedure

If you are a registered holder of initial notes and desire to tender your notes, and (1) these notes are not immediately available, (2) time will not permit your notes or other required documents to reach the exchange agent before the expiration date or (3) the procedures for book-entry transfer cannot be completed and an agent's message delivered on a timely basis, you may still tender in this exchange offer if:

(1)   you tender through a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, or an eligible guarantor institution within the meaning of Rule 17Ad-15 under the Exchange Act;

(2)  on or before the expiration date, the exchange agent receives a properly completed and duly executed letter of transmittal or facsimile of the letter of transmittal and a notice of guaranteed delivery, substantially in the form provided by us, with your name and address as holder of the initial notes and the amount of notes tendered, stating that the tender is being made by that letter and notice and guaranteeing that within three New York Stock Exchange trading days after the expiration date the certificates for all the initial notes tendered, in proper form for transfer, or a book-entry confirmation with an agent's message, as the case may be, and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent; and  

(3)  the certificates for all your tendered initial notes in proper form for transfer or a book-entry confirmation as the case may be, and all other documents required by the letter of transmittal are received by the exchange agent within three New York Stock Exchange trading days after the expiration date. 

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Acceptance of Initial Notes for Exchange; Delivery of Exchange Notes

Your tender of initial notes will constitute an agreement between you and us governed by the terms and conditions provided in this prospectus and in the related letter of transmittal.

We will be deemed to have received your tender as of the date the exchange agent receives (i) your duly signed letter of transmittal accompanied by your initial notes tendered; or (ii) a timely confirmation of a book-entry; transfer of these notes into the exchange agent's account at The Depository Trust Company with an agent's message; or (iii) your duly signed letter of transmittal accompanied by a notice of guaranteed delivery of these notes from an eligible institution.

All questions as to the validity, form, eligibility, including time of receipt, acceptance and withdrawal of tenders will be determined by us in our sole discretion. Our determination will be final and binding.

We reserve the absolute right to reject any and all initial notes not properly tendered or any initial notes which, if accepted, would, in our opinion or our counsel's opinion, be unlawful. We also reserve the absolute right to waive any conditions of this exchange offer or irregularities or defects in tender as to particular notes. If we waive a condition to this exchange offer, the waiver will be applied equally to all note holders. Our interpretation of the terms and conditions of this exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any, defects or irregularities in connection with tenders of initial notes must be cured within such time as we shall determine. We, the exchange agent or any other person will be under no duty to give notification of defects or irregularities with respect to tenders of initial notes. We and the exchange agent or any other person will incur no liability for any failure to give notification of these defects or irregularities. Tenders of initial notes will not be deemed to have been made until such irregularities have been cured or waived. The exchange agent will return without cost to their holders promptly following the expiration date any initial notes that are not properly tendered and as to which the defects or irregularities have not been cured or waived.

If all the conditions to the exchange offer are satisfied or waived on the expiration date, we will accept all initial notes properly tendered and will issue the exchange notes promptly thereafter. Please refer to the section of this prospectus entitled “—Conditions to the Exchange Offer” below. For purposes of this exchange offer, initial notes will be deemed to have been accepted as validly tendered for exchange when, as and if we give oral or written notice of acceptance to the exchange agent.

We will issue the exchange notes in exchange for the initial notes tendered pursuant to a notice of guaranteed delivery by an eligible institution only against delivery to the exchange agent of the letter of transmittal, the tendered initial notes and any other required documents, or the receipt by the exchange agent of a timely confirmation of a book-entry transfer of initial notes into the exchange agent’s account at The Depository Trust Company with an agent’s message, in each case, in form satisfactory to us and the exchange agent.

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If any tendered initial notes are not accepted for any reason provided by the terms and conditions of this exchange offer or if initial notes are submitted for a greater principal amount than the holder desires to exchange, the unaccepted or non-exchanged initial notes will be returned without expense to the tendering holder, or, in the case of initial notes tendered by book-entry transfer procedures described above, will be credited to an account maintained with the book-entry transfer facility, promptly after withdrawal, rejection of tender or the expiration or termination of the exchange offer.

Withdrawal of Tenders

Except as otherwise provided in this prospectus, you may withdraw tenders of initial notes at any time before 5:00 p.m., New York City time, on the expiration date.

For a withdrawal to be effective, you must send to the exchange agent (i) a computer generated notice of withdrawal by The Depository Trust Company on behalf of the holder in accordance with the standard operating procedures of The Depository Trust Company or (ii) a written or facsimile transmission notice of withdrawal before 5:00 p.m., New York City time on the expiration date at the address provided below under “—Exchange Agent” and before acceptance of your tendered notes for exchange by us.

Any notice of withdrawal must:

      (1)           specify the name of the person having tendered the initial notes to be withdrawn;

      (2)           identify the notes to be withdrawn, including, if applicable, the registration number or numbers and total principal amount of those notes;

      (3)           be signed by the person having tendered the initial notes to be withdrawn in the same manner as the original signature on the letter of transmittal by which those notes were tendered, including any required signature guarantees, or be accompanied by documents of transfer sufficient to permit the trustee for the initial notes to register the transfer of those notes into the name of the person having made the original tender and withdrawing the tender;

      (4)           specify the name in which any of those initial notes are to be registered, if that name is different from that of the person having tendered the initial notes to be withdrawn; and

      (5)           if applicable because the initial notes have been tendered through the book-entry procedure, specify the name and number of the participant’s account at The Depository Trust Company to be credited, if different from that of the person having tendered the initial notes to be withdrawn.

 We will determine all questions as to the validity, form and eligibility, including time of receipt, of all notices of withdrawal and our determination will be final and binding on all parties. Initial notes that are withdrawn will be deemed not to have been validly tendered for exchange in this exchange offer.

The exchange agent will return without cost to their holders all initial notes that have been tendered for exchange and are not exchanged for any reason, promptly after withdrawal, rejection of tender or expiration or termination of this exchange offer. In the case of initial notes tendered by book-entry transfer into the exchange agent’s account at The Depository Trust Company pursuant to its book-entry transfer procedures, the initial notes will be credited to an account with The Depository Trust Company specified by the holder as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer.

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You may retender properly withdrawn initial notes in this exchange offer by following one of the procedures described under “Procedures for Tendering Initial Notes” above at anytime on or before the expiration date.

Conditions to the Exchange Offer

We will complete this exchange offer only if:

      (1)           there is no change in the laws and regulations which would reasonably be expected to impair our ability to proceed with this exchange offer;

      (2)           there is no change in the current interpretation of the staff of the SEC which permits resales of the exchange notes;

      (3)           there is no stop order issued by the SEC or any state securities authority suspending the effectiveness of the registration statement which includes this prospectus or the qualification of the indenture for our exchange notes under the Trust Indenture Act of 1939 and there are no proceedings initiated or, to our knowledge, threatened for that purpose;

      (4)           there is no action or proceeding instituted or threatened in any court or before any governmental agency or body that would reasonably be expected to prohibit, prevent or otherwise impair our ability to proceed with this exchange offer; and

      (5)           we obtain all governmental approvals that we deem in our sole discretion necessary to complete this exchange offer.

These conditions are for our sole benefit. We may assert any one of these conditions regardless of the circumstances giving rise to it and may also waive any one of them, in whole or in part, at any time and from time to time, if we determine in our reasonable discretion that it has not been satisfied, subject to applicable law. Notwithstanding the foregoing, all conditions to the exchange offer must be satisfied or waived before the expiration of this exchange offer. If we waive a condition to this exchange offer, the waiver will be applied equally to all note holders. We will not be deemed to have waived our rights to assert or waive these conditions if we fail at any time to exercise any of them. Each of these rights will be deemed an ongoing right which we may assert at any time and from time to time.

If we determine that we may terminate this exchange offer because any of these conditions is not satisfied, we may:

      (1)           refuse to accept and return to their holders any initial notes that have been tendered.

      (2)           extend the exchange offer and retain all notes tendered before the expiration date, subject to the rights of the holders of these notes to withdraw their tenders; or

      (3)           waive any condition that has not been satisfied and accept all properly tendered notes that have not been withdrawn or otherwise amend the terms of this exchange offer in any respect as provided under the section in this prospectus entitled “—Expiration Date; Delays in Acceptance; Extensions; Amendments; Termination.”

The exchange offer is not conditioned upon any minimum principal amount of initial notes being tendered for exchange.

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Accounting Treatment

We will record the exchange notes at the same carrying value as the initial notes as reflected in our accounting records on the date of the exchange. Accordingly, we will not recognize any gain or loss for accounting purposes. We will amortize the costs of the exchange offer and the unamortized expenses related to the issuance of the exchange notes over the term of the exchange notes.

Exchange Agent

We have appointed The Bank of Nova Scotia Trust Company of New York as exchange agent for this exchange offer. You should direct all questions and requests for assistance on the procedures for tendering and all requests for additional copies of this prospectus or the letter of transmittal, as well as executed letters of transmittal, to the exchange agent as follows:

By mail or hand/overnight delivery:

The Bank of Nova Scotia Trust Company of New York

One Liberty Plaza

New York, NY 10006

Attention: Patricia Keane

Facsimile Transmission: (212) 225-5436

Attention: Patricia Keane

To confirm by telephone or for information: (212) 225-5427

DELIVERY TO AN ADDRESS OTHER THAN AS LISTED ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN AS LISTED ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.

Fees and Expenses

We will bear the expenses of soliciting tenders in this exchange offer, including fees and expenses of the exchange agent and trustee, SEC registration fees and accounting, legal, printing and related fees and expenses.

We will not make any payments to brokers, dealers or other persons soliciting acceptances of this exchange offer. However, we will pay the exchange agent reasonable and customary fees for its services and will reimburse the exchange agent for its reasonable out-of-pocket expenses in connection with this exchange offer. We will also pay brokerage houses and other custodians, nominees and fiduciaries their reasonable out-of-pocket expenses for forwarding copies of the prospectus, letters of transmittal and related documents to the beneficial owners of the initial notes and for handling or forwarding tenders for exchange to their customers.

We will pay all transfer taxes, if any, applicable to the exchange of initial notes in accordance with this exchange offer. However, tendering holders will pay the amount of any transfer taxes, whether imposed on the registered holder or any other persons, if:

      (1)           certificates representing exchange notes or initial notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of of, any person other than the registered holder of the notes tendered;

      (2)           tendered initial notes are registered in the name of any person other than the person signing the letter of transmittal; or

      (3)           a transfer tax is payable for any reason other than the exchange of the initial notes in this exchange offer.

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 If you do not submit satisfactory evidence of the payment of any of those taxes or of any exemption from payment with the letter of transmittal, we will bill you directly the amount of those transfer taxes.

Your Failure to Participate in the Exchange Offer May Have Adverse Consequences

The initial notes were not registered under the Securities Act or under the securities laws of any state and you may not resell them, offer them for resale or otherwise transfer them unless they are subsequently registered or resold under an exemption from the registration requirements of the Securities Act and applicable state securities laws. If you do not exchange your initial notes for exchange notes in accordance with this exchange offer, or if you do not properly tender your initial notes in this exchange offer, you will not be able to resell, offer to resell or otherwise transfer the initial notes unless they are registered under the Securities Act or unless you resell them, offer to resell or otherwise transfer them under an exemption from the registration requirements of, or in a transaction not subject to, the Securities Act.

In addition, except as set forth in this paragraph, you will not be able to obligate us to register the initial notes under the Securities Act. You will not be able to require us to register your initial notes under the Securities Act unless:

      (1)           the initial purchasers request us to register initial notes that are not eligible to be exchanged for exchange notes in the exchange offer; or

      (2)           you are not eligible to participate in the exchange offer or do not receive freely tradable exchange notes in the exchange offer,

in which case the registration rights agreement requires us to file a registration statement for a continuous offer in accordance with Rule 415 under the Securities Act for the benefit of the holders of the initial notes described in this sentence. We do not currently anticipate that we will register under the Securities Act any initial notes that remain outstanding after completion of the exchange offer.

Your participation in the exchange offer is voluntary, and you should carefully consider whether to participate. We urge you to consult your financial and tax advisors in making a decision whether or not to tender your initial notes. Please refer to the section in this prospectus entitled “Certain Income Tax Considerations.”

We may in the future seek to acquire untendered initial notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. However, we have no present plans to acquire any initial notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered notes.

Delivery of Prospectus

Each broker-dealer that receives exchange notes for its own account in exchange for initial notes, where such initial notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of Distribution.”

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The SEC considers broker-dealers that acquired initial notes directly from us, but not as a result of market-making or other trading activities, to be making a distribution of the exchange notes if they participate in the exchange offer. Consequently, these broker-dealers cannot use this prospectus for the exchange offer in connection with a resale of the exchange notes and, absent an exemption, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a resale of the exchange notes. These broker-dealers cannot rely on the position of the SEC’s staff set forth in the Exxon Capital Holdings Corporation no-action letter (available May 13, 1988) or similar letters.

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DESCRIPTION OF EXCHANGE NOTES

The exchange notes evidence the same continuing indebtedness as the initial notes. The form and terms of the exchange notes and the initial notes are substantially identical, except that the transfer restrictions, interest rate increase provisions and exchange offer provisions applicable to the initial notes do not apply to the exchange notes. References in this section to the “notes” include both the initial notes and the exchange notes.

You can find the definitions of certain terms used in this description under the subheading “Certain Definitions.” In this description, the word “Holdings” refers only to Canadian Satellite Radio Holdings Inc. and not to any of its subsidiaries. All references to “dollars,” “US$” or “$” in this description refer to United States dollars.

Holdings issued the initial notes under an indenture dated February 10, 2006 among itself, the Guarantors and The Bank of Nova Scotia Trust Company of New York, as trustee, in a private transaction that is not subject to the registration requirements of the Securities Act, and will issue the exchange notes under the same indenture. The terms of the notes will include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended.

The following description is a summary of the material provisions of the indenture and the interest reserve and security agreement. It does not restate those agreements in their entirety. We urge you to read the indenture and the interest reserve and security agreement because they, and not this description, define your rights as holders of the notes. Copies of the indenture and the interest reserve and security agreement are available as set forth below under “—Additional Information.” Certain defined terms used in this description but not defined below under “—Certain Definitions” have the meanings assigned to them in the indenture.

The registered holder of a note will be treated as the owner of it for all purposes. Only registered holders will have rights under the indenture.

Brief Description of the Notes and the Note Guarantees

The Notes

The notes:

•will be general unsecured obligations of Holdings;

•will be equal in right of payment with all existing and future unsecured senior Indebtedness of Holdings;

•will be senior in right of payment to any future subordinated Indebtedness of Holdings; and

•will be unconditionally guaranteed on a senior unsecured basis by the Guarantors.

The Note Guarantees

The notes will be guaranteed by all of Holdings’ current Restricted Subsidiaries and each of Holding’s future Restricted Subsidiaries that is not an Immaterial Subsidiary.

Each guarantee of the notes:

•will be a general unsecured obligation of the Guarantor;

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•will be equal in right of payment with all existing and future unsecured senior Indebtedness of that Guarantor; and

•will be senior in right of payment to any future subordinated Indebtedness of that Guarantor.

As of the date of the indenture, all of our Subsidiaries were “Restricted Subsidiaries.” However, under the circumstances described below under the caption “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries,” we will be permitted to designate certain of our Subsidiaries as “Unrestricted Subsidiaries.” Our Unrestricted Subsidiaries will not be subject to many of the restrictive covenants in the indenture. Our Unrestricted Subsidiaries will not guarantee the notes.

Principal, Maturity and Interest

Holdings issued US$100.0 million in aggregate principal amount of initial notes in the private offering and will issue the same aggregate principal amount of exchange notes in this offering. Holdings may issue additional notes under the indenture from time to time after this offering. Any issuance of additional notes is subject to all of the covenants in the indenture, including the covenant described below under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock.” The notes and any additional notes subsequently issued under the indenture will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Holdings will issue notes in minimum denominations of US$2,000 and integral multiples of US$1,000. The notes will mature on February 15, 2014.

Interest on the notes will accrue at the rate of 12.75% per annum and will be payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2006. Interest on overdue principal and interest and Liquidated Damages, if any, will accrue at a rate that is 1% higher than the then applicable interest rate on the notes. Holdings will make each interest payment to the holders of record on the immediately preceding February 1 and August 1.

Interest on the notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Methods of Receiving Payments on the Notes

If a holder of notes has given wire transfer instructions to Holdings, Holdings will pay all principal, interest and premium and Liquidated Damages, if any, on that holder’s notes in accordance with those instructions. All other payments on the notes will be made at the office or agency of the paying agent and registrar within the City and State of New York unless Holdings elects to make interest payments by check mailed to the noteholders at their address set forth in the register of holders.

Paying Agent and Registrar for the Notes

The trustee will initially act as paying agent and registrar. Holdings may change the paying agent or registrar without prior notice to the holders of the notes, and Holdings or any of its Subsidiaries may act as paying agent or registrar.

Transfer and Exchange

A holder may transfer or exchange notes in accordance with the provisions of the indenture. The registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents in connection with a transfer of notes. Holders will be required to pay all taxes due on transfer. Holdings will not be required to transfer or exchange any note selected for redemption. Also, Holdings will not be required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed.

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Interest Reserve

On February 10, 2006, Holdings entered into an interest reserve and security agreement with the trustee in its capacity as interest reserve agent. At the same time, Holdings deposited into the interest reserve account in the United States created under the interest reserve and security agreement an amount in cash precisely determined in order to provide sufficient funds to enable Holdings to make the first six interest payments when due (the “reserve interest”) with respect to the notes. To the extent Holdings issues additional notes prior to the payment by Holdings of the sixth interest payment on the notes issued on the date of the indenture (the “interest reserve period”), Holdings will deposit such additional funds into the interest reserve sufficient to enable Holdings to make interest payments on the additional notes through the interest reserve period (such additional funds, the “additional collateral”). The initial amount deposited in the interest reserve was US$35.5 million (approximately $40.5 million) (together with any additional collateral, the “cash collateral”). The cash collateral deposited into the interest reserve account will be held by the interest reserve agent to secure the payment and performance when due of our obligations under the indenture with respect to the notes. Pending release of the cash collateral in the interest reserve account, such funds have been invested in Government Securities.

The interest reserve and security agreement provides that the interest reserve agent will release the cash collateral from the interest reserve account as directed by the trustee:

·   to the trustee to pay interest on the notes and, upon certain repurchases or redemptions of the notes, to pay principal of and premium, if any, thereon; or

·   provided that no Event of Default will have occurred and be continuing or result therefrom, to Holdings:

o   to the extent that Holdings redeems, retires or repurchases any of the then outstanding notes prior to the end of the interest reserve period, in the amount of the cash collateral in excess of the amounts necessary to pay the reserve interest on the remaining notes when due shall be released to Holdings; or

o   to the extent of any cash collateral remaining after Holdings makes the first six interest payments on the notes.

To secure the payment and performance when due of the obligations of Holdings under the indenture with respect to the notes and under such notes, Holdings has also granted to the trustee for the benefit of the trustee and the holders of the notes a first priority security interest in the interest reserve account, such security interest having been perfected prior to the closing of the offering of the initial notes. See “Risk Factors—In a Canadian bankruptcy, insolvency or restructuring proceeding, the pledged funds may not be available to the holders of notes to pay the interest on the notes” and “Risk Factors—Certain bankruptcy and insolvency laws may impair the trustee’s ability to enforce remedies under the notes.”

Upon the acceleration of the maturity of the notes or the failure to pay principal at maturity or upon certain redemptions and repurchases of the notes, the interest reserve and security agreement provides for the foreclosure by the trustee upon the funds and Government Securities held in the interest reserve account. In the event of such a foreclosure, the proceeds of the interest reserve account will be applied, first, to amounts owing to the trustee in respect of fees and expenses of the trustee, second, to the holders to the full extent of all Obligations under the indenture and the notes and, third, any remainder to Holdings or its estate.

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Note Guarantees

The notes will be guaranteed by each of Holdings’ current Restricted Subsidiaries and each of Holdings’ future Restricted Subsidiaries that is not an Immaterial Subsidiary. These Note Guarantees will be joint and several unsecured obligations of the Guarantors. The obligations of each Guarantor under its Note Guarantee will be limited as necessary to prevent that Note Guarantee from constituting a fraudulent conveyance under applicable law. See “Risk Factors—Certain bankruptcy and insolvency laws may impair the trustee’s ability to enforce remedies under the notes.”

A Guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with, amalgamate with, or merge with or into (whether or not such Guarantor is the surviving Person) another Person, other than Holdings or another Guarantor, unless:

(1)   immediately after giving effect to that transaction, no Default or Event of Default exists; and

(2)   either:

(a)   the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation, amalgamation or merger assumes all the obligations of that Guarantor under the indenture, its Note Guarantee and the registration rights agreement and the interest reserve and security agreement pursuant to a supplemental indenture; or

(b)   the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the indenture.

The Note Guarantee of a Guarantor will be released:

(1)   in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger, amalgamation or consolidation) to a Person that is not (either before or after giving effect to such transaction) Holdings or a Restricted Subsidiary of Holdings, if the sale or other disposition does not violate the “Asset Sale” provisions of the indenture;

(2)   in connection with any sale or other disposition of all of the Capital Stock of that Guarantor to a Person that is not (either before or after giving effect to such transaction) Holdings or a Restricted Subsidiary of Holdings, if the sale or other disposition does not violate the “Asset Sale” provisions of the indenture;

(3)   if Holdings designates any Restricted Subsidiary that is a Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of the indenture; or

(4)   upon legal defeasance or satisfaction and discharge of the indenture as provided below under the captions “—Legal Defeasance and Covenant Defeasance” and “—Satisfaction and Discharge.”

See “—Repurchase at the Option of Holders—Asset Sales.”

Additional Amounts

All amounts paid or credited by Holdings under or with respect to the notes, or by any Guarantor pursuant to the Guarantees, will be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities or expenses related thereto) (hereinafter, “Taxes”) imposed or levied by or on behalf of the Government of Canada or the United States or of any province, territory, state or other political subdivision thereof or by any authority or agency therein or thereof having power to tax (each, a “Relevant Taxing Jurisdiction”), unless Holdings or such Guarantor, as the case may be, is required to withhold or deduct any amount for or on account of Taxes by law or by the interpretation or administration thereof. If Holdings or any Guarantor is required to withhold or deduct any amount for or on account of any such Taxes from any amount paid or credited under or with respect to the notes or the Guarantees, Holdings or such Guarantor will pay such additional amounts (the “Additional Amounts”) as may be necessary so that the net amount received by each owner of a beneficial interest in the notes (an “owner” for the purposes of this “Additional Amounts” section) (including Additional Amounts) after such withholding or deduction (including any withholding or deduction in respect of Additional Amounts) will not be less than the amount such owner would have received if such Taxes had not been withheld or deducted; provided, however, that Additional Amounts will not be payable to an owner or holder of notes with respect to any Taxes to the extent such Taxes (“Excluded Taxes”) would not have been imposed but for such owner or holder being an owner or holder:

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(1)   in the case of Canadian Taxes, with which Holdings or such Guarantor does not deal at arm’s length (within the meaning of the Income Tax Act (Canada)) at the time of making a payment;

(2)   which is subject to such Taxes by reason of such owner or holder being connected with the Relevant Taxing Jurisdiction other than solely by reason of the mere acquisition or holding of notes, the receipt of payments thereunder or the enforcement of the holder’s or owner’s rights thereunder;

(3)   which failed to duly and timely comply with a timely and reasonable request of Holdings to provide information, documents, certification or other evidence concerning such owner’s or holder’s nationality, residence, entitlement to treaty benefits, identity or connection with a Relevant Taxing Authority, but only if such owner or holder is legally entitled to comply with such request and only to the extent that due and timely compliance with such request would have resulted in the reduction or elimination of the Taxes in question; or

(4)   which is a fiduciary, a partnership or other holder that is not the beneficial owner of a note, if and to the extent that any beneficiary or settlor of such fiduciary, any partner in such partnership or the beneficial owner of such note (as the case may be) would not have been entitled to receive Additional Amounts with respect to the payment in question if such beneficiary, settlor, partner or beneficial owner had been the holder of such note (but only if there is no material cost or expense associated with transferring such note to such beneficiary, settlor, partner or beneficial owner and no restriction on such transfer that is outside the control of such beneficiary, settlor, partner or beneficial owner).

Holdings or such Guarantor will also (a) make such withholding or deduction and (b) remit the full amount deducted or withheld to the relevant authority in accordance with and in the time required under applicable law.

Holdings or the Guarantor will furnish the holders of the notes, within 30 days after the date the payment of any Taxes is due pursuant to applicable law, evidence of such payment by Holdings or such Guarantor. Holdings and the Guarantors will indemnify and hold harmless each holder and owner from and against (x) any Taxes (other than Excluded Taxes) levied or imposed on such holder or owner as a result of payments or credits made under or with respect to the notes or the Guarantees, and (y) any Taxes (other than Excluded Taxes) so levied or imposed with respect to any indemnification payments under the foregoing clause (x) or this clause (y) such that the net amount received by such holder or owner after such indemnification payments will not be less than the net amount the holder or owner would have received if the Taxes described in clauses (x) and (y) above had not been imposed.

At least 30 days prior to each date on which any payment under or with respect to the notes is due and payable, if Holdings or any Guarantor will be obligated to pay Additional Amounts with respect to such payment, Holdings or such Guarantor will deliver to the trustee an officer’s certificate stating the fact that such Additional Amounts will be payable and the amounts so payable and will set forth such other information necessary to enable the trustee to pay such Additional Amounts to holders or owners on the payment date. Whenever in the indenture or in this “Description of Exchange Notes” there is mentioned, in any context, the payment of principal, premium, if any, redemption price, Change of Control Payment, Asset Sale Offer purchase price, interest or any other amount payable under or with respect to any note, such mention shall be deemed to include mention of the payment of Additional Amounts or indemnification payments to the extent that, in such context, Additional Amounts or indemnification payments are, were or would be payable in respect thereof.

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Holdings and the Guarantors will pay any present or future stamp, court, documentary or other excise or property Taxes, charges or similar levies that arise in any Relevant Taxing Jurisdiction from the execution, delivery or registration of, or enforcement of rights under, the notes, the indenture, any Guarantee or any related document (“Documentary Taxes”).

The obligation to pay any Additional Amounts (and any associated indemnification payments) and Documentary Taxes under the terms and conditions described above will survive any termination, defeasance or discharge of the indenture.

Optional Redemption

At any time prior to February 15, 2009, Holdings may on any one or more occasions redeem the notes issued under the indenture at a redemption price of 112.75% of the principal amount, plus accrued and unpaid interest and Liquidated Damages, if any, to the redemption date, with the net cash proceeds from the sale or issuance of Equity Interests (other than Disqualified Stock); provided that:

(1)   at least 75% of the aggregate principal amount of notes originally issued under the Indenture (excluding notes held by Holdings and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and

(2)   the redemption occurs within 90 days of the date of the closing of such sale or issuance of Equity Interests (other than Disqualified Stock).

Except pursuant to the preceding paragraph and as described below under “—Redemption for Changes in Withholding Taxes,” the notes will not be redeemable at Holdings’ option prior to February 15, 2010.

On or after February 15, 2010, Holdings may redeem all or a part of the notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, on the notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on February 15 of the years indicated below, subject to the rights of holders of notes on the relevant record date to receive interest on the relevant interest payment date:

Year	Percentage
2010	106.375%
2011	103.188%
2012 and thereafter	100.000%

Unless Holdings defaults in the payment of the redemption price, interest will cease to accrue on the notes or portions thereof called for redemption on the applicable redemption date.

Redemption for Changes in Withholding Taxes

Holdings may redeem all, but not less than all, of the notes at any time, upon not less than 30 nor more than 60 days’ notice, at 100% of the aggregate principal amount of the notes, together with accrued and unpaid interest and Liquidated Damages, if any, on the notes redeemed to the redemption date, if Holdings has become or would become obligated to pay, on the next date on which any amount would be payable with respect to the notes, any Additional Amounts as a result of a change in the laws or treaties (including any regulations promulgated thereunder) of a Relevant Taxing Jurisdiction, or any change in any official position of any governmental agency, taxing authority or regulatory authority regarding the application or interpretation of such laws or regulations, which change is announced or becomes effective on or after the date of this prospectus (a “Change in Law”).

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Mandatory Redemption

Holdings is not required to make mandatory redemption or sinking fund payments with respect to the notes.

Repurchase at the Option of Holders

Change of Control

If a Change of Control occurs, each holder of notes will have the right to require Holdings to repurchase all or any part (equal to US$1,000 or an integral multiple of US$1,000) of that holder’s notes pursuant to a Change of Control Offer on the terms set forth in the indenture. In the Change of Control Offer, Holdings will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest and Liquidated Damages, if any, on the notes repurchased to the date of purchase, subject to the rights of holders of notes on the relevant record date to receive interest due on the relevant interest payment date. Within 30 days following any Change of Control, Holdings will mail a notice to each holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase notes on the Change of Control Payment Date specified in the notice, which date will be no earlier than 10 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the indenture and described in such notice. Holdings will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the indenture, Holdings will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the indenture by virtue of such compliance.

On the Change of Control Payment Date, Holdings will, to the extent lawful:

(1)   accept for payment all notes or portions of notes properly tendered pursuant to the Change of Control Offer;

(2)   deposit with the paying agent an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and

(3)   deliver or cause to be delivered to the trustee the notes properly accepted together with an officer’s certificate stating the aggregate principal amount of notes or portions of notes being purchased by Holdings.

The paying agent will promptly mail to each holder of notes properly tendered the Change of Control Payment for such notes, and the trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a new note equal in principal amount to any unpurchased portion of the notes surrendered, if any. Holdings will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

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The provisions described above that require Holdings to make a Change of Control Offer following a Change of Control will be applicable whether or not any other provisions of the indenture are applicable. Except as described above with respect to a Change of Control, the indenture does not contain provisions that permit the holders of the notes to require that Holdings repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction.

Holdings will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control Offer made by Holdings and purchases all notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to the indenture as described above under the caption “—Optional Redemption,” unless and until there is a default in payment of the applicable redemption price.

The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of Holdings and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of notes to require Holdings to repurchase its notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of Holdings and its Subsidiaries taken as a whole to another Person or group may be uncertain.

Asset Sales

Holdings will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(1)   Holdings (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and

(2)   at least 75% of the consideration received in the Asset Sale by Holdings or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash:

(a)   any liabilities, as shown on Holdings’ most recent consolidated balance sheet, of Holdings or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the notes or any Note Guarantee) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases Holdings or such Restricted Subsidiary from further liability;

(b)   any securities, notes or other obligations received by Holdings or any such Restricted Subsidiary from such transferee that are within 60 days converted by Holdings or such Restricted Subsidiary into cash or Cash Equivalents, to the extent of the cash or Cash Equivalents received in that conversion; and

(c)   any stock or assets of the kind referred to in clauses (2) or (4) of the next paragraph of this covenant.

Within 360 days after the receipt of any Net Proceeds from an Asset Sale, Holdings (or the applicable Restricted Subsidiary, as the case may be) may:

(x)apply such Net Proceeds at its option:

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(1)   to acquire all or substantially all of the assets of, or any Capital Stock of, a Permitted Business, if, after giving effect to any such acquisition of Capital Stock, the Permitted Business is or becomes a Restricted Subsidiary of Holdings;

(2)   to make a capital expenditure; or

(3)   to acquire other assets that are not classified as current assets under GAAP and that are used or useful in a Permitted Business;

  (y)to repay secured Indebtedness; or

  (z)enter into a legally binding agreement to apply such Net Proceeds as described in the preceding clause (x) within six months after such agreement is entered into and apply such Net Proceeds in accordance with the terms of  such agreement or the provisions of clause (x) above; provided that if such agreement terminates Holdings shall have until the earlier of (i) 90 days after the date of such termination and (ii) six months after the date of the Asset Sale resulting in such Net Proceeds to effect such an application.

Pending the final application of any Net Proceeds, Holdings or any Restricted Subsidiary may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by the indenture.

Any Net Proceeds from Asset Sales that are not applied or invested as provided in the second paragraph of this covenant will constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds US$10.0 million, within five days thereof, Holdings will make an Asset Sale Offer to all holders of notes and all holders of other Indebtedness that is pari passu with the notes containing provisions similar to those set forth in the indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid interest and Liquidated Damages, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, Holdings or any Restricted Subsidiary may use those Excess Proceeds for any purpose not otherwise prohibited by the indenture. If the aggregate principal amount of notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the trustee will select the notes and such other pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.

Holdings will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of the indenture, Holdings will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the indenture by virtue of such compliance.

The agreements governing Holdings’ other Indebtedness contain, and future agreements may contain, prohibitions of certain events, including events that would constitute a Change of Control or an Asset Sale. The exercise by the holders of notes of their right to require Holdings to repurchase the notes upon a Change of Control or an Asset Sale could cause a default under these other agreements, even if the Change of Control or Asset Sale itself does not, due to the financial effect of such repurchases on Holdings. In the event a Change of Control or Asset Sale occurs at a time when Holdings is prohibited from purchasing notes, Holdings could seek the consent of its senior lenders to the purchase of notes or could attempt to refinance the borrowings that contain such prohibition. If Holdings does not obtain a consent or repay those borrowings, Holdings will remain prohibited from purchasing notes. In that case, Holdings’ failure to purchase tendered notes would constitute an Event of Default under the indenture which could, in turn, constitute a default under the other indebtedness. Finally, Holdings’ ability to pay cash to the holders of notes upon a repurchase may be limited by Holdings’ then existing financial resources. See “Risk Factors—We may be unable to purchase notes in the event of a change of control.”

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Selection and Notice

If less than all of the notes are to be redeemed at any time, the trustee will select notes for redemption on a pro rata basis unless otherwise required by law or applicable stock exchange requirements.

No notes of US$1,000 or less can be redeemed in part. Notices of redemption will be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each holder of notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the notes or a satisfaction and discharge of the indenture. Notices of redemption may not be conditional.

If any note is to be redeemed in part only, the notice of redemption that relates to that note will state the portion of the principal amount of that note that is to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note will be issued in the name of the holder of notes upon cancellation of the original note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on notes or portions of notes called for redemption.

Certain Covenants

Restricted Payments

Holdings will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1)   declare or pay any dividend or make any other payment or distribution on account of Holdings’ or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger, amalgamation or consolidation involving Holdings or any of its Restricted Subsidiaries) or to the direct or indirect holders of Holdings’ or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of Holdings and other than dividends or distributions payable to Holdings or a Restricted Subsidiary of Holdings);

(2)   purchase, redeem or otherwise acquire or retire for value (excluding, for the avoidance of doubt, any exchange of Class B Voting Shares of Holdings for Class A Voting Shares of Holdings, but including, without limitation, in connection with any merger, amalgamation or consolidation involving Holdings) any Equity Interests of Holdings or any direct or indirect parent of Holdings (other than any such Equity Interests owned by Holdings or any Restricted Subsidiary of Holdings);

(3)   make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of Holdings or any Guarantor that is contractually subordinated to the notes or to any Note Guarantee (excluding any intercompany Indebtedness between or among Holdings and any of its Restricted Subsidiaries), except a payment of interest or principal at the Stated Maturity thereof; or

(4)   make any Restricted Investment

(all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”),

unless, at the time of and after giving effect to such Restricted Payment:

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(1)   no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;

(2)   Holdings would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable two-quarter period, have been permitted to incur at least US$1.00 of additional Indebtedness pursuant to the Consolidated Leverage Ratio test set forth in the first paragraph of the covenant described below under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock;” and

(3)   such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by Holdings and its Restricted Subsidiaries since the date of the indenture (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (6) and (7) of the next succeeding paragraph), is less than the sum, without duplication, of:

(a)   the difference between (i) Consolidated Cash Flow of Holdings for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the indenture to the end of Holdings’ most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment and (ii) 200% of the Consolidated Interest Expense of Holdings for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the indenture to the end of Holdings’ most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment; plus

(b)   Total Incremental Equity; plus

(c)   to the extent that any Restricted Investment that was made after the date of the indenture is sold for cash or otherwise liquidated or repaid for cash, the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any); plus

(d)   50% of any dividends received by Holdings or a Restricted Subsidiary of Holdings after the date of the indenture from an Unrestricted Subsidiary of Holdings, to the extent that such dividends were not otherwise included in the Consolidated Net Income of Holdings for such period; plus

(e)   to the extent that any Unrestricted Subsidiary of Holdings designated as such after the date of the indenture is redesignated as a Restricted Subsidiary after the date of the indenture, the Fair Market Value of Holdings’ Investment in such Subsidiary as of the date of such redesignation; minus

(f)   100% of the aggregate principal amount of Indebtedness then outstanding, which was incurred pursuant to clause (2) of the second paragraph of the covenant entitled “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock.”

So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit:

(1)   the payment of any dividend or distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend, distribution or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend, distribution or redemption payment would have complied with the provisions of the indenture;

(2)   the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of Holdings) of Equity Interests of Holdings (other than Disqualified Stock) or from the substantially concurrent contribution of common equity capital to Holdings; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded from clause (3)(b) of the preceding paragraph;

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(3)   the repurchase, repayment, prepayment, redemption, defeasance or other acquisition or retirement for value of Indebtedness of Holdings or any Guarantor that is contractually subordinated to the notes or to any Note Guarantee with the net cash proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness;

(4)   the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary of Holdings to the holders of its Equity Interests on a pro rata basis;

(5)   the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Holdings or any Restricted Subsidiary of Holdings held by any current or former officer, director or employee of Holdings or any of its Restricted Subsidiaries pursuant to any equity subscription agreement, stock option agreement, shareholders’ agreement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed US$1,000,000 in any twelve-month period;

(6)   the repurchase of Equity Interests deemed to occur upon the exercise of stock options to the extent such Equity Interests represent a portion of the exercise price of those stock options;

(7)   payments made to purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of Holdings or a Guarantor that is contractually subordinated to the notes or to any Guarantee, in each case, pursuant to provisions requiring such Person to offer to purchase, redeem, defease or otherwise acquire or retire for value such subordinated Indebtedness upon the occurrence of a “change of control” or with the proceeds of “asset sales” as defined in the agreements or instruments governing such subordinated Indebtedness; provided however, that a Change of Control Offer or Asset Sale Offer, as applicable, has been made and Holdings has purchased all notes validly tendered in connection with that Change of Control Offer or Asset Sale Offer;

(8)   the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of Holdings or any Restricted Subsidiary of Holdings issued on or after the date of the indenture in accordance with the Consolidated Leverage Ratio test described below under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock;”

(9)   payments or distributions to dissenting stockholders pursuant to applicable law pursuant to or in connection with a consolidation, merger or transfer of assets that complies with the provisions of the indenture applicable to mergers, consolidations and transfers of all or substantially all of our property or assets; and

(10)   other Restricted Payments in an aggregate amount not to exceed US$5.0 million since the date of the indenture.

The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by Holdings or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this covenant will be determined in good faith (a) in the case of assets or securities valued at US$5.0 million or less, by a senior financial officer of Holdings set forth in a certificate to the trustee from such officer, and (b) in the case of assets or securities valued at more than US$10.0 million, by Holdings’ Board of Directors and set forth in an officers’ certificate delivered to the trustee. The Board of Directors’ determination must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if the Fair Market Value exceeds US$20.0 million.

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Incurrence of Indebtedness and Issuance of Preferred Stock

Holdings will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and Holdings will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that Holdings may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock and any Guarantor may incur Indebtedness (including Acquired Debt) or issue shares of preferred stock, if Holdings’ Consolidated Leverage Ratio at the time of incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock, after giving pro forma effect to such incurrence or issuance as of such date and to the use of proceeds therefrom as if the same had occurred at the beginning of the most recently ended two full fiscal quarters of Holdings for which internal financial statements are available, would have been no greater than 5.5 to 1.

The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

(1)   the incurrence by Holdings or any Guarantor of additional Indebtedness, including under the Credit Agreement, in an aggregate principal amount at any one time outstanding under this clause (1) not to exceed US$50.0 million;

(2)   the incurrence by Holdings and any Guarantor of Indebtedness in an aggregate principal amount at any one time outstanding under this clause (2) of up to 200% of Total Incremental Equity; provided that the total amount of Indebtedness outstanding at any one time under this clause (2) may not exceed US$50.0 million; provided further that the amount of any such net cash proceeds that are utilized for purposes of incurring Indebtedness under this clause (2) will be excluded from clause (3)(b) of the first paragraph of the section entitled “Certain Covenants—Restricted Payments;”

(3)   the incurrence by Holdings and any Guarantor of Indebtedness that is contractually subordinated in right of payment to the notes;

(4)   the incurrence by Holdings or any of its Restricted Subsidiaries of Indebtedness, incurred for the purpose of financing all or any part of the purchase price or cost of inventory used in the business of Holdings or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed US$5.0 million at any time outstanding;

(5)   the incurrence by Holdings and its Restricted Subsidiaries of the Existing Indebtedness;

(6)   the incurrence by Holdings and the Guarantors of Indebtedness represented by the notes and the related Note Guarantees to be issued on the date of the indenture and continued to be represented by the exchange notes and the related Note Guarantees to be issued pursuant to the registration rights agreement;

(7)   the incurrence by Holdings or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used in the business of Holdings or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (7), not to exceed US$5.0 million at any time outstanding;

(8)   the incurrence by Holdings or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by the indenture to be incurred under the first paragraph of this covenant or clauses (4), (5), (6), (7) or (15) of this paragraph;

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(9)   the incurrence by Holdings or any of its Restricted Subsidiaries of intercompany Indebtedness between or among Holdings and any of its Restricted Subsidiaries; provided, however, that:

(a)   if Holdings or any Guarantor is the obligor on such Indebtedness and the payee is not Holdings or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the notes, in the case of Holdings, or the Note Guarantee, in the case of a Guarantor; and

(b)   (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than Holdings or a Restricted Subsidiary of Holdings and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either Holdings or a Restricted Subsidiary of Holdings, will be deemed, in each case, to constitute an incurrence of such Indebtedness by Holdings or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (9);

(10)   the issuance by any of Holdings’ Restricted Subsidiaries to Holdings or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:

(a)   any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than Holdings or a Restricted Subsidiary of Holdings; and

(b)   any sale or other transfer of any such preferred stock to a Person that is not either Holdings or a Restricted Subsidiary of Holdings,

will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (10);

(11)   the incurrence by Holdings or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;

(12)   the guarantee by Holdings or any of the Guarantors of Indebtedness of Holdings or a Restricted Subsidiary of Holdings that was permitted to be incurred by another provision of this covenant; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the notes, then the guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;

(13)   the incurrence by Holdings or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, performance or surety bonds or other reimbursement obligations in the ordinary course of business;

(14)   the incurrence by Holdings or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days; and

(15)   the incurrence by Holdings or any of its Restricted Subsidiaries of Indebtedness to the extent the net proceeds thereof are promptly deposited to defease all outstanding notes as described below under the caption “—Legal Defeasance and Covenant Defeasance.”

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Holdings will not incur, and will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of Holdings or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of Holdings solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis.

For purposes of determining compliance with this “Incurrence of Indebtedness and Issuance of Preferred Stock” covenant, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (15) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, Holdings will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant, including by allocation to more than one other type of Indebtedness. Other Indebtedness ranking equal in right of payment with the notes outstanding on the date on which notes are first issued and authenticated under the indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The outstanding principal amount of any particular Indebtedness shall be counted only once and any obligations arising under any Guarantee, Lien, letter of credit or similar instrument supporting such Indebtedness shall not be double counted. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that Holdings or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.

The amount of any Indebtedness outstanding as of any date will be:

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

(2)   the principal amount of the Indebtedness, in the case of any other Indebtedness; and

(3)   in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:

(a)   the Fair Market Value of such assets at the date of determination; and

(b)   the amount of the Indebtedness of the other Person.

Liens

Holdings will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind securing Indebtedness on any asset now owned or hereafter acquired, except Permitted Liens.

Limitation on Sale and Leaseback Transactions

Holdings will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction; provided that Holdings and any Guarantor may enter into a sale and leaseback transaction if:

(1)   Holdings or that Guarantor, as applicable, could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction under the Consolidate Leverage Coverage Ratio test in the first paragraph of the covenant described above under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock” and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant described above under the caption “—Liens;” and

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(2)   the transfer of assets in that sale and leaseback transaction is permitted by, and Holdings applies the proceeds of such transaction in compliance with, the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales.”

Dividend and Other Payment Restrictions Affecting Subsidiaries

Holdings will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1)   pay dividends or make any other distributions on its Capital Stock to Holdings or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to Holdings or any of its Restricted Subsidiaries;

(2)   make loans or advances to Holdings or any of its Restricted Subsidiaries; or

(3)   sell, lease or transfer any of its properties or assets to Holdings or any of its Restricted Subsidiaries.

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

(1)   agreements governing Existing Indebtedness as in effect on the date of the indenture and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those agreements; provided that the amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the date of the indenture;

(2)   the indenture, the notes and the Note Guarantees;

(3)   applicable law, rule, regulation or order;

(4)   any agreement or instrument governing Indebtedness or Capital Stock of a Person acquired by, or merged, consolidated or otherwise combined with or into, Holdings or any of its Restricted Subsidiaries as in effect at the time of such acquisition, merger, consolidation or other combination (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the indenture to be incurred;

(5)   customary non-assignment provisions in leases, contracts and licenses or related documents entered into in the ordinary course of business;

(6)   purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions on the property purchased or leased of the nature described in clause (3) of the preceding paragraph;

(7)   any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition;

(8)   Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;

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(9)   Liens permitted to be incurred under the provisions of the covenant described above under the caption “—Liens” that limit the right of the debtor to dispose of the assets subject to such Liens;

(10)   provisions limiting the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements entered into with the approval of Holdings’ Board of Directors, which limitation is applicable only to the assets that are the subject of such agreements; and

(11)   restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business.

Merger, Consolidation or Sale of Assets

Holdings will not, directly or indirectly: (1) consolidate, amalgamate or merge with or into another Person (whether or not Holdings is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of Holdings and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless:

(1)   either: (a) Holdings is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than Holdings) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation organized or existing under the laws of Canada, the United States, any province, territory or any state thereof or the District of Columbia;

(2)   the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Holdings) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of Holdings under the notes, the indenture, the registration rights agreement and the interest reserve and security agreement;

(3)   immediately after such transaction, no Default or Event of Default exists; and

(4)   Holdings or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Holdings), or to which such sale, assignment, transfer, conveyance or other disposition has been made would, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable two-quarter period, either (a) be permitted to incur at least US$1.00 of additional Indebtedness pursuant to the Consolidated Leverage Ratio test set forth in the first paragraph of the covenant described above under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock,” or (b) have a Consolidated Leverage Ratio equal to or less than the Consolidated Leverage Ratio of Holdings immediately preceding such transaction.

In addition, Holdings will not, directly or indirectly, lease all or substantially all of the properties and assets of it and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to any other Person.

This “Merger, Consolidation or Sale of Assets” covenant will not apply to:

(1)   a merger of Holdings with an Affiliate solely for the purpose of reincorporating Holdings in another jurisdiction; or

(2)   any consolidation, amalgamation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of assets between or among Holdings and its Restricted Subsidiaries.

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Transactions with Affiliates

Holdings will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of Holdings (each, an “Affiliate Transaction”), unless:

(1)   the Affiliate Transaction is on terms that are no less favorable to Holdings or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by Holdings or such Restricted Subsidiary with an unrelated Person; and

(2)   Holdings delivers to the trustee:

(a)   with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of US$5.0 million, a resolution of the Board of Directors of Holdings set forth in an officer’s certificate certifying that such Affiliate Transaction complies with this covenant and, if an opinion meeting the requirements set forth in clause (b) below has not been obtained, that such Affiliate Transaction has been approved by a majority of the members of the Board of Directors of Holdings who have no direct financial interest in such Affiliate Transaction (other than as a stockholder of Holdings or CSR, Inc.); and

(b)   with respect to (x) any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of US$20.0 million, (y) an Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of US$5.0 million where none of the members of the Board of Directors qualify as having no direct financial interest in such Affiliate Transaction (other than as a stockholder of Holdings), an opinion as to the fairness to Holdings or such Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing in the United States or Canada.

The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

(1)   any transaction by Holdings or any Restricted Subsidiary with an Affiliate related to the purchase, sale or distribution of products in the ordinary course of business, which has been approved by a majority of the members of the Board of Directors who are disinterested with respect to such transaction;

(2)   any employment agreement, employee benefit plan, officer or director indemnification agreement or any similar arrangement entered into by Holdings or any of its Restricted Subsidiaries in the ordinary course of business and payments pursuant thereto;

(3)   transactions between or among Holdings and/or its Restricted Subsidiaries;

(4)   transactions with a Person (other than an Unrestricted Subsidiary of Holdings) that is an Affiliate of Holdings solely because Holdings owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;

(5)   payment of reasonable compensation or fees to directors or officers of Holdings and its Subsidiaries;

(6)   any sale or issuance of Equity Interests (other than Disqualified Stock) of Holdings to Affiliates of Holdings;

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(7)   Restricted Payments that do not violate the provisions of the indenture described above under the caption “—Restricted Payments; and

(8)   transactions or agreements in existence on the date of the indenture, including pursuant to the Operating Documents (and extensions or amendments thereof on terms which are not materially less favorable to Holdings than the terms of any such transaction or agreement as in existence on the date of the indenture);

In addition, arms length transactions with XM Satellite Radio Holdings, Inc. and General Motors of Canada Limited, and any of their respective affiliates, undertaken in the ordinary course of business will not be subject to the provisions of clause 2(b) of the immediately preceding paragraph.

Business Activities

Holdings will not, and will not permit any of its Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except to such extent as would not be material to Holdings and its Restricted Subsidiaries taken as a whole.

Additional Note Guarantees

If Holdings or any of its Restricted Subsidiaries acquires or creates another Restricted Subsidiary after the date of the indenture, then that newly acquired or created Restricted Subsidiary will become a Guarantor and execute a supplemental indenture and deliver an opinion of counsel to the effect that such supplemental indenture has been duly authorized, executed and delivered and constitutes a legal, valid, binding and enforceable obligation within 10 business days of the date on which it was acquired or created provided that any Restricted Subsidiary that constitutes an Immaterial Subsidiary need not become a Guarantor until such time as it ceases to be a Immaterial Subsidiary.

Designation of Restricted and Unrestricted Subsidiaries

The Board of Directors of Holdings may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by Holdings and its Restricted Subsidiaries in the Subsidiary designated as Unrestricted will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the covenant described above under the caption “—Restricted Payments” or under one or more clauses of the definition of Permitted Investments, as determined by Holdings. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of Holdings may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that redesignation would not cause a Default.

Any designation of a Subsidiary of Holdings as an Unrestricted Subsidiary will be evidenced to the trustee by filing with the trustee a certified copy of a resolution of the Board of Directors giving effect to such designation and an officer’s certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption “—Restricted Payments.” If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of Holdings as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock,” Holdings will be in default of such covenant. The Board of Directors of Holdings may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of Holdings; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of Holdings of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness is permitted under the covenant described under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock,” calculated on a pro forma basis as if such designation had occurred at the beginning of the two-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation.

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Payments for Consent

Holdings will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture 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.

Reports

Whether or not required by the rules and regulations of the SEC, so long as any notes are outstanding, Holdings will furnish to the holders of notes or cause the trustee to furnish to the holders of notes, within the time periods specified in the SEC’s rules and regulations:

(1)      (a)  all annual financial information that would be required to be contained in a filing with the SEC on Form 20-F or 40-F, as applicable (or any successor forms), containing the information required therein (or required in such successor form); and

               (b)  for first three quarters of each year, all quarterly financial information that would be required to be contained in a filing with the SEC on Form 6-K (or any successor form) containing, at a minimum, the information that would be required to be provided in quarterly reports under the laws of Ontario to securityholders of a company with securities listed on the Toronto Stock Exchange, whether or not Holdings has any of its securities so listed, in each case including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report on the annual financial statements by Holdings’ certified independent accountants; and

(2)      all current reports that would otherwise be required to be filed with the SEC on Form 6-K if Holdings were required to file such reports.

If, at any time after consummation of the exchange offer contemplated by the registration rights agreement, Holdings is no longer subject to the periodic reporting requirements of the Exchange Act for any reason, Holdings will nevertheless continue filing the reports specified in the preceding paragraphs of this covenant with the SEC within the time periods specified above unless the SEC will not accept such a filing. Holdings will not take any action for the purpose of causing the SEC not to accept any such filings. If, notwithstanding the foregoing, the SEC will not accept Holdings’ filings for any reason, Holdings will post the reports referred to in the preceding paragraphs on its website within the time periods that would apply if Holdings were required to file those reports with the SEC.

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If Holdings has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraphs will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the financial condition and results of operations of Holdings and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of Holdings.

If at any time the notes are Guaranteed by a parent company of Holdings, the obligations of Holdings set forth in this covenant will be deemed satisfied if such parent company complies instead with the terms of this covenant by providing all reports and information (including, without limitation, financial information on a consolidated basis) that would otherwise be required to be provided by Holdings.

Events of Default and Remedies

Each of the following is an “Event of Default”:

(1)   default for 30 days in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the notes;

(2)   default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the notes;

(3)   failure by Holdings or any of its Restricted Subsidiaries to comply with the provisions described under the captions “Additional Amounts,” “—Repurchase at the Option of Holders—Change of Control,” or “—Certain Covenants—Merger, Consolidation or Sale of Assets;”

(4)   failure by Holdings or any of its Restricted Subsidiaries for 60 days after notice to Holdings by the trustee or the holders of at least 25% in aggregate principal amount of the notes then outstanding voting as a single class to comply with any of the other agreements in the indenture or the interest reserve and security agreement;

(5)   default 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 Holdings or any of its Restricted Subsidiaries (or the payment of which is guaranteed by Holdings or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the date of the indenture, if that default:

(a)   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”); or

(b)   results in the acceleration of such Indebtedness prior to its express maturity,

and, in each case, the principal amount of any 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 US$10.0 million or more;

(6)   failure by Holdings or any of its Restricted Subsidiaries to pay final non-appealable judgments for the payment of money entered by a court or courts of competent jurisdiction aggregating in excess of US$10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days;

(7)   except as permitted by the indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee;

(8)   breach by Holdings or any of its Restricted Subsidiaries of any material representation or warranty or agreement in the interest reserve and security agreement, the repudiation by Holdings or any of its Restricted Subsidiaries of any of its obligations under the interest reserve and security agreement or the unenforceability of the interest reserve and security agreement against Holdings or any of its Restricted Subsidiaries for any reason;

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(9)   certain events of bankruptcy or insolvency described in the indenture with respect to Holdings or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary;

(10)   failure by Holdings to comply with any material term of the interest reserve and security agreement that is not cured within 10 days; and

       (11)the interest reserve and security agreement or any other security document or any Lien purported to be granted thereby on the interest reserve account or the cash or Government Securities therein is held in any judicial proceeding to be unenforceable or invalid, in whole or in part, or ceases for any reason (other than pursuant to a release that is delivered or becomes effective as set forth in the indenture) to be fully enforceable and perfected.

In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to Holdings, any Restricted Subsidiary of Holdings that is a Significant Subsidiary or any group of Restricted Subsidiaries of Holdings that, taken together, would constitute a Significant Subsidiary, all outstanding notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding notes may declare all the notes to be due and payable immediately.

Subject to certain limitations, holders of a majority in aggregate principal amount of the then outstanding notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from holders of the notes notice of any continuing Default or Event of Default if it determines that withholding notice is in their interest, except a Default or Event of Default relating to the payment of principal, interest or premium or Liquidated Damages, if any.

Subject to the provisions of the indenture relating to the duties of the trustee, in case an Event of Default occurs and is continuing, the trustee will be under no obligation to exercise any of the rights or powers under the indenture at the request or direction of any holders of notes unless such holders have offered to the trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest or Liquidated Damages, if any, when due, no holder of a note may pursue any remedy with respect to the indenture or the notes unless:

(1)   such holder has previously given the trustee notice that an Event of Default is continuing;

(2)   holders of at least 25% in aggregate principal amount of the then outstanding notes have requested the trustee to pursue the remedy;

(3)   such holders have offered the trustee reasonable security or indemnity against any loss, liability or expense;

(4)   the trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

(5)   holders of a majority in aggregate principal amount of the then outstanding notes have not given the trustee a direction inconsistent with such request within such 60-day period.

The holders of a majority in aggregate principal amount of the then outstanding notes by notice to the trustee may, on behalf of the holders of all of the notes, rescind an acceleration or waive any existing Default or Event of Default and its consequences under the indenture except a continuing Default or Event of Default in the payment of interest or premium or Liquidated Damages, if any, on, or the principal of, the notes.

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In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of Holdings with the intention of avoiding payment of the premium that Holdings would have had to pay if Holdings then had elected to redeem the notes pursuant to the optional redemption provisions of the indenture, an equivalent premium will become and be immediately due and payable to the extent permitted by law upon the acceleration of the notes. If an Event of Default occurs prior to February 15, 2010, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of Holdings with the intention of avoiding the prohibition on redemption of the notes prior to February 15, 2010, then an additional premium specified in the indenture will also become and be immediately due and payable to the extent permitted by law upon the acceleration of the notes.

Holdings is required to deliver to the trustee annually a statement regarding compliance with the indenture. Upon becoming aware of any Default or Event of Default, Holdings is required to deliver to the trustee a statement specifying such Default or Event of Default.

No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee, incorporator or stockholder of Holdings or any Guarantor, as such, will have any liability for any obligations of Holdings or the Guarantors under the notes, the indenture, the Note Guarantees, the interest reserve and security agreement or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the United States federal securities laws.

Legal Defeasance and Covenant Defeasance

Holdings may at any time, at its option, elect to have all of its obligations discharged with respect to the outstanding notes and all obligations of the Guarantors discharged with respect to their Note Guarantees (“Legal Defeasance”) except for:

(1)   the rights of holders of outstanding notes to receive payments in respect of the principal of, or interest or premium and Liquidated Damages, if any, on, such notes when such payments are due from the trust referred to below;

(2)   Holdings’ obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust;

(3)   the rights, powers, trusts, duties and immunities of the trustee, and Holdings’ and the Guarantors’ obligations in connection therewith; and

(4)   the Legal Defeasance provisions of the indenture.

In addition, Holdings may, at its option and at any time, elect to have the obligations of Holdings and the Guarantors released with respect to certain covenants (including its obligation to make Change of Control Offers and Asset Sale Offers) that are described in the indenture (“Covenant Defeasance”) and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under “Events of Default and Remedies” will no longer constitute an Event of Default with respect to the notes.

In order to exercise either Legal Defeasance or Covenant Defeasance:

(1)   Holdings must irrevocably deposit with the trustee, in trust, for the benefit of the holders of the notes, cash in United States dollars, non-callable Government Securities, or a combination of cash in United States dollars and non-callable Government Securities, in amounts as will be sufficient, in the opinion of a nationally recognized investment bank in the United States or Canada, appraisal firm or firm of independent public accountants, to pay the principal of, or interest and premium and Liquidated Damages, if any, on, the outstanding notes on the stated maturity thereof or on the applicable redemption date, as the case may be, and Holdings must specify whether the notes are being defeased to such stated maturity or to a particular redemption date;

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(2)   in the case of Legal Defeasance, Holdings must deliver to the trustee an opinion of counsel confirming that (a) Holdings has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the date of the indenture, there has been a change in the applicable United States federal income tax law, in either case to the effect that, and based thereon such opinion of counsel will confirm that, the holders of the outstanding notes will not recognize income, gain or loss for United States federal income tax purposes as a result of such Legal Defeasance and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3)   in the case of Covenant Defeasance, Holdings must deliver to the trustee an opinion of counsel confirming that the holders of the outstanding notes will not recognize income, gain or loss for United States federal income tax purposes as a result of such Covenant Defeasance and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4)   in the case of Legal Defeasance or Covenant Defeasance, Holdings must deliver to the trustee an opinion of counsel confirming that the holders and beneficial owners of the outstanding notes will not recognize income, gain or loss for Canadian federal, provincial, territorial income tax or other tax purposes as a result of such Legal Defeasance or Covenant Defeasance, as applicable, and will be subject to Canadian federal, provincial or territorial income tax and other tax on the same amounts, if any, in the same manner and at the same times as would have been the case if such Legal Defeasance or Covenant Defeasance, as the case may be, had not occurred (which condition may not be waived by any holder of outstanding notes or the trustee);

(5)   no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit);

(6)   such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the indenture) to which Holdings or any of its Subsidiaries is a party or by which Holdings or any of its Subsidiaries is bound;

(7)   Holdings must deliver to the trustee an officer’s certificate stating that the deposit was not made by Holdings with the intent of preferring the holders of notes over the other creditors of Holdings with the intent of defeating, hindering, delaying or defrauding any creditors of Holdings or others; and

(8)   Holdings must deliver to the trustee an officer’s certificate and an opinion of counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Amendment, Supplement and Waiver

Except as provided in the next two succeeding paragraphs, the indenture or the notes or the Note Guarantees may be amended or supplemented with the consent of the holders of at least a majority in aggregate principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes), and any existing Default or Event of Default or compliance with any provision of the indenture or the notes or the Note Guarantees may be waived with the consent of the holders of a majority in aggregate principal amount of the then outstanding notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes).

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Without the consent of each holder of notes affected, an amendment, supplement or waiver may not (with respect to any notes held by a non-consenting holder):

(1)   reduce the principal amount of notes whose holders must consent to an amendment, supplement or waiver;

(2)   reduce the principal of or change the fixed maturity of any note or alter the provisions with respect to the redemption of the notes (other than provisions relating to the covenants described above under the caption “—Repurchase at the Option of Holders”);

(3)   reduce the rate of or change the time for payment of interest, including default interest, on any note;

(4)   waive a Default or Event of Default in the payment of principal of, or interest or premium, or Liquidated Damages, if any, on, the notes (except a rescission of acceleration of the notes by the holders of at least a majority in aggregate principal amount of the then outstanding notes and a waiver of the payment default that resulted from such acceleration);

(5)   make any note payable in money other than that stated in the notes;

(6)   make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of holders of notes to receive payments of principal of, or interest or premium or Liquidated Damages, if any, on, the notes;

(7)   waive a redemption payment with respect to any note (other than a payment required by one of the covenants described above under the caption “—Repurchase at the Option of Holders”);

(8)   release any Guarantor from any of its obligations under its Note Guarantee or the indenture, except in accordance with the terms of the indenture;

(9)   release of any collateral except as contemplated by the interest reserve and security agreement; or

(10)   make any change in the preceding amendment and waiver provisions.

Notwithstanding the preceding, without the consent of any holder of notes, Holdings, the Guarantors and the trustee may amend or supplement the indenture, the notes or the Note Guarantees:

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(1)   to cure any ambiguity, defect or inconsistency;

(2)   to provide for uncertificated notes in addition to or in place of certificated notes;

(3)   to provide for the assumption of Holdings’ or a Guarantor’s obligations to holders of notes and Note Guarantees in the case of a merger, amalgamation or consolidation or sale of all or substantially all of Holdings’ or such Guarantor’s assets, as applicable;

(4)   to make any change that would provide any additional rights or benefits to the holders of notes or that does not adversely affect the legal rights under the indenture of any such holder;

(5)   to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act;

(6)   to conform the text of the indenture, the Note Guarantees, the interest reserve and security agreement or the notes to any provision of this Description of Exchange Notes to the extent that such provision in this Description of Exchange Notes was intended to be a verbatim recitation of a provision of the indenture, the Note Guarantees, the interest reserve and security agreement or the notes;

(7)   to provide for the issuance of additional notes in accordance with the limitations set forth in the indenture as of the date of the indenture; or

(8)   to allow any Guarantor to execute a supplemental indenture and/or a Note Guarantee with respect to the Notes.

Satisfaction and Discharge

The indenture will be discharged and will cease to be of further effect as to all notes issued thereunder, when:

(1)   either:

(a)   all notes that have been authenticated, except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has been deposited in trust and thereafter repaid to Holdings, have been delivered to the trustee for cancellation; or

(b)   all notes that have not been delivered to the trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and Holdings or any Guarantor has irrevocably deposited or caused to be deposited with the trustee as trust funds in trust solely for the benefit of the holders, cash in United States dollars, non-callable Government Securities, or a combination of cash in United States dollars and non-callable Government Securities, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the notes not delivered to the trustee for cancellation for principal, premium and Liquidated Damages, if any, and accrued interest to the date of maturity or redemption;

(2)   no Default or Event of Default has occurred and is continuing on the date of the deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which Holdings or any Guarantor is a party or by which Holdings or any Guarantor is bound;

(3)   Holdings or any Guarantor has paid or caused to be paid all sums payable by it under the indenture; and

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(4)   Holdings has delivered irrevocable instructions to the trustee under the indenture to apply the deposited money toward the payment of the notes at maturity or on the redemption date, as the case may be.

In addition, Holdings must deliver an officer’s certificate and an opinion of counsel to the trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Concerning the Trustee

If the trustee becomes a creditor of Holdings or any Guarantor, the indenture limits the right of the trustee to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee (if the indenture has been qualified under the Trust Indenture Act) or resign.

The holders of a majority in aggregate principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee, subject to certain exceptions. The indenture provides that in case an Event of Default occurs and is continuing, the trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder of notes, unless such holder has offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense.

Consent to Jurisdiction and Service

The indenture and the interest reserve and security agreement provide that Holdings and each Guarantor irrevocably appoint CT Corporation System of New York, New York, as their respective agent for service of process in any suit, action or proceeding with respect to the indenture and the interest reserve and security agreement, the notes or the exchange notes and for actions brought under United States federal or state securities laws brought in any United States federal or state court located in The City of New York and will submit to the jurisdiction of such courts.

Additional Information

Anyone who receives this prospectus may obtain a copy of the indenture and the interest reserve and security agreement, without charge, by writing to Canadian Satellite Radio Holdings Inc., Suite 2300, PO Box 222, Canada Trust Tower, BCE Place, 161 Bay Street, Toronto, Ontario M5J 2S1, Attention Chief Financial Officer.

Governing Law

The indenture provides that the indenture, the notes and the Note Guarantees are governed by and construed in accordance with the laws of the State of New York.

Enforceability of Judgments

Since substantially all of the assets of Holdings are outside the United States, any judgment obtained in the United States against Holdings, including judgments with respect to the payment of principal, premium, Liquidated Damages, if any, and interest on the notes, may not be collectible within the United States.

Holdings has been informed by its Canadian counsel, Stikeman Elliott LLP, that the laws of the Province of Ontario permit an action to be brought in a court of competent jurisdiction in the Province of Ontario (a “Canadian Court”) on any final and conclusive judgment in personam of any federal or state court located in the Borough of Manhattan in the City of New York (“New York Court”) that is not impeachable as void or voidable under the internal laws of the State of New York for a sum certain if (i) the court rendering such judgment had jurisdiction over the judgment debtor, as recognized by a Canadian Court (and submission by Holdings in the indenture to the jurisdiction of the New York Court will be sufficient for the purpose); (ii) such judgment was not obtained by fraud or in a manner contrary to natural justice and the enforcement thereof would not be inconsistent with public policy, as such term is understood under the laws of the Province of Ontario; (iii) the enforcement of such judgment does not constitute, directly or indirectly, the enforcement of foreign revenue, expropriatory or penal laws; and (iv) the action to enforce such judgment is commenced within six years of the date of such judgment. In the opinion of such counsel, a Canadian Court would not avoid enforcement of judgments of a New York Court respecting the indenture, the notes or the Note Guarantees on the basis of public policy, as that term is understood under the laws of the Province of Ontario and the federal laws of Canada applicable therein.

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Book-Entry, Delivery and Form

The notes will initially be issued in registered, global form in minimum denominations of US$2,000 and integral multiples of US$1,000 in excess of US$1,000.

The Global Notes will be deposited upon issuance with the trustee as custodian for The Depository Trust Company (“DTC”), in New York, New York, and registered in the name of DTC or its nominee, in each case, for credit to an account of a direct or indirect participant in DTC as described below.

Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for definitive notes in registered certificated form (“Certificated Notes”) except in the limited circumstances described below. See “—Exchange of Global Notes for Certificated Notes.” Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of notes in certificated form.

In addition, transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants (including, if applicable, those of Euroclear and Clearstream), which may change from time to time.

Paying Agent and Registrar for the Notes

The trustee will initially act as paying agent and registrar. Holdings may change the paying agent or registrar without prior notice to the holders of the notes, and Holdings or any of its Subsidiaries may act as paying agent or registrar.

Transfer and Exchange

A holder may transfer or exchange notes in accordance with the provisions of the indenture. The registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents in connection with a transfer of notes. Holders will be required to pay all taxes due on transfer. Holdings will not be required to transfer or exchange any note selected for redemption. Also, Holdings will not be required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed.

Depository Procedures

The following description of the operations and procedures of DTC, Euroclear and Clearstream are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. Holdings takes no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters.

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DTC has advised Holdings that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the “Participants”) and to facilitate the clearance and settlement of transactions in those securities between the Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the initial purchasers), banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the “Indirect Participants”). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.

DTC has also advised Holdings that, pursuant to procedures established by it:

(1)   upon deposit of the Global Notes, DTC will credit the accounts of the Participants designated by the initial purchasers with portions of the principal amount of the Global Notes; and

(2)   ownership of these interests in the Global Notes will be shown on, and the transfer of ownership of these interests will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interest in the Global Notes).

Investors in the Global Notes who are Participants may hold their interests therein directly through DTC. Investors in the Global Notes who are not Participants may hold their interests therein indirectly through organizations (including Euroclear and Clearstream) which are Participants.

All interests in a Global Note, including those held through Euroclear or Clearstream, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream may also be subject to the procedures and requirements of such systems. The laws of some states require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such Persons will be limited to that extent. Because DTC can act only on behalf of the Participants, which in turn act on behalf of the Indirect Participants, the ability of a Person having beneficial interests in a Global Note to pledge such interests to Persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.

Except as described below, owners of interests in the Global Notes will not have notes registered in their names, will not receive physical delivery of notes in certificated form and will not be considered the registered owners or “holders” thereof under the indenture for any purpose.

Payments in respect of the principal of, and interest and premium, if any, and Liquidated Damages, if any, on, a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered holder under the indenture. Under the terms of the indenture, Holdings and the trustee will treat the Persons in whose names the notes, including the Global Notes, are registered as the owners of the notes for the purpose of receiving payments and for all other purposes. Consequently, neither Holdings, the trustee nor any agent of Holdings or the trustee has or will have any responsibility or liability for:

(1)   any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Notes; or

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(2)   any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.

DTC has advised Holdings that its current practice, upon receipt of any payment in respect of securities such as the notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe that it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the trustee or Holdings. Neither Holdings nor the trustee will be liable for any delay by DTC or any of the Participants or the Indirect Participants in identifying the beneficial owners of the notes, and Holdings and the trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.

Transfers between the Participants will be effected in accordance with DTC’s procedures, and will be settled in same-day funds, and transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.

Subject to compliance with the transfer restrictions applicable to the notes described herein, cross-market transfers between the Participants, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC’s rules on behalf of Euroclear or Clearstream, as the case may be, by their respective depositaries; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositories for Euroclear or Clearstream.

DTC has advised Holdings that it will take any action permitted to be taken by a holder of notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the notes, DTC reserves the right to exchange the Global Notes for legended notes in certificated form, and to distribute such notes to its Participants.

Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. None of Holdings, the trustee and any of their respective agents will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Exchange of Global Notes for Certificated Notes

A Global Note is exchangeable for Certificated Notes if:

(1)   DTC (a) notifies Holdings that it is unwilling or unable to continue as depositary for the Global Notes or (b) has ceased to be a clearing agency registered under the Exchange Act and, in either case, Holdings fails to appoint a successor depositary;

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(2)   Holdings, at its option, notifies the trustee in writing that it elects to cause the issuance of the Certificated Notes; or

(3)   there has occurred and is continuing a Default or Event of Default with respect to the notes.

In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon prior written notice given to the trustee by or on behalf of DTC in accordance with the indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures).

Same Day Settlement and Payment

Holdings will make payments in respect of the notes represented by the Global Notes (including principal, premium, if any, interest and Liquidated Damages, if any) by wire transfer of immediately available funds to the accounts specified by DTC or its nominee. Holdings will make all payments of principal, interest and premium, if any, and Liquidated Damages, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the holders of the Certificated Notes or, if no such account is specified, by mailing a check to each such holder’s registered address. All other payments on certificated notes will be made at the office or agency of the paying agent and registrar within the City and State of New York unless Holdings elects to make interest payments by check mailed to the holders of such notes at their address set forth in the register of holders. The notes represented by the Global Notes are expected to be eligible to trade in The PORTAL^SM Market and to trade in DTC’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in such notes will, therefore, be required by DTC to be settled in immediately available funds. Holdings expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.

Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a Participant will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised Holdings that cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note by or through a Euroclear or Clearstream participant to a Participant will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC’s settlement date.

Certain Definitions

Set forth below are certain defined terms used in the indenture. Reference is made to the indenture for a full disclosure of all defined terms used therein, as well as any other capitalized terms used herein for which no definition is provided.

“Acquired Debt” means, with respect to any specified Person:

(1)   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, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and

(2)   Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“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, means 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 will be deemed to be control. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

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“Asset Sale” means:

(1)   the sale, lease, conveyance or other disposition of any assets or rights; provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of Holdings and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the indenture described above under the caption “—Repurchase at the Option of Holders—Change of Control” and/or the provisions described above under the caption “—Certain Covenants—Merger, Consolidation or Sale of Assets” and not by the provisions of the Asset Sale covenant; and

(2)   the issuance of Equity Interests in any of Holdings’ Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries.

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(1)   any single transaction or series of related transactions that involves assets having a Fair Market Value of less than US$1.0 million;

(2)   a transfer of assets between or among Holdings and its Restricted Subsidiaries (including any Persons that become a Restricted Subsidiary in connection with such transaction);

(3)   an issuance of Equity Interests by a Restricted Subsidiary of Holdings to Holdings or to a Restricted Subsidiary of Holdings;

(4)   the sale or lease of inventory, equipment, products, services or accounts receivable in the ordinary course of business and any sale or other disposition of damaged, worn-out or obsolete assets in the ordinary course of business;

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

(6)   a Restricted Payment that does not violate the covenant described above under the caption “—Certain Covenants—Restricted Payments;”

(7)   a Permitted Investment; and

(8)   any sale or disposition deemed to occur in connection with creating, granting or enforcing any Permitted Lien.

“Asset Sale Offer” has the meaning assigned to that term in the indenture governing the notes.

“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; provided, however, that if such sale and leaseback transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capital Lease Obligation.”

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“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” will 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 after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.

“Board of Directors” means:

(1)   with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

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

(3)   with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and

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

“Capital Lease Obligation” means, at the time any determination 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 prepared 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 interests (whether general or limited) or membership interests; 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, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“Cash Equivalents” means, as at any date of determination,

(1)   United States dollars;

(2)   Canadian dollars;

(3)   marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States or Canada and maturing within one year of the date of acquisition thereof or (b) issued by any agency of the United States or Canada the obligations of which are backed by the full faith and credit of the United States or Canada, in each case maturing within one year after the date of acquisition thereof;

(4)   marketable direct obligations issued by any state of the United States of America or province of Canada or any political subdivision of any such state or province or any public instrumentality thereof, in each case maturing within one year after the date of acquisition thereof and having a rating of at least A-2 from S&P or at least P-2 from Moody’s;

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(5)   commercial paper maturing no more than one year from the date of acquisition thereof and having a rating of at least A-2 from S&P, at least P-2 from Moody’s or at least R-2 (high) from Dominion Bond Rating Services Limited;

(6)   certificates of deposit, time deposits or bankers’ acceptances maturing within one year after the date of acquisition thereof and issued or accepted by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator) and has Tier 1 capital (as defined in such regulations) of not less than US$100.0 million;

(7)   financial instruments maturing within one year after the date of acquisition thereof and issued by any Canadian chartered bank which has a long-term debt rating of at least A+ by S&P, A2 by Moody’s or A (high) by Dominion Bond Rating Services Limited;

(8)   repurchase agreements with a term of not more than 30 days for underlying securities of the types described in clause (1) or (2) entered into with any bank meeting the qualifications specified in clause (4) or (5), which repurchase obligations are secured by a perfected first priority security interest in the underlying securities; and

(9)   shares of any money market mutual fund that has at least 95% all of its assets invested continuously in the types of investments referred to in clauses (1) and (5) above.

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

(1)   the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger, amalgamation or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of Holdings 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 Holdings;

(3)   the consummation of any transaction (including, without limitation, any merger, amalgamation or consolidation), the result of which is that any “person” (as defined in clause (1) above), 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, measured by voting power rather than number of shares; or

(4)   Holdings consolidates with, amalgamates with, or merges with or into, any Person, or any Person consolidates with, amalgamates with, or merges with or into, Holdings, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of Holdings 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 Holdings 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);

(5)   the first day on which a majority of the members of the Board of Directors of Holdings are not Continuing Directors; or

(6)   the direct or indirect sale, lease, transfer, conveyance or other disposition of effective control of the satellite broadcasting undertaking to any “person” (as that term is used in Section 13(d) of the Exchange Act), or a material change in the CRTC License, which directly results in the termination by XM of their obligations pursuant to the XM License Agreement or renders Holdings or any of its Restricted Subsidiaries incapable of conducting business as conducted on the date hereof.

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“Change of Control Offer” has the meaning assigned to that term in the indenture governing the notes.

“Consolidated Cash Flow” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication:

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

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

(3)   the Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period, to the extent that such Consolidated Interest Expenses were 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 Person and its Restricted 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 Restricted Subsidiary of Holdings shall be added to Consolidated Net Income to compute Consolidated Cash Flow of Holdings only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to Holdings by such Restricted 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 Restricted Subsidiary or its stockholders.

“Consolidated Indebtedness” means, at any date of determination, with respect to any Person as of any date of determination, the sum, without duplication, of (i) the total amount of Indebtedness of such Person and its Restricted Subsidiaries, plus (ii) the total amount of Indebtedness of any other Person, to the extent that such Indebtedness has been Guaranteed by the referent Person or one or more of its Restricted Subsidiaries, plus (iii) the aggregate liquidation value of all Disqualified Stock of such Person and all preferred stock of Restricted Subsidiaries of such Person, in each case, determined on a consolidated basis in accordance with GAAP.

“Consolidated Interest Expense” means, with respect to any Person for any period, the sum without duplication of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, 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, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net payments (if any) pursuant to Hedging Obligations) and (ii) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (a) all dividend payments on any series of preferred stock of such Person or any of its Subsidiaries, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, provincial, state and local or other statutory Canadian or United States tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP.

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“Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (a) the Consolidated Indebtedness of Holdings as of such date to (b) two times the Consolidated Cash Flow of Holdings for the two most recent full fiscal quarter ending immediately prior to such date for which internal financial statements are available, determined on a pro forma basis after giving effect to all acquisitions or dispositions of assets made by Holdings and its Restricted Subsidiaries from the beginning of such two-quarter period through and including such date of determination (including any related financing transactions) as if such acquisitions and dispositions had occurred at the beginning of such two-quarter period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by Holdings or any of its Subsidiaries, including through mergers, amalgamations or consolidations and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, during the two-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (3) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded.

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

(1)   the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person;

(2)   the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted 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 Restricted Subsidiary or its stockholders, members, managers or partners, as applicable;

(3)   the cumulative effect of a change in accounting principles will be excluded; and

(4)   notwithstanding clause (1) above, the Net Income of any Unrestricted Subsidiary will be excluded, whether or not distributed to the specified Person or one of its Subsidiaries.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of Holdings who:

(1)   was a member of such Board of Directors on the date of the indenture; or

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(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 of Directors at the time of such nomination or election.

“Credit Agreement” means that certain agreement dated as of November 17, 2005 between CSR, Inc., Holdings and XM Satellite Radio Holdings, Inc. as amended, extended, renewed, restated, replaced, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreement (and related document or instrument) governing Indebtedness incurred to Refinance, in whole or in part, the borrowings and commitments then outstanding or permitted to be outstanding under such Credit Agreement or a successor Credit Agreement, whether by the same or any other lender or group of lenders.

“CRTC License” means the broadcasting license to carry on a satellite subscription radio undertaking granted to CSR pursuant to the Broadcasting Act in Broadcasting Decision CRTC 2005-246, as amended or renewed from time to time.

“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.

“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 of the Capital Stock), 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 of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require Holdings to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that Holdings may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption “—Certain Covenants—Restricted Payments.” The amount of Disqualified Stock deemed to be outstanding at any time for purposes of the indenture will be the maximum amount that Holdings and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

“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).

“Existing Indebtedness” means Indebtedness of Holdings and its Subsidiaries in existence on the date of the indenture, until such amounts are repaid.

“Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the Board of Directors of Holdings (unless otherwise provided in the indenture).

“GAAP” means generally accepted accounting principles consistently applied as in effect in Canada as of the date of the indenture.

“GovernmentSecurities” means direct obligations of, or obligations guaranteed by, the United States of America (including any agency or instrumentality thereof) for the payment of which obligations or guarantees the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer’s option.

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“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, without limitation, 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 (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise).

“Guarantors” means each of:

(2)   Canadian Satellite Radio Inc.; and

(3)   any other Subsidiary of Holdings that executes a Note Guarantee in accordance with the provisions of the indenture,

and their respective successors and assigns, in each case, until the Note Guarantee of such Person has been released in accordance with the provisions of the indenture.

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

(1)   interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;

(2)   other agreements or arrangements designed to manage interest rates or interest rate risk; and

(3)   other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates.

“Immaterial Subsidiary” means, as of any date, any Restricted Subsidiary whose total assets, as of that date, are less than US$250,000 and whose total revenues for the most recent 12-month period for which financial statements are available do not exceed US$250,000; provided that a Restricted Subsidiary will not be considered to be an Immaterial Subsidiary if it, directly or indirectly, guarantees or otherwise provides direct credit support for any Indebtedness of Holdings.

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent:

(1)   in respect of borrowed money;

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

(3)   in respect of banker’s acceptances;

(4)   representing Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions;

(5)   representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed, except any such balance that constitutes an accrued exposure or trade payable; or

(6)   representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit, Attributable Debt 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” includes 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) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person.

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“Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms 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. If Holdings or any Restricted Subsidiary of Holdings sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of Holdings such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of Holdings, Holdings will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of Holdings’ Investments in such Restricted Subsidiary that were not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption “—Certain Covenants—Restricted Payments.” The acquisition by Holdings or any Restricted Subsidiary of Holdings of a Person that holds an Investment in a third Person will be deemed to be an Investment by Holdings or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in the final paragraph of the covenant described above under the caption “—Certain Covenants—Restricted Payments.” Except as otherwise provided in the indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value.

“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.

“Liquidated Damages” means all liquidated damages then owing pursuant to the registration rights agreement.

“Moody’s” means Moody’s Investors Service, Inc.

“Net Income” means, with respect to any specified Person, the net income (loss) of such Person, 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 Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted 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 Holdings or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, 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, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation or severance expenses incurred as a result of the Asset Sale, taxes paid or payable as a result of the Asset Sale, 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.

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“Non-Recourse Debt” means Indebtedness:

(1)   as to which neither Holdings nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender;

(2)   no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of Holdings or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and

(3)   as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of Holdings or any of its Restricted Subsidiaries.

“Note Guarantee” means the Guarantee by each Guarantor of Holdings’ obligations under the indenture and the notes, executed pursuant to the provisions of the indenture.

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

“Operating Documents” means the XM License Agreement, XM Programming Agreement, XM Repeater Purchase Agreement, XM Technical Services Agreement, XM Trademark License Agreement, XM Operational Letter Agreement and the GMCL Distribution Agreement, as the same may by amended or modified from time to time, in each case on terms that are not materially adverse to the holders of notes.

“Permitted Business” means any business conducted by Holdings or any Restricted Subsidiary on the date of the indenture and any businesses that, in the good faith judgment of the Board of Directors of Holdings, are similar, reasonably related, ancillary or complementary thereto, or reasonable extensions or expansions thereof, including in connection with Holdings existing and future technology, trademarks, patents or licenses.

“Permitted Investments” means:

(1)   any Investment in Holdings or in Restricted Subsidiary of Holdings;

(3)   any Investment in Cash Equivalents;

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

(a)   such Person becomes a Restricted Subsidiary of Holdings; 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, Holdings or a Restricted Subsidiary of Holdings;

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(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 the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales;”

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

(6)   any Investments received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of Holdings or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation, arbitration or other disputes with Persons who are not Affiliates;

(7)   Investments represented by Hedging Obligations;

(8)   loans or advances to officers, directors and employees of Holdings or any Restricted Subsidiary of Holdings made in the ordinary course of business in an aggregate principal amount not to exceed US$2.0 million at any one time outstanding;

(9)   repurchases of the notes;

(10)   Investments in existence on the date of the indenture and modifications thereof, including investments made or to be made pursuant to the Operating Documents; 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) that are at the time outstanding not to exceed US$10.0 million.

“Permitted Liens” means:

(1)   Liens in favor of Holdings or the Guarantors;

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

(3)   Liens on property (including Capital Stock) existing at the time of acquisition of the property by Holdings or any Subsidiary of Holdings; provided that such Liens were in existence prior to, and not incurred in contemplation of, such acquisition;

(4)   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;

(5)   Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (7) of the second paragraph of the covenant entitled “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock”;

(6)   Liens existing on the date of the indenture;

(7)   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 is required in conformity with GAAP has been made therefor;

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(8)   Liens imposed by law, such as carriers’, warehousemen’s, landlord’s and mechanics’ Liens, in each case, incurred in the ordinary course of business;

(9)   survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(10)   Liens created for the benefit of (or to secure) the notes or the Note Guarantees;

(11)   Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under the indenture; provided, however, that:

(a)   the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and

(b)   the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount, or, if greater, committed amount, of the Permitted Refinancing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge;

(12)   Liens to secure Indebtedness permitted by clause (4) of the second paragraph of the covenant entitled “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock” covering only the assets acquired with or financed by such Indebtedness

(13)   Liens to secure Indebtedness (including Hedging Obligations) permitted by clause (11) of the second paragraph of the covenant entitled “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock”;

(14)   Liens in connection with sale and leaseback transactions permitted by the covenant entitled “—Certain Covenants—Limitation on Sale and Leaseback Transactions.”

(15)   Liens incurred in the ordinary course of business of Holdings or any Subsidiary of Holdings with respect to obligations that do not exceed US$5.0 million at any one time outstanding.

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

(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 extended, renewed, refunded, refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith);

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(2)   such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged;

(3)   if the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged 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, renewed, refunded, refinanced, replaced, defeased or discharged; and

(4)   such Indebtedness is incurred either by Holdings or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged.

“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 XM Satellite Radio Holdings, Inc., General Motors of Canada Limited, John I. Bitove and CSR Investments Inc.

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, replace, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.

“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

(2)   any trust, corporation, partnership, limited liability company or other entity, the beneficiaries, stockholders, partners, members, 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 Investment” means an Investment other than a Permitted Investment.

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

“S&P” means Standard & Poor’s Ratings Group.

“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 the date of the indenture.

“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the date of the indenture, and will 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.

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“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 Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(2)   any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

“Total Incremental Equity” means 100% of the aggregate net cash proceeds received by Holdings since the date of the indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests (other than Disqualified Stock) of Holdings or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities or other debt obligations of Holdings or CSR Inc. that have been converted into or exchanged for such Equity Interests (other than Disqualified Stock) (other than Equity Interests (other than Disqualified Stock) (or Disqualified Stock or debt securities) sold to a Subsidiary of Holdings) or the Fair Market Value of the consideration (if other than cash) from the issue or sale of Equity Interests (other than Disqualified Stock) of Holdings.

“Unrestricted Subsidiary” means any Subsidiary of Holdings that is designated by the Board of Directors of Holdings as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors, but only to the extent that such Subsidiary:

(1)   has no Indebtedness other than Non-Recourse Debt;

(2)   except as permitted by the covenant described above under the caption “—Certain Covenants—Transactions with Affiliates,” is not party to any agreement, contract, arrangement or understanding with Holdings or any Restricted Subsidiary of Holdings unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to Holdings or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of Holdings;

(3)   is a Person with respect to which neither Holdings nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(4)   has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of Holdings or any of its Restricted Subsidiaries.

“Voting Stock” of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness 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, including payment at final maturity, in respect of the Indebtedness, 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 of such Indebtedness.

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Description Of Initial Notes

The initial notes were issued and sold on February 10, 2006, in a private transaction that was exempt from the registration requirements of the Securities Act. The form and terms of the initial notes are the same as the form and terms of the exchange notes, except that:

·   the initial notes are not registered under the Securities Act and bear legends restricting their transfer; and

·   holders of initial notes have rights under a registration rights agreement which will terminate upon the consummation of the exchange offer.

Please refer to the section of this prospectus entitled “Description of Exchange Notes.”

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CERTAIN INCOME TAX CONSIDERATIONS

ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES SET FORTH IN THIS EXCHANGE OFFER WAS WRITTEN IN CONNECTION WITH THE PROMOTION AND MARKETING OF THE TRANSACTIONS DESCRIBED IN THIS EXCHANGE OFFER. SUCH DISCUSSION WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, BY ANY PERSON FOR THE PURPOSE OF AVOIDING ANY U.S. FEDERAL TAX PENALTIES THAT MAY BE IMPOSED ON SUCH PERSON. EACH U.S. HOLDER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

Certain U.S. Federal Income Tax Considerations

The following summary describes certain U.S. federal income tax consequences to U.S. persons (as defined below) of the exchange of initial notes for exchange notes in accordance with the exchange offer, and of the acquisition, ownership and disposition of exchange notes acquired in the exchange offer. Subject to the exceptions, assumptions and qualifications set forth below, the discussion accurately reflects the material U.S. federal income tax consequences to U.S. Holders (as defined below) of the consummation of the exchange offer and the ownership and disposition of exchange notes acquired in the exchange offer. This discussion is based on currently existing provisions of the Internal Revenue Code of 1986, as amended (the “Code”), existing, temporary and proposed Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof, all as in effect or proposed on the date hereof and all of which are subject to change, possibly with retroactive effect, or different interpretations. This discussion assumes that U.S. persons hold the initial notes and exchange notes as capital assets (“U.S. Holders”) within the meaning of Section 1221 of the Code. Moreover, this discussion is for general information only and does not address the tax consequences to holders that are not U.S. Holders or the tax consequences that may be relevant to particular initial investors in light of their personal circumstances or to certain types of initial investors subject to special tax rules (such as brokers, banks and other financial institutions, insurance companies, tax-exempt entities, dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, regulated investment companies, real estate investment trusts, U.S. expatriates or former long-term residents of the U.S., investors liable for the alternative minimum tax, individual retirement accounts and other tax-deferred accounts, investors that hold notes as part of straddles, hedging transactions or conversion transactions for U.S. federal income tax purposes or investors whose functional currency is not the U.S. dollar). In addition, this discussion does not include any description of estate and gift tax consequences, or the tax laws of any state, local or foreign government that may he applicable to the initial notes or the exchange notes.

No rulings from the U.S. Internal Revenue Service (the “IRS”) have been or will be sought with respect to the matters discussed below. There can be no assurance that the IRS will not disagree with or challenge any position taken herein regarding the tax consequences of the exchange of initial notes for exchange notes, or of the ownership or disposition of the exchange notes, or that any such position, if challenged, would be sustained.

EACH U.S. HOLDER SHOULD CONSULT ITS TAX ADVISOR REGARDING THE U.S. FEDERAL INCOME TAX CONSEQUENCES APPLICABLE TO SUCH HOLDER IN LIGHT OF ITS PARTICULAR SITUATION OF THE EXCHANGE OFFER, THE OWNERSHIP AND DISPOSITION OF THE EXCHANGE NOTES, AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY OTHER RELEVANT FOREIGN, STATE, LOCAL, OR OTHER TAXING JURISDICTION.

As used herein, the term “U.S. person” means a beneficial owner of an initial note or an exchange note that is, for U.S. federal income tax purposes, (i) an individual who is a citizen or resident of the U.S., (ii) a corporation or other entity taxable as a corporation created or organized in the U.S. or under the laws of the U.S. or of any state thereof (including the District of Columbia), (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source, or (iv) a trust (A) if a U.S. court is able to exercise primary supervision over the trust’s administration and one or more “United States persons” (within the meaning of the Code) have authority to control all substantial decisions of such trust, or (B) that was in existence on August 20, 1996, was treated as a U.S. person under the Code on the previous day, and has a valid election in effect to continue to be so treated.

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If a partnership or other pass-through entity holds the initial notes or exchange notes, the tax treatment of a partner in or owner of the partnership or pass-through entity will generally depend upon the status of the partner or owner and the activities of the entity. If you are a partner in or owner of a partnership or other pass-through entity that holds initial notes and is considering participating in the exchange offer, you should consult your tax advisor.

Exchange of Initial Notes for Exchange Notes

The exchange of an initial note for an exchange note pursuant to the exchange offer will not constitute a taxable exchange for U.S. federal income tax purposes. Consequently, a U.S. Holder will not recognize any gain or loss upon the receipt of an exchange note pursuant to the exchange offer. A holder’s holding period for an exchange note should include the holding period for the initial note exchanged pursuant to the exchange offer and the holder’s initial basis in an exchange note should be the same as the adjusted basis of such holder in the initial note at the time of the exchange. The U.S. federal income tax consequences of holding and disposing of an exchange note generally should be the same as the U.S. federal income tax consequences of holding and disposing of an initial note.

Taxation of Interest on Exchange Notes

Stated interest on an exchange note will generally be taxable to a U.S. Holder as ordinary income at the time it is paid or accrued in accordance with the U.S. Holder’s method of accounting for tax purposes. In addition to interest on the exchange notes, a U.S. Holder will be required to include as income any Additional Amounts paid as a result of the imposition of foreign withholding taxes (see “Description of Exchange Notes-Additional Amounts”). As a result, a U.S. Holder may be required to include more interest in gross income than the amount of cash it actually receives.

Market Discount

If a U.S. Holder purchased an initial note prior to this exchange offer for an amount that is less than its principal amount, then, subject to a statutory de minimis rule, the difference generally will be treated as market discount. If a U.S. Holder exchanges an initial note with respect to which there is market discount, for an exchange note pursuant to the exchange offer, the market discount applicable to the initial note should carry over to the exchange note so received. In that case, any partial principal payment on, or any gain realized on the sale, redemption, retirement or other disposition of (including dispositions which are nonrecognition transactions under certain provisions of the Code), the exchange note will be included in gross income and characterized as ordinary income to the extent of the market discount that (1) has not previously been included in income and (2) is treated as having accrued on the exchange note prior to the payment or disposition.

Market discount generally accrues on a straight-line basis over the remaining term of the exchange note. Upon an irrevocable election, however, market discount will accrue on a constant yield basis. A U.S. Holder might be required to defer all or a portion of the interest expense on indebtedness incurred or continued to purchase or carry an exchange note. If a U.S. Holder elects to include market discount in gross income currently as it accrues, the preceding rules relating to the recognition of market discount and deferral of interest expense will not apply. An election made to include market discount in gross income as it accrues will apply to all debt instruments acquired by the U.S. Holder on or after the first day of the taxable year to which the election applies and may be revoked only with the consent of the IRS.

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Sale, Redemption or Retirement of the Exchange Notes

Upon the sale, redemption, retirement at maturity or other taxable disposition of an exchange note, a U.S. Holder generally will recognize gain or loss equal to the difference between the sum of cash plus the fair market value of all other property received on such disposition (except to the extent such cash or property is attributable to accrued but unpaid interest, which will be taxable as ordinary income) and such U.S. Holder’s adjusted tax basis in the note. A U.S. Holder’s adjusted tax basis in an exchange note generally will be its cost for the note increased by any accrued market discount previously included in income through the date of disposition. A gain or loss recognized on the disposition of an exchange note generally will be capital gain or loss and will be long-term capital gain or loss if, at the time of such disposition, the note is treated as having been held for more than one year. In the case of a U.S. Holder who is a non-corporate taxpayer, including an individual, the maximum US federal income tax rate on net long-term capital gain is 15%. The deductibility of capital losses is subject to limitations.

Foreign Tax Credit Considerations

If interest payments on the exchange notes become subject to Canadian withholding taxes, a U.S. Holder may be able, subject to generally applicable limitations, to claim a foreign tax credit or take a deduction for such withholding taxes imposed on interest payments (including any Additional Amounts). Interest (including any Additional Amounts) will constitute income from sources without the U.S. for U.S. foreign tax credit limitation purposes. For taxable years beginning before January 1, 2007, interest income (including any Additional Amounts) generally will constitute “passive income” or, in the case of certain U.S. Holders, “financial services income” for U.S. foreign tax credit limitation purposes. If, however, such withholding tax is imposed at a rate of 5% or more, such income will constitute “high withholding tax interest.” The rules governing the U.S. foreign tax credit are complex, and U.S. Holders are urged to consult their tax advisors regarding the application of such rules to their particular circumstances.

If the U.S. Holder is a U.S. resident (as defined in section 865 of the Code), gains realized upon disposition of an exchange note by such U.S. Holder generally will be U.S. source income, and disposition losses generally will be allocated to reduce U.S. source income.

Backup Withholding and Information Reporting

Backup withholding currently at a rate of 28% and information reporting requirements may apply to certain payments of principal of, and interest on, an exchange note and to proceeds of the sale or other disposition of an exchange note before maturity, if a U.S. Holder:

·   fails to furnish its taxpayer identification number,

·   fails to certify that such number is correct,

·   fails to certify that such U.S. Holder is not subject to backup withholding, or

·   otherwise fails to comply with the applicable requirements of the backup withholding rules.

Certain U.S. Holders, including corporations, are generally not subject to backup withholding and information reporting requirements provided their exemptions from backup withholding and information reporting are properly established. Any amounts withheld under the backup withholding rules from a payment to a U.S. Holder will be allowed as a credit against such holder’s U.S. federal income tax and may entitle the holder to a refund, provided that the required information is furnished to the IRS.

Certain Canadian Federal Income Tax Considerations

The following is, as of the date hereof, a summary of the material Canadian federal income tax consequences generally applicable to a holder of notes who, for purposes of the Income Tax Act (Canada) (the “Act”) at all relevant times, is the beneficial owner of the notes, is not and is not deemed to be resident in Canada, does not use or hold and is not deemed to use or hold the notes in carrying on business in Canada and with whom Holdings deals at arm’s length within the meaning of the Act (a “Non-Resident Holder”). For the purposes of the Act, related persons (as therein defined) are deemed not to deal at arm’s length and it is a question of fact whether persons not related to each other deal at arm’s length. A reference to the notes herein includes a reference to the exchange notes, but not to any additional notes.

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This summary is based on the provisions of the Act in force on the date hereof, the regulations thereunder, and counsel’s understanding of the current published administrative practices and policies of the Canada Revenue Agency (“CRA”), all in effect as of the date hereof. This summary also takes into account all specific proposals to amend the Act and the regulations publicly announced by the Minister of Finance (Canada) prior to the date hereof. Except for such proposals, this summary does not take into account or anticipate any changes in law, whether by judicial, governmental or legislative decision or action, or any changes in the administrative practices of the CRA. This summary does not take into account tax legislation or considerations of any province or territory of Canada or of any jurisdiction other than Canada. This summary is of a general nature only and is not intended to be, and should not be interpreted as, legal or tax advice to any particular holder of notes. Holders are encouraged to consult their own tax advisors having regard to their particular circumstances.

The exchange of an initial note for an exchange note under the exchange offer will not be a taxable event to a Non-resident Holder for purposes of the Act. The payment by Holdings of interest, principal or premium on the notes to a Non-Resident Holder with whom Holdings deals at arm’s length within the meaning of the Act at the time of making the payment will be exempt from Canadian withholding tax.

No other taxes on income (including taxable capital gains) will be payable under the Act in respect of the holding, redemption or disposition of the notes by a Non-Resident Holder, provided that in the case of a Non-Resident Holder that carries on an insurance business in Canada and elsewhere, the notes are not “designated insurance property” (as defined in the Act) and are not otherwise connected with an insurance business carried in Canada.

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PLAN OF DISTRIBUTION

We are not using any underwriters for this exchange offer. Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer in exchange for initial notes acquired by such broker-dealer as a result of market making or other trading activities may be deemed to be an “underwriter” within the meaning of the Securities Act and, therefore, must deliver a prospectus meeting the requirements of the Securities Act in connection with any resales, offers to resell or other transfers of the exchange notes received by it in connection with the exchange offer. Accordingly, each such broker-dealer must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for initial notes where such initial notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the expiration of this exchange offer, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale.

We will not receive any proceeds from any sale of exchange notes by broker-dealers or any other persons. Exchange notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit of such resale of exchange notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act.

LEGAL MATTERS

Certain legal matters relating to the notes offered hereby will be passed upon for us by Stikeman Elliott LLP with respect to Canadian and U.S. law, by Covington & Burling with respect to U.S. law and by Borden Ladner Gervais LLP with respect to Canadian tax law.

EXPERTS

The consolidated financial statements as of August 31, 2005, 2004 and 2003 and for each of the three years in the period ended August 31, 2005 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

AVAILABLE  INFORMATION

We have filed a registration statement on Form F-4 with the SEC covering the exchange notes. This prospectus is part of our registration statement. For further information about us and the exchange notes, you should refer to our registration statement and its exhibits. This prospectus summarizes material provisions of contracts and other documents to which we refer you. Since the prospectus might not contain all of the information that you might find important, you should review the full text of these documents. We have included copies of these documents as exhibits to our registration statement.

Upon the effectiveness of our registration statement on Form F-4 covering the exchange notes, we will become subject to the periodic reporting and other informational requirements of the Exchange Act, and accordingly we file reports and other information with the SEC. Copies of our reports and other information may be inspected and copied at the public reference facilities maintained by the SEC. However, we are a “foreign private issuer” as defined in Rule 405 of the Securities Act, and therefore are not required to comply with Exchange Act provisions regarding proxy statements and short swing profit disclosure.

-146-

Copies of these materials may also be obtained by mail at prescribed rates from the Public Reference Room of the SEC, 100 F Street, NE, Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of this internet site is http://www.sec.gov.

We also file information, such as periodic reports and financial information, with the Canadian Securities Administrators, which may be accessed at www.sedar.com.

Anyone who receives a copy of this prospectus may obtain a copy of the indenture, the registration rights agreement and the interest reserve and security agreement without charge by writing to Canadian Satellite Radio Holdings Inc., Suite 2300, PO Box 222, Canada Trust Tower, BCE Place, 161 Bay Street, Toronto, Ontario M5J 2S1, Attention Chief Financial Officer.

In the indenture for the notes we have agreed that, whether or not required by the rules and regulations of the SEC, so long as any notes are outstanding, we will furnish to the holders of notes or cause the trustee to furnish to the holders of notes, within the time periods specified in the SEC’s rules and regulations:

·   all annual financial information that would be required to be contained in a filing with the SEC on Form 20-F or 40-F, as applicable (or any successor forms), containing the information required therein (or required in such successor form); and

·   for the first three quarters of each year, all quarterly financial information that would be required to be contained in a filing with the SEC on Form 6-K (or any successor form) containing, at a minimum, the information that would be required to be provided in quarterly reports under the laws of Ontario to securityholders of a company with securities listed on the Toronto Stock Exchange, whether or not Holdings has any of its securities so listed, in each case including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report on the annual financial statements by Holdings’ certified independent accountants; and

·   all current reports that would otherwise be required to be filed with the SEC on Form 6-K if Holdings were required to file such reports.

In addition, following the consummation of this exchange offer, we will file a copy of the annual and quarterly reports referred to above with the SEC for public availability within the time periods specified in the rules and regulations applicable to such reports (unless the SEC will not accept such a filing) and will post the reports on its website within those time periods. We will at all times comply with TIA § 314(a).

If, at any time, after the consummation of this exchange offer, we are no longer subject to the periodic reporting requirements of the Exchange Act for any reason, we will nevertheless continue filing reports specified in the preceding paragraph with the SEC for public availability within the time periods specified above unless the SEC will not accept such a filing. We will not take any action for the purpose of causing the SEC not to accept any such filings. If, notwithstanding the foregoing, the SEC will not accept our filings for any reason, we will post the financial information and information referred to in the preceding paragraph on our website within the time periods that would apply if we were required to file these reports with the SEC.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Auditors’ Report	F-2
Consolidated Balance Sheets as at August 31, 2005, 2004 and 2003	F-3
Consolidated Statements of Operations and Deficit for the years ended August 31, 2005, 2004 and 2003	F-4
Consolidated Statements of Cash Flows for the years ended August 31, 2005, 2004 and 2003	F-5
Notes to Consolidated Financial Statements as at August 31, 2005, 2004 and 2003	F-6
Interim Consolidated Balance Sheet as at February 28, 2006 (unaudited)	F-18
Interim Consolidated Statement of Operations and Deficit for the three months ended February 28, 2006 and 2005 (unaudited)	F-19
Interim Consolidated Statement of Cash Flows for the three months ended February 28, 2006 and 2005 (unaudited)	F-20
Notes to Interim Consolidated Financial Statements as at February 28, 2006 (unaudited)	F-21

F-1

INDEPENDENT AUDITORS’ REPORT

To the Shareholders and Directors of

CANADIAN SATELLITE RADIO HOLDINGS INC.

We have audited the consolidated balance sheets of Canadian Satellite Radio Holdings Inc. (a development stage company) as at August 31, 2005, 2004 and 2003 and the consolidated statements of operations and deficit and cash flows for the years then ended. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the company as at August 31, 2005, 2004 and 2003 and the results of its operations and its cash flows for the years then ended and, cumulatively, for the period from incorporation of the Company to August 31, 2005, in accordance with Canadian generally accepted accounting principles.

Toronto, Ontario	(signed) PRICEWATERHOUSECOOPERS LLP
December 2, 2005	Chartered Accountants
(except for notes 1, 4, 7, 9 and 11 which are as of April 13, 2006)

F-2

CANADIAN SATELLITE RADIO HOLDINGS INC.

A Development Stage Company

CONSOLIDATED BALANCE SHEETS

As at August 31, 2005, 2004 and 2003

(In Canadian dollars)

	2005		2004		2003
	$		$		$
Assets
Current assets
Cash	20		20		20
Property and equipment (note 3)	1,996,606		254,336		—
Intangibles (note 2)	1,006,634		—		—
Total assets	3,003,260		254,356		20
Liabilities and Shareholders’ Deficiency Current liabilities Accounts payable and accrued liabilities (notes 4 and 6)	11,864,983		2,427,807		485,426
Long-term obligations (note 2)	16,987		—		—
Total liabilities	11,881,970		2,427,807		485,426
Shareholders’ deficiency Common shares (note 9)	20		20		20
Deficit accumulated during the development stage	(8,878,730	)	(2,173,471	)	(485,426	)
Total shareholders’ deficiency	(8,878,710	)	(2,173,451	)	(485,406	)
Total liabilities and shareholders’ deficiency	3,003,260		254,356		20

Commitments (notes 5, 6, 7 and 11)

Approved by the Board of Directors

(signed) JOHN I. BITOVE	(signed) PHILIP EVERSHED
Director	Director

F-3

CANADIAN SATELLITE RADIO HOLDINGS INC.

A Development Stage Company

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

(In Canadian dollars)

							For the period from
							inception (July 31,
	For the year ended		For the year ended		For the year ended		2002) through
	August 31, 2005		August 31, 2004		August 31, 2003		August 31, 2005
	$		$		$		$
Revenue	—		—		—		—
Operating expenses Cost of revenue	—		—		—		—
Indirect costs (note 4)	3,528,914		907,606		157,532		4,679,233
General and administrative (note 4)	3,172,480		779,692		157,532		4,194,885
Amortization	3,865		747		—		4,612
	6,705,259		1,688,045		315,064		8,878,730
Net loss for the year	(6,705,259	)	(1,688,045	)	(315,064	)	(8,878,730	)
Deficit — Beginning of period	(2,173,471	)	(485,426	)	(170,362	)	(0	)
Deficit — End of period	(8,878,730	)	(2,173,471	)	(485,426	)	(8,878,730	)
Basic and fully diluted loss per common share	(17,833	)	(4,489	)	(838	)	(23,614	)

F-4

CANADIAN SATELLITE RADIO HOLDINGS INC.

A Development Stage Company

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Canadian dollars)

	For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the period from inception (July 31, 2002) through August 31, 2005
	$			$			$			$
Cash provided by (used in) Operating activities Net loss for the period		(6,705,259	)		(1,688,045	)		(315,064	)		(8,878,730	)
Add: non cash item Amortization		3,865			747			—			4,612
Net change in non cash working capital related to operations
Accounts payable		6,701,394			1,687,298			315,064			8,874,118
Net cash used in operating activities		0			0			0			0
Change in cash during the period		—			—			—			—
Cash — Beginning of period		20			20			20			20
Cash — End of period		20			20			20			20
Supplemental cash flow disclosures
Property and equipment purchases in accounts payable		1,729,148			255,083			—			1,984,231
Computer software purchases in accounts payable		1,006,634			—			—			1,006,634
Additions to property and equipment and long-term obligations		16,987			—			—			16,987

F-5

CANADIAN SATELLITE RADIO HOLDINGS INC.

A Development Stage Company

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2005, 2004 and 2003

(In Canadian dollars, unless otherwise stated)

1. Organization and nature of business

Canadian Satellite Radio Holdings Inc. (the Company) is at August 31, 2005 a wholly owned subsidiary of Canadian Satellite Radio Investments Inc. (CSR Investments) and was incorporated on July 31, 2002 for the purpose of establishing and operating a Canadian satellite radio service. On June 16, 2005, the Canadian Radio-television and Telecommunications Commission (CRTC) approved the application for a license to the Company’s wholly owned subsidiary, Canadian Satellite Radio Inc. (CSR). The decision granted a broadcasting license to CSR to carry on a satellite subscription undertaking, subject to certain conditions. The undertaking must be operational within 24 months of the decision. The initial form of the broadcasting license will expire on August 31, 2011. The license is described further in note 7.

The Company is in the development stage and has no history of commercial operations. In addition to the application for its broadcasting license, the Company has been in the process of building its infrastructure and developing its marketing and other operational plans, with the intention of launching its subscription-based satellite radio service to the Canadian market. Except for the capital expenditures related to property, equipment and software, the Company has expensed all other costs incurred on developing its business.

The Company has certain exclusive arrangements with XM Satellite Radio Holdings Inc. (XM) to provide the Company’s services in Canada as further explained in note 11. The Company’s operations will rely on XM’s cooperation and its programming content, satellite network and underlying technology, as well as XM’s operational and marketing efficiency, competitiveness, finances, regulatory status and overall success in the United States.

From its inception, the Company has incurred net losses, and losses and negative cash flow are expected to continue through to the launch of services and beyond. Throughout the period from August 31, 2005 to the launch of the Canadian satellite radio service on November 22, 2005, the Company incurred capital infrastructure expenditures and operating losses. These costs and expenditures were financed by CSR Investments or other related companies prior to the completion of the Company’s initial public offering of shares (“Equity Offering”). On December 12, 2005, the Company completed the Equity Offering for 3,437,500 Class A Subordinate Voting Shares and received net proceeds of approximately $50 million. Immediately prior to the Equity Offering, the Company received a capital contribution of $15 million from CSR Investments, which was used to repay amounts owing to a company controlled by John I. Bitove as described in note 4. With the proceeds from the capital contribution, the Equity Offering and the XM $45 million standby credit facility, the Company expects to be able to fund the costs of the launch of the service and ongoing operations through calendar 2006.

On February 10, 2006, the Company completed a note offering for gross proceeds of US$100 million, of which US$35.5 million is held in an interest reserve account to cover the first six semi-annual interest payments due on the notes. See note 11 for further information on these notes.

F-6

2.Summary of significant accounting policies

The consolidated financial statements of the Company have been prepared in accordance with Canadian generally accepted accounting principles, and include the following significant accounting policies:

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its subsidiary, CSR. All material intercompany transactions and balances have been eliminated.

Property and equipment

Property and equipment are recorded at cost less accumulated amortization.

Repairs and maintenance that do not enhance the service potential of the related assets are charged to expenses as incurred. Renewals and betterments, which materially prolong the useful lives of the assets, are capitalized. The cost and related accumulated amortization of property sold are removed from the accounts, and gains and losses are recognized in the consolidated statement of operations and deficit.

Amortization of property and equipment

Amortization is computed on a straight-line basis at rates sufficient to amortize the cost of the assets over their estimated useful lives.

Leaseholds	Initial lease term
Broadcast studio equipment	3 to 10 years
Computer hardware	3 to 5 years
Furnishings and equipment	3 to 10 years

Asset retirement obligations

The Company has obligations with respect to the retirement of terrestrial repeaters and restoration of facilities back to their original state at the end of the lease term. Accruals are made based on management’s estimates of current market restoration costs, inflation rates and discount rates. At the inception of a lease, the present value of the expected cash payments is recognized as an asset retirement obligation with a corresponding amount recognized in property assets. The property asset amount is amortized and the liability is accreted over the period from lease inception to the time the Company expects to remove the terrestrial repeater equipment and vacate the premises resulting in both amortization and accretion charges in the consolidated statement of operations and deficit.

During the year ended August 31, 2005, the Company recorded an asset retirement obligation of $16,987 which is included in long-term obligations.

Intangibles

Intangibles consist of computer software development and is recorded at cost. Capitalized computer software costs will be amortized on a straight-line basis over five years once in operation. No amortization has been taken during the year ended August 31, 2005 as the assets were still in development.

Impairment of long-lived assets

Property, equipment and computer software are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If it is determined that the carrying value of the asset or group of assets is not recoverable, a write-down to fair value is charged to the statement of operations and deficit in the period that such a determination is made.

F-7

Foreign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate in effect at the consolidated balance sheet dates and non-monetary items are translated at historical exchange rates.

Operating revenue and expenses are translated at average exchange rates prevailing during the year. Gains or losses arising from these transactions are included in the statement of operations and deficit.

Financial instruments

The carrying amounts of cash and accounts payable approximate their fair values because of the near-term maturity of these instruments.

Income taxes

Income taxes are accounted for under the liability method, whereby future income tax assets and liabilities are recognized for temporary differences between the tax and accounting bases of assets and liabilities, as well as for the benefit of losses available to be carried forward to future years for income tax purposes. A valuation allowance is provided for the portion of future tax assets that is more likely than not to remain unrealized. Significant judgment is involved in determining the realizability of temporary differences and tax loss carry-forwards. Future income tax assets and liabilities are measured using substantively enacted income tax rates applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. Future income tax assets and liabilities are adjusted for the effects of changes in income tax laws in the period in which the change occurs.

Stock-based compensation

The Company expenses the fair value of share options when granted to employees, directors and senior officers over the related vesting period.

Revenue recognition

The Company expects to derive revenue primarily from subscription and activation fees and advertising.

Subscriber fees which generally are expected to be billed in advance, are recognized as the service is provided. Activation fees, which are expected to be non-refundable after 30 days are anticipated to be recognized over the estimated 40-month life of the customer relationship. The estimated term of the subscriber relationship is based on market data and management’s judgment, and may change in the future as further historical data becomes available. Sales incentives consisting of rebates to customers generally are accounted for as reductions of revenue when the revenue is recognized or the incentive offered.

The Company will recognize advertising revenue from sales of advertisements in the period in which the advertising is broadcast. Agency fees are presented as a reduction to revenue in the financial statements. Advertising revenues from barter transactions are recognized at fair value. Merchandise or services received in barter transactions are recorded as expenses when used or received.

Advertising and marketing

Advertising and marketing costs are expensed as incurred. Market development funds consisting of variable payments to reimburse retailers for the costs of advertising and other market awareness activities are expensed at the time the activities occur.

F-8

Subscriber acquisition costs

Subscriber acquisition costs include incentives and subsidies paid to retailers, automotive manufacturers and radio manufacturers to distribute and activate radios with the capacity to receive XM satellite radio programming (XM Radios). Subscriber acquisition costs do not include advertising and marketing costs, loyalty payments or revenue share arrangements. The Company expects the majority of these subscriber acquisition costs to be incurred in advance of the subscriber purchasing a subscription from the Company. Compensation paid under these arrangements is expensed upon sale or activation of the radio.

Subscriber service costs

The activation fee paid to XM as part of the license agreement (note 11) is deferred and amortized to cost of revenue over the estimated 40-month life of the customer relationship. The XM subscription participation fees are expensed as a cost of revenue as the related subscription revenue is recognized into income.

Broadcast license acquisition costs

All costs related to obtaining and maintaining the broadcast license are expensed as incurred.

Programming royalty arrangements

The Company negotiates music programming royalty arrangements with a number of Canadian copyright collectives. The cost of these royalty arrangements are expensed as a cost of revenue. Until these arrangements are finalized, the Company recognizes the cost based on management’s best estimate.

Loss per share

Loss per share is computed by dividing the net loss for the year by the weighted average number of common shares outstanding during the year.

Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the dates of the financial statements and expenses for the periods reported. Actual results may differ from those estimates.

Recent Accounting Pronouncements

Financial Instruments, Comprehensive Income, Hedges - On January 27, 2005, the Accounting Standards Board issued CICA Handbook section 1530 Comprehensive Income (“Section 1530”), Handbook Section 3855 Financial Instruments - Recognition and Measurement (“Section 3855”) and Handbook Section 3865 Hedges (“Section 3865”). Section 3855 expands on CICA Handbook section 3860 Financial Instruments - Disclosure and Presentation by prescribing when a financial instrument is to be recognized on the balance sheet and at what amount. It also specifies how financial instrument gains and losses are to be presented. Section 3865 is optional. It provides alternative treatments to Section 3855 for entities that choose to designate qualifying transactions as hedges for accounting purposes and specifies how hedge accounting is applied and what disclosures are necessary when it is applied. Section 1530 introduced a new requirement to present temporarily certain gains and losses outside net income in a new component of shareholders’ equity entitled Comprehensive Income. These standards are effective for the Company beginning September 1, 2007. Based on the Company’s current financial position, the Company does not expect these standards to have a material impact on its consolidated financial statements.

F-9

3.Property and equipment

Property and equipment consist of the following:

	2005
	Cost		Accumulated amortization		Net
	$		$		$
Terrestrial repeater network		1,885,164		—		1,885,164
Leaseholds		81,312		—		81,312
Computer hardware		34,742		4,612		30,130
		2,001,218		4,612		1,996,606

	2004
	Cost		Accumulated amortization		Net
	$		$		$
Terrestrial repeater network		248,364		—		248,364
Computer hardware		6,719		747		5,972
		255,083		747		254,336

The amount disclosed under terrestrial repeater network represents costs capitalized related to the construction of the XM radio system which is still in progress. Once in operation, the terrestrial repeater network assets will be amortized on a straight-line basis over their estimated useful lives of 5 to 10 years.

4.Related party accounts and transactions

John I. Bitove is the controlling shareholder of CSR Investments and the Chairman and Chief Executive Officer of the Company. The Company was established for the purpose of making satellite radio service available to the Canadian public on a commercial basis. To achieve this purpose, John I. Bitove and the Company entered into a Memorandum of Agreement (MOA) with XM dated August 7, 2003. Prior to completing the MOA, the Company commenced some initial assessments and investigation of satellite radio for Canada. The MOA confirmed the binding arrangements for the parties to work together to obtain a Canadian broadcast license to operate a subscription-based satellite radio service in Canada. In addition, the MOA also included the non-binding arrangements with respect to a future license arrangement between the parties, the equity structure, corporate governance, and other matters impacting the launch, marketing and operations of the satellite radio service in Canada.

The Company contracted the services of another company controlled by John I. Bitove to manage and fund the process of applying and obtaining a Canadian broadcast license for its planned satellite radio service. The Company was required to reimburse all direct costs as they were incurred throughout the period of the license application and up to the time of the Equity Offering. An additional amount was payable based on the level of direct costs. This amount, reported as indirect costs in the consolidated statement of operations and deficit, includes an element for all indirect costs incurred by John I. Bitove or any company controlled by John I. Bitove during the period presented.

The amounts due to companies controlled by John I. Bitove of $10,528,029 (2004: $2,184,556, 2003: $485,426) represent the amounts paid or payable for direct operating expenses, capital expenditures and the general administrative expenses. The amounts are non-interest bearing with no fixed terms of repayment, and due within 90 days of the issuance of a broadcast license by the CRTC. Subsequent to year-end, $15 million was received from CSR Investments and used to repay amounts owing to these companies.

F-10

In 2003, CSR Investments granted the equivalent of 34,918 options to acquire shares of CSR Investments at nominal exercise price to a director of CSR Investments who, in fiscal 2005, became an officer of the Company. The grant included anti-dilution provisions which entitled the director to a 5% interest in CSR Investments. These options vested upon receiving the regulatory approval for the CRTC license. The grant date fair value of each option was later determined to be $15.75. The compensation cost included in indirect costs for fiscal 2005, 2004 and 2003 for the individual amounted to $240,000, $240,000 and $60,000 respectively. These amounts were included in amounts due to companies controlled by John I. Bitove. The estimated fair value of the options was based on the same value arising from the $15 million of equity contributed to the Company by CSR Investments. As at August 31, 2005, none of these options were exercisable.

In June 2005, CSR Investments granted 21,868 options to acquire shares of CSR Investments at the equivalent of $7.54 per share to certain consultants and advisors that provided services to the Company, employees of a company related to CSR Investments and an officer of the Company. These options had the equivalent of a grant date fair value of $151 per option and an estimated fair value of $3.3 million. Approximately 75% of these options expire in June 2008, vested and were exercisable immediately and accordingly the compensation cost has been included in indirect costs in fiscal 2005. The remaining options vest in June 2008, expire in December 2008 and compensation costs are being expensed as stock-based compensation, starting with fiscal 2005, over the 3-year vesting period. The estimated fair market value of these options was determined using the Black Scholes valuation model using the following assumptions: estimated fair value of CSR Investments of $160 per share, risk free interest rates of 5%, expected lives of 3 years, dividend yield of nil and volatility of 82.5%.

In December 2005, through a series of steps including the amalgamation of the Company with 2087609 Ontario, Inc., the existing CSR Investments option holders described above exercised half of their options and received 1,007,289 Class A Subordinate Voting Shares. The director whose options vested with the CRTC license approval exchanged the remaining options for an equivalent equity interest in CSR Investments with fair market value repurchase rights. While all of these costs were borne by CSR Investments,  this series of steps was viewed to create a modification of the options and has thus resulted in an additional stock-based compensatory expense of approximately $3 million in the three month period ended February 28, 2006. The Company did not receive any consideration on the exercise of these options.

In December 2005, 2,403 options of CSR Investments were granted to an officer of the Company with an nominal exercise price. These options vest over three years but may be accelerated if the employee ceases to be employed by the Company. Accordingly, an additional stock-based compensatory expense of approximately $1 million was recorded in the three month period ended February 28, 2006. These options were valued using the Black Scholes valuation model using the following  assumptions: fair value of CSR Investments of $416 per share, risk free interest rate of 5%, expected life of  three years, dividend yield of nil and volatility of 82.5%.

Subsequent to year end, CSR Investments advanced the Company $300,000. This loan is non-interest bearing and has no fixed terms of repayment. In addition, CSR Investments incurred $2,862,764 of costs related to the Company’s license application process. This amount will be included in contributed surplus.

Subsequent to year-end, the Company has entered into a payroll service agreement with KIT LP for an annual amount of $20,000. KIT LP is owned, directly or indirectly, as to approximately 60.2% by Priszm Canadian Income Fund and as to approximately 39.8% by a company controlled by John I. Bitove.

5.Lease obligations

The Company has non-cancelable operating leases for office space and terrestrial repeater sites committed as of August 31, 2005. The annual minimum lease payments in the table below do not include any common costs, such as taxes and utilities, which cannot be determined in advance.

	$
2006		137,592
2007		99,012
2008		99,012
2009		99,012
2010		98,179
Thereafter		117,184
		649,991

6.Contracts and commitments

Terrestrial repeater purchase agreement with XM

The Company has agreed to purchase terrestrial repeaters from XM as needed to build a terrestrial repeater system throughout Canada. Terrestrial repeaters are used to improve the transmission of satellite signals in more densely populated and developed areas. As of August 31, 2005, a total of six high power repeaters had been purchased and received by the Company. The following amounts included as part of accounts payable were due to XM in respect of the purchase of these terrestrial repeaters:

F-11

	2005 $	2004 $
Accounts payable to XM for terrestrial repeater purchases	1,336,954	243,251

In the period from September 1, 2005 through November 30, 2005, the Company purchased 74 additional terrestrial repeaters for US$7,556,035.

The terrestrial repeaters will be paid either from the proceeds of the Equity Offering, a facility provided by XM or other available funds. The amounts are payable to XM in U.S. dollars.

National Hockey League

On September 9, 2005, XM and the National Hockey League signed a term sheet to secure satellite radio National Hockey League broadcast and marketing rights. The term sheet between XM and the National Hockey League is a ten-year agreement, with satellite radio exclusivity over the last eight years, for which XM’s total cost is approximately US$100 million. The Company’s commitment to reimburse XM for a portion of its obligations under this term sheet totals US$69 million payable as follows:

	US$
2006	5,500,000
2007		5,500,000
2008		7,000,000
2009		7,000,000
2010		7,000,000
Thereafter		37,000,000
		69,000,000

Retailer agreements

The Company has signed agreements with The Source and Best Buy Canada Ltd. for the retailers to act as compensated independent contractors on the sale of satellite receiving equipment. Under these agreements, the Company will compensate the retailers for each XM Radio sold in the retail locations. The Company will also create a market development compensation fund, based on a variable per radio activated rate, to be used for certain cooperative consumer advertising programs and events.

7.Broadcast license

On June 16, 2005, CSR Inc. received approval of its application for a broadcast license from the CRTC, subject to certain conditions. On September 7, 2005, CSR Inc. applied to amend the CRTC broadcast license. On November 21, 2005, the CRTC advised CSR Inc. that it was satisfied that the conditions to the grant of its broadcast license were fulfilled, and that the license would therefore be issued when: (i) the Department of Industry notified the CRTC that its technical requirements had been met, and (ii) CSR Inc. confirmed to the CRTC that it was prepared to commence operations. The Department of Industry notified the CRTC that its technical requirements had been met on November 22, 2005. Similarly, on November 22, 2005, CSR Inc. confirmed to the CRTC that it was prepared to commence operations. As a result of the satisfaction of these conditions, CSR Inc. has fulfilled all regulatory conditions to launch, and CSR Inc. has been authorized to launch its service. The Company must contribute a minimum of 5% of gross revenues of the satellite radio undertaking to eligible third parties directly connected to the development of Canadian musical and other artistic talent during each broadcast year. On February 10, 2006, the CRTC approved CSR Inc.’s application dated September 7, 2005.

F-12

8.Income taxes

The Company has recorded a nil provision for income taxes. The difference between the amount computed by multiplying the net loss by the statutory Canadian tax rate and the nil provision for income taxes is reconciled as follows:

	2005		2004		2003
	$		$		$
Net loss		6,705,259		1,688,045		315,064
Tax at statutory rate — 36.12%		2,421,940		609,722		113,801
Differences in income taxes resulting from:
Change in valuation allowance		2,418,603		604,254		113,801
Non-deductible items		3,337		5,468		—
Provision for income taxes		0		0		0

Future income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Future income tax assets and liabilities consist of the following temporary differences:

	2005			2004
		$			$
Future tax assets:
Losses not recognized		3,044,498			752,614
Tax assets related to capital assets		151,129			24,410
Total future assets		3,195,627			777,024
Valuation allowance		(3,195,627	)		(777,024	)
Net future tax asset		0			0

A full valuation allowance has been provided to fully offset the future tax assets as the Company is not certain that such benefits can be utilized in the near future.

9.Share capital

	$
Authorized Unlimited number of common shares Issued 200 common shares		20

As a result of a reorganization of the Company on December 8, 2006, the Company’s existing 15,000,200 common shares were converted to 81,615,633 Class B Voting Shares and 1,007,289 Class A Subordinate Voting Shares. As three Class B Voting Shares are economically equivalent to one Class A Subordinate Voting Share, the conversion resulted in the issuance of 28,212,500 common share equivalents. The conversion has been accounted for as a share split resulting in 1.88 common share equivalents being issued for each pre-existing common share. The per share information in these financial statements have been restated to reflect the impact of the share split. The Company’s number of shares outlined in the table above have not been revised in these financial statements as further described in Note 11.

10.Segmented information

The Company has a single operating segment. All of the Company’s property, equipment and intangibles are located in Canada.

F-13

11.Subsequent events

Audiovox Electronics Corp. (Audiovox)

On September 23, 2005, the Company signed a two-year agreement with Audiovox as a satellite radio hardware manufacturer. The agreement includes terms as to the selling price of the products as well as a subsidy fee payable to Audiovox by the Company based on the number of units that Audiovox sells as well as the number of units that are activated by the Company.

Delphi Automotive Systems LLC (Delphi)

On September 28, 2005, the Company signed an agreement with Delphi as a satellite radio hardware manufacturer. The term of the agreement is to December 31, 2007. The agreement includes a subsidy amount to be paid by the Company for each Delphi unit activated on a monthly basis.

Leases entered into after August 31, 2005

A total of 20 leases have been entered into since August 31, 2005. This includes 18 leases for terrestrial repeater sites and the leases for the Montréal and Toronto studios. The lease for the Toronto studio is with a company controlled by John I. Bitove. This lease is for 15 years with total charges of approximately $1.9 million. The annual minimum lease payments in the table below do not include any common costs, such as taxes and utilities, which cannot be determined in advance. As at February 10, 2006, the annual minimum lease payments, excluding any common costs, such as taxes and utilities, which cannot be determined in advance, are as follows:

	$
2006		244,228
2007		243,840
2008		240,340
2009		236,173
2010		235,340
Thereafter		1,342,848
		2,542,769

Reorganization of share capital

On December 8, 2005, the Company amalgamated with 2087609 Ontario Inc., a newly incorporated company wholly-owned by CSR Investments. As a result of the amalgamation the Company was (i) authorized to issue an unlimited number of Class A Subordinate Voting Shares, Class B Voting Shares, and Non-Voting Shares, (ii) the existing 15,000,200 common shares were converted into 81,615,633 Class B Voting Shares and 1,007,289 class A Subordinate Voting Shares which were then issued to certain employees and service providers which will be accounted for as compensatory, and (iii) the common shares were deleted as an authorized class of shares.

Stock-based compensation

In November 2005, the Board of Directors of the Company approved a stock option plan for the purpose of providing additional incentives to attract and retain employees, directors, and senior officers of the Company and its affiliates.

Under this plan, the Company has granted options to certain of its employees and senior officers, for 1,100,000 Class A Subordinate Voting Shares. The exercise price is $0.01. The options were conditional on the closing of the Equity Offering. 1,075,000 options will vest in equal one-fourth annual amounts beginning on the date of the closing of the Company’s Equity Offering and ending on the third anniversary thereof. Vesting may be accelerated if the employee ceases to be employed by the Company. Given that the vesting of these options were also conditional on the closing of the Equity Offering, no compensation expense was recorded for these options for the year ended August 31, 2005. The remaining 25,000 options vested on the closing of the Company’s Equity Offering.

F-14

In December 2005, the Company granted options, prior to the closing of the Equity Offering, to certain of its directors, employees and senior officers for 1,175,000 Class A Subordinate Voting Shares with an exercise price of $16.00. These options will vest in equal one-fifth amounts beginning on the first anniversary of the Equity Offering and ending on the fifth anniversary of the Equity Offering date.

These options will expire on the seventh anniversary of the grant date. Any option not exercised prior to the expiry date will become null and void.

Advertising commitments

The Company has committed to buy $3 million and $2 million of radio advertising from two entities to be paid through the issuance of the Company’s Class A Subordinate Voting Shares. In addition, the Company has committed to a minimum purchase of $10 million of advertising from one of these entities over a period of three years commencing on the date of closing of the Equity Offering, subject to a per annum minimum of $1.5 million.

XM agreements

On November 17, 2005, the Company entered into a number of agreements with XM which provide the Company with exclusive rights to offer XM satellite digital audio radio service in Canada. These rights include the following:

·   exclusive non-transferable right and license to sell the XM basic channels package to Canadian subscribers;

·   access to the programming on the XM channels;

·   rights to the use of the XM related trademarks;

·   information and expertise regarding the following:

o   acquisition of content distribution rights,

o   promotion, marketing and distribution,

o   construction, maintenance and operation of a repeater network and broadcast facilities,

o   computer software and system support, and

o   sharing of technology licenses.

The license agreement requires the payment of a service fee of 15% of all subscriber fees for the basic service. The Company will also pay to XM an additional fee for any premium services sold to subscribers and an activation charge for each subscriber.

In addition, XM has agreed to provide certain technical and consulting services to the Company to assist with the installation and roll-out of terrestrial repeaters and other services, including technical assistance with interfaces between the Company’s and XM’s systems and operational support. The Company will pay XM US$100,000 per month from September to December 2005 for these services. The monthly fee will be re-evaluated after December 2005 and adjusted based on the level of continuing assistance required.

XM has provided the Company a $45 million credit facility solely to be utilized to finance the purchase of terrestrial repeaters and license fees. The facility matures on December 31, 2012 and bears an interest rate of 9% per year. XM has a right to convert unpaid principal amounts advanced into Class A Subordinate Voting Shares of the Company at a conversion price of $16.00 per share. In certain circumstances, the Company may convert any outstanding amounts into Class A Subordinate Voting Shares. Advances under the facility are subject to certain conditions including a maximum amount of additional debt and minimum annual cash flow requirements. Currently no amounts are outstanding under this facility.

F-15

Agreements with Original Equipment Manufacturers

On November 30, 2005, the Company entered into a 13-year distribution agreement with General Motors of Canada Limited (GMCL) to install satellite radio receivers in certain GMCL vehicles and to market the Company’s services. In exchange, the Company will pay consideration to GMCL that includes one-time installation commissions, subscriber commissions, a share of subscription fees for GM subscribers and funds to be used on joint advertising opportunities.

In addition, the Company agreed to issue in escrow a 3% equity interest in the Company to another automotive equipment manufacturer (OEM) that enters into a distribution agreement with the Company on certain specific terms. In December 2005, 1,424,250 Class A Subordinate Voting Shares of the Company were placed in escrow. In March 2006, the Company entered into agreements with Honda Canada Inc. (“Honda”) and Nissan Canada Inc. (“Nissan”). The distribution agreements include one-time installation commissions, subscriber commissions and a share of subscription fees. As part of the distribution agreement with Honda, the Company provided 949,500 Class A subordinate Voting Shares from escrow which were determined to have a value of $9,827,325 based on the market price of the shares at the date the shares were released from escrow. Distribution rights with a value of $9,827,325 will be recorded as an intangible asset to be amortized over the 8-year term of the Honda agreement. As part of the distribution agreement with Nissan, the company provided 474,750 Class A Subordinate Voting Shares from escrow which were determined to have a value of $4,913,663 based on the market price of the shares at the date the shares were released from escrow. Distribution rights with a value of $4,913,663 will be recorded as an intangible asset to be amortized over the 10-year term of the Nissan agreement.

Initial Public Offering

On December 12, 2005, the Company completed an initial public offering for 3,437,500 Class A Subordinate Voting Shares and received net proceeds of approximately $50 million.

Share capital transactions

Immediately prior to the closing of the Equity Offering, CSR Investments provided additional capital of $15 million. On December 12, 2005, the Company repaid $15 million owed to parties related to CSR Investments.

On November 17, 2005, the Company entered into a Share Issuance Agreement and provided XM its rights to a 23.33% ownership interest in the Company, as contemplated in the 2003 Memorandum of Agreement and as reflected in documents filed with the CRTC. On December 12, 2005, the Company issued 11,077,500 Class A Subordinate Voting Shares of the Company to XM. The Class A Subordinate Voting Shares were determined to have a value of $177,240,000, based on the Equity Offering price of $16.00 per share. Contract rights with a value of $177,240,000 will be recorded as an intangible asset to be amortized over the initial term of the XM agreements of ten years plus the additional renewal period of 5 years.

As part of the distribution agreement with GMCL, the Company agreed to provide GMCL with a 7% equity interest in the Company. On December 12, 2005, the Company issued 3,323,250 Class A Subordinate Voting Shares to GMCL. The Class A Subordinate Voting Shares were determined to have a value of $53,172,000, based on the Equity Offering price of $16.00 per share. Distribution rights with a value of $53,172,000, will be recorded as an intangible asset to be amortized over the 13-year term of the GMCL agreement.

Notes Offering

On February 10, 2006, the Company issued US$100.0 million aggregate principal amount of 12.75% Senior Notes due 2014 (the “Notes”), in a private placement. Interest payments on the Notes are due semi-annually, on each February 15 and August 15, commencing August 15, 2006. The Notes are unsecured and guaranteed by the subsidiaries of the Company. The Notes are redeemable at the option of the Company on or after February 15, 2010. Prior to February 15, 2009, the Company may redeem up to 25% of the Notes with the proceeds of sales of capital stock. The indenture governing the Notes requires the Company to establish an interest reserve account in the amount of US$35.5 million to cover the first six interest payments due under the Notes. The indenture also contains certain provisions which restrict or limit the Company’s ability to, among other things, incur more debt, pay dividends, redeem stock or make other distributions, enter into transactions with affiliates or transfer or sell assets.

F-16

The Notes issued by the Company are guaranteed by its wholly-owned subsidiary CSR, the Company’s only subsidiary. The guarantee is full and unconditional. The Company has no independent assets or operations. As a result, the consolidating financial information has not been provided.

12   Canadian and United States accounting policy differences

The consolidated financial statements of the Company have been prepared in accordance with GAAP as applied in Canada. In certain aspects GAAP as applied in the United States (“U.S.”) differs from Canadian GAAP. There were no material differences between Canadian and U.S. GAAP that impacted the consolidated balance sheets, statements of operations and deficit and cash flows of the Company. Other additional disclosures required under U.S. GAAP have been provided below:

Principal differences affecting the Company

Other disclosures

The following amounts are included in general and administrative costs:

	2005		2004		2003
Rent expense	$	31,909	$	0	$	0

Amortization expense for intangible assets for the next five years will be as follows:

	$
2006		201,327
2007		201,327
2008		201,327
2009		201,327
2010		201,327

Recent U.S. accounting pronouncements:

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R. SFAS 123R requires recognition of compensation expense for stock options granted to employees. The expense is equal to the grant-date fair value of the option granted, and the expense is recognized over the vesting period. The standard is effective for the Company as at September 1, 2005. As of August 31, 2005, the Company had not granted any stock options. Compensation expense will need to be recorded for new option awards. The amount of compensation expense that will be recorded in fiscal 2006 and beyond will depend on the amount and timing of option activity. The Company has adopted the standard under the modified prospective basis afforded under the standard.

SFAS 153, “Exchanges of Non-Monetary Assets - an Amendment of APB Opinion 29,” was issued in December 2004. Accounting Principles Board (“APB”) Opinion 29 is based on the principle that exchanges of non-monetary assets should be measured based on the fair value of assets exchanged. SFAS amends APB Opinion 29 to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. The standard is effective for the Company for non-monetary asset exchanges occurring in fiscal 2006 and will be applied prospectively. The adoption of this standard is not expected to have a material impact on the financial statements of the Company.

F-17

CANADIAN SATELLITE RADIO HOLDINGS INC.

(Formerly A Development Stage Company)

INTERIM CONSOLIDATED BALANCE SHEET

(UNAUDITED)

As at February 28, 2006

(In Canadian dollars)

	February 28, 2006 $			August 31, 2005 $
Assets
Current assets
Cash anc cash equivalents		78,997,450			20
Accounts receivable		498,607			-
Inventory		929,789			-
Prepaid expenses		2,621,663			-
		83,047,509			20
Restricted investment (note 12)		40,469,206			-
Deferred financing costs (note 12)		5,209,208			-
Property and equipment (note 6)		21,752,225			1,996,606
Contract rights, distribution rights and computer software (note 7)		232,145,435			1,006,634
Total assets		382,623,583			3,003,260
Liabilities and Shareholders’ Equity (Deficiency)
Current liabilities
Accounts payable (notes 8 and 9)		12,007,596			11,864,983
Deferred revenue		1,294,928			-
		13,302,524			11,864,983
Long-term debt (note 12)		113,660,000			-
Long-term obligations (note 3)		546,269			16,987
Total liabilities		127,508,793			11,881,970
Shareholders’ Equity (Deficiency)
Share capital (note 11)		297,454,374			20
Contributed surplus (notes 8 and 11)		25,107,310			-
Deficit		(67,446,894	)		(8,878,730	)
Total shareholders’ equity (deficiency)		255,114,790			(8,878,710	)
Total liabilities and shareholders’ equity (deficiency)		382,623,583			3,003,260

F-18

CANADIAN SATELLITE RADIO HOLDINGS INC.

(Formerly A Development Stage Company)

INTERIM CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT

(UNAUDITED)

(In Canadian dollars)

	Three months ended February 28,						Six months ended February 28,
	2006 $			2005 $			2006 $			2005 $
Revenue		1,144,931			-			1,190,941			-
Operating expenses
Cost of revenue		5,190,056			-			8,319,699			-
Indirect costs (note 8)		-			519,252			827,125			993,025
General and administrative (note 8)		4,012,465			455,840			9,600,470			877,414
Stock-based compensation (note 11)		22,244,546			-			22,244,546			-
Marketing		9,385,347			-			14,015,595			-
Amortization		4,712,630			560			5,191,310			1,120
		45,545,044			975,652			60,198,745			1,871,559
		(44,400,113	)		(975,652	)		(59,007,804	)		(1,871,559	)
Interest expenses		211,589			-			211,589			-
Foreign exchange gains		650,389			-			651,229			-
Net loss for the period		(43,961,313	)		(975,652	)		(58,568,164	)		(1,871,559	)
Deficit-Beginning of period		(23,485,581	)		(3,069,378	)		(8,878,730	)		(2,173,471	)
Deficit - End of period		(67,446,894	)		(4,045,030	)		(67,446,894	)		(4,045,030	)
Basic and fully diluted loss per share (note 13)		(1.05	)		(2,595	)		(2.81	)		(4,978	)

F-19

CANADIAN SATELLITE RADIO HOLDINGS INC.

(Formerly A Development Stage Company)

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

(In Canadian dollars)

	Three months ended February 28,						Six months ended February 28,
	2006 $			2005 $			2006 $			2005 $
Cash provided by (used in)
Operating activities
Net loss for the period		(43,961,313	)		(975,652	)		(58,568,164	)		(1,871,559	)
Add: Non-cash items
Costs paid by parent company		-			-			2,862,764			-
Stock option expense		22,244,546			-			22,244,546			-
Amortization of intangible assets		4,245,099			-			4,687,474			-
Amortization of property and equipment		467,531			560			503,836			1,120
Interest accretion expense		15,857			-			16,409			-
Foreign exchange gains		(650,389	)		-			(651,229	)		-
Net change in non-cash working capital related to operations (note 14)		(15,656,528	)		975,092			(4,374,406	)		1,870,439
Net cash used in operating activities		(33,295,197	)		-			(33,278,770	)		-
Investing activities
Restricted investments		(41,015,595	)		-			(41,015,595	)		-
Purchase of property and equipment		(17,073,694	)		-			(17,073,694	)		-
Purchase of intangibles		(4,781,761	)		-			(4,781,761	)		-
Net cash used in investing activities		(62,871,050	)		-			(62,871,050	)		-
Financing activities
Initial public offering - net of issuance costs		50,042,354			-			50,042,354			-
Shares issued to CSR Investments		15,000,000			-			15,000,000			-
Deferred financing costs		(4,641,862	)		-			(4,641,862	)		-
Proceeds from long-term debt		115,420,000			-			115,420,000			-
Net cash provided by financing activities		175,820,492			-			175,820,492			-
Foreign exchange loss on cash held in foreign currency		(674,082	)		-			(673,242	)		-
Change in cash and cash equivalents during the period		78,980,163			-			78,997,430			-
Cash and cash equivalents - Beginning of period		17,287			20			20			20
Cash and cash equivalents - End of period		78,997,450			20			78,997,450			20
Supplemental cash flow disclosures
Rights acquired through issuance of shares		-			-			230,412,000			-
Property and equipment purchases in accounts payable		2,672,888			-			2,672,888			-
Computer software purchases in accounts payable		632,514			-			632,514			-
Prepaid advertising purchased through issuance of equity		2,000,000			-			2,000,000			-
Additions to property and equipment and long-term obligations for asset retirement obligation		89,579			-			512,873			-
Deferred financing costs related to long-term debt		600,000			-			600,000			-

F-20

CANADIAN SATELLITE RADIO HOLDINGS INC.

(Formerly A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

February 28, 2006

1.Basis of presentation

The accompanying interim consolidated financial statements of Canadian Satellite Radio Holdings Inc. (the Company) have been prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP) for interim financial information. Accordingly, they do not include all of the information and footnotes required by Canadian GAAP for annual financial statements. These interim consolidated financial statements should be read in conjunction with the most recent annual consolidated financial statements of the Company. The accompanying financial information reflects all adjustments, consisting primarily of normally recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of results for interim periods. Operating results for the three-month period ended February 28, 2006 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2006. These interim consolidated financial statements follow the same accounting principles and methods of application as the consolidated financial statements for the year ended August 31, 2005, except as described in note 3.

2.Organization and nature of business

The Company was a wholly owned subsidiary of Canadian Satellite Radio Investments Inc. (CSR Investments) and was incorporated on July 31, 2002 for the purpose of establishing and operating a Canadian satellite radio service. On June 16, 2005, the Canadian Radio-television and Telecommunications Commission (CRTC) approved the application for a broadcasting license to the Company’s wholly owned subsidiary, Canadian Satellite Radio Inc. (CSR). The decision granted a broadcasting license to CSR to carry on a satellite subscription undertaking, subject to certain conditions. The initial form of the broadcasting license will expire on August 31, 2011. The license is described further in note 10.

The Company was previously a development stage company. The Company has now completed the construction of its terrestrial repeater network, launched its subscription-based satellite radio to the Canadian market on November 22, 2005, and achieved revenues from new subscribers. As a result, the Company is no longer considered a development stage company.

The Company has certain exclusive arrangements with XM Satellite Radio Holdings Inc. (XM) to provide the Company’s services in Canada as further explained in note 4. The Company’s operations will rely on XM’s co-operation and its programming content, satellite network and underling technology, as well as XM’s operational and marketing efficiency, competitiveness, finances, regulatory status and overall success in the United States.

From its inception, the Company has incurred net losses. Losses and negative cash flows are expected to continue. On December 12, 2005, the Company completed an initial public offering for 3,437,500 Class A Subordinate Voting Shares (the Offering) and received net proceeds of approximately $50 million. Immediately prior to the Offering, the Company also received an additional equity contribution of $15 million from CSR Investments. This $15 million contribution was used to reduce amounts owing to a company controlled by John I. Bitove as described in note 8.

On February 10, 2006, the Company completed a note offering for gross proceeds of US$100 million, of which US$35.5 million is held in an interest reserve account to cover the first six semi-annual interest payments due on the notes. See note 12 for further information on these notes.

F-21

3.Summary of significant accounting policies

Principles of consolidation

The interim consolidated financial statements include the accounts of the Company and its subsidiary, CSR. All material intercompany transactions and balances have been eliminated.

Inventory

Inventory is valued at the lower of weighted average cost and market and consists of finished goods.

Amortization of property and equipment

Amortization is computed on a straight-line basis at rates sufficient to amortize the cost of the assets over their estimated useful lives.

Terrestrial repeater network	5 to 10 years
Leaseholds	initial lease term
Broadcast studio equipment	3 to 10 years
Computer hardware	3 to 5 years
Furnishings and equipment	3 to 10 years

Asset retirement obligations

The Company has obligations with respect to the retirement of terrestrial repeater equipment and restoration of facilities back to their original state at the end of the lease term. Accruals are made based on management’s estimates of current market restoration costs, inflation rates and discount rates. At the inception of a lease, the present value of the expected cash payments is recognized as an asset retirement obligation with a corresponding amount recognized in property assets. The property asset amount is amortized and the liability is accreted over the period from the lease inception to the time the Company expects to remove the terrestrial repeater equipment and vacate the premises, resulting in both amortization and accretion charges in the interim consolidated statement of operations and deficit.

During the six months ended February 28, 2006, the Company recorded an asset retirement obligation of $512,873, which is included in long-term obligations.

Contract rights, distribution rights and computer software

Contract rights, distribution rights and computer software consist of XM rights, General Motors of Canada Limited (GMCL) distribution rights and computer software. These assets are recorded at cost and amortized as follows:

XM rights	15 years
GMCL distribution rights	13 years
Computer software	5 years

4.XM agreements

On November 17, 2005, and as contemplated by the 2003 Memorandum of Agreement with XM, the Company entered into a number of agreements with XM, which provide the Company with exclusive rights to offer XM satellite digital radio service in Canada. These agreements include a License Agreement, a Programming Agreement and a Trademark Agreement, which include the following rights:

F-22

·   exclusive non-transferable rights and license to sell the XM basic channels package to Canadian subscribers;

·   access to the programming on the XM channels;

·   rights to theuse of the XM related trademarks; and

·   information and expertise regarding the following:

o   acquisition of content distribution rights;

o   promotion, marketing and distribution;

o   construction, maintenance and operation of a terrestrial repeater network and broadcast facilities;

o   computer software and system support; and

o   sharing of technology licenses.

The agreements have an initial term of ten years. The Company may, at its option, extend the term for an additional five years.

The License Agreement requires the payment of a fee of 15% on recognized subscriber revenues for the basic service, an activation charge for each subscriber and an additional fee for any premium services.

In addition, XM has agreed to provide certain technical and consulting services to the Company to assist with the installation and rollout of the terrestrial repeater equipment and other services, including technical assistance with equipment interfaces between the Company’s and XM’s systems and operational support. The Company will pay XM US$100,000 per month from September to December 2005 for these services. Beginning in January 2006, this monthly fee was adjusted to US$50,000 per month through March 2006. This will be renegotiated on a quarterly basis.

XM has provided the Company a $45 million credit facility to be utilized to finance the purchase of terrestrial repeaters and to pay license fees. The facility matures on December 31, 2012 and bears an interest rate of 9% per year. XM has a right to convert unpaid principal amounts into Class A Subordinate Voting Shares of the Company at the Offering price of $16.00 per share. As at February 28, 2006, no amount was drawn against this facility.

5.Agreements with original equipment manufacturers

On November 30, 2005, the Company entered into a 13-year distribution agreement with GMCL to install satellite radio receivers in certain GMCL vehicles and to market the Company’s services. In exchange, the Company will pay consideration to GMCL that includes one-time installation commissions, subscriber commissions, a share of subscription fees for GM subscribers and funds to be used on joint advertising opportunities.

In addition, the Company agreed to issue in escrow a 3% equity interest in the  Company to another  automotive equipment manufacturer (OEM) that enters  into  a  distribution agreement with the Company on certain specific terms. In December 2005, 1,424,250 Class A Subordinate Voting Shares of the Company were placed in escrow. In March 2006, the Company entered into agreements with Honda Canada Inc. (“Honda”) and Nissan Canada Inc. (“Nissan”). The distribution agreements include one-time installation commissions, subscriber commissions and a share of subscription fees. As part of the distribution agreement with Honda, the Company provided 949,500 Class A subordinate Voting Shares from escrow which were determined to have a value of $9,827,325 based on the market price of the shares at the date the shares were released from escrow. Distribution rights with a value of $9,827,325 will be recorded as an intangible asset to be amortized over the 8-year term of the Honda agreement. As part of the distribution agreement with Nissan, the company provided 474,750 Class A Subordinate Voting Shares from escrow which were determined to have a value of $4,913,663 based on the market price of the shares at the date the shares were released from escrow. Distribution rights with a value of $4,913,663 will be recorded as an intangible asset to be amortized over the 10-year term of the Nissan agreement.

F-23

6.Property and equipment

Property and equipment consist of the following:

	February 28, 2006
	Cost $		Accumulated amortization $		Net $
Terrestrial repeater network		14,143,822		271,646		13,872,176
Leaseholds		5,471,160		113,488		5,357,672
Broadcast studio equipment		1,393,027		55,511		1,337,516
Computer hardware		611,251		37,521		573,730
Furnishings and equipment		641,413		30,282		611,131
		22,260,673		508,448		21,752,225

	August 31, 2005
	Cost $		Accumulated amortization $		Net $
Terrestrial repeater network		1,885,164		-		1,885,164
Leaseholds		81,312		-		81,312
Computer hardware		34,742		4,612		30,130
		2,001,218		4,612		1,996,606

The balance in terrestrial repeater network as at August 31, 2005 represents costs capitalized relating to the construction of the XM satellite radio system, which was still in progress. The terrestrial repeater network went into operation in November 2005.

7.Contract rights, distribution rights and computer software

Contract rights, distribution rights and computer software consist of the following:

	February 28, 2006
	Cost $		Accumulated amortization $		Net $
XM rights (note 4)		177,240,000		3,380,690		173,859,310
GMCL distribution rights (note 5)		53,172,000		1,022,538		52,149,462
Computer software		6,420,909		284,246		6,136,663
		236,832,909		4,687,474		232,145,435

F-24

	August 31, 2005
	Cost $		Accumulated amortization $		Net $
Computer software		1,006,634		-		1,006,634

During the three and six months ended February 28, 2006, $4,245,099 and $4,687,474, respectively, of amortization was recorded on these intangible assets.

8.Related party accounts and transactions

John I. Bitove is the controlling shareholder of CSR Investments and the Chairman and Chief Executive Officer of the Company. The Company was established for the purpose of making satellite radio service available to the Canadian public on a commercial basis. To achieve this purpose, John I. Bitove and the Company entered into a Memorandum of Agreement (MOA) with XM dated August 7, 2003. Prior to completing the MOA, the Company commenced some initial assessments and investigation of satellite radio for Canada. The MOA confirmed the binding arrangements for the parties to work together to obtain a Canadian broadcast license to operate a subscription-based satellite radio service in Canada. In addition, the MOA also included the non-binding arrangements with respect to a future license arrangement between the parties, the equity structure, corporate governance and other matters impacting the launch, marketing and operations of the satellite radio service in Canada.

The Company contracted the services of another company controlled by John I. Bitove to manage and fund the process of applying for and obtaining a Canadian broadcast license for its planned satellite radio service. The Company was required to reimburse all direct costs as they were incurred throughout the period of the license application and up to the time of the Offering. An additional amount was payable based on the level of direct costs. This total amount, reported as indirect costs in the interim consolidated statement of operations and deficit, includes an element for all indirect costs incurred by John I. Bitove or any company controlled by John I. Bitove during the periods presented. As at February 28, 2006, the amount owing was $nil (August 31, 2005 - $10,528,029).

In 2003, CSR Investments granted the equivalent of 34,918 options to acquire shares of CSR Investments at nominal exercise price to a director of CSR Investments who, in fiscal 2005, became an officer of the Company. The grant included anti-dilution provisions which entitled the director to a 5% interest in CSR Investments. These options vested upon receiving the regulatory approval for the CRTC license. The grant date fair value of each option was later determined to be $15.75. The compensation cost included in indirect costs for fiscal 2005, 2004 and 2003 for the individual amounted to $240,000, $240,000 and $60,000 respectively. These amounts were included in amounts due to companies controlled by John I. Bitove. The estimated fair value of the options was based on the same value arising from the $15 million of equity contributed to the Company by CSR Investments. As at August 31, 2005, none of these options was exercisable.

In June 2005, CSR Investments granted 21,868 options to acquire shares of CSR Investments at the equivalent of $7.54 per share to certain consultants and advisors that provided services to the Company, employees of a company related to CSR Investments and an officer of the Company. These options had a grant date fair value of $151 per option and an estimated fair value of $3.3 million. Approximately 75% of these options expire in June 2008, vested and were exercisable immediately and accordingly the compensation cost has been included in indirect costs in fiscal 2005. The remaining options vest in June 2008, expire in December 2008 and compensation costs are being expensed as stock-based compensation, starting with fiscal 2005, over the 3-year vesting period. The estimated fair market value of these options was determined using the Black Scholes valuation model using the following assumptions: estimated fair value of CSR Investments of $160 per share, risk free interest rates of 5%, expected lives of 3 years, dividend yield of nil and volatility of 82.5%.

F-25

In December 2005, through a series of steps including the amalgamation of the Company with 2087609 Ontario Inc., the existing CSR Investments option holders described above exercised half of their options and received 1,007,289 Class A Subordinate Voting Shares. The director whose options vested with the CRTC license approval exchanged the remaining options for an equivalent equity interest in CSR Investments with fair market value repurchase rights. While all  of these costs were borne by CSR Investments, this series of steps was viewed to create a modification of the options and has thus resulted in an additional stock-based compensatory expense of approximately $3 million in the three month period ended February 28, 2006. The Company did not receive any consideration on the exercise of these options.

In December 2005, 2,403 options of CSR Investments were granted to an officer of the Company with a nominal exercise price. These options vest over three years but may be accelerated if the employee ceases to be employed by the Company. Accordingly, an additional stock-based compensatory expense of approximately $1 million was recorded in the three month period ended February 28, 2006. These options were valued using the Black Scholes valuation model using the following assumptions: fair value of CSR Investments of $416 per share, risk free interest rate of 5%, expected life of 3 years, dividend yield of nil and volatility of 82.5%.

As described in note 11, XM has a 23.30% interest in the Company. See notes 4 and 9 for transactions with and amounts owed to XM.

During the six months ended February 28, 2006, CSR Investments advanced to the company $300,000. This loan is non-interest-bearing, has no fixed terms of repayment and is included in accounts payable. In addition, during the six months ended February 28, 2006, CSR Investments incurred $2,862,764 of costs related to the Company’s license application process. This amount has been included in contributed surplus.

During the three and six months ended February 28, 2006, the Company received printing services from AMI Printing valued at approximately $478,000 and $808,000, respectively. An affiliate of CSR Investments holds an indirect minority interest in AMI Printing.

During the six months ended February 28, 2006, the Company entered into a payroll service agreement with KIT LP for an annual amount of $20,000. KIT LP is owned, directly and indirectly, approximately 60% by Priszm Canadian Income Fund and approximately 40% by a company controlled by John I. Bitove.

During the three months ended February 28, 2006, the Company entered into a marketing agreement with Vision Group of Companies (Vision), under which the Company received field marketing services valued at approximately $322,000. Vision also provided the Company with other marketing services during the three months ended February 28, 2006 valued at approximately $166,000.  The principal of Vision is a brother of John I. Bitove.

During the three and six months ended February 28, 2006, the Company incurred $40,300 and $53,800, respectively, of expenses respectively related to the lease of its Toronto studio from a company controlled by John I. Bitove. The Company has leased this property for a 15-year period for a total amount of approximately $1.9 million.

9.Contracts and commitments

Terrestrial repeater purchase agreement with XM

The Company has agreed to purchase terrestrial repeaters from XM as needed to build a terrestrial repeater network throughout Canada. Terrestrial repeaters are used to improve the transmission of satellite signals in more densely populated and developed areas. As at February 28, 2006, a total of 80 (November 30, 2005 - 80) high-power and standard terrestrial repeaters had been purchased and received by the Company. The following amount included as part of accounts payable is due to XM in respect of the purchase of these terrestrial repeaters:

F-26

	February 28, 2006 $		August 31, 2005 $
Accounts payable to XM for terrestrial repeater purchases		613,926		1,336,954

Lease obligations

The Company has non-cancellable operating leases for office space and terrestrial repeater sites committed as at February 28, 2006. The annual minimum lease payments in the table below do not include any common costs, such as taxes and utilities, which cannot be determined in advance.

	$
2006	574,297
2007	575,750
2008	570,375
2009	563,583
2010	562,125
Thereafter	1,569,483

Service provider agreement

On February 28, 2006, the Company entered into a three-year agreement with Accenture Inc. for maintenance and development services on the Company’s customer care and billing system. Under the agreement, the Company is committed to pay a minimum of $12.3 million over the three-year period.

10.Broadcast license

On June 16, 2005, CSR received approval of its application for a broadcasting license from the CRTC, subject to certain conditions. On September 7, 2005, CSR applied to amend the CRTC broadcasting license. On November 21, 2005, the CRTC advised CSR that it was satisfied that the conditions to the grant of its broadcasting license were fulfilled and that the license would therefore be issued when: (i) the Department of Industry notified the CRTC that its technical requirements had been met, and (ii) CSR confirmed to the CRTC that it was prepared to commence operations. The Department of Industry notified the CRTC that its technical requirements had been met on November 22, 2005. Similarly, on November 22, 2005, CSR confirmed to the CRTC that it was prepared to commence operations. As a result of the satisfaction of these conditions, CSR has fulfilled all regulatory conditions to launch and CSR was authorized to launch its service.

Under the terms of its broadcasting license, the Company must contribute a minimum of 5% of gross revenues of the satellite radio undertaking to eligible third parties directly connected to the development of Canadian musical and other artistic talent during each broadcast year. On February 10, 2006, the CRTC approved CSR’s application dated September 7, 2005.

F-27

11.Share capital and other activity

The authorized share capital of the Company as at February 28, 2006 consisted of the following shares:

Class A Subordinate Voting Shares	unlimited
Class B Voting Shares	unlimited
Class C Non-Voting Shares	unlimited

The Class B Voting Shares are convertible at any time at the holder’s option into fully paid and non-assessable Class A Subordinate Voting Shares upon the basis of one Class A Subordinate Share for each three Class B Voting Shares. The Class A Subordinate Voting Shares and the Class C Non-Voting Shares participate in the equity of the Company on an equal per share basis. The Class B Voting Shares, however, participate in the equity of the Company on a per share rate equal to one third of the rate of participation of the Class A Subordinate Voting Shares and the Class C Non Voting Shares.

Share capital and other activity are summarized as follows:

	Number of shares							Value of shares
	Common shares			Class A Subordinate Voting Shares		Class B Voting Shares		Common shares $			Class A Subordinate Voting Shares $		Class B Voting Shares $		Contributed surplus $		Total $
Balance as at August 31, 2005		200			-		-		20			-		-		-		20
Costs incurred by CSR Investments (note 8)		-			-		-		-			-		-		2,862,764		2,862,764
Issuance of common shares to CSR Investments		15,000,000			-		-		15,000,000			-		-		-		15,000,000
Issuance of Class A Subordinate Voting Shares to XM		-			11,077,500		-		-			177,240,000		-		-		177,240,000
Issuance of Class A Subordinate Voting Shares to GMCL		-			3,323,250		-		-			53,172,000		-		-		53,172,000
Conversion of common shares to 81,615,633 Class B Voting Shares		(15,000,200	)		-		81,615,633		(15,000,020	)		-		15,000,020		-		-
Issuance of Class A Subordinate Voting Shares as part of the amalgamation with 2087609 Ontario Inc.		-			1,007,289				-			-		-		-		-
Issuance of Class A Subordinate Voting Shares in exchange for purchase of radio advertising services		-			125,000		-		-			2,000,000		-		-		2,000,000
Stock options expense		-			-		-		-			-		-		22,244,546		22,244,546
Issuance of Class A Subordinate Voting Shares in an initial public offering (less issuance costs of $4,957,646) (note 2)		-			3,437,500		-		-			50,042,354		-		-		50,042,354
Balance as at February 28, 2006		-			18,970,539		81,615,633		-			282,454,354		15,000,020		25,107,310		322,561,684

F-28

As a result of a reorganization of the Company on December 8, 2006, the Company’s existing 15,000,200 common shares were converted to 81,615,633 Class B Voting Shares and 1,007,289 Class A Subordinate Voting Shares were issued. As three Class B Voting Shares are economically equivalent to one Class A Subordinate Voting Share, the conversion resulted in the issuance of 28,212,500 common share equivalents. The conversion has been accounted for as a share split resulting in 1.88 common share equivalents being issued for each pre-existing common share. The per share information in these interim consolidated financial statements has been restated to reflect the impact of the share split. The Company’s information for the three months ended November 30, 2005 and 2004 should have reflected this share split; accordingly, the loss per share for the periods ended November 30, 2005 and 2004 are revised to $38,848 and $2,383, respectively, based on the weighted average number of shares outstanding of 376.

On November 17, 2005, the Company entered into a Share Issuance Agreement and provided XM its rights to a 23.30% ownership interest in the Company, as contemplated in the 2003 Memorandum of Agreement and as reflected in documents filed with the CRTC. Immediately prior to the closing of the Offering, the Company issued 11,077,500 Class A Subordinate Voting Shares of the Company to XM. The Class A Subordinate Voting Shares were determined to have a value of $177,240,000, based on the Offering price of $16.00 per share. Rights with a value of $177,240,000 have been recorded as an intangible asset to be amortized over the initial term of the XM agreements of ten years plus the additional renewal period of five years.

As part of the distribution agreement with GMCL, the Company agreed to provide GMCL with a 7% equity interest in the Company. Immediately prior to the closing of the Offering in December 2005, the Company issued 3,323,250 Class A Subordinate Voting Shares to GMCL. The Class A Subordinate Voting Shares were determined to have a value of $53,172,000, based on the Offering price of $16.00 per share. Distribution rights with a value of $53,172,000 have been recorded as an intangible asset to be amortized over the 13-year term of the GMCL agreement.

In December 2005, the Company issued 125,000 Class A Subordinate Shares in exchange for the purchase of radio advertising services to be received by the Company in an aggregate amount of $2 million. A corresponding amount was recorded as prepaid expenses, which will be expensed as radio advertising services are received by the Company.

Stock options

In November 2005, the Board of Directors of the Company approved a stock option plan for the purpose of providing additional incentives to attract and retain employees, directors and senior officers of the Company and its affiliates.

Under this plan, the Company has granted options to certain of its employees and senior officers, for 1,100,000 Class A Subordinate Voting Shares with an exercise price of $0.01. The options were conditional on the closing of the Offering. 1,075,000 options will vest in equal one-fourth annual amounts beginning on the date of the closing of the Offering and ending on the third anniversary thereof. Vesting may be accelerated if the employee ceases to be employed by the Company. The remaining 25,000 options were vested on the closing of the Offering. The options were valued at $16 each based on Offering price of the shares. An expense of $17.6 million has been recorded during the three and six months ended February 28, 2006. As at February 28, 2006, no options had been exercised and 293,750 of the options were exercisable.

F-29

In December 2005, prior to the closing of the Offering, the Company granted options to certain of its directors, employees and senior officers for 1,175,000 Class A Subordinate Voting Shares with an exercise price of $16.00. These options will vest in equal one-fifth amounts beginning on the first anniversary of the Offering and ending on the fifth anniversary of the Offering date. The fair value of these options was $12.9 million and $0.6 million was recorded in the interim consolidated statement of operations and deficit. The weighted average grant date fair value of these options was $10.98. As at February 28, 2006, no options had been exercised or cancelled.

The fair value of these options was estimated on the date of grant using the Black-Scholes option pricing model. The following are assumptions that were used for the options granted during the six months ended February 28, 2006: expected dividend yield of nil%, expected volatility of 82.75%, risk-free interest rate of 4.00%, and expected life of five years.

These options will expire on the seventh anniversary of the grant date. Any option not exercised prior to the expiry date will become null and void.

12.Notes offering

On February 10, 2006, the Company issued US$100.0 million aggregate principal amount of 12.75% senior notes, due in 2014 (the notes), in a private placement. Interest payments on the notes are due semi-annually, on February 15 and August 15, commencing on August 15, 2006. The notes are unsecured and guaranteed by the subsidiaries of the Company. The notes are redeemable at the option of the Company on or after February 15, 2010. Prior to February 15, 2009, the Company may redeem up to 25% of the notes with the proceeds of sales of its share capital. The indenture governing the notes requires the Company to establish an interest reserve account in the amount of approximately US$35.5 million to cover the first six interest payments due under the notes. The indenture also contains certain provisions which restrict or limits the Company’s ability to, among other things, incur more debt, pay dividends, redeem shares or make other distributions, enter into transactions with affiliates, transfer or sell assets.

The notes issued by the Company are guaranteed by its wholly owned subsidiary CSR, the Company’s only subsidiary. The guarantee is full and unconditional. The Company has no independent assets or operations. As a result, the consolidating financial information has not been provided.

As part of the issuance of the above-mentioned notes, the Company incurred costs amounting to $5,241,862. These costs are amortized on a straight-line basis over the term of the notes. During the three and six months ended February 28, 2006, $32,654 of amortization was included in the interim consolidated statement of operations and deficit.

13.Loss per share

The basic weighted average shares outstanding for the three months ended February 28, 2006, were 41,912,939 (February 28, 2005 - 376).

The basic weighted average shares outstanding for the six months ended February 28, 2006, were 20,840,877 (February 28, 2005 - 376).

F-30

For purposes of the weighted average shares outstanding, the Class B Voting Shares were converted into the equivalent number of Class A Subordinate Voting Shares. Class B Voting Shares participate in the dividends and distributions at a rate of one-third of each Class A Subordinate Voting Share and are convertible into Class A Subordinate Voting Shares on the basis of one Class A Subordinate Voting Share for three Class B Voting Shares.

1,424,250 Class A Subordinate Voting Shares issued in escrow (note 5) and the stock options (note 11) were not included in the computation of diluted loss per share as they would have been anti-dilutive for the periods presented.

14. Supplemental cash flow disclosures

Changes in non-cash working capital related to operations:

	Three months ended February 28,					Six months ended February 28,
	2006 $			2005 $		2006 $			2005 $
Increase in current assets
Accounts receivable		(341,660	)		-		(498,607	)		-
Inventory		(511,039	)		-		(929,789	)		-
Prepaid expenses		(543,555	)		-		(589,009	)		-
Increase (decrease) in current liabilities
Accounts payable		(15,465,811	)		975,092		(3,651,929	)		1,870,439
Deferred revenue		1,205,537			-		1,294,928			-
Net change in non-cash working capital related to operations		(15,656,528	)		975,092		(4,374,406	)		1,870,439

F-31

15. Canadian and United States accounting policy differences

The consolidated financial statements of the Company have been prepared in accordance with GAAP as applied in Canada. In certain aspects GAAP as applied in the United States (“U.S.”) differs from Canadian GAAP. There were no material differences between Canadian and U.S. GAAP that impacted the consolidated balance sheets, statements of operations and deficit and cash flows of the Company.

Principal differences affecting the Company

Other disclosures

The following amounts are included in accounts payable and accrued liabilities:

	February 28, 2006	August 31, 2005
Trade creditors	9,573,674	1,336,954
Amounts due to related parties	1,028,509	10,528,029
Amounts related to employees	704,255	-
Interest accrual on long-term debt	601,158	-
	12,007,596	11,864,983

Recent U.S. accounting pronouncements:

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R. SFAS 123R requires recognition of compensation expense for stock options granted to employees. The expense is equal to the grant-date fair value of the option granted, and the expense is recognized over the vesting period. The standard is effective for the Company as at September 1, 2005. The amount of compensation expense that will be recorded in fiscal 2006 and beyond will depend on the amount and timing of option activity. The Company has adopted the standard under the modified prospective basis afforded under the standard. There are no cumulative effect adjustments as a result of the adoption of the standard.

SFAS 153, “Exchanges of Non-Monetary Assets - an Amendment of APB Opinion 29,” was issued in December 2004. Accounting Principles Board (“APB”) Opinion 29 is based on the principle that exchanges of non-monetary assets should be measured based on the fair value of assets exchanged. SFAS amends APB Opinion 29 to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. The standard is effective for the Company for non-monetary asset exchanges occurring in fiscal 2006 and will be applied prospectively. The adoption of this standard is not expected to have a material impact on the financial statements of the Company.

F-32

US$100,000,000

Canadian Satellite Radio Holdings Inc.

OFFER TO EXCHANGE

12.75% Senior Notes due 2014

which have been registered under the Securities Act of 1933

for

any and all outstanding 12.75% Senior Notes due 2014

which have not been registered under the Securities Act of 1933

              , 2006

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PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 20.Indemnification of Directors and Officers

The Issuer:

Under the Business Corporations Act (Ontario) (the “Act”) and our by-laws, we may indemnify, to the fullest extent permitted by the Act, a director or officer of the Corporation, a former director or officer of the corporation or a person who acts or has acted at our request as a director or officer of another corporation of which we are or were a shareholder or creditor, and his or her heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him or her in respect of any civil, criminal, or administrative action or proceeding to which he or she is made a party by reason of being or having been a director or officer of the corporation or such other corporation, if, (a) he or she acted honestly and in good faith with a view to the best interests of the corporation; and (b) in the case of a criminal or administrative action of proceeding that is enforced by a monetary penalty, he or she had reasonable grounds for believing that his or her conduct was lawful.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been advised that, in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.

We maintain directors’ and officers’ liability insurance for our directors and officers.

The Subsidiary Guarantor:

Under the Canada Business Corporations Act and the by-laws of the subsidiary guarantor (the “Guarantor”) listed as a registrant under this registration statement, the Guarantor may indemnify a director or officer of the Guarantor, a former director or officer of the Guarantor or another individual who acts or acted at the Guarantor’s request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Guarantor or another entity, if the individual (a) acted honestly and in good faith with a view to the best interests of the Guarantor, or as the case may be, to the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at the Guarantor’s request; and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual’s conduct was lawful.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and persons controlling the subsidiary guarantor listed as a registrant under this registration statement, pursuant to the foregoing provisions, the subsidiary guarantor has been advised that, in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.

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The subsidiary guarantor maintains directors’ and officers’ liability insurance for its directors and officers.

Item 21.Exhibits

The exhibits to this registration statement are listed in the Exhibit Index to this registration statement, which Exhibit Index is herein incorporated by reference.

Item 22.Undertakings

(1) The undersigned registrants hereby undertake:

(i)to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement;

(a)to include any prospectus required by Section10(a)(3) of the Securities Act of 1933;

(b)to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar volume of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(c) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(ii)that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

(iii)to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; and

(iv)to file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided, that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (1)(iv) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements.

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(2) The undersigned registrants hereby undertake:

(i) to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such requests, and to send the incorporated documents by first class mail or other equally prompt means; and

(ii) to arrange or provide for a facility in the United States for the purpose of responding to such requests.

The undertaking  in subparagraph (i) above includes information contained in documents filed subsequent to the effective date of the  registration  statement  through  the date of responding to the request.

(3) The undersigned registrants  hereby  undertake  to supply  by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

(4) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted  to  directors,  officers  and  controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Toronto, Province of Ontario, Canada, on June 27, 2006.

CANADIAN SATELLITE RADIO HOLDINGS INC.
By:	/s/ Michael Washinushi
	Name: Michael Washinushi
	Title: Chief Financial Officer, Treasurer and Secretary

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Capacity	Date
* John I. Bitove	Director, Chairman and Chief Executive Officer (Principal Executive Officer)	June 27, 2006
* Michael Washinushi	Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)	June 27, 2006
* Pierre Boivin	Director	June 27, 2006
* Philip Evershed	Director	June 27, 2006
* Michael A. Grimaldi	Director	June 27, 2006
* James W. McCutcheon	Director	June 27, 2006
* Gary M. Parsons	Director	June 27, 2006
* Robert Storey	Director	June 27, 2006
* Joseph A. Verbrugge	Director	June 27, 2006
* Mariette L. Wilcox	Director	June 27, 2006
* By: /s/ Michael Washinushi Michael Washinushi Attorney - in - fact

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Toronto, Province of Ontario, Canada, on June 27, 2006.

CANADIAN SATELLITE RADIO INC.
By:	/s/ Michael Washinushi
	Name: Michael Washinushi
	Title: Chief Financial Officer, Treasurer and Secretary

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Capacity	Date
/s/ John I. Bitove John I. Bitove	Director, Chairman and Chief Executive Officer (Principal Executive Officer)	June 27, 2006
/s/ Michael Washinushi Michael Washinushi	Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)	June 27, 2006
* Philip Evershed	Director	June 27, 2006
* Robert Storey	Director	June 27, 2006
* Joseph A. Verbrugge	Director	June 27, 2006
* Mariette L. Wilcox	Director	June 27, 2006
* By: /s/ Michael Washinushi Michael Washinushi Attorney - in - fact

-153-

AUTHORIZED REPRESENTATIVE

Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, the Authorized Representative has signed this registration statement, solely in the capacity of the duly authorized representative of Canadian Satellite Radio Holdings Inc. and Canadian Satellite Radio Inc. in the United States, on June 27, 2006.

PUGLISI & ASSOCIATES
By:	/s/ Donald J. Puglisi
	Name: Donald J. Puglisi
	Title: Managing Director

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EXHIBITS

Exhibit Number	Description
3.1	Articles of Amalgamation of Canadian Satellite Radio Holdings Inc.
3.2	Articles of Incorporation of Canadian Satellite Radio Inc.
3.3	By-laws of Canadian Satellite Radio Holdings Inc.
3.4	By-laws of Canadian Satellite Radio Inc.
4.1*	Indenture, dated February 10, 2006, among Canadian Satellite Radio Holdings Inc., Canadian Satellite Radio Inc. and The Bank of Nova Scotia Trust Company of New York, as Trustee, relating to the 12.75% Senior Notes due 2014.
4.2*	Form of 12.75% Senior Notes due 2014 and Guarantee.
4.3*	Interest Reserve and Security Agreement, dated February 10, 2006 among Canadian Satellite Radio Holdings Inc., Canadian Satellite Radio Inc. and The Bank of Nova Scotia Trust Company of New York, as Interest Reserve Agent and Trustee.
4.4*	Registration Rights Agreement, dated February 10, 2006 among Canadian Satellite Radio Holdings Inc., Canadian Satellite Radio Inc., Bear Stearns & Co. Inc. and RBC Capital Markets Corporation.
5.1	Opinion of Stikeman Elliott LLP as to the legality of the exchange notes and subsidiary guarantee.
10.1	Credit Agreement, dated November 17, 2005 among Canadian Satellite Radio Holdings Inc., Canadian Satellite Radio Inc. and XM Satellite Radio Holdings Inc.
10.2	XM System License Agreement, dated November 17, 2005 among Canadian Satellite Radio Holdings Inc., Canadian Satellite Radio Inc. and XM Satellite Radio Inc.
10.3	Programming Agreement, dated November 17, 2005 among Canadian Satellite Radio Holdings Inc., Canadian Satellite Radio Inc. and XM Satellite Radio Inc.
10.4	Distribution Agreement, dated November 10, 2005 among Canadian Satellite Radio Inc., General Motors Of Canada Limited and XM Satellite Radio Inc.
10.5	Shareholders Agreement, dated November 17, 2005 among Canadian Satellite Radio Holdings Inc., Canadian Satellite Radio Inc., Canadian Satellite Radio Investments Inc. and XM Satellite Radio Holdings Inc.
10.6	Employment Agreement between Canadian Satellite Radio Holdings Inc. and John I. Bitove, dated December 5, 2005.
10.7	Employment Agreement between Canadian Satellite Radio Holdings Inc. and Stephen Tapp, dated December 5, 2005.
10.8	Employment Agreement between Canadian Satellite Radio Holdings Inc. and Michael Washinushi, dated December 5, 2005.
21.1	List of subsidiaries.
23.1	Consent of Stikeman Elliott LLP(See Exhibit 5.1).
23.2	Consent of Covington & Burling.
23.3	Consent of PricewaterhouseCoopers LLP.
23.4	Consent of Borden Ladner Gervais LLP
24.1*	Powers of Attorney
25.1	Statement of Eligibility on Form T-1 of The Bank of Nova Scotia Trust Company of New York.
99.1	Form of Letter of Transmittal.
99.2	Form of Notice of Guaranteed Delivery.
99.3	Form of Instructions to Registered Holders from Beneficial Owner.
99.4	Form of Letter to Registered Holders.
99.5	Form of Letter to Clients.

* Previously Filed 

155

EX-3.1

EXHIBIT 3.1

Ontario Corporation Number 1681731

ARTICLES OF AMALGAMATION

Form 4  1. The Name of the amalgamated corporation is (Set out in  BLOCK CAPITAL LETTERS):

Business

Corporations CANADIAN SATELLITE RADIO HOLDINGS INC.

Act

    2.  The address of the registered office is:

161 Bay Street, Suite 2300, Canada Trust Tower, BCE Place

(Street & Number or R.R. Number & if Multi-Office Building give Room No.)

Toronto, Ontario            M5J 2S1

 (Name of Municipality or Post Office)     (Postal Code)

   3.  Number of directors is/are:  or       minimum and maximum number of directors is/are: 3 (minimum) 5 (maximum) 

4.	The director(s) is/are:	Address for service	Resident Canadian
	John I. Bitove	177 Forest Hill Road	Yes
		Toronto, Ontario M5P 2N3
	Philip Evershed	323 Riverview Drive	Yes
		Toronto, Ontario M4N 3C9
	Mariette L. Wilcox	2670 Bellevue Avenue	Oui
		West Vancouver, BC V7V 1E4

2

5. Check A or B

þA)The amalgamation agreement has been duly adopted by the shareholders of each of the amalgamating corporations as required by subsection 176 (4) of the Business 

   Corporations Act on the date set out below.

 or

r B) By Theamalgamationhasbeen approved by the directors of eachamalgamating corporation by a resolution as required by section 177 of the Business Corporations

 Act on the date set out below.

The articles of amalgamation in substance contain the provisions of the articles of incorporation of

 are more particularly set out in these articles.

and

Names of amalgamating corporations	Ontario Corporation Number	Date of Adoption/Approval
Canadian Satelitte Radio Holdings, Inc.	2014503	2005-Dec-07
2087609 Ontario Inc.	2087609	2005-Dec-07

3

6. Restnctions, if any, on business the corporation may carry on or on powers the corporation may exercise None	3
7. The classesand any maximum number of shares that the corporation is authorized toissue: An unlimited number of Class A Subordinate Voting Shares, an unlimited number of Class B Voting Shares and an unlimited number of Class C Non-Voting Shares.

4

8. Rights, privileges, restrictions and conditions (if any) attaching to each class of shares and directors authority with respect to any class of shares which may be issued in series:

The Class A Subordinate Voting Shares, the Class B Voting Shares and the Class C Non-Voting Shares shall have attached thereto the respective rights, privileges, restrictions and conditions as set forth on pages 4A to 4N attached hereto.

4 A

Class A Subordinate Voting Shares, Class B Voting Shares

and Class C Non-Voting Shares

A.Voting.

At all meetings of shareholders of the Corporation, except meetings at which only holders of another class of shares are entitled to vote, the holders of the Class A Subordinate Voting Shares shall be entitled to one (1) vote in respect of each Class A Subordinate Voting Share and the holders of the Class B Voting Shares shall be entitled to one (1) vote in respect of each Class B Voting Share.

The holders of the Class C Non-Voting Shares shall be entitled to receive notice of and to attend at any meetings of the shareholders of the Corporation, but shall not be entitled to vote at any such meetings (except where the holders of a specified class of shares are entitled to vote separately as a class as provided in the Act, in which case each holder of Class C Non-Voting Shares shall be entitled to one (1) vote in respect of each Class C Non-Voting Share). The holders of the Class C Non-Voting Shares shall not be entitled to vote separately as a class or series or to dissent upon a proposal to amend the articles of the Corporation to:

(a)   increase or decrease any maximum number of authorized shares of such class or series, or increase any maximum number of authorized shares of a class or series having rights or privileges equal or superior to the shares of such class or series;

(b)   effect an exchange, reclassification or cancellation of the shares of such class or series; or

(c)   create a new class or series of shares equal or superior to the shares of such class or series.

B.Liquidation, Dissolution and Winding-up.

In the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, all of the remaining property of the Corporation available for distribution to the holders of the Class A Subordinate Voting Shares, the Class B Voting Shares and the Class C Non-Voting Shares (the “Remaining Property”) shall, subject to the prior rights of the holders of any shares ranking senior to the Class A Subordinate Voting Shares, the Class B Voting Shares and the Class C Non-Voting Shares in respect of any such distribution, liquidation, dissolution or winding-up of the Corporation or other distribution of assets among its shareholders for the purpose of winding-up its affairs, whether voluntary or involuntary, be paid or distributed to the holders of the Class A Subordinate Voting Shares, the Class B Voting Shares and the Class C Non-Voting Shares such that the holders of the Class A Subordinate Voting Shares and the Class C Non-Voting Shares share equally in the Remaining Property on a per share basis, and the holders of the Class B Voting Shares each receive, on a per share basis, one-third of the amount paid or distributed, on a per share basis, to the holders of the Class A Subordinate Voting Shares and the Class C Non-Voting Shares.

4 B

C.Dividends.

Subject to the prior rights of the holders of any other shares ranking senior to the Class A Subordinate Voting Shares, the Class B Voting Shares and the Class C Non-Voting Shares in respect of priority in the payment of dividends, the holders of Class A Subordinate Voting Shares, Class B Voting Shares and Class C Non-Voting Shares shall be entitled to participate at the same time in any dividend, whether in cash, in shares of the Corporation or otherwise, which may be declared or paid on any class of such shares, such participation to be, with respect to the Class A Subordinate Voting Shares and the Class C Non-Voting Shares, on an equal per share basis, including without limitation with respect to the amount per share of the dividend (the “Dividend Amount”), and to be, with respect to the Class B Voting Shares, an amount per share equal to one-third (1/3) of the Dividend Amount.

D.Rights Reserved.

In the event that the Class A Subordinate Voting Shares, the Class B Voting Shares or the Class C Non-Voting Shares are sub-divided, consolidated or otherwise changed in number or reclassified or exchanged for the shares of another class, the rights, privileges and restrictions attaching to the shares of the other classes shall be amended at the same time so as to preserve the rights conferred hereby on each class in relation to the other classes.

E.Board Rights.

(a)   The holders of a majority of the Class B Voting Shares outstanding at any time shall have the right, on one occasion, exercisable at any time, to increase the size of the board of directors of the Corporation (the “Board of Directors”) by three (3) members, and upon exercising such right shall be entitled to appoint such additional three (3) members to the Board of Directors.

(b)   The appointment right provided for herein may be exercised by the holders of a majority of the Class B Voting Shares outstanding at any time by delivering written notice of the exercise of such right to the Corporation at its registered office, accompanied by:

(i)   a certificate of the holder(s) exercising such right as to the number of Class B Voting Shares held by the holder(s) exercising such right; and

(ii)   the names of the persons who such shareholders wish to appoint to the Board of Directors, as well as their respective consents to act as directors of Corporation under Section 119(9) of the Act.

(c)   Upon the due exercise of the foregoing right, and provided that the persons appointed as directors by such holders are not disqualified from acting as directors of the Corporation under Section 118(1) of the Act, the size of the Board of Directors shall without further action by the Corporation or the Board of Directors be increased by three (3), and such additional three (3) members as are appointed by such holders shall become directors of the Corporation, to hold office for a term expiring on the close of the next annual meeting of shareholders.

4 C

(d)   Notwithstanding the foregoing, if at any time the outstanding Class B Voting Shares represent less than one-third of the total outstanding shares of the Corporation, assuming the conversion of all Class B Voting Shares into Subordinate Voting Shares, then the foregoing nomination rights shall automatically terminate and shall no longer remain in effect.

(e)   For greater certainty, the appointment rights provided in this Part E may only be exercised once.

F. Rights to Convert Class B Voting Shares.

(f)   A holder of Class B Voting Shares shall be entitled at such holder’s option at any time and from time to time to have all or any of the Class B Voting Shares registered in the name of the holder on the books of the Corporation converted into fully paid and non-assessable Class A Subordinate Voting Shares as the same shall be constituted at the time of conversion upon the basis of one (1) Class A Subordinate Voting Share for every three (3) Class B Voting Shares so converted. No fractional Class A Subordinate Voting Shares shall be issued on any conversion.

(g)   The conversion right provided for herein may be exercised by notice in writing given to the Corporation at its registered office accompanied by the certificate or certificates representing the Class B Voting Shares in respect of which the holder thereof desires to exercise such right of conversion and such notice shall be executed by the person registered on the books of the Corporation as the holder of the Class B Voting Shares in respect of which such right is being exercised or by his duly authorized attorney and shall specify the number of such shares which the holder desires to have converted. The conversion shall be deemed to take effect upon the date which the said certificate or certificates shall be surrendered to the Corporation at its registered office accompanied by the said notice in writing unless such date be a Saturday, Sunday or a holiday, in which event it shall take effect on the next business day. Upon due exercise of the conversion right, the Corporation shall issue a share certificate representing the number of fully-paid and non-assessable Class A Subordinate Voting Shares determined on the basis set out above. If the conversion right is exercised in respect of less than all of the Class B Voting Shares represented by any share certificate, the Corporation shall also issue a new share certificate representing the number of Class B Voting Shares in respect of which the conversion right is not being exercised.

4 D

G. Rights to Convert Class A Subordinate Voting Shares and Class C Non-Voting Shares in the event of an offer for the Class B Voting Shares.

1.   For the purposes of this Part G:

“Canadian” has the meaning set forth in the Direction.

“Conversion Period” means the period of time commencing eight days following the Offer Date and terminating on the Expiry Date.

“Converted Shares” means Class B Voting Shares resulting from the conversion of Class A Subordinate Voting Shares or Class C Non-Voting Shares.

“Direction” means the Direction to the CRTC (Ineligibility of Non-Canadians) issued by the Governor General in Council pursuant to the Broadcasting Act (Canada), as amended or replaced from time to time.

“Exclusionary Offer” means an offer to purchase Class B Voting Shares that:

(i) must, pursuant to applicable securities legislation or the requirements of a stock exchange on which the Class B Voting Shares are then listed, be made to all of the holders of the Class B Voting Shares in a province of Canada to which the requirement applies; and

(ii) is not made concurrently with an offer to purchase Class A Subordinate Voting Shares and Class C Non-Voting Shares that is identical to the offer to purchase Class B Voting Shares with respect to percentage of outstanding Class B Voting Shares for which the offer is made (exclusive of shares owned by the Offeror immediately prior to the offer) and in all other material respects provided that the price per Class A Subordinate Voting Share and Class C Non-Voting Share must be three times the price per share for the Class B Voting Shares (since pricing will be determined on an as-converted basis, assuming the conversion of Class B Voting Shares for Class A Subordinate Voting Shares) and except in respect of the conditions, if any, to which the offer to purchase Class B Voting Shares may be subject, and that is unconditional except in respect of the right not to take up and pay for Class A Subordinate Voting Shares and Class C Non-Voting Shares tendered if no shares are purchased pursuant to the offer for Class B Voting Shares,

and for the purposes of this definition, if an offer to purchase Class B Voting Shares would be an Exclusionary Offer except for the application of sub-clause (ii), the varying of any term of such offer shall be deemed to constitute the making of a new offer unless an identical variation is concurrently made to the corresponding offer to purchase Class A Subordinate Voting Shares and Class C Non-Voting Shares.

“Expiry Date” means the last date upon which holders of Class B Voting Shares may accept an Exclusionary Offer.

4 E

“Joint Actor” means a person or company acting jointly or in concert with an Offeror, as the phrase “acting jointly or in concert” is defined in the Securities Act (Ontario).

“Offer Date” means the date on which an Exclusionary Offer is made.

“Offeror” means a person or company that makes an offer to purchase Class B Voting Shares, and includes any Joint Actor.

“Transfer Agent” means at any time the transfer agent at such time for the Corporation’s shares or, if at such time there is no such transfer agent, means the Corporation.

2.   In the event that an Exclusionary Offer is made, then subject to sub-paragraph 7(b), each outstanding Class A Subordinate Voting Share and each outstanding Class C Non-Voting Share shall be convertible into three (3) Class B Voting Shares at the option of the holder during the Conversion Period. To exercise such conversion right a shareholder or the shareholder’s attorney duly authorized in writing shall:

(a)   give written notice to the Transfer Agent of the exercise of such right and of the number of Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, in respect of which the right is being exercised;

(b)   deliver to the Transfer Agent the share certificate or certificates representing the Class A Subordinate Voting Shares or Class C Non-Voting Shares in respect of which the right is being exercised; and

(c)   pay any applicable governmental or stamp tax or similar duty on or in respect of such conversion.

Upon due exercise of the conversion right, a shareholder shall be issued, in accordance with the following, a share certificate representing fully-paid and non-assessable Class B Voting Shares. If the conversion right is exercised in respect of less than all of the Class A Subordinate Voting Shares or Class C Non-Voting Shares represented by any share certificate, the holder shall also be entitled to receive a new share certificate representing the number of Class A Subordinate Voting Shares or Class C Non-Voting Shares in respect of which the conversion right is not being exercised.

3.   A holder of Converted Shares shall be deemed to have irrevocably elected to deposit all such shares pursuant to the Exclusionary Offer subject to such holder’s right to subsequently withdraw the shares from the offer. If Converted Shares are subsequently withdrawn from an offer, the holder of such shares shall be deemed to have irrevocably elected to re-convert the withdrawn shares into Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, on a one-for-three basis, and the deemed election shall be effective from the time the shares are withdrawn. The holder of Converted Shares deposited pursuant to an Exclusionary Offer shall be deemed to have irrevocably elected to re-convert into Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, such shares as are not taken up pursuant to the offer. The deemed election to re-convert into Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, shall be effective from the time immediately following that prescribed by applicable securities legislation for the Offeror to take up and pay for such shares as are to be acquired pursuant to the Exclusionary Offer. If, however, Converted Shares are not taken up as a result of the abandonment or withdrawal of an Exclusionary Offer, the deemed election to re-convert in respect of such shares shall be effective from the time of the abandonment or withdrawal of the offer.

4 F

4.   The Transfer Agent, on behalf of the holders of the Converted Shares, shall deposit pursuant to the Exclusionary Offer a share certificate or certificates representing the Converted Shares. No share certificate representing Converted Shares shall be delivered to the holders of the shares before such shares are deposited pursuant to the Exclusionary Offer. Upon completion of the offer, the Transfer Agent shall deliver to the holders entitled thereto all consideration paid by the Offeror for their Converted Shares pursuant to the offer. If Converted Shares are re-converted into Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, pursuant to paragraph 3, the Transfer Agent shall deliver to the holders entitled thereto share certificates representing the Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, resulting from the conversion. The Corporation shall make all arrangements with the Transfer Agent necessary or desirable to give effect to this paragraph 4.

5.   Converted Shares resulting from the conversion of Class A Subordinate Voting Shares and Class C Non-Voting Shares as set out above and taken up and paid for by the Offeror shall immediately be re-converted into Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, upon such taking up and payment for such Converted Shares if the Offeror taking up and paying for such Converted Shares is not a Canadian.

6.   For greater certainty, on any re-conversion of Converted Shares as a result of any of the foregoing, such Converted Shares shall, as applicable, be re-converted into Class A Subordinate Voting Shares or Class C Non-Voting Shares on a one-for-three basis such that such Converted Shares are, following such re-conversion, the number of Class A Subordinate Voting Shares or Class C Non-Voting Shares that existed immediately prior to their conversion into Converted Shares.

7.   (a) For the purposes of this paragraph 7:

“Certificate of Non-Participation” means a certificate signed by or on behalf of a holder of Class B Voting Shares, confirming:

(i)   the number of Class B Voting Shares owned by a shareholder;

(ii)   that neither such shareholder nor a Joint Actor has made an Exclusionary Offer;

4 G

(iii)   that such shareholder shall not tender any shares in acceptance of any Exclusionary Offer which has been made, including any varied form of such offer, without giving the Transfer Agent and the Corporation written notice of such acceptance or intended acceptance at least seven days prior to the Expiry Date; and

(iv)   that such shareholder shall not transfer any Class B Voting Share, directly or indirectly, prior to the Expiry Date of any Exclusionary Offer which has been made without giving the Transfer Agent and the Corporation written notice of such transfer or intended transfer at least seven days prior to the Expiry Date, stating the names of the transferees, if known to the transferor, and the number of Class B Voting Shares transferred or to be transferred to each transferee;

“Certificate of Retention” means a certificate signed by or on behalf of a holder of Class B Voting Shares confirming the number of Class B Voting Shares then owned by the holder and that such holder of Class B Voting Shares shall not:

(i)   tender any shares in acceptance of any Exclusionary Offer without giving the Transfer Agent and the Corporation written notice of such acceptance or intended acceptance at least seven days prior to the Expiry Date;

(ii)   make any Exclusionary Offer;

(iii)   act jointly or in concert with any person or company that makes any Exclusionary Offer; or

(iv)   transfer any Class B Voting Shares, directly or indirectly, during the time at which any Exclusionary Offer is outstanding without giving the Transfer Agent and the Corporation written notice of such transfer or intended transfer at least seven days prior to the Expiry Date, stating the names of the transferees, if known to the transferor, and the number of Class B Voting Shares transferred or to be transferred to each transferee;

“Notice of Tender” means a written notice given to the Transfer Agent and to the Corporation at least seven days prior to the Expiry Date of an Exclusionary Offer by a holder of Class B Voting Shares, which notice states that such shareholder has or intends to tender shares in acceptance of an Exclusionary Offer;

“Notice of Transfer” means a written notice given to the Transfer Agent and to the Corporation at least seven days prior to the Expiry Date of an Exclusionary Offer by a holder of Class B Voting Shares, which notice states that such shareholder intends to transfer or has transferred Class B Voting Shares, directly or indirectly, during the time when the Exclusionary Offer is outstanding, and which states the names of the transferees, if known to the transferor, and the number of Class B Voting Shares transferred or to be transferred to each transferee;

4 H

(b) Subject to sub-paragraph 7(c), the holders of Class A Subordinate Voting Shares and Class C Non-Voting Shares shall not be entitled to convert such shares into Class B Voting Shares if one or more Certificates of Retention or one or more Certificates of Non-Participation or a combination of the foregoing, representing, in the aggregate, more than fifty percent (50%) of the then outstanding Class B Voting Shares, exclusive of shares owned immediately prior to the Exclusionary Offer by the Offeror and any Joint Actor, have been duly delivered to the Transfer Agent and to the Corporation. A Certificate of Retention shall be duly delivered to the Transfer Agent and to the Corporation if delivered before any Exclusionary Offer has been made. A Certificate of Non-Participation shall be duly delivered to the Transfer Agent and to the Corporation if delivered before the end of the seventh day after any Exclusionary Offer has been made.

(c) When, by reason of the application of sub-paragraph 7(b), the holders of Class A Subordinate Voting Shares and Class C Non-Voting Shares are not entitled to convert such shares into Class B Voting Shares, should a Notice of Tender or a Notice of Transfer be given by a holder having previously provided a Certificate of Retention or a Certificate of Non-Participation, the Transfer Agent shall forthwith upon receipt of such notice or forthwith after the seventh day following the Offer Date, whichever is later, deduct the number of Class B Voting Shares to which the notice relates from the number of Class B Voting Shares represented by Certificates of Retention and Certificates of Non-Participation. In the case of a Notice of Transfer, where the Transfer Agent is advised of the identity of the transferee, either by the Notice of Transfer or by the transferee in writing, and the transferee is a person or company from whom the Transfer Agent has a subsisting Certificate of Retention or subsisting Certificate of Non-Participation, no such deduction shall be made.

(d) If after any deduction made by the Transfer Agent in accordance with sub-paragraph 7(c), the number of Class B Voting Shares represented by Certificates of Retention and Certificates of Non-Participation does not exceed 50% of the number of then outstanding Class B Voting Shares, exclusive of shares owned immediately prior to the Exclusionary Offer by the Offeror and any Joint Actor, sub-paragraph 7(b) shall cease to apply and the right to convert Class A Subordinate Voting Shares and Class C Non-Voting Shares into Class B Voting Shares shall arise and be in effect for the remainder of the Conversion Period.

8.   As soon as reasonably possible after the seventh day following the Offer Date, the Corporation shall send to each holder of Class A Subordinate Voting Shares and Class C Non-Voting Shares a notice advising each such holder whether a right to convert Class A Subordinate Voting Shares and Class C Non-Voting Shares into Class B Voting Shares has arisen and the reasons such a right has or has not arisen, as the case may be. If no right to convert Class A Subordinate Voting Shares and Class C Non-Voting Shares into Class B Voting Shares has arisen, but subsequently arises by virtue of sub-paragraph 7(d) or otherwise, the Corporation shall forthwith send to the holders of Class A Subordinate Voting Shares and Class C Non-Voting Shares a notice advising such holders that such a right has arisen, and the reasons therefor.

4 I

9.   If a notice referred to above discloses that the holders of Class A Subordinate Voting Shares and Class C Non-Voting Shares are entitled to convert such shares into Class B Voting Shares, the notice shall, in addition:

(a)   disclose the procedure to be followed to effect the conversion and to have the Converted Shares tendered under the offer;

(b)   contain the information set out in paragraphs 3 and 4; and

(c)   be accompanied by a copy of the offer and all other material sent to holders of Class B Voting Shares in respect of the offer (to the extent the Corporation is in possession of the offer and such other material).

As soon as reasonably possible after any additional material, including any notice of variation, is sent to the holders of Class B Voting Shares in respect of the offer, the Corporation shall (to the extent the Corporation is in possession of such additional material) send a copy of such additional material to each holder of Class A Subordinate Voting Shares and Class C Non-Voting Shares.

H.Rights to Convert Class C Non-Voting Shares in the event of an offer for Class A Subordinate Voting Shares

1.   For the purposes of this Part H:

“Canadian” has the meaning set forth in the Direction.

“Conversion Period” means the period of time commencing eight days following the Offer Date and terminating on the Expiry Date.

“Converted Shares” means Class A Subordinate Voting Shares resulting from the conversion of Class C Non-Voting Shares.

“Direction” means the Direction to the CRTC (Ineligibility of Non-Canadians) issued by the Governor General in Council pursuant to the Broadcasting Act (Canada), as amended or replaced from time to time.

“Exclusionary Offer” means an offer to purchase Class A Subordinate Voting Shares that:

(i) must, pursuant to applicable securities legislation or the requirements of a stock exchange on which the Class A Subordinate Voting Shares are then listed, be made to all of the holders of the Class A Subordinate Voting Shares in a province of Canada to which the requirement applies;

(ii) is not made concurrently with an offer to purchase Class C Non-Voting Shares that is identical to the offer to purchase Class A Subordinate Voting Shares with respect to price per share, percentage of outstanding shares for which the offer is made (exclusive of shares owned by the Offeror immediately prior to the offer) and in all other material respects, except in respect of the conditions, if any, to which the offer to purchase Class A Subordinate Voting Shares may be subject, and that is unconditional except in respect of the right not to take up and pay for Class C Non-Voting Shares tendered if no shares are purchased pursuant to the offer for Class A Subordinate Voting Shares; and

4 J

(iii) is not an “Exclusionary Offer” within the meaning of Part G, Section 1,

and for the purposes of this definition if an offer to purchase Class A Subordinate Voting Shares would be an Exclusionary Offer except for the application of sub-clause (ii), the varying of any term of such offer shall be deemed to constitute the making of a new offer unless an identical variation is concurrently made to the corresponding offer to purchase Class C Non-Voting Shares.

“Expiry Date” means the last date upon which holders of Class A Subordinate Voting Shares may accept an Exclusionary Offer.

“Joint Actor” means a person or company acting jointly or in concert with an Offeror, as the phrase “acting jointly or in concert” is defined in the Securities Act (Ontario).

“Offer Date” means the date on which an Exclusionary Offer is made.

“Offeror” means a person or company that makes an offer to purchase Class A Subordinate Voting Shares, and includes any Joint Actor.

“Transfer Agent” means at any time the transfer agent at such time for the Corporation’s shares or, if at such time there is no such transfer agent, means the Corporation.

2.   In the event that an Exclusionary Offer is made, then subject to sub-paragraph (6)(b), each outstanding Class C Non-Voting Share shall be convertible into one (1) Class A Subordinate Voting Share at the option of the holder during the Conversion Period. To exercise such conversion right a shareholder or the shareholder’s attorney duly authorized in writing shall:

(a)   give written notice to the Transfer Agent of the exercise of such right and of the number of Class C Non-Voting Shares in respect of which the right is being exercised;

(b)   deliver to the Transfer Agent the share certificate or certificates representing the Class C Non-Voting Shares in respect of which the right is being exercised; and

(c)   pay any applicable governmental or stamp tax or similar duty on or in respect of such conversion.

4 K

Upon due exercise of the conversion right, a shareholder shall be issued, in accordance with the following, a share certificate representing fully-paid and non-assessable Class A Subordinate Voting Shares. If the conversion right is exercised in respect of less than all of the Class C Non-Voting Shares represented by any share certificate, the holder shall also be entitled to receive a new share certificate representing the number of Class C Non-Voting Shares in respect of which the conversion right is not being exercised.

3.   A holder of Converted Shares shall be deemed to have irrevocably elected to deposit all such shares pursuant to the Exclusionary Offer subject to such holder’s right to subsequently withdraw the shares from the offer. If Converted Shares are subsequently withdrawn from an offer, the holder of such shares shall be deemed to have irrevocably elected to re-convert the withdrawn shares into Class C Non-Voting Shares on a one-for one basis, and the deemed election shall be effective from the time the shares are withdrawn. The holder of Converted Shares deposited pursuant to an Exclusionary Offer shall be deemed to have irrevocably elected to re-convert into Class C Non-Voting Shares such shares as are not taken up pursuant to the offer. The deemed election to re-convert into Class C Non-Voting Shares shall be effective from the time immediately following that prescribed by applicable securities legislation for the Offeror to take up and pay for such shares as are to be acquired pursuant to the Exclusionary Offer. If, however, Converted Shares are not taken up as a result of the abandonment or withdrawal of an Exclusionary Offer, the deemed election to re-convert in respect of such shares shall be effective from the time of the abandonment or withdrawal of the offer.

4.   The Transfer Agent, on behalf of the holders of the Converted Shares, shall deposit pursuant to the Exclusionary Offer a share certificate or certificates representing the Converted Shares. No share certificate representing Converted Shares shall be delivered to the holders of the shares before such shares are deposited pursuant to the Exclusionary Offer. Upon completion of the offer, the Transfer Agent shall deliver to the holders entitled thereto all consideration paid by the Offeror for their Converted Shares pursuant to the offer. If Converted Shares are re-converted into Class C Non-Voting Shares pursuant to the immediately foregoing paragraph, the Transfer Agent shall deliver to the holders entitled thereto share certificates representing the Class C Non-Voting Shares resulting from the conversion. The Corporation shall make all arrangements with the Transfer Agent necessary or desirable to give effect to this paragraph 4.

5.   Converted Shares resulting from the conversion of Class C Non-Voting Shares as set out above and taken up and paid for by the Offeror shall immediately be re-converted into Class C Non-Voting Shares upon such taking up and payment for such Converted Shares if the Offeror taking up and paying for such Converted Shares is not a Canadian.

6.   For the purposes of this paragraph 6:

“Certificate of Non-Participation” means a certificate signed by or on behalf of a holder of Class A Subordinate Voting Shares, confirming:

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(i)   the number of Class A Subordinate Voting Shares owned by a shareholder;

(ii)   that neither such shareholder nor a Joint Actor has made an Exclusionary Offer;

(iii)   that such shareholder shall not tender any shares in acceptance of any Exclusionary Offer which has been made, including any varied form of such offer, without giving the Transfer Agent and the Corporation written notice of such acceptance or intended acceptance at least seven days prior to the Expiry Date; and

(iv)   that such shareholder shall not transfer any Class A Subordinate Voting Shares, directly or indirectly, prior to the Expiry Date of any Exclusionary Offer which has been made without giving the Transfer Agent and the Corporation written notice of such transfer or intended transfer at least seven days prior to the Expiry Date, stating the names of the transferees, if known to the transferor, and the number of Class A Subordinate Voting Shares transferred or to be transferred to each transferee;

“Certificate of Retention” means a certificate signed by or on behalf of a holder of Class A Subordinate Voting Shares confirming the number of Class A Subordinate Voting Shares then owned by the holder and that such holder of Class A Subordinate Voting Shares shall not:

(i)   tender any shares in acceptance of any Exclusionary Offer without giving the Transfer Agent and the Corporation written notice of such acceptance or intended acceptance at least seven days prior to the Expiry Date;

(ii)   make any Exclusionary Offer;

(iii)   act jointly or in concert with any person or company that makes any Exclusionary Offer; or

(iv)   transfer any Class A Subordinate Voting Shares, directly or indirectly, during the time at which any Exclusionary Offer is outstanding without giving the Transfer Agent and the Corporation written notice of such transfer or intended transfer at least seven days prior to the Expiry Date, stating the names of the transferees, if known to the transferor, and the number of Class A Subordinate Voting Shares transferred or to be transferred to each transferee;

“Notice of Tender” means a written notice given to the Transfer Agent and to the Corporation at least seven days prior to the Expiry Date of an Exclusionary Offer by a holder of Class A Subordinate Voting Shares, which notice states that such shareholder has or intends to tender shares in acceptance of an Exclusionary Offer,

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“Notice of Transfer” means a written notice given to the Transfer Agent and to the Corporation at least seven days prior to the Expiry Date of an Exclusionary Offer by a holder of Class A Subordinate Voting Shares, which notice states that such shareholder intends to transfer or has transferred Class A Subordinate Voting Shares, directly or indirectly, during the time when the Exclusionary Offer is outstanding, and which states the names of the transferees, if known to the transferor, and the number of Class A Subordinate Voting Shares transferred or to be transferred to each transferee;

(b) Subject to sub-paragraph 6(c), the holders of Class C Non-Voting Shares shall not be entitled to convert such shares into Class A Subordinate Voting Shares if one or more Certificates of Retention or one or more Certificates of Non-Participation or a combination of the foregoing, representing, in the aggregate, more than fifty percent (50%) of the then outstanding Class A Subordinate Voting Shares, exclusive of shares owned immediately prior to the Exclusionary Offer by the Offeror and any Joint Actor, have been duly delivered to the Transfer Agent and to the Corporation. A Certificate of Retention shall be duly delivered to the Transfer Agent and to the Corporation if delivered before any Exclusionary Offer has been made. A Certificate of Non-Participation shall be duly delivered to the Transfer Agent and to the Corporation if delivered before the end of the seventh day after any Exclusionary Offer has been made.

(c) When, by reason of the application of sub-paragraph 6(b), the holders of Class C Non-Voting Shares are not entitled to convert such shares into Class A Subordinate Voting Shares, should a Notice of Tender or a Notice of Transfer be given by a holder having previously provided a Certificate of Retention or a Certificate of Non-Participation, the Transfer Agent shall forthwith upon receipt of such notice or forthwith after the seventh day following the Offer Date, whichever is later, deduct the number of Class A Subordinate Voting Shares to which the notice relates from the number of Class A Subordinate Voting Shares represented by Certificates of Retention and Certificates of Non-Participation. In the case of a Notice of Transfer, where the Transfer Agent is advised of the identity of the transferee, either by the Notice of Transfer or by the transferee in writing, and the transferee is a person or company from whom the Transfer Agent has a subsisting Certificate of Retention or subsisting Certificate of Non-Participation, no such deduction shall be made.

(d) If after any deduction made by the Transfer Agent in accordance with sub-paragraph 6(c), the number of Class A Subordinate Voting Shares represented by Certificates of Retention and Certificates of Non-Participation does not exceed 50% of the number of then outstanding Class A Subordinate Voting Shares, exclusive of shares owned immediately prior to the Exclusionary Offer by the Offeror and any Joint Actor, sub-paragraph 6(b) shall cease to apply and the right to convert Class C Non-Voting Shares into Class A Subordinate Voting Shares shall arise and be in effect for the remainder of the Conversion Period.

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7.   As soon as reasonably possible after the seventh day following the Offer Date, the Corporation shall send to each holder of Class C Non-Voting Shares a notice advising each such holder whether a right to convert Class C Non-Voting Shares into Class A Subordinate Voting Shares has arisen and the reasons such a right has or has not arisen, as the case may be. If no right to convert Class C Non-Voting Shares into Class A Subordinate Voting Shares has arisen, but subsequently arises by virtue of sub-paragraph 6(d) or otherwise, the Corporation shall forthwith send to the holders of Class C Non-Voting Shares a notice advising such holders that such a right has arisen, and the reasons therefor.

8.   If a notice referred to above discloses that the holders of Class C Non-Voting Shares are entitled to convert such shares into Class A Subordinate Voting Shares, the notice shall, in addition:

(a)   disclose the procedure to be followed to effect the conversion and to have the Converted Shares tendered under the offer;

(b)   contain the information set out in paragraphs 3 and 4; and

(c)   be accompanied by a copy of the offer and all other material sent to holders of Class A Subordinate Voting Shares in respect of the offer (to the extent the Corporation is in possession of the offer and such other material).

As soon as reasonably possible after any additional material, including any notice of variation, is sent to the holders of Class A Subordinate Voting Shares in respect of the offer, the Corporation shall (to the extent the Corporation is in possession of such additional material) send a copy of such additional material to each holder of Class C Non-Voting Shares.

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9.   The issue, transfer or ownership of shares is/is not restricted and the restrictions, (if any) are as follows:

The issue, transfer or ownership of shares of the Corporation is restricted and the restrictions are set forth on pages 5A to 5J attached hereto.

10.   Other provisions, (if any):

See page 5K attached hereto.

11.   The statements required by subsection 178(2) of the Business Corporations Act are attached as Schedule "A".

12.   A copy of the amalgamation agreement or directors' resolutions (as the case may be) is/are attached as Schedule "B"

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Restrictions on Issue, Ownership, Transfer and Voting of Shares

1.             Definitions.

For the purposes of this Schedule I:

“Act” means the Business Corporations Act (Ontario), and any amendments thereto.

“Associate” means persons, firms, associations, corporations, partnerships and other entities acting in concert with the person with respect to whom the term “Associate” is relevant and includes an associate as defined in the Act.

“Broadcasting Business” means, at any time, any business of providing, or any business which includes the provision of, communications services by means of signals transmitted through any free space or guided transmission medium or any combination thereof over the air, or by coaxial cable, ordinary wire or fibre optic cable or any combination thereof in which the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, is then engaged or is then actively considering a proposal to engage and includes, without limiting the generality of the foregoing, any satellite or subscription radio broadcasting business.

“Broadcasting Legislation” means any law, statute, act, regulation, ordinance, order-in-council or other rule promulgated by any federal, provincial or other authority having or purporting to have jurisdiction including, without limitation, any parliament, legislature, privy council, cabinet, cabinet minister or government department, independent regulatory agency, government commission, government board or government council relating to any Broadcasting Business or which imposes a requirement to obtain a Licence in order to enable the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, to carry on any Broadcasting Business and includes, without limiting the generality of the foregoing, the Broadcasting Act (Canada), the Radiocommunication Act (Canada), the Direction and the Canadian Radio-television and Telecommunications Commission Act (Canada), as amended or replaced from time to time.

“Canadian” has the meaning set forth in the Direction.

“Controlled” means controlled in any manner that results in control in fact whether directly or through the ownership of shares or indirectly through a trust, a contract, the ownership of shares of any other body corporate or otherwise.

“CRTC” means the Canadian Radio-television and Telecommunications Commission.

“Direction” means the Direction to the CRTC (Ineligibility of Non-Canadians) issued by the Governor General in Council pursuant to the Broadcasting Act (Canada), as amended or replaced from time to time.

“Licence” means a licence, permit, franchise or other authority issued or granted by a governmental authority required to operate or carry on a business or to operate any equipment device required to carry on a business, including without limitation a broadcasting licence issued by the CRTC under the Broadcasting Act(Canada).

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“Non-Voting Share” means a share of the Corporation which does not carry voting rights in all circumstances, and includes, without limitation, a Class C Non-Voting Share of the Corporation.

“person” includes an individual, firm, corporation, association, trust and any other entity.

“Restricted Class” means persons who are not Canadians, or any class or description of persons and their Associates whose significant or controlling interest in the shares of the Corporation or in a certain class of shares of the Corporation is likely to preclude the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, from being qualified to hold, obtain, maintain, renew or amend any Licence pursuant to any Broadcasting Legislation or other Licence required in order to carry on any Broadcasting Business or would cause the Corporation or any corporation in which the Corporation has an interest to be in breach of any Broadcasting Legislation or the terms of any such Licence.

“Shares” means Voting Shares and Non-Voting Shares, and any other shares of the Corporation.

“Voting Shares” means a share of the Corporation carrying voting rights in all circumstances or by reason of the occurrence of an event that has occurred and that is continuing (and includes, without limitation, a Class B Voting Share and a Class A Subordinate Voting Share), as well as a security currently convertible into such a share and currently exercisable options and rights to acquire such a share or such a convertible security.

2.           Voting Shares.

In the event that the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, obtains any Licence pursuant to any Broadcasting Legislation or other Licence required in order to carry on any Broadcasting Business, the power of the Corporation to issue any of its Voting Shares and the right of the holder of any such shares to transfer or vote the same shall be restricted as follows:

(a)   General Restrictions.The power of the Corporation to issue any Voting Shares and the right of any holder of Voting Shares to transfer or vote such shares is restricted in the manner hereinafter set out for the purposes of ensuring that the Corporation or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations remains qualified to hold, obtain, maintain, renew or amend any Licence pursuant to any Broadcasting Legislation or other Licence required in order to carry on any Broadcasting Business and ensuring that the Corporation, or any corporation in which the corporation has a direct or indirect interest though the holding of shares in that or other corporations, is not in breach of any Broadcasting Legislation or the terms of any Licence held by the Corporation, or such corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, required in order to carry on a Broadcasting Business.

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(b)   Refusal to Register Transfers.

(i)             Notwithstanding anything herein otherwise provided, the Board of Directors shall refuse to register a transfer of any Voting Shares if the transfer would, in the opinion of the Board of Directors, jeopardize the purposes stated in Section 2(a) above.

(ii)            Without limiting the generality of subsection 2(b)(i), so long as any Broadcasting Legislation shall:

(A)           prohibit the issue of any Licence to the Corporation, or to any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations; or

(B)            prohibit the retention, amendment or renewal of or result in the cancellation of any Licence held by the Corporation, or held by any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations,

required in order to carry on any Broadcasting Business (or if any terms or conditions or any Licences required in order to carry on any Broadcasting Business held by the Corporation, or held by any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, would be breached) if shares to which are attached more than a specified percentage of the voting rights attached to all Voting Shares or which represent more than a specified percentage of the total number of issued and outstanding Voting Shares are held by persons who are members of a Restricted Class, the Board of Directors shall refuse to register a transfer of such Voting Shares if:

(C)           the shares held by or on behalf of the Restricted Class exceeds the maximum of such specified percentage (or if such legislation or Licence shall contain more than one such provision, a maximum of the lowest such percentage so specified) of Voting Shares as may be held by in the aggregate by or for members of the Restricted Class at any relevant time (the “Maximum Aggregate Holdings”) and the transfer is to one or more persons in the Restricted Class; or

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(D)           the total number of Voting Shares held by or on behalf of persons in the Restricted Class does not exceed the Maximum Aggregate Holdings but the transfer would result in the number of such shares held by persons in the Restricted Class exceeding the Maximum Aggregate Holdings.

(iii)           Without limiting the generality of subsections 2(b)(i) and (ii), so long as the Direction shall prohibit the CRTC from issuing a Licence under the Broadcasting Act (Canada) to the Corporation (or to any corporation in which the corporation has a direct or indirect interest through the holding of shares in that or other corporations) or renewing or amending any such Licence held by the Corporation (or by any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations), if the number of votes attached to Voting Shares or the number of Voting Shares held by members of the Restricted Class exceeds 33.33% (or some different specified percentage thereof as may be specified, from time to time, under the Direction) of the aggregate voting rights attached to all Voting Shares or of the total number of issued and outstanding Voting Shares, no Voting Share shall be transferred to a member of the Restricted Class if, immediately following its transfer, Voting Shares to which are attached more than 33.33% (or such different specified percentage thereof as may be specified, from time to time, under the Direction) of the voting rights attached to all the issued and outstanding Voting Shares or Voting Shares which represent more than 33.33% (or such different specified percentage thereof as may be specified, from time to time, under the Direction) of the total number of issued and outstanding Voting Shares would be held in the aggregate by or for persons who are members of such Restricted Class at any time.

(iv)              Without limiting the generality of the foregoing, the Board of Directors shall refuse to register a transfer of any Voting Shares if such transfer requires the prior approval of the CRTC or any other governmental body or authority having or purporting to have jurisdiction unless and until such approval has been received.

(c)          Refusal to Allot or Issue.

(i)                The Board of Directors shall not allot or issue a Voting Share to a person in the Restricted Class in circumstances where the Board of Directors would be required under Section 2(b) to refuse to register a transfer of such a share to such person.

(ii)               For the purposes of subsection (i), the Board of Directors may count as issued shares any Voting Shares that the Corporation is offering to its shareholders or prospective shareholders at the time of any such determination.

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(d)             Refusal to Permit Vote. Whenever in the opinion of the Board of Directors of the Corporation, the purposes as stated in Section 2(a) for which the transfer, voting and issue of the Voting Shares are restricted would be jeopardized by the exercise of the voting rights attached to such shares held by or on behalf of persons in the Restricted Class, the Board of Directors may by resolution at any time and from time to time suspend all voting rights attached to the Voting Shares held by or on behalf of one or more persons in the Restricted Class, such persons to be selected in the manner described below, so that the proportion of the voting rights attached to the Voting Shares or the Voting Shares held by or on behalf of one or more persons in the Restricted Class is reduced to not more than 33.33% (or some different specified percentage thereof as may be specified, from time to time, under the Direction) of the voting rights attached to all the issued and outstanding Voting Shares or not more than 33.33% (or such different specified percentage thereof as may be specified, from time to time, under the Direction) of the total number of issued and outstanding Voting Shares that would be held in the aggregate by or for persons who are members of such Restricted Class at any time. The Board of Directors shall, in selecting the Voting Shares held by person(s) in the Restricted Class whose Voting Rights are to be suspended, do so in an order inverse to the date of registration of ownership of the Voting Shares, which shall be considered to be:

(i)            the date of registration of the Voting Shares on the security register of the Corporation or on the books or records of the Corporation’s transfer agent or registrar; or

(ii)            where the Voting Shares are held by an intermediary or a depository, the date of the registration of the transfer of the Voting Shares on its books or records.

(e)              Matters Which the Board of Directors May Consider in Exercising Their Powers in Respect of Voting Shares. In considering whether a transfer, issue or voting of a Voting Share would, in the opinion of the Board of Directors, jeopardize the purposes stated in Section 2(a) and in exercising their powers under Section 2(b), (c) and (d), the Board of Directors may have regard, among other things, to the likelihood that outstanding rights to purchase any shares of the Corporation might be exercised by persons who are members of the Restricted Class and to the likelihood that such shares registered in the name of persons who are not members of the Restricted Class are in fact beneficially owned by persons who are members of the Restricted Class.

3.          Non-Voting Shares.

In the event that the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, obtains any Licence pursuant to any Broadcasting Legislation or other Licence required in order to carry on any Broadcasting Business, the power of the Corporation to issue any of its Non-Voting Shares and the right of the holder of any such shares to transfer the same, as well as other Shares, shall be restricted as follows:

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(a)            General Restrictions.The right of any holder of Non-Voting Shares or other Shares to transfer such shares is restricted in the manner hereinafter set out for the purposes of ensuring that the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations remains qualified to hold, obtain, maintain, renew or amend any Licence pursuant to any Broadcasting Legislation or other Licence required in order to carry on any Broadcasting Business and ensuring that the Corporation, or any corporation in which the corporation has a direct or indirect interest though the holding of shares in that or other corporations, is not in breach of any Broadcasting Legislation or the terms of any Licence held by the Corporation, or such corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, required in order to carry on a Broadcasting Business.

(b)           Refusal to Register Transfers.

(i)             Notwithstanding anything herein otherwise provided, the Board of Directors may refuse to register a transfer of any Non-Voting Shares or other Shares if the transfer would, in the opinion of the Board of Directors, jeopardize the purposes stated in Section 3(a) above.

(ii)            Without limiting the generality of the foregoing, the Board of Directors may refuse to register a transfer of any Non-Voting Shares or other Shares if such transfer requires the prior approval of the CRTC or any other governmental body or authority having or purporting to have jurisdiction unless and until such approval has been received.

(c)          Refusal to Allot or Issue.

(i)            The Board of Directors may refuse to allot or issue a Non-Voting Share or other Share in circumstances where the Board of Directors may under Section 3(b) refuse to register a transfer such a share to such person.

(ii)            For the purposes of subsection (i), the Board of Directors may count as issued shares any Non-Voting Shares or other Shares that the Corporation is offering to its shareholders or prospective shareholders at the time of any such determination.

(d)          Matters Which the Board of Directors May Consider in Exercising Their Powers in Respect of Voting Shares. In considering whether a transfer or issue of a Non-Voting Share or other Share would, in the opinion of the Board of Directors, jeopardize the purposes stated in Section 3(a) and in exercising their powers under Section 3(b) and (c), the Board of Directors may have regard, among other things, to the likelihood that outstanding rights to purchase any shares of the Corporation might be exercised by persons who are members of the Restricted Class and to the likelihood that such shares registered in the name of persons who are not members of the Restricted Class are in fact beneficially owned by persons who are members of the Restricted Class.

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4.           Sale of Shares.

The Corporation may, if and as permitted by applicable law, sell as if it were the owner thereof any of the Shares of the Corporation held by or on behalf of one or more persons in the Restricted Class for the purpose of ensuring that the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, remains qualified to hold, obtain, maintain, renew or amend any Licence pursuant to any Broadcasting Legislation or other Licence required in order to carry on any Broadcasting Business and ensuring that the Corporation, or any corporation in which the corporation has a direct or indirect interest though the holding of shares in that or other corporations, is not in breach of any Broadcasting Legislation or the terms of any Licence held by the Corporation, or such corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, required in order to carry on a Broadcasting Business. The Board of Directors shall, in selecting the Shares held by person(s) in the Restricted Class that are to be sold in accordance with the foregoing, do so in an order inverse to the date of registration of ownership of such Shares, which shall be considered to be:

(i)       the date of registration of the Shares on the security register of the Corporation or on the books or records of the Corporation’s transfer agent or registrar; or

(ii)      where the Shares are held by an intermediary or a depository, the date of the registration of the transfer of the Shares on its books or records.

In the event of such a sale, the owner of the Shares so sold shall be automatically divested of such owner’s interest in such Shares and be entitled to receive only the net proceeds of the sale, together with any income earned thereon from the beginning of the month next following the date of the receipt by the Corporation of the proceeds of the sale, less any taxes thereon and any costs of administration thereof.

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5.           Rules.

(a)            The Board of Directors may from time to time make, amend or repeal any rules required to administer the restricted share provisions set out in this Section 2, Section 3 and Section 4, including, without limitation, rules:

(i)      to require any person in whose name Shares are registered to furnish a statutory declaration under the Canada Evidence Act declaring:

(A)         whether the shareholder is a beneficial owner of the Shares or holds them for a beneficial owner and if so, identifying the beneficial owner;

(B)         whether the shareholder or beneficial owner of the Shares is an Associate of any other shareholder and, if so, identifying the other shareholder or beneficial owner;

(C)         whether the shareholder or beneficial owner is a Canadian;

(D)         whether the shareholder or beneficial owner is a Canadian citizen;

(E)         whether the shareholder is subject to any arrangement requiring the shareholder to act in concert with respect to the shareholder’s interest in the Corporation with any other shareholder or beneficial owner and disclosing particulars of the arrangement;

(F)         whether or not a body corporate which is a shareholder or which is the beneficial owner of shares of the Corporation is a “qualified corporation” within the meaning of the Direction or any other applicable Broadcasting Legislation; and

(G)         any further or other facts the Board of Directors considers relevant;

(ii)      to require any person seeking to have a transfer of a Share registered in that person’s name or to have a Share issued to that person to furnish a declaration similar to the declaration a shareholder may be required to furnish under paragraph (a)(i); and

(iii)      to determine the circumstances in which declarations are required, their form, content and the times when they are to be furnished.

(b)            Where a person is required to furnish a declaration pursuant to a rule made under subsection (a), the Board of Directors may refuse to register a transfer of a Share to that person or to issue such Share to that person until that person has furnished such a declaration and such person shall not be entitled to vote at any meeting of shareholders of the Corporation held thereafter unless that person provides such declaration forty-eight (48) hours prior to the date and time of any such meeting.

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(c)            In administering these provisions, the Board of Directors, any officer, employee or agent of the Corporation may rely upon:

(i)             a statement made in a declaration furnished under subsection (a) or (b); and

(ii)            the knowledge of such director or any officer, employee or agent;

and the Corporation, its directors, officers, employees and agents are not liable for anything done or omitted by them in good faith in reliance upon such statements or knowledge.

(d)             Where the Board of Directors are required to determine the total number of Shares held by or on behalf of persons who are members of the Restricted Class, the Board of Directors may calculate the number of such shares as the total of:

(i)            the Shares held by every shareholder whose latest address as shown on the share register is outside of Canada;

(ii)           the Shares held by every shareholder whose latest address as shown in the share register is located in Canada, but who, to the knowledge of a director, officer, employee or agent of the Corporation, is not a Canadian; and

(iii)          the Shares held by every shareholder to the knowledge of a director, officer, employee or agent of the Corporation who is not a Canadian citizen or a “qualified corporation” as defined in the Direction.

(e)           The Board of Directors may rely on the share register of the Corporation to make the calculation under subsection (d) as of the date that is not earlier than four (4) months before the date on which the calculation is made.

14.           General

(a)            In the event of any conflict between the provisions of these Articles and of the provisions in the Act relating to constrained share corporations, or of the provisions of any of the Broadcasting Legislation, the provisions in the Act or the Broadcasting Legislation, as the case may be, shall prevail, and the provisions of these Articles shall be deemed to be amended accordingly and shall be retroactive in effect, as so amended.

(b)           Subject to the Act, the directors of the Corporation may make, amend or repeal any by-laws and take such other action as they may deem necessary or appropriate to administer the constrained share provisions of these Articles, and to require any affidavit, declaration or other statement required under any of the Broadcasting Legislation.

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15.           Disclosure.

The Board of Directors shall cause to be noted conspicuously the general nature or existence of these provisions in every:

(a)            certificate representing a Share issued hereafter;

(b)           management proxy circular;

(c)            prospectus, statement of material facts, registration statement or similar document; and

(d)           take-over bid circular where the consideration for the shares of the offeree is in whole or in part securities of the Corporation.

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A.The board of directors may from time to time on behalf of the Corporation, without authorization of the shareholders:

(a) borrow money on the credit of the Corporation;

(b) issue, reissue, sell or pledge bonds, debentures, notes or other evidences of indebtedness or guarantee of the Corporation, whether secured or unsecured;

(c) to the extent permitted by the Business Corporations Act (Ontario), give a guarantee on behalf of the Corporation to secure performance of any present or future indebtedness, liability or obligation of any person; and

(d) mortgage, hypothecate, pledge or otherwise create a security interest in all or any currently owned or subsequently acquired real or personal, movable or immovable, property of the Corporation including book debts, rights, powers, franchises and undertakings, to secure any such bond, debentures, notes or other evidences of indebtedness or guarantee or any other present or future indebtedness, liability or obligation of the Corporation.

The board of directors may from time to time delegate to such one or more of the directors and officers of the Corporation as may be designated by the board all or any of the powers conferred on the board above to such extent and in such manner as the board shall determine at the time of such delegation.

These articles are signed in duplicate.

Names of the amalgamating corporations and signatures and descriptions of office of their proper officers.

Canadian Satellite Radio Holdings Inc.
Per:	/s/ Stewart Lyons
	Per: /s/ Stewart Lyons
	Secretary

 

 

2087609 Ontario Inc.
Per:	/s/ Frank Penny
	Frank Penny
	Secretary

SCHEDULE “A”

Statement of Director or Officer

Under Subsection 178(2) of

the Business Corporations Act (Ontario)

I am the Secretary of 2087609 Ontario Inc. ("2087609"). I have conducted such examinations of the books and records of 2087609 as are necessary to enable me to make this statement. This Statement is made pursuant to subsection 178(2) of the Business Corporations Act (Ontario) (the “Act”). In my capacity as Secretary of 2087609, I state that:

1.   There are reasonable grounds for believing that:

(a)   2087609 is, and the corporation continuing from the amalgamation of 2087609 and Canadian Satellite Radio Holdings Inc. (the “Corporation”) will be, able to pay its liabilities as they become due, and

(b)   the realizable value of the Corporation's assets will not be less than the aggregate of its liabilities and stated capital of all classes.

2.   There are reasonable grounds for believing that no creditor of 2087609 will be prejudiced by the amalgamation.

DATED December 7, 2005.

/s/ Frank Penny

Frank Penny

SCHEDULE “A”

Statement of Director or Officer

Under Subsection 178(2) of

the Business Corporations Act (Ontario)

I am the Secretary of Canadian Satellite Radio Holdings Inc. ("CSR Holdings"). I have conducted such examinations of the books and records of CSR Holdings as are necessary to enable me to make this statement. This Statement is made pursuant to subsection 178(2) of the Business Corporations Act (Ontario) (the “Act”). In my capacity as Secretary of CSR Holdings, I state that:

1.   There are reasonable grounds for believing that:

(a)   CSR Holdings is, and the corporation continuing from the amalgamation of CSR Holdings and 2087609 Ontario Inc. (the “Corporation”) will be, able to pay its liabilities as they become due, and

(b)   the realizable value of the Corporation's assets will not be less than the aggregate of its liabilities and stated capital of all classes.

2.   There are reasonable grounds for believing that no creditor of CSR Holdings will be prejudiced by the amalgamation.

DATED December 7, 2005.

/s/ Stewart Lyons

Stewart Lyons

SCHEDULE “B”

AMALGAMATION AGREEMENT

Amalgamation Agreement dated December 7, 2005 between Canadian Satellite Radio Holdings Inc. (“CSR Holdco”) and 2087609 Ontario Inc. (“2087609“).

RECITALS

(a)   CSR Holdco was incorporated under the Act by Certificate and Articles of Incorporation dated July 31, 2002, as amended.

(b)   2087609 was incorporated under the Act by Certificate and Articles of Incorporation dated November 30, 2005.

(c)   CSR Holdco is authorized to issue an unlimited number of shares. 15,000,200 common shares of CSR Holdco are issued and outstanding as of the date of this Agreement.

(d)   2087609 is authorized to issue an unlimited number of Class A shares and an unlimited number of Class B shares. 28,393 Class A shares and one (1) Class B share of 2087609 are issued and outstanding as of the date of this Agreement.

(e)   CSR Holdco and 2087609 have fully and completely disclosed to each other their respective assets and liabilities.

(f)   CSR Holdco and 2087609 have agreed to amalgamate and continue as one corporation on the terms contained in this Agreement.

In consideration of the foregoing and the mutual agreements contained in this Agreement (the receipt and adequacy of which are acknowledged), the parties agree as follows:

Section 1Definitions.

(1)   In this Agreement:

“Act” means the Business Corporations Act (Ontario).

“Agreement” means this amalgamation agreement.

“Amalgamating Corporations” means CSR Holdco and 2087609.

“Corporation” means the corporation continuing from the amalgamation of the Amalgamating Corporations.

“Effective Date” means the date set out on the certificate endorsed by the Director appointed under the Act on the articles of amalgamation giving effect to the amalgamation of the Amalgamating Corporations.

(2)   Unless the context otherwise requires, all terms used in this Agreement which are defined in the Act have the respective meanings given to them in the Act.

Section 2Amalgamation.

The Amalgamating Corporations agree to amalgamate on the Effective Date under the provisions of the Act and to continue as one corporation on the terms contained in this Agreement.

Section 3Name of Corporation.

The name of the Corporation shall be Canadian Satellite Radio Holdings Inc.

Section 4Registered Office.

The location of the registered office of the Corporation shall be 161 Bay Street, Suite 2300, BCE Place, Canada Trust Tower, Toronto, Ontario M5J 2S1.

Section 5Business and Powers.

There shall be no restrictions on the business that the Corporation may carry on or on the powers that the Corporation may exercise.

Section 6Authorized Share Capital.

The classes and any maximum number of shares that the Corporation shall be authorized to issue are as follows:

An unlimited number of Class A Subordinate Voting Shares, an unlimited number of Class B Voting Shares and an unlimited number of Class C Non-Voting Shares.

Section 7Share Provisions.

The Class A Subordinate Voting Shares, the Class B Voting Shares and the Class C Non-Voting Shares shall have attached thereto the respective rights, privileges, restrictions and conditions as set forth in Schedule I attached hereto.

Section 8Share Transfer Restrictions.

The issue, transfer or ownership of shares of the Corporation is restricted and the restrictions are set forth in Schedule II attached hereto.

Section 9       Other Provisions.

(1)   The board of directors may from time to time on behalf of the Corporation, without authorization of the shareholders:

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(a)   borrow money on the credit of the Corporation;

(b)   issue, reissue, sell or pledge bonds, debentures, notes or other evidences of indebtedness or guarantee of the Corporation, whether secured or unsecured;

(c)   to the extent permitted by the Business Corporations Act (Ontario), give a guarantee on behalf of the Corporation to secure performance of any present or future indebtedness, liability or obligation of any person; and

(d)   mortgage, hypothecate, pledge or otherwise create a security interest in all or any currently owned or subsequently acquired real or personal, movable or immovable, property of the Corporation including book debts, rights, powers, franchises and undertakings, to secure any such bond, debentures, notes or other evidences of indebtedness or guarantee or any other present or future indebtedness, liability or obligation of the Corporation.

The board of directors may from time to time delegate to such one or more of the directors and officers of the Corporation as may be designated by the board all or any of the powers conferred on the board above to such extent and in such manner as the board shall determine at the time of such delegation.

Section 10Number of Directors and First Directors.

(1)   The number of directors of the Corporation shall be a minimum of three (3) and a maximum of fifteen (15), until changed in accordance with the Act.

(2)   Until changed by the shareholders of the Corporation, or by the directors of the Corporation if authorized by the shareholders of the Corporation, the number of directors of the Corporation shall be three (3).

(3)   The first directors of the Corporation shall be the following:

Name	Residence Address	Resident Canadian
John I. Bitove	177 Forest Hill Road, Toronto, Ontario M5P 2N3	Yes
Philip Evershed	323 Riverview Drive, Toronto, Ontario M4N 3C9	Yes
Mariette Wilcox	2670 Bellevue Avenue West Vancouver, BC V7V 1E4	Yes

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The first directors named above shall hold office until the later of the close of the first annual meeting of shareholders of the Corporation and the date on which their successors are elected or appointed.

Section 11By-laws.

The by-laws of the Corporation shall not be the by-laws of any of the Amalgamating Corporations. Prior to the Effective Date a copy of the proposed by-laws may be examined at the offices of Stikeman Elliott LLP, 199 Bay Street, 5300 Commerce Court West, Toronto, Ontario M5L 1B9 at any time during regular business hours.

Section 12      Conversion or Cancellation of Shares of Amalgamating Corporations.

On the Effective Date, the issued and outstanding shares in the capital of the Amalgamating Corporations shall be converted into fully paid and non-assessable shares of the Corporation or shall be cancelled without any repayment of capital in respect of such shares, as follows:

(a)   the 14,464,638 issued and outstanding common shares of CSR Holdco, which are at the date of this Agreement and will be at the Effective Date held by or on behalf of Canadian Satellite Radio Investments Inc., shall be converted into 81,615,633 Class B Voting Shares of the Corporation on the basis of 5.642424857 Class B Voting Shares of the Corporation for each one (1) common share of CSR Holdco;

(b)   the 535,562 issued and outstanding common shares of CSR Holdco, which are at the date of this Agreement and will be at the Effective Date held by or on behalf of 2087609, shall be cancelled without any repayment of capital in respect of such shares and shall not be converted into shares of the Corporation;

(c)   the 28,393 issued and outstanding Class A shares of 2087609 shall be converted into 1,007,289 Class A Subordinate Voting Shares of the Corporation on the basis of 35.47666678 Class A Subordinate Voting Shares of the Corporation for each one (1) Class A share of 2087609, and in the event that such conversion results in a shareholder holding a fractional share, no fractional share shall be issued and such fraction, if less than 0.5, will be rounded down to the nearest whole number, and shall otherwise be rounded up to the nearest whole number;

(d)   the one (1) issued and outstanding Class B share of 2087609 shall be cancelled without any repayment of capital in respect of such shares and shall not be converted into shares of the Corporation.

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Section 13Stated Capital.

The stated capital attributable to each class of shares of the Corporation issuable pursuant to Section 12 shall be the aggregate of the stated capital attributable to the shares of the Amalgamating Corporations converted into shares of the Corporation of such class.

Section 14Replacement Share Certificates.

After the Effective Date, the shareholders of the Amalgamating Corporations shall, when requested by the Corporation, surrender for cancellation the certificates representing the shares held by them in the Amalgamating Corporations and shall be entitled to receive certificates for shares of the Corporation issuable to them pursuant to Section 12.

Section 15Effect of Amalgamation.

Upon the Effective Date:

(a)   the Amalgamating Corporations are amalgamated and continue as the Corporation as contemplated by this Agreement;

(b)   the Corporation possesses all the property, rights, privileges and franchises and is subject to all liabilities, including civil, criminal and quasi-criminal, and all contracts, disabilities and debts of each of the Amalgamating Corporations;

(c)   a conviction against, or ruling, order or judgment in favour or against an Amalgamating Corporation may be enforced by or against the Corporation;

(d)   the articles of amalgamation are deemed to be the articles of incorporation of the Corporation and, except for the purposes of subsection 117(1) of the Act, the certificate of amalgamation is deemed to be the certificate of incorporation of the Corporation; and

(e)   the Corporation shall be deemed to be the party plaintiff or the party defendant, as the case may be, in any civil action commenced by or against an Amalgamating Corporation before the Effective Date.

Section 16Termination.

At any time before the Effective Date, this Agreement may be terminated by the directors of an Amalgamating Corporation, notwithstanding the approval of this Agreement by the shareholders of all or any of the Amalgamating Corporations.

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Section 17Further Assurances.

Each of the Amalgamating Corporations shall execute and deliver all other documents and do all acts or things as may be necessary or desirable to give effect to this Agreement.

Section 18Governing Law.

This Agreement shall be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

IN WITNESS WHEREOF the parties have executed this Agreement.

CANADIAN SATELLITE RADIO HOLDINGS INC.
By:	/s/ Stewart Lyons
	Stewart Lyons
	Authorized Signing Officer

	2087609 ONTARIO INC.
Date:	By:	/s/ Frank Penny
		Frank Penny
		Secretary

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SCHEDULE I

Class A Subordinate Voting Shares, Class B Voting Shares

and Class C Non-Voting Shares

A.Voting.

At all meetings of shareholders of the Corporation, except meetings at which only holders of another class of shares are entitled to vote, the holders of the Class A Subordinate Voting Shares shall be entitled to one (1) vote in respect of each Class A Subordinate Voting Share and the holders of the Class B Voting Shares shall be entitled to one (1) vote in respect of each Class B Voting Share.

The holders of the Class C Non-Voting Shares shall be entitled to receive notice of and to attend at any meetings of the shareholders of the Corporation, but shall not be entitled to vote at any such meetings (except where the holders of a specified class of shares are entitled to vote separately as a class as provided in the Act, in which case each holder of Class C Non-Voting Shares shall be entitled to one (1) vote in respect of each Class C Non-Voting Share). The holders of the Class C Non-Voting Shares shall not be entitled to vote separately as a class or series or to dissent upon a proposal to amend the articles of the Corporation to:

increase or decrease any maximum number of authorized shares of such class or series, or increase any maximum number of authorized shares of a class or series having rights or privileges equal or superior to the shares of such class or series;

(a)   effect an exchange, reclassification or cancellation of the shares of such class or series; or

(b)   create a new class or series of shares equal or superior to the shares of such class or series.

B.Liquidation, Dissolution and Winding-up.

In the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, all of the remaining property of the Corporation available for distribution to the holders of the Class A Subordinate Voting Shares, the Class B Voting Shares and the Class C Non-Voting Shares (the “Remaining Property”) shall, subject to the prior rights of the holders of any shares ranking senior to the Class A Subordinate Voting Shares, the Class B Voting Shares and the Class C Non-Voting Shares in respect of any such distribution, liquidation, dissolution or winding-up of the Corporation or other distribution of assets among its shareholders for the purpose of winding-up its affairs, whether voluntary or involuntary, be paid or distributed to the holders of the Class A Subordinate Voting Shares, the Class B Voting Shares and the Class C Non-Voting Shares such that the holders of the Class A Subordinate Voting Shares and the Class C Non-Voting Shares share equally in the Remaining Property on a per share basis, and the holders of the Class B Voting Shares each receive, on a per share basis, one-third of the amount paid or distributed, on a per share basis, to the holders of the Class A Subordinate Voting Shares and the Class C Non-Voting Shares.

C.Dividends.

Subject to the prior rights of the holders of any other shares ranking senior to the Class A Subordinate Voting Shares, the Class B Voting Shares and the Class C Non-Voting Shares in respect of priority in the payment of dividends, the holders of Class A Subordinate Voting Shares, Class B Voting Shares and Class C Non-Voting Shares shall be entitled to participate at the same time in any dividend, whether in cash, in shares of the Corporation or otherwise, which may be declared or paid on any class of such shares, such participation to be, with respect to the Class A Subordinate Voting Shares and the Class C Non-Voting Shares, on an equal per share basis, including without limitation with respect to the amount per share of the dividend (the “Dividend Amount”), and to be, with respect to the Class B Voting Shares, an amount per share equal to one-third (1/3) of the Dividend Amount.

D.Rights Reserved.

In the event that the Class A Subordinate Voting Shares, the Class B Voting Shares or the Class C Non-Voting Shares are sub-divided, consolidated or otherwise changed in number or reclassified or exchanged for the shares of another class, the rights, privileges and restrictions attaching to the shares of the other classes shall be amended at the same time so as to preserve the rights conferred hereby on each class in relation to the other classes.

E.Board Rights.

(a)   The holders of a majority of the Class B Voting Shares outstanding at any time shall have the right, on one occasion, exercisable at any time, to increase the size of the board of directors of the Corporation (the “Board of Directors”) by three (3) members, and upon exercising such right shall be entitled to appoint such additional three (3) members to the Board of Directors.

(a)   The appointment right provided for herein may be exercised by the holders of a majority of the Class B Voting Shares outstanding at any time by delivering written notice of the exercise of such right to the Corporation at its registered office, accompanied by:

(i)    a certificate of the holder(s) exercising such right as to the number of Class B Voting Shares held by the holder(s) exercising such right; and

(ii)    the names of the persons who such shareholders wish to appoint to the Board of Directors, as well as their respective consents to act as directors of Corporation under Section 119(9) of the Act.

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(b)   Upon the due exercise of the foregoing right, and provided that the persons appointed as directors by such holders are not disqualified from acting as directors of the Corporation under Section 118(1) of the Act, the size of the Board of Directors shall without further action by the Corporation or the Board of Directors be increased by three (3), and such additional three (3) members as are appointed by such holders shall become directors of the Corporation, to hold office for a term expiring on the close of the next annual meeting of shareholders.

(c) Notwithstanding the foregoing, if at any time the outstanding Class B Voting Shares represent less than one-third of the total outstanding shares of the Corporation, assuming the conversion of all Class B Voting Shares into Subordinate Voting Shares, then the foregoing nomination rights shall automatically terminate and shall no longer remain in effect.

(c)   For greater certainty, the appointment rights provided in this Part E may only be exercised once.

F. Rights to Convert Class B Voting Shares.

(f)   A holder of Class B Voting Shares shall be entitled at such holder’s option at any time and from time to time to have all or any of the Class B Voting Shares registered in the name of the holder on the books of the Corporation converted into fully paid and non-assessable Class A Subordinate Voting Shares as the same shall be constituted at the time of conversion upon the basis of one (1) Class A Subordinate Voting Share for every three (3) Class B Voting Shares so converted. No fractional Class A Subordinate Voting Shares shall be issued on any conversion.

(g)   The conversion right provided for herein may be exercised by notice in writing given to the Corporation at its registered office accompanied by the certificate or certificates representing the Class B Voting Shares in respect of which the holder thereof desires to exercise such right of conversion and such notice shall be executed by the person registered on the books of the Corporation as the holder of the Class B Voting Shares in respect of which such right is being exercised or by his duly authorized attorney and shall specify the number of such shares which the holder desires to have converted. The conversion shall be deemed to take effect upon the date which the said certificate or certificates shall be surrendered to the Corporation at its registered office accompanied by the said notice in writing unless such date be a Saturday, Sunday or a holiday, in which event it shall take effect on the next business day. Upon due exercise of the conversion right, the Corporation shall issue a share certificate representing the number of fully-paid and non-assessable Class A Subordinate Voting Shares determined on the basis set out above. If the conversion right is exercised in respect of less than all of the Class B Voting Shares represented by any share certificate, the Corporation shall also issue a new share certificate representing the number of Class B Voting Shares in respect of which the conversion right is not being exercised.

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G. Rights to Convert Class A Subordinate Voting Shares and Class C Non-Voting Shares in the event of an offer for the Class B Voting Shares.

1.   For the purposes of this Part G:

 “Canadian” has the meaning set forth in the Direction.  

“Conversion Period” means the period of time commencing eight days following the Offer Date and terminating on the Expiry Date.

“Converted Shares” means Class B Voting Shares resulting from the conversion of Class A Subordinate Voting Shares or Class C Non-Voting Shares.

“Direction” means the Direction to the CRTC (Ineligibility of Non-Canadians) issued by the Governor General in Council pursuant to the Broadcasting Act (Canada), as amended or replaced from time to time.

“Exclusionary Offer” means an offer to purchase Class B Voting Shares that:

(i) must, pursuant to applicable securities legislation or the requirements of a stock exchange on which the Class B Voting Shares are then listed, be made to all of the holders of the Class B Voting Shares in a province of Canada to which the requirement applies; and

(ii) is not made concurrently with an offer to purchase Class A Subordinate Voting Shares and Class C Non-Voting Shares that is identical to the offer to purchase Class B Voting Shares with respect to percentage of outstanding Class B Voting Shares for which the offer is made (exclusive of shares owned by the Offeror immediately prior to the offer) and in all other material respects provided that the price per Class A Subordinate Voting Share and Class C Non-Voting Share must be three times the price per share for the Class B Voting Shares (since pricing will be determined on an as-converted basis, assuming the conversion of Class B Voting Shares for Class A Subordinate Voting Shares) and except in respect of the conditions, if any, to which the offer to purchase Class B Voting Shares may be subject, and that is unconditional except in respect of the right not to take up and pay for Class A Subordinate Voting Shares and Class C Non-Voting Shares tendered if no shares are purchased pursuant to the offer for Class B Voting Shares,

and for the purposes of this definition, if an offer to purchase Class B Voting Shares would be an Exclusionary Offer except for the application of sub-clause (ii), the varying of any term of such offer shall be deemed to constitute the making of a new offer unless an identical variation is concurrently made to the corresponding offer to purchase Class A Subordinate Voting Shares and Class C Non-Voting Shares.

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“Expiry Date” means the last date upon which holders of Class B Voting Shares may accept an Exclusionary Offer.

“Joint Actor” means a person or company acting jointly or in concert with an Offeror, as the phrase “acting jointly or in concert” is defined in the Securities Act (Ontario).

“Offer Date” means the date on which an Exclusionary Offer is made.

“Offeror” means a person or company that makes an offer to purchase Class B Voting Shares, and includes any Joint Actor.

“Transfer Agent” means at any time the transfer agent at such time for the Corporation’s shares or, if at such time there is no such transfer agent, means the Corporation.

2.   In the event that an Exclusionary Offer is made, then subject to sub-paragraph 7(b), each outstanding Class A Subordinate Voting Share and each outstanding Class C Non-Voting Share shall be convertible into three (3) Class B Voting Shares at the option of the holder during the Conversion Period. To exercise such conversion right a shareholder or the shareholder’s attorney duly authorized in writing shall:

(a)   give written notice to the Transfer Agent of the exercise of such right and of the number of Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, in respect of which the right is being exercised;

(b)   deliver to the Transfer Agent the share certificate or certificates representing the Class A Subordinate Voting Shares or Class C Non-Voting Shares in respect of which the right is being exercised; and

(c)   pay any applicable governmental or stamp tax or similar duty on or in respect of such conversion.

Upon due exercise of the conversion right, a shareholder shall be issued, in accordance with the following, a share certificate representing fully-paid and non-assessable Class B Voting Shares. If the conversion right is exercised in respect of less than all of the Class A Subordinate Voting Shares or Class C Non-Voting Shares represented by any share certificate, the holder shall also be entitled to receive a new share certificate representing the number of Class A Subordinate Voting Shares or Class C Non-Voting Shares in respect of which the conversion right is not being exercised.

3.   A holder of Converted Shares shall be deemed to have irrevocably elected to deposit all such shares pursuant to the Exclusionary Offer subject to such holder’s right to subsequently withdraw the shares from the offer. If Converted Shares are subsequently withdrawn from an offer, the holder of such shares shall be deemed to have irrevocably elected to re-convert the withdrawn shares into Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, on a one-for-three basis, and the deemed election shall be effective from the time the shares are withdrawn. The holder of Converted Shares deposited pursuant to an Exclusionary Offer shall be deemed to have irrevocably elected to re-convert into Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, such shares as are not taken up pursuant to the offer. The deemed election to re-convert into Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, shall be effective from the time immediately following that prescribed by applicable securities legislation for the Offeror to take up and pay for such shares as are to be acquired pursuant to the Exclusionary Offer. If, however, Converted Shares are not taken up as a result of the abandonment or withdrawal of an Exclusionary Offer, the deemed election to re-convert in respect of such shares shall be effective from the time of the abandonment or withdrawal of the offer.

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4.   The Transfer Agent, on behalf of the holders of the Converted Shares, shall deposit pursuant to the Exclusionary Offer a share certificate or certificates representing the Converted Shares. No share certificate representing Converted Shares shall be delivered to the holders of the shares before such shares are deposited pursuant to the Exclusionary Offer. Upon completion of the offer, the Transfer Agent shall deliver to the holders entitled thereto all consideration paid by the Offeror for their Converted Shares pursuant to the offer. If Converted Shares are re-converted into Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, pursuant to paragraph 3, the Transfer Agent shall deliver to the holders entitled thereto share certificates representing the Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, resulting from the conversion. The Corporation shall make all arrangements with the Transfer Agent necessary or desirable to give effect to this paragraph 4.

5.   Converted Shares resulting from the conversion of Class A Subordinate Voting Shares and Class C Non-Voting Shares as set out above and taken up and paid for by the Offeror shall immediately be re-converted into Class A Subordinate Voting Shares or Class C Non-Voting Shares, as applicable, upon such taking up and payment for such Converted Shares if the Offeror taking up and paying for such Converted Shares is not a Canadian.

6.   For greater certainty, on any re-conversion of Converted Shares as a result of any of the foregoing, such Converted Shares shall, as applicable, be re-converted into Class A Subordinate Voting Shares or Class C Non-Voting Shares on a one-for-three basis such that such Converted Shares are, following such re-conversion, the number of Class A Subordinate Voting Shares or Class C Non-Voting Shares that existed immediately prior to their conversion into Converted Shares.

7.   (a) For the purposes of this paragraph 7:

“Certificate of Non-Participation” means a certificate signed by or on behalf of a holder of Class B Voting Shares, confirming:

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(i)   the number of Class B Voting Shares owned by a shareholder;

(ii)   that neither such shareholder nor a Joint Actor has made an Exclusionary Offer;

(iii)   that such shareholder shall not tender any shares in acceptance of any Exclusionary Offer which has been made, including any varied form of such offer, without giving the Transfer Agent and the Corporation written notice of such acceptance or intended acceptance at least seven days prior to the Expiry Date; and

(iv)   that such shareholder shall not transfer any Class B Voting Share, directly or indirectly, prior to the Expiry Date of any Exclusionary Offer which has been made without giving the Transfer Agent and the Corporation written notice of such transfer or intended transfer at least seven days prior to the Expiry Date, stating the names of the transferees, if known to the transferor, and the number of Class B Voting Shares transferred or to be transferred to each transferee;

“Certificate of Retention” means a certificate signed by or on behalf of a holder of Class B Voting Shares confirming the number of Class B Voting Shares then owned by the holder and that such holder of Class B Voting Shares shall not:

(i)   tender any shares in acceptance of any Exclusionary Offer without giving the Transfer Agent and the Corporation written notice of such acceptance or intended acceptance at least seven days prior to the Expiry Date;

(ii)   make any Exclusionary Offer;

(iii)   act jointly or in concert with any person or company that makes any Exclusionary Offer; or

(iv)   transfer any Class B Voting Shares, directly or indirectly, during the time at which any Exclusionary Offer is outstanding without giving the Transfer Agent and the Corporation written notice of such transfer or intended transfer at least seven days prior to the Expiry Date, stating the names of the transferees, if known to the transferor, and the number of Class B Voting Shares transferred or to be transferred to each transferee;

“Notice of Tender” means a written notice given to the Transfer Agent and to the Corporation at least seven days prior to the Expiry Date of an Exclusionary Offer by a holder of Class B Voting Shares, which notice states that such shareholder has or intends to tender shares in acceptance of an Exclusionary Offer;

“Notice of Transfer” means a written notice given to the Transfer Agent and to the Corporation at least seven days prior to the Expiry Date of an Exclusionary Offer by a holder of Class B Voting Shares, which notice states that such shareholder intends to transfer or has transferred Class B Voting Shares, directly or indirectly, during the time when the Exclusionary Offer is outstanding, and which states the names of the transferees, if known to the transferor, and the number of Class B Voting Shares transferred or to be transferred to each transferee;

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(b) Subject to sub-paragraph 7(c), the holders of Class A Subordinate Voting Shares and Class C Non-Voting Shares shall not be entitled to convert such shares into Class B Voting Shares if one or more Certificates of Retention or one or more Certificates of Non-Participation or a combination of the foregoing, representing, in the aggregate, more than fifty percent (50%) of the then outstanding Class B Voting Shares, exclusive of shares owned immediately prior to the Exclusionary Offer by the Offeror and any Joint Actor, have been duly delivered to the Transfer Agent and to the Corporation. A Certificate of Retention shall be duly delivered to the Transfer Agent and to the Corporation if delivered before any Exclusionary Offer has been made. A Certificate of Non-Participation shall be duly delivered to the Transfer Agent and to the Corporation if delivered before the end of the seventh day after any Exclusionary Offer has been made.

(c) When, by reason of the application of sub-paragraph 7(b), the holders of Class A Subordinate Voting Shares and Class C Non-Voting Shares are not entitled to convert such shares into Class B Voting Shares, should a Notice of Tender or a Notice of Transfer be given by a holder having previously provided a Certificate of Retention or a Certificate of Non-Participation, the Transfer Agent shall forthwith upon receipt of such notice or forthwith after the seventh day following the Offer Date, whichever is later, deduct the number of Class B Voting Shares to which the notice relates from the number of Class B Voting Shares represented by Certificates of Retention and Certificates of Non-Participation. In the case of a Notice of Transfer, where the Transfer Agent is advised of the identity of the transferee, either by the Notice of Transfer or by the transferee in writing, and the transferee is a person or company from whom the Transfer Agent has a subsisting Certificate of Retention or subsisting Certificate of Non-Participation, no such deduction shall be made.

(d) If after any deduction made by the Transfer Agent in accordance with sub-paragraph 7(c), the number of Class B Voting Shares represented by Certificates of Retention and Certificates of Non-Participation does not exceed 50% of the number of then outstanding Class B Voting Shares, exclusive of shares owned immediately prior to the Exclusionary Offer by the Offeror and any Joint Actor, sub-paragraph 7(b) shall cease to apply and the right to convert Class A Subordinate Voting Shares and Class C Non-Voting Shares into Class B Voting Shares shall arise and be in effect for the remainder of the Conversion Period.

8.   As soon as reasonably possible after the seventh day following the Offer Date, the Corporation shall send to each holder of Class A Subordinate Voting Shares and Class C Non-Voting Shares a notice advising each such holder whether a right to convert Class A Subordinate Voting Shares and Class C Non-Voting Shares into Class B Voting Shares has arisen and the reasons such a right has or has not arisen, as the case may be. If no right to convert Class A Subordinate Voting Shares and Class C Non-Voting Shares into Class B Voting Shares has arisen, but subsequently arises by virtue of sub-paragraph 7(d) or otherwise, the Corporation shall forthwith send to the holders of Class A Subordinate Voting Shares and Class C Non-Voting Shares a notice advising such holders that such a right has arisen, and the reasons therefor.

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9.   If a notice referred to above discloses that the holders of Class A Subordinate Voting Shares and Class C Non-Voting Shares are entitled to convert such shares into Class B Voting Shares, the notice shall, in addition:

disclose the procedure to be followed to effect the conversion and to have the Converted Shares tendered under the offer;

contain the information set out in paragraphs 3 and 4; and

be accompanied by a copy of the offer and all other material sent to holders of Class B Voting Shares in respect of the offer (to the extent the Corporation is in possession of the offer and such other material).

As soon as reasonably possible after any additional material, including any notice of variation, is sent to the holders of Class B Voting Shares in respect of the offer, the Corporation shall (to the extent the Corporation is in possession of such additional material) send a copy of such additional material to each holder of Class A Subordinate Voting Shares and Class C Non-Voting Shares.

H. Rights to Convert Class C Non-Voting Shares in the event of an offer for Class A Subordinate Voting Shares

1.     For the purposes of this Part H:

“Canadian” has the meaning set forth in the Direction.

“Conversion Period” means the period of time commencing eight days following the Offer Date and terminating on the Expiry Date.

“Converted Shares” means Class A Subordinate Voting Shares resulting from the conversion of Class C Non-Voting Shares.

“Direction” means the Direction to the CRTC (Ineligibility of Non-Canadians) issued by the Governor General in Council pursuant to the Broadcasting Act (Canada), as amended or replaced from time to time.

“Exclusionary Offer” means an offer to purchase Class A Subordinate Voting Shares that:

(i) must, pursuant to applicable securities legislation or the requirements of a stock exchange on which the Class A Subordinate Voting Shares are then listed, be made to all of the holders of the Class A Subordinate Voting Shares in a province of Canada to which the requirement applies;

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(ii) is not made concurrently with an offer to purchase Class C Non-Voting Shares that is identical to the offer to purchase Class A Subordinate Voting Shares with respect to price per share, percentage of outstanding shares for which the offer is made (exclusive of shares owned by the Offeror immediately prior to the offer) and in all other material respects, except in respect of the conditions, if any, to which the offer to purchase Class A Subordinate Voting Shares may be subject, and that is unconditional except in respect of the right not to take up and pay for Class C Non-Voting Shares tendered if no shares are purchased pursuant to the offer for Class A Subordinate Voting Shares; and

(iii) is not an “Exclusionary Offer” within the meaning of Part G, Section 1,

and for the purposes of this definition if an offer to purchase Class A Subordinate Voting Shares would be an Exclusionary Offer except for the application of sub-clause (ii), the varying of any term of such offer shall be deemed to constitute the making of a new offer unless an identical variation is concurrently made to the corresponding offer to purchase Class C Non-Voting Shares.

“Expiry Date” means the last date upon which holders of Class A Subordinate Voting Shares may accept an Exclusionary Offer.

“Joint Actor” means a person or company acting jointly or in concert with an Offeror, as the phrase “acting jointly or in concert” is defined in the Securities Act (Ontario).

“Offer Date” means the date on which an Exclusionary Offer is made.

“Offeror” means a person or company that makes an offer to purchase Class A Subordinate Voting Shares, and includes any Joint Actor.

“Transfer Agent” means at any time the transfer agent at such time for the Corporation’s shares or, if at such time there is no such transfer agent, means the Corporation.

2.   In the event that an Exclusionary Offer is made, then subject to sub-paragraph (6)(b), each outstanding Class C Non-Voting Share shall be convertible into one (1) Class A Subordinate Voting Share at the option of the holder during the Conversion Period. To exercise such conversion right a shareholder or the shareholder’s attorney duly authorized in writing shall:

(a)   give written notice to the Transfer Agent of the exercise of such right and of the number of Class C Non-Voting Shares in respect of which the right is being exercised;

(b)   deliver to the Transfer Agent the share certificate or certificates representing the Class C Non-Voting Shares in respect of which the right is being exercised; and

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(b)   pay any applicable governmental or stamp tax or similar duty on or in respect of such conversion.

Upon due exercise of the conversion right, a shareholder shall be issued, in accordance with the following, a share certificate representing fully-paid and non-assessable Class A Subordinate Voting Shares. If the conversion right is exercised in respect of less than all of the Class C Non-Voting Shares represented by any share certificate, the holder shall also be entitled to receive a new share certificate representing the number of Class C Non-Voting Shares in respect of which the conversion right is not being exercised.

3.   A holder of Converted Shares shall be deemed to have irrevocably elected to deposit all such shares pursuant to the Exclusionary Offer subject to such holder’s right to subsequently withdraw the shares from the offer. If Converted Shares are subsequently withdrawn from an offer, the holder of such shares shall be deemed to have irrevocably elected to re-convert the withdrawn shares into Class C Non-Voting Shares on a one-for one basis, and the deemed election shall be effective from the time the shares are withdrawn. The holder of Converted Shares deposited pursuant to an Exclusionary Offer shall be deemed to have irrevocably elected to re-convert into Class C Non-Voting Shares such shares as are not taken up pursuant to the offer. The deemed election to re-convert into Class C Non-Voting Shares shall be effective from the time immediately following that prescribed by applicable securities legislation for the Offeror to take up and pay for such shares as are to be acquired pursuant to the Exclusionary Offer. If, however, Converted Shares are not taken up as a result of the abandonment or withdrawal of an Exclusionary Offer, the deemed election to re-convert in respect of such shares shall be effective from the time of the abandonment or withdrawal of the offer.

4.   The Transfer Agent, on behalf of the holders of the Converted Shares, shall deposit pursuant to the Exclusionary Offer a share certificate or certificates representing the Converted Shares. No share certificate representing Converted Shares shall be delivered to the holders of the shares before such shares are deposited pursuant to the Exclusionary Offer. Upon completion of the offer, the Transfer Agent shall deliver to the holders entitled thereto all consideration paid by the Offeror for their Converted Shares pursuant to the offer. If Converted Shares are re-converted into Class C Non-Voting Shares pursuant to the immediately foregoing paragraph, the Transfer Agent shall deliver to the holders entitled thereto share certificates representing the Class C Non-Voting Shares resulting from the conversion. The Corporation shall make all arrangements with the Transfer Agent necessary or desirable to give effect to this paragraph 4.

5.   Converted Shares resulting from the conversion of Class C Non-Voting Shares as set out above and taken up and paid for by the Offeror shall immediately be re-converted into Class C Non-Voting Shares upon such taking up and payment for such Converted Shares if the Offeror taking up and paying for such Converted Shares is not a Canadian.

6.   For the purposes of this paragraph 6:

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“Certificate of Non-Participation” means a certificate signed by or on behalf of a holder of Class A Subordinate Voting Shares, confirming:

(i)   the number of Class A Subordinate Voting Shares owned by a shareholder;

(ii)   that neither such shareholder nor a Joint Actor has made an Exclusionary Offer;

(iii)   that such shareholder shall not tender any shares in acceptance of any Exclusionary Offer which has been made, including any varied form of such offer, without giving the Transfer Agent and the Corporation written notice of such acceptance or intended acceptance at least seven days prior to the Expiry Date; and

(iv)   that such shareholder shall not transfer any Class A Subordinate Voting Shares, directly or indirectly, prior to the Expiry Date of any Exclusionary Offer which has been made without giving the Transfer Agent and the Corporation written notice of such transfer or intended transfer at least seven days prior to the Expiry Date, stating the names of the transferees, if known to the transferor, and the number of Class A Subordinate Voting Shares transferred or to be transferred to each transferee;

“Certificate of Retention” means a certificate signed by or on behalf of a holder of Class A Subordinate Voting Shares confirming the number of Class A Subordinate Voting Shares then owned by the holder and that such holder of Class A Subordinate Voting Shares shall not:

(i)   tender any shares in acceptance of any Exclusionary Offer without giving the Transfer Agent and the Corporation written notice of such acceptance or intended acceptance at least seven days prior to the Expiry Date;

(ii)   make any Exclusionary Offer;

(iii)   act jointly or in concert with any person or company that makes any Exclusionary Offer; or

(iv)   transfer any Class A Subordinate Voting Shares, directly or indirectly, during the time at which any Exclusionary Offer is outstanding without giving the Transfer Agent and the Corporation written notice of such transfer or intended transfer at least seven days prior to the Expiry Date, stating the names of the transferees, if known to the transferor, and the number of Class A Subordinate Voting Shares transferred or to be transferred to each transferee;

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“Notice of Tender” means a written notice given to the Transfer Agent and to the Corporation at least seven days prior to the Expiry Date of an Exclusionary Offer by a holder of Class A Subordinate Voting Shares, which notice states that such shareholder has or intends to tender shares in acceptance of an Exclusionary Offer,

“Notice of Transfer” means a written notice given to the Transfer Agent and to the Corporation at least seven days prior to the Expiry Date of an Exclusionary Offer by a holder of Class A Subordinate Voting Shares, which notice states that such shareholder intends to transfer or has transferred Class A Subordinate Voting Shares, directly or indirectly, during the time when the Exclusionary Offer is outstanding, and which states the names of the transferees, if known to the transferor, and the number of Class A Subordinate Voting Shares transferred or to be transferred to each transferee;

(b) Subject to sub-paragraph 6(c), the holders of Class C Non-Voting Shares shall not be entitled to convert such shares into Class A Subordinate Voting Shares if one or more Certificates of Retention or one or more Certificates of Non-Participation or a combination of the foregoing, representing, in the aggregate, more than fifty percent (50%) of the then outstanding Class A Subordinate Voting Shares, exclusive of shares owned immediately prior to the Exclusionary Offer by the Offeror and any Joint Actor, have been duly delivered to the Transfer Agent and to the Corporation. A Certificate of Retention shall be duly delivered to the Transfer Agent and to the Corporation if delivered before any Exclusionary Offer has been made. A Certificate of Non-Participation shall be duly delivered to the Transfer Agent and to the Corporation if delivered before the end of the seventh day after any Exclusionary Offer has been made.

(c) When, by reason of the application of sub-paragraph 6(b), the holders of Class C Non-Voting Shares are not entitled to convert such shares into Class A Subordinate Voting Shares, should a Notice of Tender or a Notice of Transfer be given by a holder having previously provided a Certificate of Retention or a Certificate of Non-Participation, the Transfer Agent shall forthwith upon receipt of such notice or forthwith after the seventh day following the Offer Date, whichever is later, deduct the number of Class A Subordinate Voting Shares to which the notice relates from the number of Class A Subordinate Voting Shares represented by Certificates of Retention and Certificates of Non-Participation. In the case of a Notice of Transfer, where the Transfer Agent is advised of the identity of the transferee, either by the Notice of Transfer or by the transferee in writing, and the transferee is a person or company from whom the Transfer Agent has a subsisting Certificate of Retention or subsisting Certificate of Non-Participation, no such deduction shall be made.

(d) If after any deduction made by the Transfer Agent in accordance with sub-paragraph 6(c), the number of Class A Subordinate Voting Shares represented by Certificates of Retention and Certificates of Non-Participation does not exceed 50% of the number of then outstanding Class A Subordinate Voting Shares, exclusive of shares owned immediately prior to the Exclusionary Offer by the Offeror and any Joint Actor, sub-paragraph 6(b) shall cease to apply and the right to convert Class C Non-Voting Shares into Class A Subordinate Voting Shares shall arise and be in effect for the remainder of the Conversion Period.

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7.   As soon as reasonably possible after the seventh day following the Offer Date, the Corporation shall send to each holder of Class C Non-Voting Shares a notice advising each such holder whether a right to convert Class C Non-Voting Shares into Class A Subordinate Voting Shares has arisen and the reasons such a right has or has not arisen, as the case may be. If no right to convert Class C Non-Voting Shares into Class A Subordinate Voting Shares has arisen, but subsequently arises by virtue of sub-paragraph 6(d) or otherwise, the Corporation shall forthwith send to the holders of Class C Non-Voting Shares a notice advising such holders that such a right has arisen, and the reasons therefor.

8.   If a notice referred to above discloses that the holders of Class C Non-Voting Shares are entitled to convert such shares into Class A Subordinate Voting Shares, the notice shall, in addition:

(a)  disclose the procedure to be followed to effect the conversion and to have the Converted Shares tendered under the offer;

(b)  contain the information set out in paragraphs 3 and 4; and

(c)  be accompanied by a copy of the offer and all other material sent to holders of Class A Subordinate Voting Shares in respect of the offer (to the extent the Corporation is in possession of the offer and such other material).

As soon as reasonably possible after any additional material, including any notice of variation, is sent to the holders of Class A Subordinate Voting Shares in respect of the offer, the Corporation shall (to the extent the Corporation is in possession of such additional material) send a copy of such additional material to each holder of Class C Non-Voting Shares.

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SCHEDULE II

Restrictions on Issue, Ownership, Transfer and Voting of Shares

1.   Definitions.

For the purposes of this Schedule I:

“Act” means the Business Corporations Act (Ontario), and any amendments thereto.

“Associate” means persons, firms, associations, corporations, partnerships and other entities acting in concert with the person with respect to whom the term “Associate” is relevant and includes an associate as defined in the Act.

“Broadcasting Business” means, at any time, any business of providing, or any business which includes the provision of, communications services by means of signals transmitted through any free space or guided transmission medium or any combination thereof over the air, or by coaxial cable, ordinary wire or fibre optic cable or any combination thereof in which the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, is then engaged or is then actively considering a proposal to engage and includes, without limiting the generality of the foregoing, any satellite or subscription radio broadcasting business.

“Broadcasting Legislation” means any law, statute, act, regulation, ordinance, order-in-council or other rule promulgated by any federal, provincial or other authority having or purporting to have jurisdiction including, without limitation, any parliament, legislature, privy council, cabinet, cabinet minister or government department, independent regulatory agency, government commission, government board or government council relating to any Broadcasting Business or which imposes a requirement to obtain a Licence in order to enable the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, to carry on any Broadcasting Business and includes, without limiting the generality of the foregoing, the Broadcasting Act (Canada), the Radiocommunication Act (Canada), the Direction and the Canadian Radio-television and Telecommunications Commission Act (Canada), as amended or replaced from time to time.

“Canadian” has the meaning set forth in the Direction.

“Controlled” means controlled in any manner that results in control in fact whether directly or through the ownership of shares or indirectly through a trust, a contract, the ownership of shares of any other body corporate or otherwise.

“CRTC” means the Canadian Radio-television and Telecommunications Commission.

“Direction” means the Direction to the CRTC (Ineligibility of Non-Canadians) issued by the Governor General in Council pursuant to the Broadcasting Act (Canada), as amended or replaced from time to time.

“Licence” means a licence, permit, franchise or other authority issued or granted by a governmental authority required to operate or carry on a business or to operate any equipment device required to carry on a business, including without limitation a broadcasting licence issued by the CRTC under the Broadcasting Act(Canada).

“Non-Voting Share” means a share of the Corporation which does not carry voting rights in all circumstances, and includes, without limitation, a Class C Non-Voting Share of the Corporation.

“person” includes an individual, firm, corporation, association, trust and any other entity.

“Restricted Class” means persons who are not Canadians, or any class or description of persons and their Associates whose significant or controlling interest in the shares of the Corporation or in a certain class of shares of the Corporation is likely to preclude the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, from being qualified to hold, obtain, maintain, renew or amend any Licence pursuant to any Broadcasting Legislation or other Licence required in order to carry on any Broadcasting Business or would cause the Corporation or any corporation in which the Corporation has an interest to be in breach of any Broadcasting Legislation or the terms of any such Licence.

“Shares” means Voting Shares and Non-Voting Shares, and any other shares of the Corporation.

“Voting Shares” means a share of the Corporation carrying voting rights in all circumstances or by reason of the occurrence of an event that has occurred and that is continuing (and includes, without limitation, a Class B Voting Share and a Class A Subordinate Voting Share), as well as a security currently convertible into such a share and currently exercisable options and rights to acquire such a share or such a convertible security.

2.   Voting Shares.

In the event that the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, obtains any Licence pursuant to any Broadcasting Legislation or other Licence required in order to carry on any Broadcasting Business, the power of the Corporation to issue any of its Voting Shares and the right of the holder of any such shares to transfer or vote the same shall be restricted as follows:

(a)   General Restrictions.The power of the Corporation to issue any Voting Shares and the right of any holder of Voting Shares to transfer or vote such shares is restricted in the manner hereinafter set out for the purposes of ensuring that the Corporation or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations remains qualified to hold, obtain, maintain, renew or amend any Licence pursuant to any Broadcasting Legislation or other Licence required in order to carry on any Broadcasting Business and ensuring that the Corporation, or any corporation in which the corporation has a direct or indirect interest though the holding of shares in that or other corporations, is not in breach of any Broadcasting Legislation or the terms of any Licence held by the Corporation, or such corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, required in order to carry on a Broadcasting Business.

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(b)   Refusal to Register Transfers.

(i)   Notwithstanding anything herein otherwise provided, the Board of Directors shall refuse to register a transfer of any Voting Shares if the transfer would, in the opinion of the Board of Directors, jeopardize the purposes stated in Section 2(a) above.

(ii)   Without limiting the generality of subsection 2(b)(i), so long as any Broadcasting Legislation shall:

(A)   prohibit the issue of any Licence to the Corporation, or to any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations; or

(B)   prohibit the retention, amendment or renewal of or result in the cancellation of any Licence held by the Corporation, or held by any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations,

required in order to carry on any Broadcasting Business (or if any terms or conditions or any Licences required in order to carry on any Broadcasting Business held by the Corporation, or held by any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, would be breached) if shares to which are attached more than a specified percentage of the voting rights attached to all Voting Shares or which represent more than a specified percentage of the total number of issued and outstanding Voting Shares are held by persons who are members of a Restricted Class, the Board of Directors shall refuse to register a transfer of such Voting Shares if:

(C)   the shares held by or on behalf of the Restricted Class exceeds the maximum of such specified percentage (or if such legislation or Licence shall contain more than one such provision, a maximum of the lowest such percentage so specified) of Voting Shares as may be held by in the aggregate by or for members of the Restricted Class at any relevant time (the “Maximum Aggregate Holdings”) and the transfer is to one or more persons in the Restricted Class; or

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(D)   the total number of Voting Shares held by or on behalf of persons in the Restricted Class does not exceed the Maximum Aggregate Holdings but the transfer would result in the number of such shares held by persons in the Restricted Class exceeding the Maximum Aggregate Holdings.

(iii)   Without limiting the generality of subsections 2(b)(i) and (ii), so long as the Direction shall prohibit the CRTC from issuing a Licence under the Broadcasting Act (Canada) to the Corporation (or to any corporation in which the corporation has a direct or indirect interest through the holding of shares in that or other corporations) or renewing or amending any such Licence held by the Corporation (or by any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations), if the number of votes attached to Voting Shares or the number of Voting Shares held by members of the Restricted Class exceeds 33.33% (or some different specified percentage thereof as may be specified, from time to time, under the Direction) of the aggregate voting rights attached to all Voting Shares or of the total number of issued and outstanding Voting Shares, no Voting Share shall be transferred to a member of the Restricted Class if, immediately following its transfer, Voting Shares to which are attached more than 33.33% (or such different specified percentage thereof as may be specified, from time to time, under the Direction) of the voting rights attached to all the issued and outstanding Voting Shares or Voting Shares which represent more than 33.33% (or such different specified percentage thereof as may be specified, from time to time, under the Direction) of the total number of issued and outstanding Voting Shares would be held in the aggregate by or for persons who are members of such Restricted Class at any time.

(iv)   Without limiting the generality of the foregoing, the Board of Directors shall refuse to register a transfer of any Voting Shares if such transfer requires the prior approval of the CRTC or any other governmental body or authority having or purporting to have jurisdiction unless and until such approval has been received.

(c)   Refusal to Allot or Issue.

(i)   The Board of Directors shall not allot or issue a Voting Share to a person in the Restricted Class in circumstances where the Board of Directors would be required under Section 2(b) to refuse to register a transfer of such a share to such person.

(ii)   For the purposes of subsection (i), the Board of Directors may count as issued shares any Voting Shares that the Corporation is offering to its shareholders or prospective shareholders at the time of any such determination.

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(d)   Refusal to Permit Vote. Whenever in the opinion of the Board of Directors of the Corporation, the purposes as stated in Section 2(a) for which the transfer, voting and issue of the Voting Shares are restricted would be jeopardized by the exercise of the voting rights attached to such shares held by or on behalf of persons in the Restricted Class, the Board of Directors may by resolution at any time and from time to time suspend all voting rights attached to the Voting Shares held by or on behalf of one or more persons in the Restricted Class, such persons to be selected in the manner described below, so that the proportion of the voting rights attached to the Voting Shares or the Voting Shares held by or on behalf of one or more persons in the Restricted Class is reduced to not more than 33.33% (or some different specified percentage thereof as may be specified, from time to time, under the Direction) of the voting rights attached to all the issued and outstanding Voting Shares or not more than 33.33% (or such different specified percentage thereof as may be specified, from time to time, under the Direction) of the total number of issued and outstanding Voting Shares that would be held in the aggregate by or for persons who are members of such Restricted Class at any time. The Board of Directors shall, in selecting the Voting Shares held by person(s) in the Restricted Class whose Voting Rights are to be suspended, do so in an order inverse to the date of registration of ownership of the Voting Shares, which shall be considered to be:

(i)   the date of registration of the Voting Shares on the security register of the Corporation or on the books or records of the Corporation’s transfer agent or registrar; or

(ii)   where the Voting Shares are held by an intermediary or a depository, the date of the registration of the transfer of the Voting Shares on its books or records.

(e)   Matters Which the Board of Directors May Consider in Exercising Their Powers in Respect of Voting Shares. In considering whether a transfer, issue or voting of a Voting Share would, in the opinion of the Board of Directors, jeopardize the purposes stated in Section 2(a) and in exercising their powers under Section 2(b), (c) and (d), the Board of Directors may have regard, among other things, to the likelihood that outstanding rights to purchase any shares of the Corporation might be exercised by persons who are members of the Restricted Class and to the likelihood that such shares registered in the name of persons who are not members of the Restricted Class are in fact beneficially owned by persons who are members of the Restricted Class.

3.   Non-Voting Shares.

In the event that the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, obtains any Licence pursuant to any Broadcasting Legislation or other Licence required in order to carry on any Broadcasting Business, the power of the Corporation to issue any of its Non-Voting Shares and the right of the holder of any such shares to transfer the same, as well as other Shares, shall be restricted as follows:

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(a)   General Restrictions.The right of any holder of Non-Voting Shares or other Shares to transfer such shares is restricted in the manner hereinafter set out for the purposes of ensuring that the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations remains qualified to hold, obtain, maintain, renew or amend any Licence pursuant to any Broadcasting Legislation or other Licence required in order to carry on any Broadcasting Business and ensuring that the Corporation, or any corporation in which the corporation has a direct or indirect interest though the holding of shares in that or other corporations, is not in breach of any Broadcasting Legislation or the terms of any Licence held by the Corporation, or such corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, required in order to carry on a Broadcasting Business.

(b)   Refusal to Register Transfers.

(i)   Notwithstanding anything herein otherwise provided, the Board of Directors may refuse to register a transfer of any Non-Voting Shares or other Shares if the transfer would, in the opinion of the Board of Directors, jeopardize the purposes stated in Section 3(a) above.

(ii)   Without limiting the generality of the foregoing, the Board of Directors may refuse to register a transfer of any Non-Voting Shares or other Shares if such transfer requires the prior approval of the CRTC or any other governmental body or authority having or purporting to have jurisdiction unless and until such approval has been received.

(c)   Refusal to Allot or Issue.

(i)   The Board of Directors may refuse to allot or issue a Non-Voting Share or other Share in circumstances where the Board of Directors may under Section 3(b) refuse to register a transfer such a share to such person.

(ii)   For the purposes of subsection (i), the Board of Directors may count as issued shares any Non-Voting Shares or other Shares that the Corporation is offering to its shareholders or prospective shareholders at the time of any such determination.

(d)   Matters Which the Board of Directors May Consider in Exercising Their Powers in Respect of Voting Shares. In considering whether a transfer or issue of a Non-Voting Share or other Share would, in the opinion of the Board of Directors, jeopardize the purposes stated in Section 3(a) and in exercising their powers under Section 3(b) and (c), the Board of Directors may have regard, among other things, to the likelihood that outstanding rights to purchase any shares of the Corporation might be exercised by persons who are members of the Restricted Class and to the likelihood that such shares registered in the name of persons who are not members of the Restricted Class are in fact beneficially owned by persons who are members of the Restricted Class.

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4.   Sale of Shares.

The Corporation may, if and as permitted by applicable law, sell as if it were the owner thereof any of the Shares of the Corporation held by or on behalf of one or more persons in the Restricted Class for the purpose of ensuring that the Corporation, or any corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, remains qualified to hold, obtain, maintain, renew or amend any Licence pursuant to any Broadcasting Legislation or other Licence required in order to carry on any Broadcasting Business and ensuring that the Corporation, or any corporation in which the corporation has a direct or indirect interest though the holding of shares in that or other corporations, is not in breach of any Broadcasting Legislation or the terms of any Licence held by the Corporation, or such corporation in which the Corporation has a direct or indirect interest through the holding of shares in that or other corporations, required in order to carry on a Broadcasting Business. The Board of Directors shall, in selecting the Shares held by person(s) in the Restricted Class that are to be sold in accordance with the foregoing, do so in an order inverse to the date of registration of ownership of such Shares, which shall be considered to be:

(i)   the date of registration of the Shares on the security register of the Corporation or on the books or records of the Corporation’s transfer agent or registrar; or

(ii)   where the Shares are held by an intermediary or a depository, the date of the registration of the transfer of the Shares on its books or records.

In the event of such a sale, the owner of the Shares so sold shall be automatically divested of such owner’s interest in such Shares and be entitled to receive only the net proceeds of the sale, together with any income earned thereon from the beginning of the month next following the date of the receipt by the Corporation of the proceeds of the sale, less any taxes thereon and any costs of administration thereof.

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5.   Rules.

(a)   The Board of Directors may from time to time make, amend or repeal any rules required to administer the restricted share provisions set out in this Section 2, Section 3 and Section 4, including, without limitation, rules:

(i)   to require any person in whose name Shares are registered to furnish a statutory declaration under the Canada Evidence Act declaring:

(A)   whether the shareholder is a beneficial owner of the Shares or holds them for a beneficial owner and if so, identifying the beneficial owner;

(B)   whether the shareholder or beneficial owner of the Shares is an Associate of any other shareholder and, if so, identifying the other shareholder or beneficial owner;

(C)   whether the shareholder or beneficial owner is a Canadian;

(D)   whether the shareholder or beneficial owner is a Canadian citizen;

(E)   whether the shareholder is subject to any arrangement requiring the shareholder to act in concert with respect to the shareholder’s interest in the Corporation with any other shareholder or beneficial owner and disclosing particulars of the arrangement;

(F)   whether or not a body corporate which is a shareholder or which is the beneficial owner of shares of the Corporation is a “qualified corporation” within the meaning of the Direction or any other applicable Broadcasting Legislation; and

(G)   any further or other facts the Board of Directors considers relevant;

(ii)   to require any person seeking to have a transfer of a Share registered in that person’s name or to have a Share issued to that person to furnish a declaration similar to the declaration a shareholder may be required to furnish under paragraph (a)(i); and

(iii)   to determine the circumstances in which declarations are required, their form, content and the times when they are to be furnished.

(b)   Where a person is required to furnish a declaration pursuant to a rule made under subsection (a), the Board of Directors may refuse to register a transfer of a Share to that person or to issue such Share to that person until that person has furnished such a declaration and such person shall not be entitled to vote at any meeting of shareholders of the Corporation held thereafter unless that person provides such declaration forty-eight (48) hours prior to the date and time of any such meeting.

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(c)   In administering these provisions, the Board of Directors, any officer, employee or agent of the Corporation may rely upon:

(i)   a statement made in a declaration furnished under subsection (a) or (b); and

(ii)   the knowledge of such director or any officer, employee or agent;

and the Corporation, its directors, officers, employees and agents are not liable for anything done or omitted by them in good faith in reliance upon such statements or knowledge.

(d)   Where the Board of Directors are required to determine the total number of Shares held by or on behalf of persons who are members of the Restricted Class, the Board of Directors may calculate the number of such shares as the total of:

(i)   the Shares held by every shareholder whose latest address as shown on the share register is outside of Canada;

(ii)   the Shares held by every shareholder whose latest address as shown in the share register is located in Canada, but who, to the knowledge of a director, officer, employee or agent of the Corporation, is not a Canadian; and

(iii)   the Shares held by every shareholder to the knowledge of a director, officer, employee or agent of the Corporation who is not a Canadian citizen or a “qualified corporation” as defined in the Direction.

(e)   The Board of Directors may rely on the share register of the Corporation to make the calculation under subsection (d) as of the date that is not earlier than four (4) months before the date on which the calculation is made.

6.   General

(a)   In the event of any conflict between the provisions of these Articles and of the provisions in the Act relating to constrained share corporations, or of the provisions of any of the Broadcasting Legislation, the provisions in the Act or the Broadcasting Legislation, as the case may be, shall prevail, and the provisions of these Articles shall be deemed to be amended accordingly and shall be retroactive in effect, as so amended.

(b)   Subject to the Act, the directors of the Corporation may make, amend or repeal any by-laws and take such other action as they may deem necessary or appropriate to administer the constrained share provisions of these Articles, and to require any affidavit, declaration or other statement required under any of the Broadcasting Legislation.

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7.   Disclosure.

The Board of Directors shall cause to be noted conspicuously the general nature or existence of these provisions in every:

(a)   certificate representing a Share issued hereafter;

(b)   management proxy circular;

(c)   prospectus, statement of material facts, registration statement or similar document; and

(d)   take-over bid circular where the consideration for the shares of the offeree is in whole or in part securities of the Corporation.

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EX-3.2

EXHIBIT 3.2

Certificate of Incorporation

Canada Business Corporations Act

6004555 Canada Inc.

Name of corporation

1

Industry Canada

Canada Business Corporations Act

1.   Name of Corporation:  6004555 Canada Inc.

2.   The province or territory in Canada where the registered office is to be situated:  ON

3.   The classes and any maximum number of shares that the corporation is authorized to issue:  The annexed Schedule 1 is incorporated in this form

4.   Restrictions, if any, on share transfers:  The annexed Schedule 2 is incorporated in this form

5.   Number (or minimum and maximum number) of directors:  Minimum 1; Maximum 10

6.   Restrictions, if any, on business the corporation may carry on:  The annexed Schedule 3 is incorporated in this form

7.   Other provisions, if any:  The annexed Schedule 4 is incorporated in this form

8.   Incorporators:

Name:Stewart Lyons 

Address(including postal code):30 Holly Street, Apt. 1802, Toronto, Ontario, M4S 3C2 

Signature:/s/ Stewart Lyons

Stewart Lyons

Authorized Signing Officer

2

SCHEDULE 1

3.The classes and any maximum number of shares that the corporation is authorized to issue:

The corporation is authorized to issue an unlimited number of common shares.

3

SCHEDULE 2

4.Restrictions, if any, on share transfers:

No share or shares of the corporation shall at any time be transferred to any person without either (a) the consent of the directors to be signified by a resolution passed by the board or by an instrument or instruments in writing signed by a majority of the directors, or (b) the consent of the shareholders of the corporation to be signified by a resolution passed by the shareholders or by an instrument or instruments in writing signed by the holders of the shares of the corporation representing a majority of the votes attributable to all of the issued and outstanding shares of the corporation.

4

SCHEDULE 3

6.Restrictions, if any, on the business the corporation may carry on:

None.

5

SCHEDULE 4

7.Other provisions:

The number of shareholders of the corporation, exclusive of persons who are in its employment and exclusive of persons who, having been formerly in the employment of the corporation, were, while in that employment, and have continued after the termination of that employment to be, shareholders of the corporation, is limited to not more than fifty, two or more persons who are the joint registered owners of one or more shares being counted as one shareholder.

Any invitations to the public to subscribe for securities of the corporation is prohibited.

Subject to the provisions of the Canada Business Corporations Act, the corporation shall have a lien on the shares registered in the name of a shareholder or such shareholder’s legal representative for a debt of that shareholder to the corporation.

The board of directors may from time to time on behalf of the corporation, without authorization of the shareholders:

(1)borrow money on the credit of the corporation;

(2)issue, reissue, sell, pledge or hypothecate bonds, debentures, notes or other evidences of indebtedness of the corporation, whether secured or unsecured;

(3)give a guarantee on behalf of the corporation to secured performance of any present or future indebtedness, liability or obligation of any person; and

(4)mortgage, hypothecate, pledge or otherwise create a security interest in all or any currently owned or subsequently acquired real or personal, moveable or immoveable, property of the corporation including book debts, rights, powers, franchises and undertakings, to secure any such bonds, debentures, notes or other evidences of indebtedness or any guarantees or any other present or future indebtedness, liability or obligation of the corporation.

The board of directors may from time to time delegate to such one or more of the directors and officers of the corporation as may be designated by the board all or any of the powers conferred on the board above to such extent and in such manner as the board shall determine at the time of such delegation.

6

Certificate of Amendment

Canada Business Corporations Act

Name of corporation:Canadian Satellite Radio Inc.

I hereby certify that the articles of the above-named corporation were amended:

a)under section 13 of the Canada Business Corporations Act in accordance with the attached notice;

b)under section 27 of the Canada Business Corporations Act as set out in the attached articles of amendment designating a series of shares;

c)under section 179 of the Canada Business Corporations Act as set out in the attached articles of amendment;

d)under section 191 of the Canada Business Corporations Act as set out in the attached articles of reorganization;

/s/ Director - Industry Canada

7

Industry Canada

Canada Business Corporations Act

Electronic Transaction Report

Articles of Amendment (Sections 27 or 177)

 Processing Type

1.   Name of Corporation:    6004555 Canada Inc.

2.   The articles of the above-named corporation are amended as follows:

To change the name of the corporation to:

Canadian Satellite Radio Inc.

8

EX-3.3

EXHIBIT 3.3

CANADIAN SATELLITE RADIO HOLDINGS INC.

BY-LAW NO. 1

     ARTICLE 1

INTERPRETATION

Section 1.1Definitions.

As used in this by-law, the following terms have the following meanings:

“Act” means the Business Corporations Act (Ontario) and the regulations under the Act, all as amended, re-enacted or replaced from time to time.

“Authorized Signatory” has the meaning specified in Section 2.2.

“Corporation” means Canadian Satellite Radio Holdings Inc.

“person” means a natural person, partnership, limited partnership, limited liability partnership, corporation, limited liability corporation, unlimited liability company, joint stock company, trust, unincorporated association, joint venture or other entity or governmental or regulatory entity, and pronouns have a similarly extended meaning.

“recorded address” means (i) in the case of a shareholder or other securityholder, the shareholder’s or securityholder’s latest address as shown in the records of the Corporation, (ii) in the case of joint shareholders or other joint securityholders, the address appearing in the records of the Corporation in respect of the joint holding or, if there is more than one address in respect of the joint holding, the first address that appears, and (iii) in the case of a director, officer or auditor, the person’s latest address as shown in the records of the Corporation or, if applicable, the last notice filed with the Director under the Act, whichever is the most recent.

“show of hands” means a show of hands by persons present at the meeting, the functional equivalent of a show of hands by telephonic or electronic means and any combination of such methods.

Terms used in this by-law that are defined in the Act have the meanings given to such terms in the Act.

Section 1.2Interpretation.

The division of this by-law into Articles, Sections and other subdivisions and the insertion of headings are for convenient reference only and do not affect its interpretation. Words importing the singular number include the plural and vice versa. Any reference in this by-law to gender includes all genders. In this by-law the words “including”, “includes” and “include” means “including (or includes or include) without limitation”.

Section 1.3Subject to Act and Articles.

This by-law is subject to, and should be read in conjunction with, the Act and the articles. If there is any conflict or inconsistency between any provision of the Act or the articles and any provision of this by-law, the provision of the Act or the articles will govern.

Section 1.4Conflict With Unanimous Shareholder Agreement.

If there is any conflict or inconsistency between any provision of a unanimous shareholder agreement and any provision of this by-law, the provision of such unanimous shareholder agreement will govern.

ARTICLE 2

BUSINESS OF THE CORPORATION

Section 2.1Financial Year.

The financial year of the Corporation ends on such date of each year as the directors determine from time to time.

Section 2.2Execution of Instruments and Voting Rights.

Contracts, documents and instruments may be signed on behalf of the Corporation, either manually or by facsimile or by electronic means, (i) by any one director or officer or (ii) by any other person authorized by the directors from time to time, (each Person referred to in (i) and (ii) is an “Authorized Signatory”). Voting rights for securities held by the Corporation may be exercised on behalf of the Corporation by any one Authorized Signatory. In addition, the directors may, from time to time, authorize any person or persons (i) to sign contracts, documents and instruments generally on behalf of the Corporation or to sign specific contracts, documents or instruments on behalf of the Corporation and (ii) to exercise voting rights for securities held by the Corporation generally or to exercise voting rights for specific securities held by the Corporation. Any Authorized Signatory, or other person authorized to sign any contract, document or instrument on behalf of the Corporation, may affix the corporate seal, if any, to any contract, document or instrument when required.

As used in this Section, the phrase “contracts, documents and instruments” means any and all kinds of contracts, documents and instruments in written or electronic form, including cheques, drafts, orders, guarantees, notes, acceptances and bills of exchange, deeds, mortgages, hypothecs, charges, conveyances, transfers, assignments, powers of attorney, agreements, proxies, releases, receipts, discharges and certificates and all other paper writings or electronic writings.

Section 2.3Banking Arrangements.

The banking and borrowing business of the Corporation or any part of it may be transacted with such banks, trust companies or other firms or corporations as the directors determine from time to time. All such banking and borrowing business or any part of it may be transacted on the Corporation’s behalf under the agreements, instructions and delegations, and by the one or more officers and other persons, that the directors authorize from time to time. This paragraph does not limit in any way the authority granted under Section 2.2.

ARTICLE 3

DIRECTORS

Section 3.1Place of Meetings.

Meetings of directors may be held at any place in or outside Canada. However, in any financial year of the Corporation a majority of the meetings of the directors must be held at a place in Canada.

Section 3.2Calling of Meetings.

The chair of the board, the president, the chief executive officer or any two or more directors may call a meeting of the directors at any time. Meetings of directors will be held at the time and place as the person(s) calling the meeting determine.

Section 3.3Regular Meetings.

The directors may establish regular meetings of directors. Any resolution establishing such meetings will specify the dates, times and places of the regular meetings and will be sent to each director.

Section 3.4Notice of Meeting.

Subject to this section, notice of the time and place of each meeting of directors will be given to each director not less than 48 hours before the time of the meeting. No notice of meeting is required for any regularly scheduled meeting except where the Act requires the notice to specify the purpose of, or the business to be transacted at, the meeting. Provided a quorum of directors is present, a meeting of directors may be held, without notice, immediately following the annual meeting of shareholders.

The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any person, or any error in any notice not affecting the substance of the notice, does not invalidate any resolution passed or any action taken at the meeting.

Section 3.5Waiver of Notice.

A director may waive notice of a meeting of directors, any irregularity in a notice of meeting of directors or any irregularity in a meeting of directors. Such waiver may be given in any manner and may be given at any time either before or after the meeting to which the waiver relates. Waiver of any notice of a meeting of directors cures any irregularity in the notice, any default in the giving of the notice and any default in the timeliness of the notice.

Section 3.6Quorum.

A majority of the number of directors in office or such greater or lesser number as the directors may determine from time to time, constitutes a quorum at any meeting of the directors. A quorum may not be less than two-fifths of the number of directors or minimum number of directors, as the case may be. Where the Corporation has fewer than three directors, all directors must be present at any meeting of directors to constitute a quorum. Notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.

Section 3.7Meeting by Telephonic, Electronic or Other Communication Facility.

A director may, if all the directors of the Corporation consent, participate in a meeting of directors by means of a telephonic, electronic or other communication facility. A director participating in a meeting by such means is deemed to be present at the meeting. Any consent is effective whether given before or after the meeting to which it relates and may be given with respect to all meetings of the directors.

Section 3.8Chair.

The chair of any meeting of directors is the first mentioned of the following officers that is a director and is present at the meeting:

(a)   the chair of the board; or

(b)   the president.

If no such person is present at the meeting, the directors present shall choose one of their number to chair the meeting.

Section 3.9Secretary.

The corporate secretary, if any, will act as secretary at meetings of directors. If a corporate secretary has not been appointed or the corporate secretary is absent, the chair of the meeting will appoint a person, who need not be a director, to act as secretary of the meeting.

Section 3.10Votes to Govern.

At all meetings of directors, every question shall be decided by a majority of the votes cast. In case of an equality of votes, the chair of the meeting is entitled to a second or casting vote.

Section 3.11Remuneration and Expenses.

The directors may determine from time to time the remuneration, if any, to be paid to a director for his or her services as a director. The directors are also entitled to be reimbursed for travelling and other out-of-pocket expenses properly incurred by them in attending directors meetings, committee meetings and shareholders meetings and in the performance of other duties of directors of the Corporation. The directors may also award additional remuneration to any director undertaking special services on the Corporation’s behalf beyond the services ordinarily required of a director by the Corporation.

A director may be employed by or provide services to the Corporation otherwise than as a director. Such a director may receive remuneration for such employment or services in addition to any remuneration paid to the director for his or her services as a director.

ARTICLE 4

COMMITTEES

Section 4.1Committees of Directors.

The directors may appoint from their number one or more committees and delegate to such committees any of the powers of the directors except those powers that, under the Act, a committee of directors has no authority to exercise.

Section 4.2Proceedings.

Meetings of committees of directors may be held at any place in or outside Canada. At all meetings of committees, every question shall be decided by a majority of the votes cast on the question. Unless otherwise determined by the directors, each committee of directors may make, amend or repeal rules and procedures to regulate its meetings including: (i) fixing its quorum, provided that quorum may not be less than a majority of its members; (ii) procedures for calling meetings; (iii) requirements for providing notice of meetings; (iv) selecting a chair for a meeting; and (v) determining whether the chair will have a deciding vote in the event there is an equality of votes cast on a question.

Subject to a committee of directors establishing rules and procedures to regulate its meetings, Sections 3.1 to 3.10 inclusive apply to committees of directors, with such changes as are necessary.

ARTICLE 5

OFFICERS

Section 5.1Appointment of Officers.

The directors may appoint such officers of the Corporation as they deem appropriate from time to time. The officers may include any of a chair of the board, a president, a chief executive officer, one or more vice-presidents, a chief financial officer, a corporate secretary and a treasurer and one or more assistants to any of the appointed officers. No person may be the chair of the board unless that person is a director.

Section 5.2Powers and Duties.

Unless the directors determine otherwise, an officer has all powers and authority that are incident to his or her office. An officer will have such other powers, authority, functions and duties that are prescribed or delegated, from time to time, by the directors, or by other officers if authorized to do so by the directors. The directors or authorized officers may, from time to time, vary, add to or limit the powers and duties of any officer.

Section 5.3Chair of the Board.

If appointed, the chair of the board will preside at directors meetings and shareholders meetings in accordance with Section 3.8 and Section 7.9, respectively. The chair of the board will have such other powers and duties as the directors determine.

Section 5.4President.

If appointed, the president of the Corporation will have general supervision of the business and affairs of the Corporation. The president will have such other powers and duties as the directors determine. Subject to Section 3.8 and Section 7.9, during the absence or disability of the corporate secretary or the treasurer, or if no corporate secretary or treasurer has been appointed, the president will also have the powers and duties of the office of corporate secretary and treasurer, as the case may be.

Section 5.5Corporate Secretary.

If appointed, the corporate secretary will have the following powers and duties: (i) the corporate secretary will give or cause to be given, as and when instructed, notices required to be given to shareholders, directors, officers, auditors and members of committees of directors; (ii) the corporate secretary may attend at and be the secretary of meetings of directors, shareholders, and committees of directors and will have the minutes of all proceedings at such meetings entered in the books and records kept for that purpose; and (iii) the corporate secretary will be the custodian of any corporate seal of the Corporation and the books, papers, records, documents, and instruments belonging to the Corporation, except when another officer or agent has been appointed for that purpose. The corporate secretary will have such other powers and duties as the directors or the president of the Corporation determine.

Section 5.6Treasurer.

If appointed, the treasurer of the Corporation will have the following powers and duties: (i) the treasurer will ensure that the Corporation prepares and maintains adequate accounting records in compliance with the Act; (ii) the treasurer will also be responsible for the deposit of money, the safekeeping of securities and the disbursement of the funds of the Corporation; and (iii) at the request of the directors, the treasurer will render an account of the Corporation’s financial transactions and of the financial position of the Corporation. The treasurer will have such other powers and duties as the directors or the president of the Corporation determine.

Section 5.7Removal of Officers.

The directors may remove an officer from office at any time, with or without cause. Such removal is without prejudice to the officer's rights under any employment contract with the Corporation.

ARTICLE 6

PROTECTION OF DIRECTORS, OFFICERS AND OTHERS

Section 6.1Limitation of Liability.

Subject to the Act and other applicable law, no director or officer is liable for: (i) the acts, omissions, receipts, failures, neglects or defaults of any other director, officer or employee; (ii) joining in any receipt or other act for conformity; (iii) any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired for or on behalf of the Corporation; (iv) the insufficiency or deficiency of any security in or upon which any of the monies of the Corporation shall be invested; (v) any loss or damage arising from the bankruptcy, insolvency or tortious acts of any person with whom any of the monies, securities or effects of the Corporation shall be deposited; or (vi) any loss occasioned by any error of judgment or oversight on his or her part, or for any other loss, damage or misfortune whatever which shall happen in the execution of the duties of his office or in relation to his or her office.

Section 6.2Indemnity.

The Corporation will indemnify to the fullest extent permitted by the Act (i) any director or officer of the Corporation, (ii) any former director or officer of the Corporation, (iii) any individual who acts or acted at the Corporation’s request as a director or officer of a body corporate of which the Corporation is or was a shareholder or creditor, and (iv) their respective heirs and legal representatives. The Corporation is authorized to execute agreements in favour of any of the foregoing persons evidencing the terms of the indemnity. Nothing in this by-law limits the right of any person entitled to indemnity to claim indemnity apart from the provisions of this by-law.

Section 6.3Insurance.

The Corporation may purchase and maintain insurance for the benefit of any person referred to in Section 6.2 against such liabilities and in such amounts as the directors may determine and as are permitted by the Act.

ARTICLE 7

SHAREHOLDERS

Section 7.1Calling Annual and Special Meetings.

The directors and each of the chair of the board, the president and the chief executive officer have the power to call annual meetings of shareholders and special meetings of shareholders. Annual meetings of shareholders and special meetings of shareholders will be held on the date and at the time and place in or outside Ontario as the person(s) calling the meeting determine.

Section 7.2Electronic Meetings.

Meetings of shareholders may be held by telephonic or electronic means. A shareholder who, through those means, votes at the meeting or establishes a communications link to the meeting is deemed for the purposes of the Act to be present at the meeting. The directors may establish procedures regarding the holding of meetings of shareholders by such means.

Section 7.3Notice of Meetings.

If the Corporation is not a distributing corporation, the time period to provide notice of the time and place of a meeting of shareholders is not less than twenty-one (21) days and not more than sixty (60) days before the meeting.

The accidental omission to give notice of any meeting of shareholders to, or the non-receipt of any notice by, any person, or any error in any notice not affecting the substance of the notice, does not invalidate any resolution passed or any action taken at the meeting.

Section 7.4Waiver of Notice.

A shareholder, a proxyholder, a director or the auditor and any other person entitled to attend a meeting of shareholders may waive notice of a meeting of shareholders, any irregularity in a notice of meeting of shareholders or any irregularity in a meeting of shareholders. Such waiver may be waived in any manner and may be given at any time either before or after the meeting to which the waiver relates. Waiver of any notice of a meeting of shareholders cures any irregularity in the notice, any default in the giving of the notice and any default in the timeliness of the notice.

Section 7.5Representatives.

A representative of a shareholder that is a body corporate or an association will be recognized if (i) a certified copy of the resolution of the directors or governing body of the body corporate or association, or a certified copy of an extract from the by-laws of the body corporate or association, authorizing the representative to represent the body corporate or association is deposited with the Corporation, or (ii) the authorization of the representative is established in another manner that is satisfactory to the corporate secretary or the chair of the meeting.

Section 7.6Persons Entitled to be Present.

The only persons entitled to be present at a meeting of shareholders are those persons entitled to vote at the meeting, the directors, the officers, the auditor of the Corporation and others who, although not entitled to vote, are entitled or required under any provision of the Act or the articles or by-laws to be present at the meeting. Any other person may be admitted with the consent of the chair of the meeting or the persons present who are entitled to vote at the meeting.

Section 7.7Quorum.

A quorum of shareholders is present at a meeting of shareholders if the holders of not less than five (5)% of the shares entitled to vote at the meeting are present in person or represented by proxy, and at least two persons entitled to vote at the meeting are actually present at the meeting.

Section 7.8Proxies.

A proxy shall comply with the applicable requirements of the Act and other applicable law and will be in such form as the directors may approve from time to time or such other form as may be acceptable to the chair of the meeting at which the instrument of proxy is to be used. A proxy will be acted on only if it is deposited with the Corporation or its agent prior to the time specified in the notice calling the meeting at which the proxy is to be used or it is deposited with the corporate secretary, a scrutineer or the chair of the meeting or any adjournment of the meeting prior to the time of voting.

Section 7.9Chair, Secretary and Scrutineers.

The chair of any meeting of shareholders is the first mentioned of the following officers that is present at the meeting:

(a)   the chair of the board;

(b)   the president; or

(c)   a vice-president (in order of corporate seniority).

If no such person is present at the meeting, the persons present who are entitled to vote shall choose a director who is present, or a shareholder who is present, to chair the meeting.

The corporate secretary, if any, will act as secretary at meetings of shareholders. If a corporate secretary has not been appointed or the corporate secretary is absent, the chair of the meeting will appoint a person, who need not be a shareholder, to act as secretary of the meeting.

If desired, the chair of the meeting may appoint one or more persons, who need not be shareholders, to act as scrutineers at any meeting of shareholders. The scrutineers will assist in determining the number of shares held by persons entitled to vote who are present at the meeting and the existence of a quorum. The scrutineers will also receive, count and tabulate ballots and assist in determining the result of a vote by ballot, and do such acts as are necessary to conduct the vote in an equitable manner. The decision of a majority of the scrutineers shall be conclusive and binding upon the meeting and a declaration or certificate of the scrutineers shall be conclusive evidence of the facts declared or stated in it.

Section 7.10Procedure.

The chair of a meeting of shareholders will conduct the meeting and determine the procedure to be followed at the meeting. The chair’s decision on all matters or things, including any questions regarding the validity or invalidity of a form of proxy or other instrument appointing a proxy, is conclusive and binding upon the meeting of shareholders.

Section 7.11Manner of Voting.

Subject to the Act and other applicable law, any question at a meeting of shareholders shall be decided by a show of hands, unless a ballot on the question is required or demanded. Subject to the Act and other applicable law, the chair of the meeting may require a ballot or any person who is present and entitled to vote may demand a ballot on any question at a meeting of shareholders. The requirement or demand for a ballot may be made either before or after any vote on the question by a show of hands. A ballot will be taken in the manner the chair of the meeting directs. A requirement or demand for a ballot may be withdrawn at any time prior to the taking of the ballot. The result of such ballot shall be the decision of the shareholders upon the question.

In the case of a vote by a show of hands, each person present who is entitled to vote has one vote. If a ballot is taken, each person present who is entitled to vote is entitled to the number of votes that are attached to the shares which such person is entitled to vote at the meeting.

Section 7.12Votes to Govern.

Any question at a meeting of shareholders shall be decided by a majority of the votes cast on the question unless the articles, the by-laws, the Act or other applicable law requires otherwise. In case of an equality of votes either when the vote is by a show of hands or when the vote is by a ballot,the chair of the meeting is entitled to a second or casting vote.

Section 7.13Adjournment.

The chair of any meeting of shareholders may, with the consent of the persons present who are entitled to vote at the meeting, adjourn the meeting from time to time and place to place, subject to such conditions as such persons may decide. Any adjourned meeting is duly constituted if held in accordance with the terms of the adjournment and a quorum is present at the adjourned meeting. Any business may be considered and transacted at any adjourned meeting which might have been considered and transacted at the original meeting of shareholders.

ARTICLE 8

SECURITIES

Section 8.1Form of Security Certificates.

Subject to the Act, security certificates, if required, will be in the form that the directors approve from time to time or that the Corporation adopts.

Section 8.2Transfer of Shares.

No transfer of a security issued by the Corporation will be registered except upon (i) presentation of the security certificate representing the security with an endorsement which complies with the Act, together with such reasonable assurance that the endorsement is genuine and effective as the directors may require, (ii) payment of all applicable taxes and fees and (iii) compliance with the articles of the Corporation. If no security certificate has been issued by the Corporation in respect of a security issued by the Corporation, clause (i) above may be satisfied by presentation of a duly executed security transfer power, together with such reasonable assurance that the security transfer power is genuine and effective as the directors may require.

Section 8.3Transfer Agents and Registrars.

The Corporation may from time to time appoint one or more agents to maintain, for each class or series of securities issued by it in registered or other form, a central securities register and one or more branch securities registers. Such an agent may be designated as transfer agent or registrar according to their functions and one person may be designated both registrar and transfer agent. The Corporation may at any time terminate such appointment.

ARTICLE 9

PAYMENTS

Section 9.1Payments of Dividends and Other Distributions.

Any dividend or other distribution payable in cash to shareholders will be paid by cheque or by electronic means orby such other method as the directors may determine. The payment will be made to or to the order of each registered holder of shares in respect of which the payment is to be made. Cheques will be sent to the registered holder’s recorded address, unless the holder otherwise directs. In the case of joint holders, the payment will be made to the order of all such joint holders and, if applicable, sent to them at their recorded address, unless such joint holders otherwise direct. The sending of the cheque or the sending of the payment by electronic meansor the sending of the payment by a method determined by the directors in an amount equal to the dividend or other distribution to be paid less any tax that the Corporation is required to withhold will satisfy and discharge the liability for the payment, unless payment is not made upon presentation, if applicable.

Section 9.2Non-Receipt of Payment.

In the event of non-receipt of any payment made as contemplated by Section 9.1 by the person to whom it is sent, the Corporation may issue re-payment to such person for a like amount. The directors may determine, whether generally or in any particular case, the terms on which any re-payment may be made, including terms as to indemnity, reimbursement of expenses, and evidence of non-receipt and of title.

Section 9.3Unclaimed Dividends.

To the extent permitted by law, any dividend or other distribution that remains unclaimed after a period of 2years from the date on which the dividend has been declared to be payable is forfeited and will revert to the Corporation.

ARTICLE 10

MISCELLANEOUS

Section 10.1Notices.

Any notice, communication or document required to be given, delivered or sent by the Corporation to any director, officer, shareholder or auditor is sufficiently given, delivered or sent if delivered personally, or if delivered to the person’s recorded address, or if mailed to the person at the person’s recorded address by prepaid mail, or if otherwise communicated by electronic means permitted by the Act. The directors may establish procedures to give, deliver or send a notice, communication or document to any director, officer, shareholder or auditor by any means of communication permitted by the Act or other applicable law. In addition, any notice, communication or document may be delivered by the Corporation in the form of an electronic document.

Section 10.2Notice to Joint Holders.

If two or more persons are registered as joint holders of any security, any notice may be addressed to all such joint holders but notice addressed to one of them constitutes sufficient notice to all of them.

Section 10.3Computation of Time.

In computing the date when notice must be given when a specified number of days' notice of any meeting or other event is required, the date of giving the notice is excluded and the date of the meeting or other event is included.

Section 10.4Persons Entitled by Death or Operation of Law.

Every person who, by operation of law, transfer, death of a securityholder or any other means whatsoever, becomes entitled to any security, is bound by every notice in respect of such security which has been given to the securityholder from whom the person derives title to such security. Such notices may have been given before or after the happening of the event upon which they became entitled to the security.

ARTICLE 11

EFFECTIVE DATE

Section 11.1Effective Date.

This by-law comes into force when made by the directors in accordance with the Act.

This by-law was made by resolution of the directors on December 8, 2005.

/s/ Michael Washinushi

Michael Washinushi, Secretary

This by-law was confirmed by ordinary resolution of the shareholders on December 8, 2005.

/s/ Michael Washinushi

Michael Washinushi, Secretary

EX-3.4

EXHIBIT 3.4

CANADIAN SATELLITE RADIO INC.

BY-LAW NO. 3

ARTICLE 1

INTERPRETATION

Section 1.1Definitions.

As used in this by-law, the following terms have the following meanings:

“Act” means the Canada Business Corporations Act and the regulations under the Act, all as amended, re-enacted or replaced from time to time.

“Authorized Signatory” has the meaning specified in Section 2.2.

“Corporation” means Canadian Satellite Radio Inc.

“person” means a natural person, partnership, limited partnership, limited liability partnership, corporation, limited liability corporation, unlimited liability company, joint stock company, trust, unincorporated association, joint venture or other entity or governmental or regulatory entity, and pronouns have a similarly extended meaning.

“recorded address” means (i) in the case of a shareholder or other securityholder, the shareholder’s or securityholder’s latest address as shown in the records of the Corporation, (ii) in the case of joint shareholders or other joint securityholders, the address appearing in the records of the Corporation in respect of the joint holding or, if there is more than one address in respect of the joint holding, the first address that appears, and (iii) in the case of a director, officer or auditor, the person’s latest address as shown in the records of the Corporation or, if applicable, the last notice filed with the Director under the Act, whichever is the most recent.

“show of hands” means a show of hands by persons present at the meeting, the functional equivalent of a show of hands by telephonic, electronic or other means of communication and any combination of such methods.

Terms used in this by-law that are defined in the Act have the meanings given to such terms in the Act.

Section 1.2Interpretation.

The division of this by-law into Articles, Sections and other subdivisions and the insertion of headings are for convenient reference only and do not affect its interpretation. Words importing the singular number include the plural and vice versa. Any reference in this by-law to gender includes all genders. In this by-law the words “including”, “includes” and “include” means “including (or includes or include) without limitation”.

Section 1.3Subject to Act and Articles.

This by-law is subject to, and should be read in conjunction with, the Act and the articles. If there is any conflict or inconsistency between any provision of the Act or the articles and any provision of this by-law, the provision of the Act or the articles will govern.

ARTICLE 2

BUSINESS OF THE CORPORATION

Section 2.1Financial Year.

The financial year of the Corporation ends on August 31^st of each year or such other date as the directors determine from time to time.

Section 2.2Execution of Instruments and Voting Rights.

Contracts, documents and instruments may be signed on behalf of the Corporation, either manually or by facsimile or by electronic means, (i) by any one director or officer or (ii) by any other person authorized by the directors from time to time, (each Person referred to in (i) and (ii) is an “Authorized Signatory”). Voting rights for securities held by the Corporation may be exercised on behalf of the Corporation by any one Authorized Signatory. In addition, the directorsmay, from time to time, authorize any person or persons (i) to sign contracts, documents and instruments generally on behalf of the Corporation or to sign specific contracts, documents or instruments on behalf of the Corporation and (ii) to exercise voting rights for securities held by the Corporation generally or to exercise voting rights for specific securities held by the Corporation. Any Authorized Signatory, or other person authorized to sign any contract, document or instrument on behalf of the Corporation, may affix the corporate seal, if any, to any contract, document or instrument when required.

As used in this Section, the phrase “contracts, documents and instruments” means any and all kinds of contracts, documents and instruments in written or electronic form, including cheques, drafts, orders, guarantees, notes, acceptances and bills of exchange, deeds, mortgages, hypothecs, charges, conveyances, transfers, assignments, powers of attorney, agreements, share certificates, proxies, releases, receipts, discharges and certificates and all other paper writings or electronic writings.

Section 2.3Banking Arrangements.

The banking and borrowing business of the Corporation or any part of it may be transacted with such banks, trust companies or other firms or corporations as the directors determine from time to time. All such banking and borrowing business or any part of it may be transacted on the Corporation’s behalf under the agreements, instructions and delegations, and by the one or more officers and other persons, that the directors authorize from time to time. This paragraph does not limit in any way the authority granted under Section 2.2.

ARTICLE 3

DIRECTORS

Section 3.1Number of Directors.

If the articles specify a minimum and a maximum number of directors, the number of directors is the number within the minimum and maximum determined by the directors from time to time. No decrease in the number of directors will shorten the term of an incumbent director.

Section 3.2Qualification.

Unless otherwise provided by the Act, at least twenty-five percent of the directors shall be resident Canadians. However, if at any time there are less than four directors, at least one director must be a resident Canadian. No person shall be qualified for election as a director if such person: (a) is less than 18 years of age; (b) is of unsound mind and has been so found by a court in Canada or elsewhere; (c) is not an individual; or (d) has the status of a bankrupt. A director need not be a shareholder.

Section 3.3Place of Meetings.

Meetings of directors may be held at any place in or outside Canada.

Section 3.4Calling of Meetings.

The chair of the board, the president, the chief executive officer or any twoor more directors may call a meeting of the directors at any time. Meetings of directors will be held at the time and place as the person(s) calling the meeting determine.

Section 3.5Regular Meetings.

The directors may establish regular meetings of directors. Any resolution establishing such meetings will specify the dates, times and places of the regular meetings and will be sent to each director.

Section 3.6Notice of Meeting.

Subject to this section, notice of the time and place of each meeting of directors will be given to each director not less than 24hours before the time of the meeting. No notice of meeting is required for any regularly scheduled meeting except where the Act requires the notice to specify the purpose of, or the business to be transacted at, the meeting. Provided a quorum of directors is present, a meeting of directors may be held, without notice, immediately following the annual meeting of shareholders.

The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any person, or any error in any notice not affecting the substance of the notice, does not invalidate any resolution passed or any action taken at the meeting.

Section 3.7Waiver of Notice.

A director may waive notice of a meeting of directors, any irregularity in a notice of meeting of directors or any irregularity in a meeting of directors. Such waiver may be given in any manner and may be given at any time either before or after the meeting to which the waiver relates. Waiver of any notice of a meeting of directors cures any irregularity in the notice, any default in the giving of the notice and any default in the timeliness of the notice. Presence by a director at a meeting, except to protest any irregularity in a notice of meeting of directors or any irregularity in a meeting of directors, will constitute a waiver.

Section 3.8Quorum.

A majorityof the number of directors in office or such greater or lesser number as the directors may determine from time to time, constitutes a quorum at any meeting of directors. Notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.

Section 3.9Meeting by Telephonic, Electronic or Other Communication Facility.

A director may, if all the directors of the Corporation consent, participate in a meeting of directors by means of a telephonic, electronic or other communication facility. A director participating in a meeting by such means is deemed to be present at the meeting. Any consent is effective whether given before or after the meeting to which it relates and may be given with respect to all meetings of the directors.

Section 3.10Chair.

The chair of any meeting of directors is the first mentioned of the following officers that is a director and is present at the meeting:

(a)   the chair of the board; or

(b)   the president.

If no such person is present at the meeting, the directors present shall choose one of their number to chair the meeting.

Section 3.11Secretary.

The corporate secretary, if any, will act as secretary at meetings of directors. If a corporate secretary has not been appointed or the corporate secretary is absent, the chair of the meeting will appoint a person, who need not be a director, to act as secretary of the meeting.

Section 3.12Votes to Govern.

At all meetings of directors, every question shall be decided by a majority of the votes cast. In case of an equality of votes, the chair of the meeting is entitled to a second or casting vote.

Section 3.13Remuneration and Expenses.

The directors may determine from time to time the remuneration, if any, to be paid to a director for his or her services as a director. The directors are also entitled to be reimbursed for travelling and other out-of-pocket expenses properly incurred by them in attending directors meetings, committee meetings and shareholders meetings and in the performance of other duties of directors of the Corporation. The directors may also award additional remuneration to any director undertaking special services on the Corporation’s behalf beyond the services ordinarily required of a director by the Corporation.

A director may be employed by or provide services to the Corporation otherwise than as a director. Such a director may receive remuneration for such employment or services in addition to any remuneration paid to the director for his or her services as a director.

ARTICLE 4

COMMITTEES

Section 4.1Committees of Directors.

The directors may appoint from their number one or more committees and delegate to such committees any of the powers of the directors except those powers that, under the Act, a committee of directors has no authority to exercise.

Section 4.2Proceedings.

Meetings of committees of directors may be held at any place in or outside Canada. At all meetings of committees, every question shall be decided by a majority of the votes cast on the question. Unless otherwise determined by the directors, each committee of directors may make, amend or repeal rules and procedures to regulate its meetings including: (i) fixing its quorum, provided that quorum may not be less than a majority of its members; (ii) procedures for calling meetings; (iii) requirements for providing notice of meetings; (iv) selecting a chair for a meeting; and (v) determining whether the chair will have a deciding vote in the event there is an equality of votes cast on a question.

Subject to a committee of directors establishing rules and procedures to regulate its meetings, Sections 3.3 to 3.12 inclusive apply to committees of directors, with such changes as are necessary.

ARTICLE 5

OFFICERS

Section 5.1Appointment of Officers.

The directors may appoint such officers of the Corporation as they deem appropriate from time to time. The officers may include any of a chair of the board, a president, a chief executive officer, one or more vice-presidents, a chief financial officer, a corporate secretary and a treasurer and one or more assistants to any of the appointed officers.No person may be the chair of the board unless that person is a director.

Section 5.2Powers and Duties.

Unless the directors determine otherwise, an officer has all powers and authority that are incident to his or her office. An officer will have such other powers, authority, functions and duties that are prescribed or delegated, from time to time, by the directors, or by other officers if authorized to do so by the directors. The directors or authorized officers may, from time to time, vary, add to or limit the powers and duties of any officer.

Section 5.3Chair of the Board.

If appointed, the chair of the board will preside at directors meetings and shareholders meetings in accordance with Section 3.10 and Section 7.9, respectively. The chair of the board will have such other powers and duties as the directors determine.

Section 5.4President.

If appointed, the president of the Corporation will have general supervision of the business and affairs of the Corporation. The president will have such other powers and duties as the directors determine. Subject to Section 3.10 and Section 7.9, during the absence or disability of the corporate secretary or the treasurer, or if no corporate secretary or treasurer has been appointed, the president will also have the powers and duties of the office of corporate secretary and treasurer, as the case may be.

Section 5.5Corporate Secretary.

If appointed, the corporate secretary will have the following powers and duties: (i) the corporate secretary will give or cause to be given, as and when instructed, notices required to be given to shareholders, directors, officers, auditors and members of committees of directors; (ii) the corporate secretary may attend at and be the secretary of meetings of directors, shareholders, and committees of directors and will have the minutes of all proceedings at such meetings entered in the books and records kept for that purpose; and (iii) the corporate secretary will be the custodian of any corporate seal of the Corporation and the books, papers, records, documents, and instruments belonging to the Corporation, except when another officer or agent has been appointed for that purpose. The corporate secretary will have such other powers and duties as the directors or the president of the Corporation determine.

Section 5.6Treasurer.

If appointed, the treasurer of the Corporation will have the following powers and duties: (i) the treasurer will ensure that the Corporation prepares and maintains adequate accounting records in compliance with the Act; (ii) the treasurer will also be responsible for the deposit of money, the safekeeping of securities and the disbursement of the funds of the Corporation; and (iii) at the request of the directors, the treasurer will render an account of the Corporation’s financial transactions and of the financial position of the Corporation. The treasurer will have such other powers and duties as the directors or the president of the Corporation determine.

Section 5.7Removal of Officers.

The directors may remove an officer from office at any time, with or without cause. Such removal is without prejudice to the officer's rights under any employment contract with the Corporation.

ARTICLE 6

PROTECTION OF DIRECTORS, OFFICERS AND OTHERS

Section 6.1Limitation of Liability.

Subject to the Act and other applicable law, no director or officer is liable for: (i) the acts, omissions, receipts, failures, neglects or defaults of any other director, officer or employee; (ii) joining in any receipt or other act for conformity; (iii) any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired for or on behalf of the Corporation; (iv) the insufficiency or deficiency of any security in or upon which any of the monies of the Corporation shall be invested; (v) any loss or damage arising from the bankruptcy, insolvency or tortious acts of any person with whom any of the monies, securities or effects of the Corporation shall be deposited; or (vi) any loss occasioned by any error of judgment or oversight on his or her part, or for any other loss, damage or misfortune whatever which shall happen in the execution of the duties of his office or in relation to his or her office.

Section 6.2Indemnity.

The Corporation will indemnify to the fullest extent permitted by the Act (i) any director or officer of the Corporation, (ii) any former director or officer of the Corporation, (iii) any individual who acts or acted at the Corporation’s request as a director or officer, or in a similar capacity, of another entity, and (iv) their respective heirs and legal representatives. The Corporation is authorized to execute agreements in favour of any of the foregoing persons evidencing the terms of the indemnity. Nothing in this by-law limits the right of any person entitled to indemnity to claim indemnity apart from the provisions of this by-law.

Section 6.3Insurance.

The Corporation may purchase and maintain insurance for the benefit of any person referred to in Section 6.2 against such liabilities and in such amounts as the directors may determine and as are permitted by the Act.

ARTICLE 7

SHAREHOLDERS

Section 7.1Calling Annual and Special Meetings.

Thedirectors and each of the chair of the board, the president and the chief executive officer have the power to call annual meetings of shareholders and special meetings of shareholders. Annual meetings of shareholders and special meetings of shareholders will be held on the date and at the time and place in Canada as the person(s) calling the meeting determine.

Section 7.2Electronic Meetings.

Meetings of shareholders may be held entirely by means of telephonic, electronic or other communications facility that permits all participants to communicate adequately with each other during the meeting. The directors may establish procedures regarding the holding of meetings of shareholders by such means.

Section 7.3Notice of Meetings.

If the Corporation is not a distributing corporation, the time period to provide notice of the time and place of a meeting of shareholders is not less than twenty-one (21) and not more than sixty (60) days before the meeting.

The accidental omission to give notice of any meeting of shareholders to, or the non-receipt of any notice by, any person, or any error in any notice not affecting the substance of the notice, does not invalidate any resolution passed or any action taken at the meeting.

Section 7.4Waiver of Notice.

A shareholder, a proxyholder, a director or the auditor and any other person entitled to attend a meeting of shareholders may waive notice of a meeting of shareholders, any irregularity in a notice of meeting of shareholders or any irregularity in a meeting of shareholders. Such waiver may be waived in any manner and may be given at any time either before or after the meeting to which the waiver relates. Waiver of any notice of a meeting of shareholders cures any irregularity in the notice, any default in the giving of the notice and any default in the timeliness of the notice. Presence by a person at a meeting, except to protest any irregularity in a notice of meeting of shareholders or any irregularity in a meeting of shareholders, will constitute a waiver.

Section 7.5Representatives.

A representative of a shareholder that is a body corporate or an association will be recognized if (i) a certified copy of the resolution of the directors or governing body of the body corporate or association, or a certified copy of an extract from the by-laws of the body corporate or association, authorizing the representative to represent the body corporate or association is deposited with the Corporation, or (ii) the authorization of the representative is established in another manner that is satisfactory to the corporate secretary or the chair of the meeting.

Section 7.6Persons Entitled to be Present.

The only persons entitled to be present at a meeting of shareholders are those persons entitled to vote at the meeting, the directors, the officers, the auditor of the Corporation and others who, although not entitled to vote, are entitled or required under any provision of the Act or the articles or by-laws to be present at the meeting. Any other person may be admitted with the consent of the chair of the meeting or the persons present who are entitled to vote at the meeting.

Section 7.7Quorum.

A quorum of shareholders is present at a meeting of shareholders if the holders of not less than 51% of the shares entitled to vote at the meeting are present in person or represented by proxy, and at least one person entitled to vote at the meeting is actually present at the meeting.

Section 7.8Proxies.

A proxy shall comply with the applicable requirements of the Act and other applicable law and will be in such form as the directors may approve from time to time or such other form as may be acceptable to the chair of the meeting at which the instrument of proxy is to be used. A proxy will be acted on only if it is deposited with the Corporation or its agent prior to the time specified in the notice calling the meeting at which the proxy is to be used or it is deposited with the corporate secretary, a scrutineer or the chair of the meeting or any adjournment of the meeting prior to the time of voting.

Section 7.9Chair, Secretary and Scrutineers.

The chair of any meeting of shareholders is the first mentioned of the following officers that is present at the meeting:

(a)   the chair of the board;

(b)   the president; or

(c)   a vice-president (in order of corporate seniority).

If no such person is present at the meeting, the persons present who are entitled to vote shall choose a director who is present, or a shareholder who is present, to chair the meeting.

The corporate secretary, if any, will act as secretary at meetings of shareholders. If a corporate secretary has not been appointed or the corporate secretary is absent, the chair of the meeting will appoint a person, who need not be a shareholder, to act as secretary of the meeting.

If desired, the chair of the meeting may appoint one or more persons, who need not be shareholders, to act as scrutineers at any meeting of shareholders.

Section 7.10Procedure.

The chair of a meeting of shareholders will conduct the meeting and determine the procedure to be followed at the meeting. The chair’s decision on all matters or things, including any questions regarding the validity or invalidity of a form of proxy or other instrument appointing a proxy, shall be conclusive and binding upon the meeting of shareholders.

Section 7.11Manner of Voting.

Subject to the Act and other applicable law, any question at a meeting of shareholders shall be decided by a show of hands, unless a ballot on the question is required or demanded. Subject to the Act and other applicable law, the chair of the meeting may require a ballot or any person who is present and entitled to vote may demand a ballot on any question at a meeting of shareholders. The requirement or demand for a ballot may be made either before or after any vote on the question by a show of hands. A ballot will be taken in the manner the chair of the meeting directs. A requirement or demand for a ballot may be withdrawn at any time prior to the taking of the ballot. The result of such ballot shall be the decision of the shareholders upon the question.

In the case of a vote by a show of hands, each person present who is entitled to vote has one vote. If a ballot is taken, each person present who is entitled to vote is entitled to the number of votes that are attached to the shares which such person is entitled to vote at the meeting.

Section 7.12Votes to Govern.

Any question at a meeting of shareholders shall be decided by a majority of the votes cast on the question unless the articles, the by-laws, the Act or other applicable law requires otherwise. In case of an equality of votes either when the vote is by a show of hands or when the vote is by a ballot,the chair of the meeting is entitled to a second or casting vote.

Section 7.13Adjournment.

The chair of any meeting of shareholders may, with the consent of the persons present who are entitled to vote at the meeting, adjourn the meeting from time to time and place to place, subject to such conditions as such persons may decide. Any adjourned meeting is duly constituted if held in accordance with the terms of the adjournment and a quorum is present at the adjourned meeting. Any business may be considered and transacted at any adjourned meeting which might have been considered and transacted at the original meeting of shareholders.

ARTICLE 8

SECURITIES

Section 8.1Form of Security Certificates.

Subject to the Act, security certificates, if required, will be in the form that the directors approve from time to time or that the Corporation adopts.

Section 8.2Transfer of Shares.

No transfer of a security issued by the Corporation will be registered except upon (i) presentation of the security certificate representing the security with an endorsement which complies with the Act, together with such reasonable assurance that the endorsement is genuine and effective as the directors may require, (ii) payment of all applicable taxes and fees and (iii) compliance with the articles of the Corporation. If no security certificate has been issued by the Corporation in respect of a security issued by the Corporation, clause (i) above may be satisfied by presentation of a duly executed security transfer power, together with such reasonable assurance that the security transfer power is genuine and effective as the directors may require.

Section 8.3Transfer Agents and Registrars.

The Corporation may from time to time appoint one or more agents to maintain, for each class or series of securities issued by it in registered or other form, a central securities register and one or more branch securities registers. Such an agent may be designated as transfer agent or registrar according to their functions and one person may be designated both registrar and transfer agent. The Corporation may at any time terminate such appointment.

ARTICLE 9

PAYMENTS

Section 9.1Payments of Dividends and Other Distributions.

Any dividend or other distribution payable in cash to shareholders will be paid by cheque or by electronic means orby such other method as the directors may determine. The payment will be made to or to the order of each registered holder of shares in respect of which the payment is to be made. Cheques will be sent to the registered holder’s recorded address, unless the holder otherwise directs. In the case of joint holders, the payment will be made to the order of all such joint holders and, if applicable, sent to them at their recorded address, unless such joint holders otherwise direct. The sending of the cheque or the sending of the payment by electronic means or the sending of the payment by a method determined by the directors in an amount equal to the dividend or other distribution to be paid less any tax that the Corporation is required to withhold will satisfy and discharge the liability for the payment, unless payment is not made upon presentation, if applicable.

Section 9.2Non-Receipt of Payment.

In the event of non-receipt of any payment made as contemplated by Section 9.1 by the person to whom it is sent, the Corporation may issue re-payment to such person for a like amount. The directors may determine, whether generally or in any particular case, the terms on which any re-payment may be made, including terms as to indemnity, reimbursement of expenses, and evidence of non-receipt and of title.

Section 9.3Unclaimed Dividends.

To the extent permitted by law, any dividend or other distribution that remains unclaimed after a period of 2years from the date on which the dividend has been declared to be payable is forfeited and will revert to the Corporation.

ARTICLE 10

MISCELLANEOUS

Section 10.1Notices.

Any notice, communication or document required to be given, delivered or sent by the Corporation to any director, officer, shareholder or auditor is sufficiently given, delivered or sent if delivered personally, or if delivered to the person’s recorded address, or if mailed to the person at the person’s recorded address by prepaid mail, or if otherwise communicated by electronic means permitted by the Act. The directors may establish procedures to give, deliver or send a notice, communication or document to any director, officer, shareholder or auditor by any means of communication permitted by the Act or other applicable law. In addition, any notice, communication or document may be delivered by the Corporation in the form of an electronic document.

Section 10.2Notice to Joint Holders.

If two or more persons are registered as joint holders of any security, any notice may be addressed to all such joint holders but notice addressed to one of them constitutes sufficient notice to all of them.

Section 10.3Computation of Time.

In computing the date when notice must be given when a specified number of days' notice of any meeting or other event is required, the date of giving the notice is excluded and the date of the meeting or other event is included.

Section 10.4Persons Entitled by Death or Operation of Law.

Every person who, by operation of law, transfer, death of a securityholder or any other means whatsoever, becomes entitled to any security, is bound by every notice in respect of such security which has been given to the securityholder from whom the person derives title to such security. Such notices may have been given before or after the happening of the event upon which they became entitled to the security.

ARTICLE 11

EFFECTIVE DATE

Section 11.1Effective Date.

This by-law comes into force when made by the directors in accordance with the Act.

Section 11.2Repeal.

By-law No. 1 of the Corporation is repealed as of the coming into force of this by-law. Such repeal does not affect the previous operation of any by-law so repealed or affect the validity of any act done or right, privilege, obligation or liability acquired or incurred under any such by-law prior to its repeal.

This by-law was made by resolution of the directors on December 8, 2005.

/s/ Michael Washinushi

Michael Washinushi, Secretary

This by-law was confirmed by ordinary resolution of the shareholder on December 8, 2005.

/s/ Michael Washinushi

Michael Washinushi, Secretary

BY-LAW NO. 2

A By-Law Relating Generally To The Programming Decisions and Affairs Of

CANADIAN SATELLITE RADIO INC.

BE IT ENACTED and it is hereby enacted as a by-law of Canadian Satellite Radio Inc. (hereinafter called the “Corporation”) as follows:

1.   Programming Committee

(a)   There shall be a committee of the Corporation to be known as the Programming Committee which shall be responsible for making all Programming Decisions by the Corporation.

(b)   “Programming Decision” means all decisions of any kind relating to or affecting radio or television programming distributed or to be distributed by the Corporation, and includes all decisions relating to community programming as well as to the selection of signals to be distributed and to the terms of their distribution, and also including all decisions respecting the funding of programming or the making of programming contributions by the Corporation.

(c)   The directors of the Corporation, by the enactment of this by-law, do hereby delegate to the Programming Committee the sole and exclusive responsibility and authority to make all Programming Decisions on behalf of the Corporation, and to supervise the implementation thereof.

(d)   The Programming Committee shall consist of up to a total of six members. Up to five members may be officers or employees of the Corporation and other persons who may be selected from time to time by the members of the Programming Committee. One member of the Programming Committee shall be an independent member who shall not be a shareholder, a director, an officer, or current or former employee of the Corporation, its affiliates or its shareholders.

(e)   No member of the Programming Committee shall be a director of the Corporation.

(f)   No member of the Programming Committee shall be a director, an officer, or a current or former employee of Canadian Satellite Radio Holdings Inc.

(g)   No member of the Programming Committee shall be a director, an officer, or a current or former employee of any non-Canadian shareholder of the Corporation.

(h)   All of the members of the Programming Committee shall be Canadian citizens and ordinarily resident in Canada.

(i)   A quorum of the Programming Committee shall be a majority of its members.

(j)   Decisions of the Programming Committee shall be made by a majority of the members present at a meeting of the Programming Committee, either in person or by telephone.

(k)   Any decision respecting removal of members of the Programming Committee shall be made by a majority vote of the Programming Committee.

(l)   The Programming Committee shall ensure that the programming will be in conformity with any applicable conditions, regulations and policies of the CRTC, as well as the Broadcasting Act.

(m)   The termination of the Programming Committee, or any changes to the by-law governing the Programming Committee, shall be subject to the CRTC’s prior approval.

ENACTED effective the 8th day of December, 2006.

/s/ Michael Washinushi

Michael Washinushi, Secretary

EX-5.1

EXHIBIT 5.1

STIKEMAN ELLIOTT 

Stikeman Elliott LLP  Barrister & Solicitors

5300 Commerce Court West  199 Bay Street, Toronto, Canada  M5L 1B9

Tel: (416) 869-5500 Fax: (416)947-0866 www.stikeman.com

Canadian Satellite Radio Holdings Inc.

Canadian Satellite Radio Inc.

June 28, 2006

c/o Canadian Satellite Radio Holdings Inc.

Suite 2300, Canada Trust Tower

BCE Place, 161 Bay Street

Toronto, Ontario, Canada

M5J 2S1

Dear Ladies and Gentlemen:

Re: REGISTRATION STATEMENT ON FORM F-4

We have been requested to render our opinion as to the legality of the securities being registered under the Registration Statement on Form F-4 (the “Registration Statement”) filed by Canadian Satellite Radio Holdings Inc., an Ontario corporation (the “Company”), and Canadian Satellite Radio Inc., a wholly-owned subsidiary of the Company and a corporation incorporated under the federal laws of Canada (the “Subsidiary Guarantor”, and together with the Company, the “Co-Registrants”) with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Act”), and the rules and regulations under the Act. The Registration Statement relates to the registration under the Act of the Company’s US$100,000,000 aggregate principal amount of 12.75% Senior Notes due 2014 (the “Exchange Notes”) and the guarantee of the Exchange Notes by the Subsidiary Guarantor (the “Subsidiary Guarantee”). The Exchange Notes are to be offered in exchange for the Company’s outstanding 12.75% Senior Notes due 2014 (the “Initial Notes”) issued and sold by the Company on February 10, 2006 in an offering exempt from registration under the Act. The Exchange Notes will be issued by the Company in accordance with the terms of the indenture dated as of February 10, 2006 (the “Indenture”), among the Company, the Subsidiary Guarantor and The Bank of Nova Scotia Trust Company of New York, as trustee (the “Trustee”). The Indenture is governed under the laws of the State of New York.

In connection with the furnishing of this opinion, we have examined originals, conformed copies or photocopies, certified or otherwise identified to our satisfaction, of the following documents:

(i)   the Registration Statement (including its exhibits);

(ii)   the Indenture;

(iii)   the form of the Exchange Notes;

(iv)   the Initial Notes executed by the Company and the Trustee; and

(v)   the registration rights agreement, dated as of February 10, 2006 (the “Registration Rights Agreement”), among the Company, the Subsidiary Guarantor, Bear, Stearns & Co. Inc. and RBC Capital Markets Corporation.

In addition, we have examined: (i) those corporate records of the Company and the Subsidiary Guarantor as we have considered appropriate, and (ii) those other certificates, agreements and other documents as we deemed relevant and necessary as a basis for the opinions expressed below. We have also relied upon oral and written statements of officers and representatives of the Co-Registrants and the factual matters contained in the representations and warranties of the Co-Registrants made in such documents.

In rendering the opinions set forth below, we have assumed that (i) each party, other than the Co-Registrants, to each of the Indenture, the Initial Notes and the Registration Rights Agreement (collectively, the “Documents”) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has full power and authority to enter into and to carry out its obligations under such Documents, (ii) the execution and delivery of each of the Documents by each party thereto, other than the Co-Registrants, and the performance of its obligations under such Documents have been duly authorized by all necessary proceedings and actions, and that each such party has duly executed and delivered such Documents, (iii) the execution, delivery and performance of such Documents by each party, other than the Co-Registrants, does not and will not contravene or conflict with any applicable law, (iv) each of the Documents is a legal, valid and binding obligation of each party thereto, other than the Co-Registrants, enforceable against such party in accordance with the terms of such Documents, (v) that the Exchange Notes will be issued as described in the Registration Statement, (vi) that the Exchange Notes and the Subsidiary Guarantee will be in substantially the forms attached to the Indenture and that any information omitted from any such forms will be properly added, (vii) the genuineness of all signatures, (viii) the authenticity of all documents submitted to us as originals, (ix) the conformity to the authentic original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies of valid existing agreements or other documents, (x) the legal capacity of all individuals who have executed any of such documents, (xi) that the statements regarding matters of fact in the certificates, records agreements, instruments and documents that we have examined are accurate and complete and (xii) that the Exchange Notes and the Subsidiary Guarantee have been duly authorized, executed and delivered (and, in the case of the Exchange Notes, issued) in the manner provided for in the Indenture and exchanged for the Initial Notes in accordance with the terms of the Registration Rights Agreement and as provided in the Registration Statement.

Based upon the above, and subject to the stated assumptions, exceptions and qualifications set forth in this letter, we are of the opinion that:

1.   The issuance, execution and delivery of the Exchange Notes have been duly authorized by the Company and the Exchange Notes will be, when issued, duly issued, executed and delivered by the Company.

2.   The Exchange Notes will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, except that enforceability may be subject to bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer moratorium or similar laws affecting creditors’ rights generally and subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

3.   The issuance, execution and delivery of the Subsidiary Guarantee has been duly authorized by the Subsidiary Guarantor and, upon issuance of the Exchange Notes, will be duly issued, executed and delivered by each Guarantor.

4.   The Subsidiary Guarantee will constitute valid and legally binding obligations of the Subsidiary Guarantor, enforceable against the Subsidiary Guarantor in accordance with its terms, except that enforceability may be subject to bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer moratorium or similar laws affecting creditors’ rights generally and subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

Our opinions expressed above are limited to the laws of the State of New York, the federal laws of the United States of America, the laws of the Province of Ontario and the federal laws of Canada. Our opinion is rendered only with respect to the laws, and the rules, regulations and orders under them that are currently in effect.

We hereby consent to the use of this opinion as an exhibit to the Registration Statement and to the reference to our name in the Registration Statement under the headings “Risk Factors - Risks Related to the Notes - Your ability to enforce civil liabilities in Canada under U.S. securities laws may be limited,” “Description of Exchange Notes - Enforceability of Judgments” and “Legal Matters.” In giving this consent, we do not admit that we come within the category of persons whose consent is required by the Act or by the rules and regulations promulgated under it.

Yours truly,
	/s/ Stikeman Elliott LLP
	Stikeman Elliott LLP

EX-10.1

EXHIBIT 10.1

EXECUTION VERSION

CREDIT AGREEMENT

among

CANADIAN SATELLITE RADIO INC.,

as Borrower

CANADIAN SATELLITE RADIO HOLDINGS INC.,

as Guarantor

and

XM SATELLITE RADIO HOLDINGS INC.

as Lender

Dated as of the 17th day of November 2005

Table of Contents

1.	DEFINITIONS		1
	1.1	Certain Definitions	1
	1.2.	Other Definitional Provisions	10
2.	LOAN AND TERMS OF PAYMENT		10
	2.1	Loan Commitment	10
	2.2.	Manner of Borrowing	10
	2.3.	Interest	11
	2.4.	Payments and Notes	11
	2.5.	Payment at Maturity or Upon Conversion	12
	2.6.	Prepayment	12
3.	CONVERSION PROVISIONS		12
	3.1	Optional Conversion Right	12
	3.2	Mandatory Conversion	13
	3.3	Issuance of Certificates	13
	3.4	No Fractional Shares	13
	3.5	Reclassification of CSR Common Stock	14
	3.6	Reservation of CSR Common Stock	14
	3.7	Taxes	14
	3.8	No Rights or Liabilities as Stockholders	15
	3.9.	Determination of Initial Conversion Price.	15
4.	CONDITIONS PRECEDENT		15
	4.1.	Conditions to Initial Advance	15
	4.2.	Conditions to Each Advance	17
5.	REPRESENTATIONS AND WARRANTIES OF THE LENDER		18
	51.	Risks of Investment	18
	5.2.	Ability to Bear Risk	18
	5.3.	Receipt and Review of Documentation	18
	5.4.	Acquisition for Own Account	18
	5.5.	Residency, Accredited Investor	18
	5.6.	No Public Market; Rule 144	19
	5.7.	Organization, Good Standing, Corporate Authority	19
	5.8.	Due Authorization	19
6.	COVENANTS		19
	6.1	Indebtedness	19
	6.2	Ranking of Obligations	20
	6.3	Liens	20
	6.4	Consent Rights	20
	6.5	Restriction on Dividends	21
	6.6	Reporting Obligations	21
	6.7	Inspection Rights	22
	6.8	Lines of Business	22
	6.9	Legal Requirements	23
	6.10	Insurance	23
	6.11	Corporate Existence and Performance	23
	6.12	Further Assurances	23
7.	REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE BORROWER AND HOLDINGS		23
	7.1.	Incorporation, Standing, Subsidiaries	23
	7.2.	Authorization of Agreement	23
	7.3.	Absence of Defaults and Conflicts	24
	7.4.	Governmental Consents	24
	7.5	Indebtedness	24
	7.6	Ranking of Obligations	24

i

	7.8	Disclosure; Financial Statements	24
	7.9	Taxes	25
8.	DEFAULTS AND REMEDIES		25
	8.1.	Events of Default	25
	8.2.	Acceleration	27
	8.3.	Other Remedies	27
	8.4.	Waiver of Past Defaults	27
9.	RESTRICTIONS ON TRANSFER		27
	9.1.	Restrictions; Restrictive Legend	27
10.	EXPENSES		29
11.	SURVIVAL		29
12.	AMENDMENTS AND WAIVERS		29
	12.1	Amendments and Waivers	29
13.	GUARANTEES		29
	13.1.	Execution and Delivery of Agreement Subsidiary Guarantees	29
	13.2.	Subsidiary Guarantors May Consolidate, Etc. on Certain Terms	29
	13.3.	Releases Following Sale of Assets	29
	13.4.	Application of Certain Terms and Provisions to the Subsidiary Guarantors	30
	13.5.	Addition of Subsidiary Guarantors	30
	13.6.	Holdings Guarantee	30
14.	NOTICES		30
15.	SECURITY		31
	15.1	Borrower Security Required	31
	15.2	Registration	32
	15.3	Additional Security by the Borrower	32
	15.4.	Release of Collateral	33
	15.5.	Termination of Security Interest	33
	15.6.	Termination of Security Interest to Permit High Yield Debt Offering	33
	15.7.	Intercreditor Agreement	33
16.	EXECUTION IN COUNTERPARTS		33
17.	BINDING EFFECT		33
18.	GOVERNING LAW; CHOICE OF FORUM; JURY TRIAL WAIVER		33
19.	MISCELLANEOUS		34
	19.1.	Severability	34
	19.2.	No Waiver	34
	19.3.	Further Assurances	34
	19.4.	Interest Act Disclosure	34
	19.5	Canadian Currency	34
	19.6	Construction	34

ii

Exhibit AForm of Request for Advance

Exhibit BForm of Agreement Subsidiary Guarantee

Exhibit CForm of Holdings Guarantee

iii

CREDIT AGREEMENT

CREDIT AGREEMENT (this “Agreement”), dated as of the 17^th day of November 2005, by and among CANADIAN SATELLITE RADIO INC., a corporation incorporated under the laws of Canada (the “Borrower”), CANADIAN SATELLITE RADIO HOLDINGS INC., a corporation incorporated under the laws of Ontario, as the parent guarantor (“Holdings,” and together with the Borrower, “CSR”), and XM SATELLITE RADIO HOLDINGS INC., a Delaware corporation (the “Lender”).

WITNESSETH

WHEREAS CSR is engaged in the development of a satellite digital audio radio service in Canada;

WHEREAS CSR requires significant incremental capital to fund its capital expenditures and operations;

WHEREAS CSR desires to purchase from time to time from XM Satellite Radio Inc., a Delaware corporation (“XM”) terrestrial repeaters and associated equipment, including any required services to prepare such terrestrial repeaters for sale (the “Repeaters”);

WHEREAS CSR and XM have entered into the XM System Licence Agreement dated on or about the date hereof (the “XM System Licence Agreement”), pursuant to which XM is owed payments by CSR for certain subscription fees received by CSR (the “Subscription Fee Payments”);

WHEREAS in order to assist the Borrower with its capital requirements, the Lender has agreed to finance (i) the payment obligations of CSR from time to time owing to XM from the sale of Repeaters to CSR (the “Repeater Obligations”) and (ii) the payment obligations from time to time owing to XM from the obligation of CSR to make Subscription Fee Payments (the “Subscription Fee Obligations”), by allowing the Borrower to make monthly draws in an aggregate amount of up to Cdn$45,000,000 under this Agreement; and

WHEREAS the Parties desire to set forth the terms and conditions of such financing.

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

1. Definitions

1.1. Certain Definitions

The following terms when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings:

“Advances” means advances to the Borrower by the Lender pursuant to Sections 2.2(b) or 2.3(b).

“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.

“Agreement” means this Loan Agreement (including any Schedules and Exhibits hereto), as it may from time to time be amended, supplemented or modified in accordance with its terms.

1

“Agreement Subsidiary Guarantee” means any guarantee entered into in favor of the Lender pursuant to Section 13.5 hereof.

“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.

“Borrower” has the meaning set forth in the recitals to this Agreement.

“Business Day” means any day other than a Legal Holiday.

“Canadian Licences” shall mean the CRTC Licence and the Industry Canada Licences.

“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.

“Change of Control” means (i) Holdings owning less than 100% of the equity of the Borrower, (ii) CSR InvestCo owning less than 15% of the voting shares or equity of Holdings, or (iii) John Bitove and Bitove Affiliates (as defined below) holding, directly or indirectly, less than 50.01% of the voting rights of CSR InvestCo or less than the lower of (x) 33-1/3% of the equity of CSR InvestCo or (y) 50% of the number of shares of CSR InvestCo that John Bitove and Bitove Affiliates own on the date hereof (as adjusted for any recapitalization), treating in the case of both (x) and (y) any portion of the equity of or shares in CSR InvestCo subject to a Hedge (as defined below) as not being held by John Bitove or Bitove Affiliates. “Hedge” means a forward sale, swap, cap or collar agreements, or other agreement or arrangement designed to protect against fluctuations in the value of equity or shares or under which a counterparty or person other than John Bitove or Bitove Affiliates has the primary economic interest in such equity or shares or any appreciation in the value thereof. “Bitove Affiliates” means John Bitove’s Family Members or a custodian, trustee (including an RRSP, RIF, IRA or similar retirement or investment fund) or other fiduciary for John Bitove and/or his Family Members, where “Family Members” means, in respect of an individual, any parent, spouse, child, spouse of a child, grandchild and/or sibling.

“Closing” means the consummation of the transactions contemplated by this Agreement.

“Closing Date” means the date of the Closing.

“Collateral” means the Collateral (as defined in the Security Documents).

“Commitment Period” shall mean the period commencing on the effective date of the GM Distribution Agreement, and ending upon the earlier of (i) termination of theGM Distribution Agreement and (ii) the first Business Day after the fifth anniversary of theTrigger Date.

2

“Conversion” means the conversion of all or a portion of the aggregate principal amount of Advances into shares of CSR Common Stock in accordance with the provisions of Section 3 of this Agreement.

“Conversion Date” means the date a Conversion pursuant to Section 3.1 or 3.2 hereof becomes effective.

“Conversion Price” means the Initial Conversion Price, or, if no Initial Conversion Price has been established, the Fair Market Value as of the date that the Lender provides written notice to the Borrower of its intention to effect a Conversion or as of the date that the Borrower is required to undertake a Mandatory Conversion.

“Conversion Stock” means the shares of CSR Common Stock that may be issued upon Conversion in accordance with the provisions of Section 3 of this Agreement.

“CRTC” means the Canadian Radio-television and Telecommunications Commission or any successor thereto.

“CRTC Licence” means the Licence issued by the CRTC to the Borrower which together with the Industry Canada licences constitute the “Canadian Licences”.

“CSR” has the meaning set forth in the recitals to this Agreement.

“CSR Common Stock” means the Class A Subordinate Voting Shares of Holdings.

“CSR InvestCo” means Canadian Satellite Radio Investments Inc., a corporation existing under the laws of the Province of Ontario.

“Debt Obligors” has the meaning set forth in Section 6.1 of this Agreement.

“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.

“EBITDA” means, for any period, net income (or net loss) plus the sum of (a) interest expense, (b) income tax expense, (c) depreciation expense and (d) amortization expense, in each case determined in accordance with GAAP for such period.

“Equity Interest” 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.

“Excess Cash” means, for any Quarterly Period, the excess, if any, of (a) the sum, without duplication, of (i) consolidated net income of Borrower and its Subsidiaries for such Quarterly Period, (ii) an amount equal to the amount of all non-cash charges (including depreciation and amortization) deducted in arriving at such consolidated net income, (iii) decreases in consolidated working capital of Borrower and its Subsidiaries for such Quarterly Period, (iv) an amount equal to the aggregate net non-cash loss on the disposition of property by Borrower and its Subsidiaries during such Quarterly Period (other than sales of inventory in the ordinary course of business), to the extent deducted in arriving at such consolidated net income and (v) the net increase during such Quarterly Period (if any) in deferred tax accounts of Borrower and its Subsidiaries over (b) the sum, without duplication, of (i) an amount equal to the amount of all non-cash credits included in arriving at such consolidated net income, (ii) the aggregate amount actually paid by Borrower and its Subsidiaries in cash during such Quarterly Period on account of capital expenditures, (iii) the aggregate amount of all prepayments of all amounts then outstanding to the Lender under this Agreement during such Quarterly Period, (iv) the aggregate amount of all regularly scheduled principal payments of obligations made during such Quarterly Period with respect to outstanding indebtedness of Borrower and its Subsidiaries, (v) increases in consolidated working capital of Borrower and its Subsidiaries for such Quarterly Period, (vi) an amount equal to the aggregate net non-cash gain on the disposition of property by Borrower and its Subsidiaries during such Quarterly Period (other than sales of inventory in the ordinary course of business), to the extent included in arriving at such consolidated net income, and (vii) the net decrease during such fiscal year (if any) in deferred tax accounts of Borrower and its Subsidiaries.

3

“Excluded Collateral” has the meaning set forth in clause (1) of the definition of “Permitted Liens.”

“Fair Market Value” as of a certain date shall mean the price per share of CSR Common Stock equal to (a) in case CSR Common Stock is publicly traded, the weighted-average closing price as listed on a major U.S. or Canadian stock exchange where it is publicly traded for the ten (10) Trading Days immediately prior to such date or (b) in case CSR Common Stock is not publicly traded on such date, the most recent price per share of Common Stock paid in the purchase of at least Cdn$5,000,000 of CSR Common Stock by a Person unaffiliated with John Bitove or CSR InvestCo or other Affiliate of Holdings. In the event that Fair Market Value cannot be determined pursuant to the foregoing as a result of CSR Common Stock not being publicly traded or no equity purchase transactions having taken place whenever the Lender elects to effect a Conversion, the Lender and the Borrower shall each hire at their own cost an independent financial advisor to prepare an appraisal as to the “Fair Market Value” of a price per share of CSR Common Stock as of such date. In the event that the Borrower and Lender still cannot come to an agreement on “Fair Market Value”, the Lender and the Borrower shall hire a third independent financial advisor (whose costs and expenses shall be shared equally between the Borrower and the Lender) to prepare another appraisal as to “Fair Market Value” of a per share of CSR Common Stock as of such date. In such an event, “Fair Market Value” as of such date shall be the median value obtained from all three appraisals.

“Funding Date” has the meaning set forth in Section 2.2 of this Agreement.

“GAAP” means generally accepted accounting principles in Canada, provided that to the extent that a change in GAAP materially affects the calculation of any of the covenants herein, GAAP shall mean, solely with respect to the covenants so affected, the generally accepted accounting principles as in effect on the date of this Agreement.

“GM Canada” means General Motors of Canada Limited, a Canadian corporation.

“GM Distribution Agreement” means the proposed Distribution Agreement to be entered into by and among GM Canada, CSR and XM, provided that the final version of such agreement shall be satisfactory in form and substance to the Lender in its reasonable discretion.

“Governmental Entity” means any international body or any nation or government, any province or 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.

“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.

“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.

4

“High Yield Debt” meansunsecured Pari Passu Indebtedness which is evidenced by the issuance of notes in a public offering or private placement to investors under Rule 144A promulgated under the Securities Act or similar rule applicable to private placements in Canada.

“Holdings” has the meaning set forth in the recitals to this Agreement.

“Holdings Guarantee” means the Guarantee made by Holdings for the benefit of the Lender substantially in the form of Exhibit C.

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person without duplication, 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;

(6)representing any Hedging Obligations; or

(7)all obligations customarily treated as indebtedness and on which interest is customarily paid, except any such balance that constitutes an accrued expense or trade payable;

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.

“Industry Canada” shall mean the Canadian federal Department of Industry, including any successors or assigns thereof.

“Industry Canada Licences” shall mean those radio spectrum licences issued by Industry Canada to the Borrower which, together with the CRTC Licence, constitute the “Canadian Licences”.

“Initial Conversion Price” shall mean the share price of CSR Common Stock in a Qualified Initial Public Offering/Major Placement or, in the event such a Qualified Initial Public Offering/Major Placement has not occurred at the time of a proposed Conversion, the Initial Conversion Price shall mean 120% of the price per share paid in the purchase of at least Cdn$5,000,000 of CSR Common Stock by a Person unaffiliated with John Bitove or CSR InvestCo or other Affiliate of Holdings in the transaction closest to, but not after, the date the Borrower satisfies all of the conditions set forth in Section 4.1 of this Agreement for the making of the initial Advance (or, in either case, if the share price is adjusted following such transaction, whether due to antidilution adjustment provisions or otherwise, such adjusted share price). If the Qualified Initial Public Offering/Major Placement is a private placement, then (a) if only preference shares are issued in the transaction, the Initial Conversion Price shall equal the share price of CSR Common Stock issuable upon immediate conversion of such preference shares, less a 25% discount (if the preference shares generally have the same rights as common shares other than a liquidation preference) or 33% discount (if the preference shares generally have greater rights than common shares in addition to a liquidation preference) to reflect the superior features of the preference shares, and (b) any amounts paid or refunded to the investors in or arising out of the transaction shall be treated as attributable to, and resulting in a reduction of, the share price.

5

“Initial Public Offering” means the initial public offering exceeding Cdn$25,000,000 (or USD $25,000,000, in the case of a U.S. stock exchange listing) in gross proceeds and public listing of the CSR Common Stock on any major U.S. or Canadian stock exchange or market.

“Interest Payment Date” means the last day of each Quarterly Period; provided, that if any Interest Payment Date is not a Business Day, the Interest Payment Date will be deferred until the next succeeding Business Day.

“Interest Rate” means, for any day during a Quarterly Period, a rate equal to 9.0% per annum.

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

“Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in the City of New York and Toronto, Canada are authorized by law, regulation or executive order to remain closed.

“Lender” has the meaning set forth in the recitals to this Agreement.

“LIBOR Rate” means for any date, the rate that is reported on such date as the 3-month London Interbank Offered Rate in The Wall Street Journal’s listing of Money Rates, or if such newspaper shall have ceased publishing, then in any successor publication designated by the Lender.

“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 give a security interest.

“Loan Commitment” shall mean the obligation of the Lender to make Advances to the Borrower in the maximum aggregate principal amount of Cdn$45,000,000 Canadian dollars on the terms and conditions set forth herein, as such amount may be reduced pursuant to Section 2.6(c).

“Loan Parties” means Holdings and the Borrower.

“Mandatory Conversion” has the meaning set forth in Section 3.2 of this Agreement.

“Mandatory Conversion Event” means the occurrence of all of the following events: (i) CSR having achieved three consecutive Quarterly Periods of positive EBITDA, (b) CSR Common Stock being listed on a major U.S. or Canadian stock exchange in an Initial Public Offering exceeding Cdn$25,000,000 (or USD $25,000,000, in the case of a U.S. stock exchange listing) in gross proceeds and (c) CSR’s publicly traded stock closing at a price greater than 250% of the Initial Public Offering stock price for ten (10) consecutive Trading Days.

“Material Adverse Effect” means a material adverse affect on the assets, business or financial position of the Borrower, Holdings or any of their respective Subsidiaries, as considered as a whole.

“Maturity Date” means December 31, 2012.

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“Obligated” has the meaning set forth in Section 6.1 of this Agreement.

“Obligations” means any principal, interest, penalties, indemnifications, reimbursements, damages and other liabilities payable to the Lender hereunder or under the other Transaction Documents.

“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.

“Pari Passu Indebtedness” means, with respect to the Borrower or Holdings, Indebtedness of the Borrower or Holdings that is pari passu in right of payment to the Indebtedness under this Agreement and the other Transaction Documents.

Permitted Debt” has the meaning set forth in Section 6.1 of this Agreement.

“Permitted Liens” means:

(1)Liens on any assets of the Borrower, Holdings, or any of their Subsidiaries to secure Senior Bank Indebtedness incurred pursuant to Section 6.1(ii), other than (i) Liens on any Repeaters financed by Advances under this Agreement not subordinated to the Liens granted (or to be granted) in favor of the Lender under the Security Documents (as defined below) on subordination terms reasonably satisfactory to the Lender, (ii) Liens on the Canadian Licences or the shares of any Subsidiary where the primary asset of such Subsidiary is any Canadian Licence, or (iii) Liens on any assets that are not also subject to a perfected lien in favor of the Lender pursuant to the Security Documents or other documentation satisfactory to the Lender (such assets described in clauses (i), (ii) and (iii) of this proviso, the “Excluded Collateral”);

(2)Liens on property existing at the time of acquisition thereof by the Borrower or Holdings or any of their Subsidiaries, provided that such Liens were not incurred in contemplation of such acquisition;

(3)Liens to secure the performance of bids, tenders, leases (limited to rental deposits), statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business, but not in connection with the borrowing of money or obtaining credit;

(4)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;

(5)Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security not at the time due;

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

(7)easements, rights-of-way, zoning restrictions, public utility 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 the Borrower, Holdings or any of their Subsidiaries or the value of such real property;

(8)leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Borrower, Holdings or any of their Subsidiaries;

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

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(10)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;

(11)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;

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

(13)the right reserved to or vested in any Governmental Entity by any statutory provision or by the terms of any lease, licence, franchise, grant or permit of Borrower, to terminate any such lease, licence, franchise, grant or permit, or to require annual or other payments as a condition to the continuance thereof;

(14)Liens disclosed in Schedule 1.1.PL(14) but only to the extent such Liens conform to their description in Schedule 1.1.PL(14) and includes any extension or renewal thereof provided the amount so secured does not exceed the original amount secured immediately prior to the extension, renewal or refinancing and the scope of security creating the Lien is not extended; and

(15)Liens granted under the Security Documents or any other Transaction Document.

“Person” means any individual, corporation, partnership (whether general, limited or undeclared), joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

“Pre-Marketing Cash Flow” means EBITDA but excluding from such calculation all marketing, advertising, subscriber acquisition and distribution expenses.

“Qualified Initial Public Offering/Major Placement” means for the period commencing on the Trigger Date and ending on the first anniversary thereof, the transaction that results in the highest price per share from (a) an Initial Public Offering exceeding Cdn$25,000,000 (or USD $25,000,000, in the case of a U.S. stock exchange listing) in gross proceeds, or (b) a private placement of CSR Common Stock with gross proceeds exceeding Cdn$25,000,000 (or USD $25,000,000 in the event of a transaction denominated in U.S. dollars).

“Quarterly Date” means the 31st day of March, the 30th day June, the 30th day of September and the 31st day of December of each year; provided that (i) if any Quarterly Date is not a Business Day, the Quarterly Date will be deferred to the next following Business Day, and (ii) if any Quarterly Date would occur after the Maturity Date, such Quarterly Date shall be the Maturity Date.

“Quarterly Period” means, with respect to the first Quarterly Period, the period commencing on the date of the first Advance through but not including, the next following Quarterly Date, and thereafter each period commencing on and including a Quarterly Date through, but not including, the next following Quarterly Date.

“Reclassified Securities” has the meaning set forth in Section 3.5 of this Agreement.

“Registration Rights Agreement” means the Registration Rights Agreement, dated on or about the date hereof, 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.

“Regulatory Event” means the violation of any applicable law, including the Restrictions, relating to the Canadian Licences then held by the Borrower, Holdings or any Subsidiary of Holdings or Borrower.

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“Repeaters” has the meaning set forth in the recitals to this Agreement.

“Repeater Obligations” has the meaning set forth in the recitals to this Agreement.

“Request for Advance” has the meaning set forth in Section 2.2(a).

“Restrictions” shall mean all decisions, orders, rules, regulations, policies and Cabinet Directions relating to the ownership and control in fact of Canadian communications companies that hold licences under the Broadcasting Act (Canada).

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

“Security Documents” shall have the meaning set forth in Section 15.1.

“Senior Bank Indebtedness” means Indebtedness to a bank or other commercial lender incurred by the Borrower pursuant to Section 6.1(ii) for the purpose of funding the Borrower’s business which shall be senior in right of payment to the Obligations.

“Share Issuance Agreement” means the Share Issuance Agreement, dated on or about the date hereof, among the Borrower, Holdings and the Lender.

“Subscription Fee Obligations” has the meaning set forth in the recitals to this Agreement.

“Subscription Fee Payments” has the meaning set forth in the recitals to this Agreement.

“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 (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners 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 Subsidiary Guarantee pursuant to Section 13.5 hereof. As of the date hereof, there are no Subsidiary Guarantors.

“Tax” means any federal, provincial, local, foreign and other tax (including without limitation, income, gross receipts, Licence, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, 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).

“Trading Day” means any day on which CSR Common Stock is traded on a major U.S. or Canadian market or exchange on which the CSR 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 Documents, the Holdings Guarantee, each Agreement Subsidiary Guarantee, the Registration Rights Agreement and the Distribution Agreement.

“Trigger Date” has the meaning set forth in the GM Distribution Agreement.

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“Unused Loan Commitment Amount” means, at any time of determination, (i) the Loan Commitment then in effect less (ii) the aggregate principal amount of all Advances outstanding at such 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.

“XM” has the meaning set forth in the recitals to this Agreement.

“XM System Licence Agreement” has the meaning set forth in the recitals to this Agreement.

1.2. Other Definitional Provisions

The words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Defined terms in the singular shall include the plural and vice versa.

2. Loan and Terms of Payment

2.1. Loan Commitment

(a)Advances. Subject to the terms of this Agreement, the Lender agrees to make Advances to the Borrower during the Commitment Period in an aggregate principal amount not to exceed the Unused Loan Commitment Amount.

(b)Use of Proceeds. The Borrower shall use the Advances solely to pay the Repeater Obligations and the Subscription Fee Obligations owed to XM. Under no circumstances shall Advances be used to fund payments due in relation to: (i) reimbursement of XM for its actual costs incurred in the provision of outsourced services to CSR, including, among other services, back office services, customer support services and technical and engineering support, (ii) payments due XM under the XM System Licence Agreement arising from net revenues from premium, data or other non-core services, (iii) payments due XM under the XM System Licence Agreement arising from the activation by XM of CSR’s subscribers, or (iv) for greater certainty, payments due to XM under the Transaction Documents (as defined in the XM System Licence Agreement) other than the Repeater Obligations and the Subscription Fee Obligations.

(c)Purpose. Without limiting the provisions of this Agreement regarding the ability of the Borrower to request Advances hereunder, the parties acknowledge that this Agreement is to provide the Borrower with a “stand-by” credit facility that is generally intended to be used only when required by the Borrower to make the payments to XM that are permitted uses of proceeds hereunder.

2.2. Manner of Borrowing

(a)Request for Advance. Borrower may request an Advance by delivering to the Lender a completed Request for Advance in the form attached hereto as Exhibit A (a “Request for Advance”) not later than 11:00 a.m., Washington, D.C. time on the Business Day prior to the date such Advance is to be funded. Such Request for Advance shall be signed by an authorized Officer of the Borrower and shall indicate the amount of the requested Advance, the amount of the Repeater Obligations and Subscription Fee Obligations, as applicable, for which such Advance is being requested, and the date for such Advance, which shall be the date on which the Repeater Obligations and the Subscription Fee Obligations, as applicable, being funded by such Advance become due and owing (the “Funding Date”). Each Request for Advance shall be irrevocable and effective only upon receipt by the Lender. Only one (1) Request for Advance may be made per calendar month.

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   (b)Funding. Subject to Sections 4.1 and 4.2, the Lender shall, to the extent of the Unused Loan Commitment Amount, pursuant to the irrevocable instructions of the Borrower, make the proceeds of each Advance on the date requested available to Borrower to pay XM for the Repeater Obligations and Subscription Fee Obligations, as applicable, due and owing by the Borrower to XM on the date of the Advance in an amount equal to the amount of the Advance and as set forth in the applicable Request for Advance. Such funds shall be made available to the Borrower for payment to XM by the Lender by transferring the proceeds of the Advance to XM, which will acknowledge receipt of the amount received from the Lender as payment by the Borrower to XM in such amount. Upon the making of an Advance, the Lender shall make a notation on its books of account as to the amount and time of the Advance.

2.3. Interest

(a)Interest Accrual. Interest shall accrue at the Interest Rate on a daily basis during each Quarterly Period on the aggregate unpaid principal amount of all Advances. Such interest shall be due and payable in arrears on each Interest Payment Date for the most recent Quarterly Period then ended.

(b)Interest Payment. If on any Interest Payment Date (i) there exists an Unused Loan Commitment Amount and (ii) the conditions set forth in Section 4.2 hereof, including all certificates required thereunder (other than Section 4.2(a)), have been satisfied as of such Interest Payment Date, then interest due and owing on such Interest Payment Date that is not paid by the Borrower shall automatically be added to the principal amount of the outstanding Advances on such Interest Payment Date in an amount not to exceed the Unused Loan Commitment Amount. For greater certainty, any interest not applied to increase the principal amount of the Advances pursuant to this Section 2.3(b) shall be paid to the Lender in immediately available funds on such Interest Payment Date.

(c)Default Interest. In the event the Borrower shall fail to make any payment of the principal or interest when due as provided in Section 2.3(a) and (b), after giving effect to any applicable grace period provided for in this Agreement, the Borrower 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 equal to the LIBOR Rate on the date such amount shall have become due plus ten percent (10.0%) per annum (“Default Interest”), but in no event shall such default rate exceed the maximum rate permitted under applicable provincial and federal laws.

2.4. Payments and Notes

(a)Form of Payment. Except to the extent that Advances have been converted pursuant to Section 3, each payment of principal or interest will be made to the Lender by wire transfer of immediately available funds to such account as the Lender specifies in writing to the Borrower at least five (5) Business Days before such payment is to be made (or if it is not feasible to pay by wire transfer due to technological failure or other cause beyond the control of the Borrower, payment may be made by certified or bank cashier’s check to such address as is specified by the Lender).

(b)Application of Insufficient Payments. If at any time insufficient funds are received by and available to the Lender to pay fully all amounts of principal and interest, due hereunder, such funds shall be applied (i) first, to pay Default Interest and then other interest due hereunder, and (ii) second, to pay principal then due hereunder.

(c)Promissory Note. The Lender may request that the Advances be evidenced by a promissory note (a “Note”).In such event, the Borrower shall prepare, execute and deliver to the Lender a Note payable to the Lender and in a form approved by the Lender. In the event that a Note is issued, the Borrower will pay all sums becoming due hereunder for interest or principal, without the presentation or surrender of the Note or the making of any notation thereon, except that if the Note is paid in full, following such payment, the Note shall be surrendered to the Borrower for cancellation. For greater certainty, the issuance of a Note shall not preclude the Borrower from paying interest due thereon pursuant to Section 2.3(b) hereof.

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2.5. Payment at Maturity or Upon Conversion

(a)The outstanding principal amount of all Advances, together with any accrued interest thereon, shall be due and payable in full in immediately available Canadian dollars on the earlier of: (i) the Maturity Date, or (ii) such earlier date as the Advances become due and payable pursuant to this Agreement.

(b) Upon the Conversion of any or all of the Advances (or any part thereof) or interest thereon in accordance with the terms of Section 3 of this Agreement, (i) the principal amount of each Advance so converted, or part thereof or interest thereon, as the case may be, shall be deemed to have been satisfied and paid in full and (ii) the Loan Commitment shall be reduced pursuant to Section 2.6(c).

2.6. Prepayment

(a)Optional Prepayment. Each of the Advances, including all accrued interest thereon, may be prepaid only in whole and not in part at any time, without premium or penalty; providedthat (i) the Borrower shall give the Lender written notice no later than 12:00 p.m., Washington, D.C. time, on the Business Day prior to making such prepayment, specifying the amount to be prepaid and the date of prepayment and (ii) all accrued interest with respect to the Advances shall be paid on the date of such prepayment. Each such notice of prepayment shall be irrevocable upon receipt by the Lender.

(b)Mandatory Prepayments.

(i)Commencing with the first Quarterly Period after the fifth anniversary of the Trigger Date, the Borrower shall on or before the fifth Business Day after the end of each Quarterly Period, prepay the outstanding Advances, including all accrued interest thereon, without premium or penalty, in an amount equal to the lesser of (x) fifty percent (50%) of Excess Cash for such Quarterly Period and (y) the amount necessary to prepay the Obligations in full.

(ii)In the event that either Holdings or the Borrower shall, other than in accordance with Section 13.2, directly or indirectly consolidate or merge with or into another Person (whether or not the Borrower or Holdings is the surviving entity), or sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets, in any such case, other than in connection with a consolidation, sale, transfer or merger with Persons owned or controlled by the Lender, then all of the Advances shall be immediately prepaid. In the event that a Change of Control occurs, then all of the Advances shall be prepaid, including all accrued interest thereon, without premium or penalty, within three (3) Business Days of such event. An Initial Public Offering shall not trigger the mandatory prepayment requirements of this Section 2.6(b)(ii).

(c)Loan Commitment Termination or Reduction. Any amounts prepaid pursuant to this Section 2.6 or converted pursuant to Article 3 shall result in a permanent reduction of the Loan Commitment in the principal amount prepaid or converted, and may not be reborrowed. Any prepayment or conversion in whole of all the outstanding Advances shall constitute a termination of the Loan Commitment in its entirety.

3. Conversion Provisions

3.1 Optional Conversion Right

At any time following the earlier to occur of (i) an Initial Public Offering and (ii) the Lender becoming the owner of 10% or more of the Voting Stock of CSR under agreements or arrangements separate from this Agreement and the other Transaction Documents, the Lender shall have the right, at its option, at any time, subject to the Restrictions and the provisions contained in Section 3.3 regarding the exercise of such right, and the other terms and provisions of this Agreement, as applicable, to convert the unpaid principal amount of the Advances or any portion thereof owing to the Lender (or any portion thereof and together with interest accrued thereon) into shares of Conversion Stock at the Conversion Price, promptly after the delivery of a written notice of Conversion (with respect to such Conversion, a “Conversion Notice”) specifying the principal amount of Advances to be converted (together with such interest) duly executed, to Holdings and Borrower at any time during usual business hours at the principal offices of Holdings. Notwithstanding the foregoing, the Lender shall not have any right or obligation to convert the principal amount of the Advances or any portion if such Conversion or the right or obligation to effect such Conversion would result in a Regulatory Event.

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3.2 Mandatory Conversion

To the extent permitted by applicable law including the Restrictions, on the first Business Day after the occurrence of a Mandatory ConversionEvent, all of the outstanding Advances (together with any interest accrued thereon) shall be mandatorily converted (the “Mandatory Conversion”) into shares of Conversion Stock at the Conversion Price on such Business Day within three (3) Business Days of such event.

3.3 Issuance of Certificates

In the event that a Conversion of the Advances by the Lender pursuant to Section 3.1 or 3.2 requires approval by any Governmental Entity, Lender and Holdings shall promptly make all filings, which may be required in connection with such Conversion under any applicable laws, rules or regulations. Holdings and the Lender 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 delivery of a Conversion Notice or the Mandatory Conversion (or, if applicable, the receipt of required approvals from Governmental Entities), as provided in Section 3.1 or 3.2 (but in no event later than three Trading Days after such delivery in the event of a Conversion pursuant to Section 3.1 or one Trading Day in the event of a Conversion pursuant to section 3.2, in the absence of any 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 Lender (a) certificates bearing, if required by the terms hereof, the restrictive legends set forth in Section 9.1 hereof, representing the number of fully paid and non-assessable shares of Conversion Stock into which the Advances (or any portion thereof and including any accrued interest thereon) are being converted in accordance with the provisions hereof and (b) in the event of a Conversion pursuant to Section 3.1, if requested by the Lender, a replacement Note, representing the portion of the principal amount, if any, of the Advances that are not attributable to the principal amount being Converted at such time. Subject to the following provisions of this Section 3.3, such Conversion shall be deemed to have been made at the close of business on the Conversion Date (or, if applicable, the expiration of any applicable waiting period), so that (i) the rights of the Lender shall cease at such time with respect to the principal amount of the Advances (including any accrued interest) being converted, (ii) there shall be no loss of interest on the portion of the Advances not attributable to the principal amount converted, and (iii) the Lender shall be treated for all purposes as having become the record holder of such shares of Conversion Stock at such time; provided, however, that no Conversion on any date when the stock transfer books of Holdings shall be closed shall be effective to constitute the Lender 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 Conversion shall be effective to constitute the Lender 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.

3.4 No Fractional Shares

If, but for the provisions of this Section 3.4, the Conversion of any Advances for Conversion Stock were to result in the issuance by Holdings of a fraction of a share of CSR 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 to the Lender equal to the product of (i) such fraction, multiplied by (ii) the Fair Market Value of a share of CSR Common Stock on the date of the Conversion Notice or the date of the Mandatory Conversion, as applicable, computed to the nearest whole cent, in lieu of issuing a fractional share.

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3.5 Reclassification of CSR Common Stock

In case of any reclassification, stock split, subdivision, dividend or distribution payable in shares of CSR Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of CSR Common Stock), or similar recapitalization or event with respect to shares of CSR 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 CSR Common Stock into two or more classes or series of shares) or in case of any consolidation or merger of another corporation into Holdings, which is otherwise permitted pursuant to the terms of this Agreement, in which Holdings is the surviving corporation and in which there is a reclassification or change of the shares of CSR 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 CSR Common Stock into two or more classes or series of shares), Holdings shall provide that the Lender shall have the right thereafter to convert the Advances 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 CSR Common Stock into which the Advances 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 CSR Common Stock and to successive consolidations, mergers, sales or conveyances involving such reclassifications and changes of shares of CSR Common Stock. Holdings shall not effect any such consolidation, merger, sale, transfer or other disposition, which is otherwise permitted pursuant to the terms of this Agreement, 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 Lender, the obligation to deliver to the Lender such Reclassified Securities as, in accordance with the foregoing provisions, the Lender 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.

3.6 Reservation of CSR Common Stock

Holdings covenants that it will reserve and keep available out of its authorized CSR Common Stock, a sufficient number of shares for the purposes of issuance upon Conversion of all or any portion of the Advances (together with interest accrued thereon) which may be converted pursuant to Section 3.1 or 3.2 hereof. Holdings covenants that all shares of CSR 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 stock or other 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 ensure that such shares of CSR Common Stock are approved for listing on a major Canadian or U.S. exchange or market (subject to notice of issuance) and generally may be so issued without violation by Holdings of any applicable law or regulation, or of any requirements of any such securities market or exchange or trading market upon which the CSR Common Stock may be listed or quoted at the time of Conversion of all or any portion of the Advances (together with interest accrued thereon).

3.7 Taxes

The issuance of certificates for shares of Conversion Stock upon the Conversion of the Advances (or any portion thereof), shall be made without charge to the Lender 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 Lender; 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 Lender or its Affiliates, 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. For greater certainty, Lender shall be responsible for the payment of all Taxes applicable to the Lender in connection with the Conversion of any such Advances (or any part thereof).

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3.8 No Rights or Liabilities as Stockholders

Except as a result of any Conversion, the making of Advances by the Lender shall not entitle the Lender to any of the rights of a Holdings stockholder. No provision of this Agreement, in the absence of the actual Conversion of the Advances or any part thereof into Conversion Stock issuable upon such Conversion shall give rise to any liability on the part of the Lender as a stockholder of Holdings, whether such liability shall be asserted by Holdings or by creditors of Holdings.

3.9. Determination of Initial Conversion Price.

Upon the determination of the “Initial Conversion Price” pursuant to the definition thereof, the Borrower shall promptly give written notice of the “Initial Conversion Price” to the Lender and provide copies of all documents relating to the transaction pursuant to which the “Initial Conversion Price” was determined. Within 90 days after receipt of such notice and such documentation the Lender shall have the right to object to the determination of the “Initial Conversion Price.” In the event that the Lender and Borrower cannot agree on the “Initial Conversion Price”, the Lender and Borrower agree to hire (with each party paying 50% of the costs) a mutually-acceptable independent investment banker to determine the “Initial Conversion Price” to be applied for purposes of this Article 3, and the determination of such investment banker shall be final and binding upon the parties hereto.

4. Conditions Precedent

4.1. Conditions to Initial Advance

The obligation of the Lender to make the initial Advance is subject to the receipt of each of the following, in form and substance reasonably satisfactory to the Lender, and to the Lender’s determination that the following conditions precedent have been satisfied on or prior to the date of the Initial Advance:

(a)The Borrower shall have duly executed and delivered the Security Documents and such other documents, instruments and agreements as the Lender may reasonably request in connection therewith, and the Borrower shall be in full compliance with all conditions and other provisions under or associated with Article 15 hereof and the Security Documents, including without limitation the provisions requiring that particular Liens be granted in favor of the Lender, the required priority of such Liens and that the Borrower and its assets not be subject to any Liens other than Permitted Liens.

(b)All registrations necessary in the reasonable judgment of Lender in connection with any of the Transaction Documents shall have been made.

(c)The GM Distribution Agreement shall be in full force and effect, all conditions to its effectiveness have been satisfied and no defaults (or events which, with the giving of notice or lapse of time or both would result in a default) on the part of the Borrower, and to the knowledge of the Borrower, or on the part of GM Canada, shall have occurred and be continuing thereunder.

(d)The Borrower shall have raised sufficient capital for its business plan from Canadian sources so that the initial Advance will be consistent and comply with all requirements of all of its Canadian licences and applicable Canadian laws, including the CRTC Licence, required approval rights from Industry Canada, and all orders, decisions, rulings and policies of the CRTC and Industry Canada requiring holders of the Canadian licences to maintain a minimum investment from Canadian sources (collectively, “Canadian Regulatory and Minimum Canadian Investment Requirements”). The Lender shall have received a certificate of the Chief Financial Officer, the Treasurer or any Assistant Treasurer of the Borrower, dated the date of the Funding Date, in form and substance reasonably satisfactory to the Lender, containing a detailed description of all capital raised to finance the Borrower’s business plan and an analysis demonstrating that, such initial Advance will be consistent and comply with the Canadian Regulatory and Minimum Canadian Investment Requirements and certifying that the Borrower will be in full compliance with such requirements after receipt of such Advance (assuming for such purposes that Advances will not be treated as from Canadian sources).

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(e)With respect to each of the Borrower and Holdings,

(i)Copies of resolutions of the Board of Directors (or other similar authorizing documents) certified by an Officer which authorize its execution, delivery, and performance of this Agreement and the other Transaction Documents to which it is or is to be a party;

(ii)A copy of a certificate of status or similar certificate for each corporation issued by their respective governing jurisdictions, dated reasonably near the date hereof, stating it is duly qualified and in good standing as a foreign corporation in such jurisdiction;

(iii)A certificate, signed on its behalf by an Officer, dated near the date hereof, containing true and correct copies of (1) the articles of incorporation and all articles of amendment thereto and (2) all by-laws in effect on the date on which all resolutions referred to in clause(e) (i) above were adopted;

(iv)A certificate of non-restriction signed on its behalf by an Officer dated near the date hereof, certifying inter alia the corporation is not restricted from executing, delivering or performing any of the obligations under the Transaction Documents it is or is to be party to and such other matters as the Lender may reasonably require; and

(v)A certificate of an Officer certifying the names and true signatures of the officers authorized to sign each Transaction Document to which it is or is to be a party and the other documents to be delivered hereunder and thereunder.

For greater certainty, where appropriate, two or more of such certificates may be contained in the same document.

(f)The representations and warranties made by the Borrower and Holdings in Section 7 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects at the date of the Initial Advance with the same force and effect as if they had been made on and as of said date, and shall be so certified by an Officer of the Borrower.

(g)All covenants, agreements and conditions contained in this Agreement and the other Transaction Documents to which the Borrower is a party shall have been performed or complied with in all material respects.

(h)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 to which the Borrower or Holdings is party.

(i)Each of the Lender, the Borrower or Holdings shall have entered into the other Transaction Documents to which it is a party.

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

(k)The XM System Licence Agreement shall have been duly executed and delivered by the parties thereto and shall be in full force and effect.

(l)CSR shall have received all Licences and approvals from the CRTC and any other Governmental Entity necessary to operate its business in a manner consistent with its Licence application pending before the CRTC immediately prior to the date hereof.

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(m)Holdings shall have duly executed and delivered the Holdings Guarantee.

(n)The Lender shall have received favorable legal opinions (in form and substance satisfactory to the Lender acting reasonably) of counsel to the Borrower and Holdings, respectively, relating to the Borrower and Holdings, as the case may be, and the applicable Transaction Documents, including the validity, enforceability and, where applicable, the registration and priority of same.

4.2.Conditions to Each Advance

The obligation of the Lender to make each Advance, including the initial Advance, is subject to the receipt of each of the following, in form and substance reasonably satisfactory to the Lender, and to the Lender’s reasonable determination that the following conditions precedent have been satisfied on or prior to the Funding Date with respect to such Advance:

(a)The Borrower shall have delivered to the Lender a Request for Advance satisfying the requirements set forth in Section 2.2(a).

(b)Lender shall have received a certificate of the Chief Financial Officer, the Treasurer or any Assistant Treasurer of the Borrower, dated the date of the Funding Date, certifying satisfaction of the following conditions:

(i)Maximum Additional Debt. The Borrower shall be in compliance with the covenants herein, including without limitation Section 6.1 and the agreements of the Borrower set forth in Article 15 hereof regarding the permitted amounts of debt or indebtedness.

(ii)Pre-Marketing Cash Flow. Holdings shall have Pre-Marketing Cash Flow of not less than the amount set forth below opposite the fiscal year most recently then ended prior to the Funding Date:

Fiscal Year	Pre-Marketing Cash Flow
2006	Cdn$(27,955,214)
2007	(12,461,431)
2008	5,943,728
2009	21,017,043
2010	39,626,167
2011	58,490,135
2012	77,131,862

(c)The GM Distribution Agreement shall be in full force and effect, and no notice of termination shall have been given thereunder.

(d)The Borrower shall have raised sufficient equity and other capital for its business plan from Canadian sources so that the Advance will be consistent and comply with all requirements of all Canadian Regulatory and Minimum Canadian Investment Requirements. The Lender shall have received a certificate of the Chief Financial Officer, the Treasurer or any Assistant Treasurer of the Borrower, dated the date of the Funding Date, in form and substance reasonably satisfactory to the Lender, containing a detailed description of all capital raised to finance the Borrower’s business plan and an analysis demonstrating that, such Advance will be consistent and comply with the Canadian Regulatory and Minimum Canadian Investment Requirements and certifying that the Borrower will be in full compliance with such requirements after receipt of such Advance (assuming for such purposes that Advances will not be treated as from Canadian sources).

(e)The representations and warranties made by the Borrower and Holdings in Section 7 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects at the date of the Advance with the same force and effect as if they had been made on and as of said date, and shall be so certified by an Officer of the Borrower.

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(f)All covenants, agreements and conditions contained in this Agreement and the other Transaction Documents to which the Borrower is a party shall have been performed or complied with in all material respects.

(g)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 to which the Borrower or Holdings is party.

(h)No Default or Event of Default shall have occurred and be continuing on such Funding Date.

5. Representations and Warranties of the Lender

The Lender represents and warrants to and agrees with the Borrower and Holdings that as of the date hereof:

5.1. Risks of Investment

Its management recognizes that the purchase of the CSR Common Stock which may be issued in lieu of repayment of the Advances involves a high degree of risk including, but not limited to, the following: (i) an investment in CSR is highly speculative, and only investors who can afford the loss of their entire investment should consider investing in CSR and accepting the CSR Common Stock; (ii) the Lender may not be able to liquidate its investment; (iii) transferability of the CSR Common Stock is restricted; (iv) in the event of a disposition of the CSR Common Stock, the Lender could sustain the loss of its entire investment and (v) CSR does not anticipate the payment of dividends in the foreseeable future.

5.2. Ability to Bear Risk

By reason of its management’s business or financial experience the Lender 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.

5.3. Receipt and Review of Documentation

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

5.4. Acquisition for Own Account

The Lender is accepting the CSR Common Stock for its own account for investment only, and not with a view towards their distribution in violation of applicable securities laws.

5.5. Residency, Accredited Investor

The Lender is a resident of the United States and is an “accredited investor” within the meaning of Rule 501 of the Securities Act.

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5.6. No Public Market; Rule 144

(a)Its management understands and hereby acknowledges that Holdings is under no obligation to:

(i) register the CSR Common Stock under the Securities Act or any state securities or “blue sky” laws; or

(ii) qualify the CSR Common Stock for resale under any equivalent Canadian statutes,

except in the case of (i) and (ii) pursuant to the Registration Rights Agreement;

(b)The Lender’s management acknowledges and agrees that the shares of CSR Common Stock that the Lender may receive hereunder must be held indefinitely unless such shares are subsequently registered under the Securities Act and/or qualified for resale under equivalent Canadian securities laws or an exemption from such registration and/or prospectus requirements is available.

5.7. Organization, Good Standing, Corporate Authority

It is duly organized and validly existing as a corporation and in good standing under the laws of the State of Delaware, with requisite power and authority (corporate and other) to own its properties and conduct its business.

5.8. Due Authorization

The execution and delivery of, and the performance by the Lender of its obligations under this Agreement has been duly and validly authorized and, upon execution and delivery thereof, this Agreement will constitute a legal, valid, binding obligation of Lender, enforceable against Lender in accordance with its 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).

6. Covenants

The Borrower covenants and agrees with the Lender, that at the time of each Advance and at each time when any principal amount or interest is outstanding hereunder, it will be in compliance with the following:

6.1 Indebtedness

Neither the Borrower, Holdings nor any Subsidiary thereof (the “Debt Obligors”) shall be directly or indirectly liable, contingently or otherwise, as obligor, guarantor or otherwise (“Obligated”) with respect to any Indebtedness, except for the following items of Indebtedness (collectively, “Permitted Debt”):

(i)Indebtedness incurred by the Borrower under this Agreement;

(ii)Senior Bank Indebtedness in an aggregate principal amount which does not exceed Cdn$75,000,000; provided, however, to the extent that this Agreement is utilized by the Borrower to fund Repeater Obligations, the amount of permitted Senior Bank Indebtedness shall be reduced dollar-for-dollar by the amount of Repeater Obligations funded hereunder, and provided further, that this paragraph shall not apply if any of the Debt Obligors is then Obligated with respect to any High Yield Debt;

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(iii)High Yield Debt in an aggregate principal amount which does not exceed USD $125 million; provided, however, that this paragraph shall not apply if any of the Debt Obligors is then Obligated with respect to any Senior Bank Indebtedness;

(iv)other Pari Passu Indebtedness, the aggregate principal amount which does not exceed USD $5 million, which to the extent such Indebtedness is for a working capital facility, may be secured by accounts receivable, and otherwise shall be unsecured;

(v)Indebtedness existing on the Closing Date and set forth on Schedule 6.1(v) hereto;

(vi)Hedging Obligations that relate to fixing or hedging fluctuation in currency values between U.S. and Canadian dollars where the Borrower’s aggregate liability or exposure does not exceed USD $10 millionat any one time outstanding and which shall be unsecured;

(vi)the Guarantee by Holdings of Indebtedness of the Borrower that is otherwise permitted by this Section 6.1; and

(vii)the incurrence by the Borrower or any of its Subsidiaries of intercompany Indebtedness between the Borrower and its Subsidiaries; provided, however that if the Borrower is the obligor of such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full of the Obligations hereunder.

6.2 Ranking of Obligations

Except for the Indebtedness permitted pursuant to Section 6.1(ii) above, none of the Debt Obligors shall be Obligated with respect to any Indebtedness that ranks senior in right of payment to the Obligations.

6.3 Liens

There shall not exist or be effective any Lien of any kind (i) upon the Canadian Licences (other than item number thirteen (13) in the definition of Permitted Liens hereunder) or the shares of any Subsidiary where the primary asset of such Subsidiary is any Canadian Licence or (ii) except for Permitted Liens, upon any of the property or assets of the Debt Obligors (other than the Canadian Licences or the shares of any Subsidiary where the primary asset of such Subsidiary is any Canadian Licence), now owned or hereafter acquired.

6.4 Consent Rights

As long as at least Cdn $3,000,000 principal amount of Advances is outstanding under this Agreement, the prior written consent of the Lender shall be required for any of the following actions:

(i)any amendment, modification, supplement or waiver (in a manner that would be materially adverse to the interests of the Lender under this Agreement) to the certificate of incorporation or by-laws of the Borrower, Holdings, or any of their Subsidiaries;

(ii)other than as contemplated by Section 13.2, either Holdings, the Borrower, or any of their Subsidiaries shall directly or indirectly (a) consolidate or merge with or into another Person (whether or not Holdings, the Borrower or such Subsidiary is the surviving entity), or sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets, in any such case, other than in connection with a consolidation, sale, transfer or merger with Persons owned or controlled by the Lender, when any such consolidation, merger, sale or transfer would result in the Lender receiving less than full payment of all outstanding Obligations, or (b) sell, assign or otherwise dispose of any property or assets securing the Obligations pursuant to the Security Documents (other than sales in the ordinary course of business of less than Cdn $500,000 per sale and less than Cdn $2,500,000over the term of this Agreement, or the sale, assignment or other disposition of obsolete assets or property of less than Cdn $500,000 per sale and less than Cdn $2,500,000over the term of this Agreement);

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(iii)Holdings, the Borrower or any of their Subsidiaries being a party to any agreement, contract, instrument or other arrangement that restricts the ability of Holdings, the Borrower or any Subsidiary to comply with the terms of this Agreement;

(iv)any optional redemption, repurchase or other acquisition by Holdings, the Borrower or any of their Subsidiaries of any Indebtedness or securities of Holdings, the Borrower or any of their Subsidiaries that is junior in right of payment to the Obligations;

(v)except as permitted pursuant to Section 6.1, the Debt Obligors being Obligated with respect to any Indebtedness or securities by Holdings, the Borrower or any of their Subsidiaries that is pari passu with or having a preference over the Obligations hereunder; and

(vi)the principal nature of the business of Holdings, the Borrower or any of their Subsidiaries being different from the business permitted under Section 6.8.

6.5 Restriction on Dividends

Neither Holdings or Borrower shall directly or indirectly (through a Subsidiary or otherwise): (i) declare or pay any dividend or make any other payment or distribution on account of Equity Interests of either the Borrower or Holdings, or (ii) purchase redeem or otherwise acquire or retire for value any Equity Interests of Holdings or the Borrower (the transactions in the foregoing clause (i)  and clause (ii)  are referred to as “Restricted Payments”), except that so long as no Default has occurred and is continuing or would be caused thereby, the foregoing provisions shall not prohibit: (1) the Conversion of the Advances pursuant to Article 3 hereof, (2) Restricted Payments to the Lender or any of its Affiliates, and (3) the exercise by the Lender or any of its Affiliates of rights pursuant to the Share Issuance Agreement or Shareholders Agreement dated on or about the date hereof.

6.6 Reporting Obligations

The Borrower will furnish to the Lender:

(a)Default Notice. As soon as possible and in any event within two Business Days after the occurrence of any Default or any event, development or occurrence reasonably likely to have a material adverse effect continuing on the date of such statement, a statement of the chief financial officer of the Borrower setting forth details of such occurrence, and the action that the Borrower has taken and proposes to take with respect thereto.

(b)Annual Financials. As soon as available and in any event within 90 days after the end of each fiscal year, a copy of the annual audit report for such year for Holdings and its Subsidiaries, including therein Consolidated and consolidating balance sheets of Holdings and its Subsidiaries as of the end of such fiscal year and Consolidated and consolidating statements of income and a Consolidated statement of cash flows of Holdings and its Subsidiaries for such fiscal year, in each case accompanied by an opinion of independent public accountants of recognized standing, together with  a certificate of the chief financial officer of Holdings stating that no Default has occurred and is continuing or, if a default has occurred and is continuing, a statement as to the nature thereof and the action that the Borrower has taken and proposes to take with respect thereto.

(c)Quarterly Financials. As soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year, Consolidated and consolidating balance sheetsof Holdings and its Subsidiaries as of the end of such quarter and Consolidated and consolidating statements of income and a Consolidated statement of cash flows of Holdings and its Subsidiaries for the period commencing at the end of the previous fiscal quarter and ending with the end of such fiscal quarter and Consolidated and consolidating statements of income and a Consolidated statement of cash flows of Holdings and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding date or period of the preceding fiscal year, all in reasonable detail and duly certified (subject to normal year-end audit adjustments) by the chief financial officer of Holdings as having been prepared in accordance with GAAP.

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(d)Monthly Financials. As soon as available and in any event within 30 days after the end of each month, a Consolidated balance sheet of Holdings and its Subsidiaries as of the end of such month and Consolidated and consolidating statements of income and a Consolidated statement of cash flows of Holdings and its Subsidiaries for the period commencing at the end of the previous month and ending with the end of such month and Consolidated and consolidating statements of income and a Consolidated statement of cash flows of Holdings and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such month, setting forth in each case in comparative form the corresponding figures for the preceding month and the corresponding month of the preceding Fiscal Year, all in reasonable detail and duly certified by the chief financial officer of Holdings.

(e)Litigation. Promptly after the commencement thereof, notice of all actions, suits, investigations, litigation and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting Holdings, the Borrower or any of their Subsidiaries, and promptly after the occurrence thereof, notice of any adverse change in the status or the financial effect on Holdings or the Borrower.

(f)Agreement Notices. Promptly upon receipt thereof, copies of all notices, requests and other documents received by Holdings, the Borrower or any of their Subsidiaries under or pursuant to any material contract or instrument, indenture, loan or credit or similar agreement with respect to Indebtedness equal to or greater than Cdn$2,000,000, regarding or related to any breach or default by any party thereto or any other event that would be reasonably likely to materially impair the value of the interests or the rights of Holdings, the Borrower or any of their Subsidiaries and copies of any amendment, modification or waiver of any provision of any material contract or instrument, indenture, loan or credit or similar agreement and, from time to time upon request by the Lender, such information and reports regarding the material contracts and such instruments, indentures and loan and credit and similar agreements as the Lender may reasonably request.

(g)Other Information. Such other information respecting the business, condition (financial or otherwise), operations, performance, properties or prospects of Holdings, the Borrower or any of their Subsidiaries as the Lender may from time to time reasonably request.

(h)Investment Information. In connection with a proposed Conversion, such information relating to Holdings and its business as would reasonably be provided to a prospective investor.

6.7 Inspection Rights

At any reasonable time and from time to time prior to a Default upon three (3) Business Day’s prior notice and at any reasonable time after the occurrence and during the continuance of a Default, Holdings and the Borrower shall permit representatives of the Lender to examine, copy, and make extracts from its books and records, to visit and inspect its properties, and to discuss its business, operations and financial condition with its officers and employees. At any reasonable time and from time to time, Holdings and Borrower will permit representatives of the Lender to discuss its business, operations, and financial condition with its independent certified public accountants in any meeting arranged and attended by representatives of the Borrower.

6.8 Lines of Business

Neither Holdings, Borrower nor any Subsidiary shall engage in any business other than the development and provision of satellite digital audio radio service in Canada, which shall be understood to include without limitation any facets of the satellite radio business as conducted by the Lender.

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6.9 Legal Requirements

Each of Borrower and Holdings shall timely comply, and shall cause each of their respective Subsidiaries to timely comply with all legal requirements of relevance to its and their respective business(es), property or assets or undertaking (including, without limitation, all environmental statutes, regulations, orders and directives) and, when requested from time to time by the Lender acting reasonably, shall deliver to the Lender evidence of such compliance.

6.10 Insurance

Each of Borrower and Holdings shall obtain and maintain and shall cause each of their respective Subsidiaries to obtain and maintain insurance policies providing customary insurance, with coverage consistent with prudent business practice, and subject to reasonable deductibility provisions, including insurance with respect to the Repeaters naming the Lender as an additional named insured from and after the date of the Initial Advance. Each of Borrower and Holdings shall, at the request of the Lender, deliver certified copies of such policies to the Lender.

6.11 Corporate Existence and Performance

The Borrower and Holdings shall do, and shall cause each Subsidiary to do,all things necessary or desirable (i) to maintain the corporate existence of the Borrower, Holdings and each Subsidiary and (ii) to permit or enable it to comply with all obligations under the Transaction Documents.

6.12 Further Assurances

Each of Borrower and Holdings, at their expense, shall promptly, at the request of the Lender, cure or cause to be cured all defects in the content, execution and delivery of this agreement, the other Transaction Documents. The Borrower and Holdings, at their expense, shall promptly execute and deliver to the Lender, upon request by the Lender, all such other and further documents, agreements and instruments necessary to satisfy the obligations of the Borrower and Holdings hereunder or under any of the documents arising herefrom.

7. Representations, Warranties and Agreements of the Borrower and Holdings

Each of Holdings and the Borrower hereby represents, warrants and agrees with the Lender that as of the date hereof and as of the date of each Advance:

7.1. Incorporation, Standing, Subsidiaries

Each of Holdings and the Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation 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. Borrower has no Subsidiaries other than Subsidiaries formed with the prior written consent of the Lender in respect of which all applicable obligations under the Transactions Documents have been satisfied, including, without limitation, Articles 13 and 15 hereof. Holdings owns 100% of the Equity Interests of the Borrower and owns no Equity Interests in any other Person.

7.2. Authorization of Agreement

This Agreement and the other Transaction Documents to which Holdings and the Borrower are parties have been duly, executed and delivered by the Borrower or Holdings, as applicable, and each such agreement constitutes a valid, binding and enforceable obligation of the Borrower or Holdings, as applicable, 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).

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7.3. Absence of Defaults and Conflicts

The execution, delivery and performance of this Agreement and the Transaction Documents by the Borrower and Holdings in connection with the transactions contemplated hereby and thereby, and the consummation of the transactions contemplated herein or therein and compliance by the Borrower and Holdings 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 or lapse of time or both would become a default) under, require the Borrower or Holdings to conduct an offer to repurchase any outstanding Obligations in accordance with the documents establishing the terms under which such Obligations were incurred, give any others 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 the Borrower or Holdings pursuant to any material contract, indenture, mortgage, note lease or other instrument to which it is party, 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 Borrower or Holdings or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality, stock exchange or stock market or court, domestic or foreign, having jurisdiction over the Borrower or Holdings or any of their assets or properties.

7.4. Governmental Consents

Except as may be required to be obtained or made under the Securities Act or the Broadcasting Act (Canada), applicable state securities laws and equivalent applicable Canadian securities laws in connection with the exercise of any registration rights of the Lender provided for in the Registration Rights Agreement, neither Borrower nor Holdings 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 to perform its obligations hereunder and under any and_. all Transaction Documents.

7.5 Indebtedness

Holdings, the Borrower and their Subsidiaries have no Indebtedness except (i) as of the Closing Date, as reflected on Schedule 6.1(v) and (ii) at all times on and after the date of the Initial Advance, as permitted by Section 6.1.

7.6 Ranking of Obligations

Except for any Indebtedness incurred pursuant to Section 6.1(ii), no Indebtedness incurred by the Borrower ranks senior in right of payment to the Obligations.

7.7Litigation

There is no litigation and there is no legal proceeding pending, or to the best knowledge of the Borrower, and Holdings or any of their respective Subsidiaries, threatened against the Borrower, Holdings or any of their respective Subsidiaries before any court or administrative agency of any country which has, or could reasonably be expected to have, a Material Adverse Effect.

7.8 Disclosure; Financial Statements

All information and reports furnished to the Lender by Holdings or the Borrower do not contain any material misstatement of fact; nor do they omit a material fact to make any statement therein contained misleading. The financial statements dated August 31, 2005 of Borrower and Holdings, respectively, are substantially correct and complete in all material respects and have been prepared in accordance with GAAP, consistently applied. Since the date thereof, there has occurred no change which has had, or could reasonably be expected to have, a Material Adverse Effect.

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7.9 Taxes

The Borrower, Holdings and each of their respective subsidiaries has paid or made adequate provision for payment of all material taxes, assessments, fees and other governmental charges (including all Taxes) levied upon it or upon its assets or income which are due and payable, including interest and penalties, or has provided adequate reserves for the payment thereof.

8. Defaults and Remedies

8.1. Events of Default

An “Event of Default” occurs if:

(a)the Borrower defaults in the payment when due of interest on any Advance and such default continues for a period of 3 days;

(b)the Borrower defaults in the payment when due of principal of any Advance when the same becomes due and payable at maturity or pursuant to Section 2.6 hereof;

(c) (i) the Borrower or Holdings fails to observe or perform any covenant set forth in Sections 6.1, 6.2, 6.3, 6.4 and 6.5, or (ii) the Borrower or Holdings fails to observe or perform any other covenant or other agreement in this Agreement or the other Transaction Documents and such failure pursuant to this clause (ii) shall continue for 30 days after the Borrower knows or should have known of the occurrence thereof, or the Borrower does not advise Lender of the occurrence of such a failure to observe or perform promptly after the Borrower first learns of the same;

(d)a default occurs and is continuing under any mortgage, indenture or instrument (other than this Agreement) under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Borrower or Holdings or any of their respective Subsidiaries (or the payment of which is guaranteed by a Borrower or Holdings or any of their respective Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the date hereof, which default either results in the acceleration or permits the holder thereof to cause the acceleration of, such Indebtedness prior to its express maturity 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 default or the maturity of which has been so accelerated, aggregates USD $5,000,000 or more;

(e)a final nonappealable judgment or final nonappealable judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Borrower, Holdings or any of their respective 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 USD $5,000,000 (net of any amounts with respect to which a reputable and creditworthy insurance company has acknowledged liability in writing);

(f)the Borrower, Holdings or any of their respective Subsidiaries:

(i) applies for or consents to the appointment of a receiver, a receiver and manager, a liquidator or other similar person of it or of all or a substantial part of its assets;

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(ii) is unable, or admits in writing its inability to pay its debts as they become due;

(iii) is insolvent;

(iv) makes an assignment in bankruptcy or a proposal in bankruptcy, delivers a notice of intention to file a proposal in bankruptcy, or files a petition seeking reorganization or an arrangement with creditors, takes advantage of any insolvency law, or admits the material allegations of a petition filed against it in any bankruptcy, reorganization or insolvency proceeding;

(v) takes corporate action to authorize any of the foregoing;

(vi) is wound up; or

(vii) commits any act of bankruptcy;

(g)an order, judgment or decree shall be rendered by any court of competent jurisdiction granting a stay of proceedings against the Borrower, Holdings or any of their respective Subsidiaries or approving a petition seeking reorganization of the Borrower, Holdings or any such Subsidiary or appointing a receiver, receiver and manager, trustee in bankruptcy or liquidator or other similar person of it or of all or a substantial part of its assets;

(h)any proceedings are commenced against or by the Borrower, Holdings or any of their respective Subsidiaries under the Companies' Creditors Arrangement Act (Canada) or Bankruptcy and Insolvency Act (Canada) or Winding Up and Restructuring Act (Canada) to wind up or liquidate the Borrower, Holdings or any such Subsidiary;

(i)the Borrower, Holdings or any of their respective Subsidiaries shall cease or threaten to cease carrying on business in the normal course or dispose of all or a significant part of its business or assets, or a receiver or receiver and manager is appointed with respect to all or any significant part of its business or assets;

(j)an encumbrancer, lien holder, or person acting on its behalf takes possession of all or a substantial part of the assets of the Borrower, Holdings or any of their respective Subsidiaries;

(k)the Borrower, Holdings or any of their Subsidiaries shall breach any agreement set forth in the Security Documents or shall repudiate any of its obligations under the Security Documents or the Security Documents 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 cease to create a valid and perfected security interest in the Collateral purported to be covered thereby;

(l)any representation, warranty or certification made or deemed made in this Agreement, in any of the other Transaction Documents, or in any statement or certificate at any time given by any such Person pursuant to or in connection with any of the Transaction Documents shall be false or misleading in any material respect on the date as of which made or repeated;

(m)any Agreement Subsidiary 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 Guarantor shall deny or disaffirm its obligations under its Agreement Subsidiary Guarantee;

(n)the Holdings 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 Holdings shall deny or disaffirm its obligations under the Holdings Guarantee;

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(o)a default occurs under the Canadian Licences which prevents Holdings, Borrower or any of their Subsidiaries from utilizing the Canadian Licences in the conduct of their business or the Canadian Licences are for any reason, revoked, suspended or terminated;

(p)Borrower or Holdings shall default in the performance or compliance with any material term, covenant or agreement contained in the Share Issuance Agreement or the XM System Licence Agreement, and such default shall continue for thirty (30) days after the occurrence thereof, or the XM System Licence Agreement shall have terminated or been terminated for any reason; or

(q)a Change of Control occurs.

8.2. Acceleration

If any Event of Default (other than an Event of Default specified in clause (f), (g) or (h) of Section 8.1 hereof with respect to the Borrower, Holdings or any of their Subsidiaries, occurs and is continuing, the Lender may declare the Obligations to be due and payable immediately. Upon any such declaration, the principal amount of the Advances, together with all interest accrued thereon, shall become due and payable immediately and the Loan Commitment shall terminate. Notwithstanding the foregoing, if an Event of Default specified in clause (f), (g) or (h) of Section 8.1 hereof occurs with respect to the Borrower, Holdings, or any of their Subsidiaries, the outstanding principal amount of the Advances shall be due and payable immediately and the Loan Commitment shall terminate without further action or notice. The Lender may 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 principal amount, interest or premium that has become due solely because of the acceleration) have been cured or have been waived by the Lender, either separately or as part of a rescission notice issued by the Lender.

8.3. Other Remedies

If an Event of Default occurs and is continuing, the Lender may pursue any available remedy to collect the payment of the principal and interest on the Advances or to enforce the performance of any provision of this Agreement, the Agreement Subsidiary Guarantees, and the Security Documents.

A delay or omission by the Lender 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.

8.4. Waiver of Past Defaults

Lender may waive an existing Default or Event of Default and its consequences hereunder. 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.

9. Restrictions on Transfer

9.1. Restrictions; Restrictive Legend

(a)The Lender acknowledges that each certificate representing CSR Common Stock issued on any Conversion (the “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.

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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, the Lender acknowledges that each certificate representing Securities will contain a legend substantially to the following effect:

THE SECURITIES REPRESENTED HEREBY MAY NOT BE DIRECTLY OR INDIRECTLY SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED TO, FOR THE ACCOUNT OR BENEFIT OF, OR FOR RESALE TO, ANY RESIDENT OF ONTARIO UNTIL: (A.) THE DATE ON WHICH CANADIAN SATELLITE RADIO INC. (THE “COMPANY”) BECOMES A “REPORTING ISSUER” IN ANY OF ALBERTA, BRITISH COLUMBIA, MANITOBA, NOVA SCOTIA, ONTARIO, QUEBEC OR SASKATCHEWAN AND THE HOLDER OTHERWISE COMPLIES WITH ANY APPLICABLE REQUIREMENTS UNDER MULTILATERAL INSTRUMENT 45-102-RESALE OF SECURITIES, PROMULGATED UNDER APPLICABLE SECURITIES LAWS; OR (B.) THE COMPANY SHALL HAVE RECEIVED AN OPINION ADDRESSED TO THE COMPANY FROM COUNSEL TO THE REGISTERED HOLDER OR OTHER EVIDENCE IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, AS TO THE AVAILABILITY OF AN APPLICABLE EXEMPTION FROM PROSPECTUS AND REGISTRATION REQUIREMENTS UNDER THE SECURITIES LEGISLATION OF THE PROVINCE OF ONTARIO AND ANY OTHER JURISDICTION OF CANADA IN WHICH THE PROPOSED TRANSFEREE IS RESIDENT. ANY TRANSFEREE OF THESE SECURITIES MUST COMPLY WITH THE RESTRICTIONS SET OUT IN THIS LEGEND.

Certificates evidencing Securities shall not be required to contain such legend (i) following the sale of such Securities under a prospectus for which a receipt has been obtained pursuant to the securities laws of any province or territory of Canada, (ii) once the Borrower becomes a “reporting issuer” in any of Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec or Saskatchewan under applicable Canadian securities laws, or (iii) if such legend is not, in the opinion of counsel to Holdings, required in the circumstances under the applicable requirements of Canadian securities laws (including policies, rules and other instruments issued by Canadian securities regulatory authorities thereunder).

(c)In addition, the Lender acknowledges that each certificate representing 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 CSR.

Subject to Section 9.1(a) and (b), the Borrower shall remove the applicable legend(s) from the certificate(s) representing such shares promptly upon request of the holder thereof and shall promptly deliver replacement certificate(s) to such holder.

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10. Expenses

The Borrower will pay at Closing all reasonable expenses relating to this Agreement and the Transaction Documents, including the reasonable fees and disbursements of outside counsel for the Lender.

11. Survival

All express representations and warranties contained in this Agreement or made in writing by or on behalf of the Borrower, Holdings or their Subsidiaries as of the date hereof and as of the date of each Advance in connection with the transactions contemplated by this Agreement shall survive any investigation at any time made by the Lender or on the Lender’s behalf, and shall not be deemed waived or voided by the Closing, any Advance hereunder or any disposition or payment of amounts outstanding hereunder.

12. Amendments and Waivers

12.1 Amendments and Waivers

Any term of this Agreement may be amended, and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Parties hereto. Any amendment or waiver effected in accordance with this Section 12 shall be binding upon the Lender and the Borrower.

13. Guarantees

13.1. Execution and Delivery of Agreement Subsidiary Guarantees

The Borrower shall cause each Subsidiary to execute and deliver at the Closing to the Lender an Agreement Subsidiary Guarantee substantially in the form included in Exhibit B hereto, duly executed on behalf of such Subsidiary by an Officer thereof.

13.2. Subsidiary Guarantors May Consolidate, Etc. on Certain Terms

(a)Nothing contained in this Agreement or in any Agreement Subsidiary Guarantee shall prevent any consolidation or merger of a Subsidiary Guarantor with or into a Borrower or another Subsidiary Guarantor, or shall prevent the transfer of all or substantially all of the assets of a Subsidiary Guarantor to a Borrower or another Subsidiary Guarantor. Upon any such consolidation, merger, transfer or sale, the Agreement Subsidiary Guarantee of the Subsidiary Guarantor being consolidated or merged or into a Borrower 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 shall prevent any consolidation or merger of a Subsidiary Guarantor with or into a corporation or corporations other than a Borrower 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 a Borrower or another Subsidiary Guarantor (whether or not affiliated with the Subsidiary Guarantor) authorized to acquire and operate the same in the eventthat such consolidation, merger or transfer complies with the terms and conditions of this Agreement and all Agreement Subsidiary Guarantees.

13.3. Releases Following Sale of Assets

Concurrently with any sale or other disposition of assets 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 Subsidiary Guarantee and under this Section 13. Any Subsidiary Guarantor not released from its obligations under its Agreement Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Advances and for the other obligations of any Subsidiary Guarantor under the Agreement Subsidiary Guarantee as provided in this Section 13.

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13.4. Application of Certain Terms and Provisions to the Subsidiary Guarantors

Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Lender to or on any Subsidiary Guarantor may be given or served as described in this Agreement as if references herein to the Borrower were references to such Subsidiary Guarantor.

13.5. Addition of Subsidiary Guarantors

If at any time after the Closing, the Borrower forms or acquires a Subsidiary, the Borrower shall upon such formation or acquisition, cause such Subsidiary to (i) issue an Agreement Subsidiary Guarantee by causing such Subsidiary to execute and deliver to the Lender an Agreement Subsidiary Guarantee substantially in the form of Exhibit B hereto and (ii) take all actions contemplated by Section 15.1 in respect of the Security Documents. The Agreement Subsidiary Guarantee and the Security Documents so issued shall in all respects have the same legal rank and benefit under this Agreement as the Agreement Subsidiary Guarantees and the Security Documents theretofore and thereafter issued in accordance with the terms of this Agreement as though such Agreement Subsidiary Guarantee and Security Documents had been issued at the date of the execution hereof.

13.6. Holdings Guarantee

Holdings shall execute and deliver at the Closing to the Lender a parent guarantee substantially in the form of Exhibit C hereto.

14. 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 14. 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 the Borrower or Holdings:

Suite 2300, P.O. Box 222

Canada Trust Tower, BCE Place

161 Bay Street

Toronto, Ontario M5J 2S1

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If to the Lender:

XM SATELLITE RADIO HOLDINGS INC.

1500 Eckington Place, NE

Washington, D.C. 20002-2164

Fax No.: (202) 380-4500

Attention: Joseph Titlebaum

Executive Vice President, General Counsel

Joseph Verbrugge

Vice President, International Operations

15. Security

15.1. Borrower Security Required

As general and continuing security for the due payment or performance, as the case may be, of all Obligations, the Borrower shall deliver or cause to be delivered to the Lender (i) before the Initial Advance, except to the extent the conditions set forth in Section 15.6 are met as of the time of the initial Advance, or (ii) if the following security documents are not then in full force and effect, before any subsequent Advance to be made at a time when the conditions set forth in Section 15.6 are not met, the following security documents (collectively the "Security Documents") and in form and substance satisfactory to the Lender acting reasonably:

(a)a debenture containing, inter alia, a first (subject to Permitted Liens including, without limitation, priority liens in favor of Senior Bank Indebtedness that constitute Permitted Liens) fixed and floating charge of all present and future assets, property and undertaking of Holdings, the Borrower and each Subsidiary Guarantor, in registrable form containing, among other things:

(i) a fixed and specific charge of, and security interest in all present and future real property including all leasehold interests therein;

(ii) a fixed charge of and security interest in all present and future personal property including without limitation equipment, inventory, receivables, and other intangibles, but excluding any Repeaters not financed by Advances under this Agreement and any Canadian Licences and the shares of any Subsidiary where the primary asset of such Subsidiary is any Canadian Licence;

(iii) an assignment of all rights in (but not obligations under) all present and future contracts and licences other than the Canadian Licences of the Borrower;

(iv) an assignment of all insurance; and

(v) a floating charge of, and security interest in the undertaking and all present and future real and personal property not subject to a fixed charge in favour of the Lender, but excluding any Repeaters not financed by Advances under this Agreement and any Canadian Licences and the shares of any Subsidiary where the primary asset of such Subsidiary is any Canadian Licence;

(b)a delivery agreement by the Borrower, Holdings and each Subsidiary Guarantor to the Lender in respect of the debenture;

(c)a hypothec granted by the Borrower, Holdings and each Subsidiary Guarantor in favour of the Lender creating a security interest in all of its present and after-acquired personal and moveable real property in or subject to the laws of Quebec;

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(d)charges/mortgages of land with a copy of the debenture attached thereto for registration against the real property of the Borrower, Holdings, and each Subsidiary Guarantor, where applicable;

(e)to the extent not included in the debenture and hypothec a first assignment by the Borrower, Holdings and each Subsidiary Guarantor to the Lender of all present and future property insurance in effect covering the Borrower’s assets, naming the Lender as loss payee and first mortgagee together with the consent of the insurers thereto and a standard mortgage endorsement clause; and

(f)a first specific hypothecation and pledge by the Borrower, Holdings and each Subsidiary Guarantor to the Lender of all of the issued and outstanding securities now or hereafter issued by all direct or indirect existing and future Subsidiaries of the Borrower or Holdings, and delivery to the Lender of all share certificates evidencing such securities issued by each such Subsidiary and duly endorsed by owner thereof in blank for transfer (or if requested by the Lender, re-issued in the name of the Lender) or a power of attorney with respect thereto.

15.2 Registration

The Lender may, at the expense of the Borrower, register, file or record the Security Documents or financing statements or notices in respect thereof in all offices where such registration, filing or recording is, in the opinion of the Lender or its counsel, acting reasonably, necessary to the creation, perfection or preservation of the charges, assignments and security interests arising pursuant thereto. The Lender may, at the Borrower’s expense, renew such registrations, filings and recordings from time to time as and when required to keep them in full force and effect. The Borrower acknowledges that the forms of Security Documents have been prepared based on the laws in effect at the date of execution thereof and that such laws may change, and that the laws of other jurisdictions may require the execution and delivery of different forms of security instruments in order to grant to the Lender the rights intended to be granted by the Security Documents. The Borrower, Holdings, and each Subsidiary Guarantor shall, on the reasonable request from the Lender from time to time, execute and deliver to the Lender such additional security instruments and related documents and will amend or supplement any security theretofore provided to the Lender:

(a)to reflect any changes in such laws, whether arising as a result of statutory amendments, court decisions or otherwise;

(b)to facilitate the registration of appropriate forms of security or other documents in all appropriate jurisdictions; or

(c)if the Borrower amalgamates with any other person or enters into any corporate reorganization,

in each case in order to confer upon Lender such security interests with such priority, as are intended to be created by the Security Documents.

15.3 Additional Security by the Borrower

To the extent that:

(a)any applicable law or its interpretation is varied such that the Lender considers it advisable to receive additional security; or

(b)additional assets come into existence or are acquired by the Borrower, Holdings, or any Subsidiary Guarantor or the Borrower, Holdings or any Subsidiary Guarantor enters into a material contract,

the Borrower, Holdings, or the applicable Subsidiary Guarantor, as applicable, shall, within 30 days after a request from the Lender, execute and deliver to the Lender first (subject to any applicable Permitted Liens which may have priority) specific assignments, pledges or charges thereof or security interests therein as required by the Lender, in form and substance satisfactory to the Lender, whereby such assets are assigned, pledged, mortgaged and charged to the Lender, together with legal opinions from the Borrower’s counsel, consents and other documents, all in form and substance satisfactory to the Lender related to such matters as the Lender may reasonably request.

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15.4. Release of Collateral

Collateral may be released only in accordance with the terms of the Security Documents.

15.5. Termination of Security Interest.

Upon the payment in full of all Obligations of the Borrower under this Agreement, the Lender shall, at the request of the Borrower, promptly deliver a certificate to the Borrower stating that such Obligations have been paid in full, and at Borrower’s request and expense, take all actions reasonably requested to release all rights and interests of the Lender with respect to the Liens under the Security Documents.

15.6. Termination of Security Interest to Permit High Yield Debt Offering.

In the event the Borrower proposes to incur High Yield Debt of not less than USD $75 million under Section 6.1(iii) that is not subject to any security interest, encumbrance or charge, and the Borrower certifies to the Lender that Borrower is in compliance with all of the covenants herein regarding incurrence of Indebtedness and Liens (including without limitation Section 6.1 and 6.3), the Lender shall, at Borrower’s request and expense, take all actions reasonably requested to release all rights and interests of the Lender with respect to the Liens under the Security Documents effective immediately prior to the incurrence of such High Yield Debt by the Borrower, and the provisions of Section 15.1, 15.2 and 15.3 and other sections of this Agreement relating to the Security Documents shall cease to apply immediately following such release.

15.7. Intercreditor Agreement

In the event the Borrower proposes to incur any Senior Bank Indebtedness, the Lender and the Borrower shall negotiate in good faith with the lender of such Senior Bank Indebtedness an intercreditor agreement on customary terms and conditions.

16. 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.

17. Binding Effect

This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns, except that the Borrower shall not have the right to assign their respective rights or obligations hereunder, other than to an Affiliate, or any interest herein without the prior written consent of the Lender which may be withheld for any reason.

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

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF ONTARIO AND THE LAWS OF CANADA APPLICABLE THEREIN. Without prejudice to the right of the Lender to commence any proceedings with respect to this Agreement in any other proper jurisdiction, the parties hereby attorn and submit to the jurisdiction of the courts of the Province of Ontario. THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER DOCUMENT CONTEMPLATED HEREIN.

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19. Miscellaneous

19.1. 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.

19.2. 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.

19.3. 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 without limitation, entering into the other Transaction Documents to which each is a party.

19.4. Interest Act Disclosure

For purposes of the Interest Act (Canada) it is hereby agreed that where interest is calculated pursuant to this agreement at a rate or percentage based on a year of 360 days, the yearly rate or percentage of interest to which such interest rate is equivalent, is the rate obtained by multiplying such rate by the actual number of days in the relevant year and dividing by 360.

19.5 Canadian Currency

All dollar amounts referred to herein are denominated in Canadian currency unless otherwise expressly provided.

19.6 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.

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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.
By:	/s/ Gary M. Parsons
	Name: Gary M. Parsons
	Title: Chairman

CANADIAN SATELLITE RADIO INC.
By:	/s/ John I. Bitove
	Name: John I. Bitove
	Title: Chairman and CEO

CANADIAN SATELLITE RADIO HOLDINGS INC.
By:	/s/ John I. Bitove
	Name: John I. Bitove
	Title: Chairman and CEO

Signature Page to Credit Agreement

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Exhibit A

Form of Request for Advance

[Date]

XM Satellite Radio Holdings Inc.

1500 Eckington Place, NE

Washington, D.C. 20002-2194

Fax No.: (202) 380-4500

Attention: General Counsel

Ladies and Gentlemen:

The undersigned, Canadian Satellite Radio Inc. (the “Borrower”), refers to the Credit Agreement, dated as of _______ __, 2005 (as amended from time to time, the “Credit Agreement”, the terms defined therein being used herein as therein defined), among XM Satellite Radio Holdings Inc., as Lender, the Borrower, and Canadian Satellite Radio Holdings Inc., and hereby gives you, Lender, irrevocable notice, pursuant to Section 2.2(a) of the Credit Agreement, that the undersigned hereby requests an Advance under the Credit Agreement, and in that connection sets forth below the information relating to such Advance as required by Section 2.2(a) of the Credit Agreement:

(i)The Business Day of the proposed Advance is _________ __, ___ (the “Funding Date”) ¹

(ii)The aggregate amount of the proposed Advance is Cdn$__________.

(iii)The aggregate amount of the proposed Advance to be used for Repeater Obligations and Subscription Fee Obligations, respectively, is Cdn$______________ and Cdn$_________________.

(iv)The proposed Advance is being requested for [______________].

(v)The proceeds of the proposed Advance shall be made available to XM Satellite Radio Inc. to pay the Repeater Obligations and Subscription Fee Obligations then due and owing.

The undersigned hereby certifies that (A) each of the conditions set forth in Section 4.2(b) of the Credit Agreement have been satisfied as of the Funding Date and (B) no Default or Event of Default has occurred and is continuing.

	Very truly yours, CANADIAN SATELLITE RADIO INC.
Date:	By:	/s/
		Title

[Must be signed by an authorized officer.]

^{1 This date shall be the date on which the Repeater Obligations and/or Subscription Fee Obligations being funded by such Advance become due and owing in respect of any such Obligations.}

Exhibit B

Form of Agreement Subsidiary Guarantee

Exhibit C

Form of Holdings Guarantee

Schedule 1.1.PL(14)-Permitted Liens

NIL, subject to completion of a lien search to identify lien filings that the Borrower and Holdings are not presently aware of.

Schedule 6.1(v)—Indebtedness

Holdings and/or the Borrower are indebted to affiliates of Canadian Satellite Radio Investments Inc. for amounts advanced in connection with the funding of the Borrower’s business. These amounts are to be repaid upon, and out of, the contribution by Canadian Satellite Radio Investments Inc. of an additional $15 million in capital.

EX-10.2

EXHIBIT 10.2

EXECUTION VERSION

XM SYSTEM LICENCE AGREEMENT

THIS XM SYSTEM LICENCE AGREEMENT (the “Agreement”) made as of the 17th day of November 2005 (the “Effective Date”).

B E T W E E N:

XM SATELLITE RADIO INC.

(hereinafter referred to as “XM”)

and

CANADIAN SATELLITE RADIO HOLDINGS INC.

(hereinafter referred to as the “CSR Parent”)

and

CANADIAN SATELLITE RADIO INC.

(hereinafter referred to as “CSR”)

WHEREAS, pursuant to the Memorandum of Agreement (“MOA”) dated August 7, 2003 among XM Satellite Radio Holdings Inc. (“XM Parent”), XM, CSR Parent and CSR, CSR has applied to the Canadian Radio-television and Telecommunications Commission (“CRTC”) for and has received a licence award, the licence to come into effect when certain conditions are met, to provide satellite digital audio radio services (“SDARS”) within Canada (the “CRTC Licence”) and Industry Canada intends to make available to all radio spectrum authorizations that are necessary to provide SDARS (the “IC Rights”, which, together with the CRTC Licence, constitutes the “Canadian Licences”).

WHEREAS, pursuant to the MOA, it was agreed that following receipt of the Canadian Licences XM would grant to CSR the licence and would provide such related information, expertise, and ancillary services that are the subject of Technical Services Agreement and this XM System Licence Agreement, subject to the terms set forth herein.

NOW THEREFORE in consideration of the premises and the mutual agreements and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.Grant of Licence. XM hereby grants to the CSR an exclusive, non-transferable right and licence, on the terms set forth herein, to do the following throughout Canada:

1.1 to offer and provide to Subscribers (as defined in Article 1.2 below) the XM CPackage Basic Channels listed in Part 1 of Schedule A, as updated from time to time as provided herein (“XM CPackage Basic Channels”), in combination with those channels CSR supplies to XM pursuant to the Programming Agreement as defined below (the “CSR Channels”), as part of the basic services (the XM CPackage Basic Channels and CSR Channels in the basic service being referred to collectively as the “Basic Canadian Service”) for the purposes of making the Basic Canadian Service available to Subscribers in Canada for a periodic subscription fee, along with the XM CPackage Premium Channels listed in Part 2 of Schedule A, as updated from time to time as provided herein (“XM CPackage Premium Channels,” (and together with XM CPackage Basic Channels, the “XM CPackage Channels”)), that are offered by XM as part of its premium SDARS in the United States and made available to Subscribers for additional fees over and above the periodic subscription fee for the Basic Canadian Service (“Premium Canadian Services”); and

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1.2 to sell subscriptions within Canada to the Basic Canadian Service and Premium Canadian Services (collectively, the “Services”) solely as transmitted by XM’s satellites (the “XM Satellites”) to paying customers (except that CSR may provide the Basic Canadian Service on a short-term promotional basis to prospective non-paying Canadian Subscribers) who reside in Canada and provide CSR with appropriate Canadian residence information (including address and phone number) when activating an XM receiver or otherwise becoming a self-paying subscriber (each, a “Subscriber”) electing to subscribe to the Services; and

1.3 to retransmit the signal received within Canada from the XM Satellites in mutually agreed locations within Canada using terrestrial repeaters located in Canada; and

1.4 to record the XM CPackage Channels so long as it is required by the CRTC.

2.Licence Restrictions. The licence is subject to the following restrictions:

2.1 The parties acknowledge and agree that it is not technically or commercially feasible at this time for XM to tailor packages for individual CSR subscribers in Canada beyond one basic service package and specific premium services. Accordingly, CSR must offer the Basic Canadian Service package in its entirety to each Subscriber that elects to receive the Services (subject to individual Subscriber channel blocking as may be implemented pursuant to the Technical Services Agreement). CSR may only offer Premium Canadian Services to persons or entities who are subscribers to the Basic Canadian Service package. In the event that in the future XM offers different or more tailored packages other than a single basic service and add-on premium services to its subscribers within the U.S. as part of its general service offering, the parties will negotiate in good faith to enable CSR to offer such other packages within Canada, to the extent such offering would be practical and commercially reasonable given any relevant regulatory, contractual and economic considerations.

2.2 CSR may not intentionally or knowingly offer or provide any portion of the Services to non-residents of Canada, and may only offer the Services in compliance with the Canadian Licences.

2.3 The only Service that CSR is presently authorized to offer to Subscribers is SDARS programming that is broadcast by XM included in the Basic Canadian Service and Premium Canadian Services, as transmitted by the XM Satellites or as retransmitted within Canada using terrestrial repeaters located in Canada. CSR may not deliver the Services via any other method of transmission, whether by terrestrial or wireless transmission, via the Internet or otherwise, without XM’s prior written consent, which it may withhold in its sole discretion.

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2.4 The Services must be offered on a nation-wide basis, within the coverage of the XM Satellites and the CSR terrestrial repeater network to retransmit the signal received within Canada from the XM Satellites.

3.Other Definitive Agreements. Concurrently with the execution of this Agreement, the parties hereto, along with CSR Parent and XM Parent in certain cases, are entering into the following agreements dated on or about the date hereof, among others (all such agreements and documents, whether or not listed below, being referred to herein as the “Transaction Documents”):

(i) the XM Trade-mark Licence Agreement, under which CSR shall be permitted to use certain trademarks, service marks and other intellectual property and goodwill associated with XM and XM shall be permitted to use certain trademarks, service marks and other intellectual property and goodwill associated with CSR, in each case for the purposes specified therein (the “Trade-Mark Agreement”);

(ii) the Programming Agreement (the “Programming Agreement”), which shall prescribe the terms by which XM shall broadcast the CSR Channels via the XM Satellites;

(iii) the Technical Services Agreement (the “Technical Services Agreement”), pursuant to which XM will provide (1) certain technical support in connection with the installation and roll-out of terrestrial repeaters used to extend the reach of the Services within Canada and (2) other services, including technical assistance with interfaces between CSR and XM systems and operational support; and

(iv) the Share Issuance Agreement, providing for the issuance to XM Parent of shares representing an agreed interest in CSR Parent, and the Shareholders Agreement, containing certain agreements on governance matters among CSR Parent, XM Parent and Canadian Satellite Radio Investments Inc.

4.Licence to Distribute the XM CPackage Channels in Canada.

4.1 The XM CPackage Offering. The channels comprising the Services to be distributed in Canada consist of the XM CPackage Channels and the CSR Channels. The terms for producing and distributing the CSR Channels are set forth in the Programming Agreement. The “XM CPackage Channels” shall mean 72 SDARS programming channels and four (4) specified part time channels broadcast by XM from time to time via the XM Satellites selected mutually by XM and CSR from the channels that are offered by XM as part of its basic SDARS in the United States. XM reserves the right to withdraw any channels from the XM CPackage Channels that XM is withdrawing from its U.S. service or for which neither XM nor CSR has Canadian distribution rights despite their efforts to acquire such rights. XM and CSR agree that approximately 50 of the XM CPackage Channels will be music channels. XM shall have the right to determine the format, nature, content and quality of the XM CPackage Channels chosen by XM and CSR, taking into account Canadian regulatory limitations and CSR’s desire for a marketable offering. If either party wishes to increase the number of XM CPackage Channels beyond 72 channels and four part time channels, the parties shall negotiate in good faith whether and on what terms to increase the number of CSR Channels beyond the initial nine (9) channels provided for in the Programming Agreement. However, XM will not be obligated to increase the number of XM CPackage Channels beyond an aggregate of 72 channels and four part time channels at a time when the terms of the CRTC Licence prohibit more than 9 non-Canadian channels for each Canadian channel and the number of CSR Channels provided under the Programming Agreement still consists of the initial nine (9) channels.

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4.2 Changes to the XM CPackage Offering. If (i) the CRTC determines that a particular XM CPackage Channel may not be distributed in Canada or attaches a condition prohibiting distribution of a particular XM CPackage Channel, or (ii) XM no longer has the right to distribute such XM CPackage Channel in Canada, the affected XM CPackage Channel shall not be included in the Services offered by CSR in Canada and Schedule A shall be deemed revised to reflect the same. In the event of the foregoing, CSR shall seek reconsideration from the CRTC to permit transmission of any such prohibited XM CPackage Channels as part of the Services offered by CSR within Canada. If the CRTC subsequently approves transmission of any such XM CPackage Channel and XM is continuing to broadcast that XM CPackage Channel, the XM CPackage Channel shall thereafter be included in the Services offered by CSR in Canada and Schedule A shall be deemed revised to reflect such development. All replacement channels to be included in the XM CPackage Channels shall be mutually chosen by XM and CSR.

4.3 Delivery of Modified XM CPackages. If one or more XM CPackage Channels are no longer included in the Services, XM shall make commercially reasonable efforts in coordination with CSR to disable reception of such XM CPackage Channels by Subscribers. CSR acknowledges and agrees that XM will only be able to use commercially reasonable efforts to restrict reception of such XM CPackage Channels to the extent XM receives the required information from CSR, and such Subscriber and radio-related information including radio identification data as may be reasonably requested by XM. XM will have no liability to CSR for any transmissions received by any Subscriber for which CSR has failed to provide accurate and complete information.

4.4 Cross Border Issues; Gray Market Subscribers. The parties acknowledge that under present regulations and licences XM may not market its SDARS service to Canadian residents, and CSR may not market its SDARS service to U.S. residents. The parties further acknowledge that XM currently cannot prevent the reception of such XM CPackage Channels or any other XM channels and/or services in Canada by radios sold with a U.S. identification or configured to receive the U.S. service, including radios sold in the U.S. but transported to Canada, and cannot prevent U.S.-based subscribers from subscribing for CSR’s subscription offerings. The parties also acknowledge that XM can only implement reception blocking or package swapping (replacing a U.S. package of channels for a Canadian package) in radios that are operating when XM broadcasts the signals that implement such blocking or swapping, and cannot accept any liability to CSR or to any third party for any unauthorized receptions or for radios that were not operating when blocking or swapping signals were broadcast. Within the 12 month period commencing on the effective date XM and CSR will evaluate the cost effectiveness of methods or technology that use credit card billing addresses from databases to identify “gray market” subscribers and at CSR’s option will work in good faith to implement the same within such 12 month period. The cost of any changes to XM’s billing system to use Canadian credit card billing addresses from databases to identify “gray market” subscribers shall be borne by CSR. If XM implements one or more methods of or technologies for minimizing the number of or eliminating “gray market” subscribers, it shall make the methods or technologies available to CSR, and CSR shall implement the same to identify Subscribers with U.S. credit card billing addresses.

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4.5 XM’s Third Party Programming. XM shall have sole responsibility for maintaining relationships and negotiating agreements with third party programming providers to acquire Canadian distribution rights for the XM CPackage Channels throughout the term of this Agreement.

4.6 Performance Rights Royalties. With respect to the XM CPackage Channels, CSR shall be responsible for all costs and expenses incurred to obtain, maintain, and report on all performance rights, including all required payments to the Canadian equivalents of ASCAP, BMI, SESAC, and the RIAA (i.e., SOCAN) and to all Canadian regulatory tribunals or ratemaking bodies in respect of the copyright rates that may be set for reproduction or retransmission of the Services in Canada, and all analogous amounts payable as a result of the Canadian Licences.

4.7 XM CPackage Channels Compliance with Laws. CSR will bring to XM’s attention any concerns that the programming content of one or more of the XM CPackage Channels may not be permitted by or be consistent with Canadian law. The parties will work cooperatively to ensure that the XM CPackage Channels comply with all applicable Canadian laws, including any Canadian laws regarding programming content that is obscene, indecent, pornographic, defamatory, libelous, slanderous, or infringing of any third party’s intellectual property or other rights, including without limitation, privacy, publicity or personality rights.

4.9 Licence Expectations. XM and CSR acknowledge the expectation of the CRTC Licence that 60% of the original Canadian-produced channels distributed by satellite subscription radio undertakings in Canada be music channels, and that failure to meet this expectation may impact the ability of CSR to renew theCRTC Licence. XM and CSR acknowledge that CSR has committed that 7% of all new musical selections added to the playlists of the XMCPackage Channels each week shall be Canadian selections (the “CSR New Musical Selections Commitment”). XM agrees to use reasonable commercial efforts, at CSR’s sole cost and with CSR’s assistance in obtaining the requisite programming, to add musical selections to the playlists of the XMCPackage Channels in a manner that would enable CSR to meet the CSR New Musical Selections Commitment.

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4.10 Insurance. Each party shall maintain, at its own cost and expense, commercial insurance that is reasonable and customary for a company of its size and circumstances, including insurance covering the third party liability aspects of its obligations under this Agreement under an “errors and omissions” or similar commercially available policy. The insurance requirement in the prior sentence shall apply to the extent such insurance is available at a commercially reasonable cost in the commercial (as distinguished from specialty) insurance market. Nothing in this Agreement or the other Transaction Documents shall require either party to obtain any special or unusual insurance coverage. Such insurance shall remain in force at all times during the Term hereof and for a period of five (5) years thereafter. Upon the reasonable request of one party, the requested party shall provide the requesting party with a certificate of insurance evidencing this coverage, or other appropriate proof of continuing insurance coverage.

5.Consideration.

5.1 As consideration for the licence granted hereunder and such related information, expertise, and ancillary services that are the subject of this XM System Licence Agreement, CSR shall pay to XM the following fees.

5.1.1 Subject to Article 5.1.2 below, CSR will pay to XM, on a monthly basis, 15.0% of all Subscriber revenue earned by CSR or any of its Affiliates with respect to each month for the Basic Canadian Service (the “Basic Canadian Service Fees”), as determined in accordance with Canadian generally accepted accounting principles, applied on a consistent basis.

5.1.2 If in any month CSR provides the Basic Canadian Service to persons or entities (which for such month shall be based upon the number of cumulative activations, less the number of cumulative deactivations) for a per subscriber amount that is less than 70% of the amount XM then is charging on average per subscriber per month for its basic satellite radio service (comparing family plan, multi-year or other prepayment plans and other special groups of subscribers charged separate rates by XM to comparable plans for or groups of Subscribers), as converted into Canadian dollars based upon the average Bank of Canada noon spot rate for such month (the “Base Per Subscriber Amount”), then CSR shall be deemed to have received, for purposes (and only for such purposes) of determining the Basic Canadian Service Fees, from each such person or entity Subscriber fees in an amount equal to the Base Per Subscriber Amount; provided, however, that to the extent that CSR provides the Basic Canadian Service for free or nominal amount on a short-term promotional basis to prospective Canadian Subscribers, such persons shall be excluded for purposes of the Basic Canadian Service Fees calculation.

5.1.3 For greater certainty, CSR shall be entirely free to determine the actual prices and charges for the Services, activations, and other items sold to its Subscribers and other customers, and nothing in this Agreement shall limit CSR's ability to do so.

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5.1.4 CSR will pay to XM, on a monthly basis, 50.0% of the net revenues earned by CSR or any of its Affiliates from any Premium Canadian Services (“Premium Canadian Service Fees”), where “net revenues” shall be determined in accordance with Canadian generally accepted accounting principles, applied on a consistent basis, but after excluding licensing, production, promotional and distribution costs associated with such Premium Canadian Services. The parties acknowledge that this approach is being agreed to prior to any determination of how CSR will offer and market Premium Canadian Services, and that in the event XM notifies CSR that the 50.0% of net revenue approach will not provide a meaningful economic return to XM, the parties shall negotiate in good faith a different approach to determining XM’s fees for the Premium Canadian Services.

5.1.5 The parties acknowledge that the Basic Canadian Service Fees are determined on a gross basis, without any deductions, based on the understanding that costs are to be borne in the manner specified in this Agreement. In the event that the parties agree that XM is to bear a portion of the costs allocated to CSR under this Agreement, the parties shall negotiate in good faith an increase in the percentage specified in Article 5.1.1. Similarly, the parties acknowledge that such percentage was negotiated based upon an understanding that approximately 50 of the XM CPackage Channels would be music channels and/or would not have any significant fees or other amounts being payable to third party costs programming providers. To the extent that the percentage of music or other no-fee channels is at any time below such range (other than for failure of CSR to agree to the selection for the XM CPackage Channels from music channels comprising part of XM’s U.S. service), the parties shall negotiate in good faith a reduction in the percentage specified in Article 5.1.1. The parties agree that the percentage specified in Article 5.1.1 for the Basic Canadian Service Fees will not increase in the event the parties mutually agree that the number of XM CPackage Channels is to be increased beyond 72 channels and four part time channels.

5.1.6 CSR shall pay XM an activation charge each time XM activates a Subscriber’s radio identification at the request of CSR, including costs associated with reception blocking or package swapping efforts by XM (each an “Activation Charge”).

5.2 For purposes of this Agreement, an “Affiliate” is any entity that controls, is controlled by or under common control with a party hereto; except that Affiliates of XM shall not include CSR, CSR Parent or any direct or indirect subsidiary of either (“CSR Entity”), and Affiliates of CSR shall not include XM, XM Parent or any direct or indirect subsidiary of either that is not a CSR Entity.

5.3 CSR shall be entitled to retain all advertising fees attributable to advertising placed on any of the CSR Channels. CSR shall have no rights to share in any advertising fees attributable to advertising placed on any of the XM CPackage Channels. CSR acknowledges that under the Programming Agreement channels with advertisements cannot be considered music channels or placed within the lineup of music channels included in the Services (so long as XM applies this policy to its channels).

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5.4 CSR shall pay the Basic Canadian Service Fees and Premium Canadian Service Fees to XM on a monthly basis in arrears, with payment for each month to be due by the tenth business day of the following month. CSR shall provide to XM, together with such payment, a report specifying the total number of Subscribers (on both a gross addition and ending Subscriber basis) for each of the Basic Canadian Service and the various Premium Canadian Services (including also the number of family plan, multi-year prepayment plan and other pre-paid subscriptions), the number of Subscribers from the previous reporting period who cancelled or did not renew their subscriptions, the number of Subscribers from the previous reporting period who did not convert from trial or promotional programs (upon conclusion of such trial or promotional programs) into self-paying Subscribers, the total number of Subscribers on trial or promotional programs, the total amount invoiced or otherwise charged to Subscribers, the total amount actually collected, the amount of licensing, production, promotional and distribution costs that were deducted from the amounts collected for Premium Canadian Services, the total amount of the Basic Canadian Service Fees and Premium Canadian Service Fees due to XM for such month and any other similar information reasonably requested by XM from time to time. The CSR subscriber information CSR provides to XM shall be at least as detailed as that reflected in the XM Daily Subscriber Report template provided by XM to CSR (including breakdowns of activity by OEM partner, retail partner, etc.). CSR will work with XM to provide any additional subscriber information, subject to privacy and personal information regulation constraints, that may be requested by XM from time to time. All obligations of CSR to provide CSR subscriber information are subject to applicable provisions of Canadian law, including all Canadian privacy and personal information protection legislation, provided that if certain information cannot be provided as a result of such provisions or legislation, XM shall be entitled to require CSR to deliver other CSR subscriber information in lieu thereof that can be provided consistent with such provisions or legislation.

5.5 XM shall invoice CSR on a monthly basis in arrears for all Activation Charges incurred during each month. CSR shall pay the amount set forth in each such invoice within ten (10) business days after receipt of such invoice.

5.6 CSR acknowledges and understands that XM currently has and in the future will obtain licenses for certain technology used to manufacture XM radios and similar devices from third party technology providers. In consideration for XM sublicensing such technology to radio manufacturers or others for the benefit of CSR, such fees will be included in the Activation Charge.

5.7 All amounts to be paid by either party to the other hereunder shall be paid by wire transfer in immediately available funds to an account designated in writing by the party receiving such payment. Unless otherwise agreed in writing by the parties, all amounts payable by CSR for the fees specified above shall be payable in Canadian Dollars. To the extent CSR is obligated to reimburse XM hereunder for amounts paid by XM in U.S. Dollars, CSR shall pay such amounts in U.S. Dollars or in the Canadian Dollar equivalent obtained by multiplying the applicable U.S. Dollar amount by the noon spot rate as listed by the Bank of Canada two business days prior to the date such payment is due, or if paid prior to such date, two business days prior to the date of payment (the “Conversion Rate”). All amounts payable by XM shall be payable in U.S. Dollars, except that to the extent XM is obligated to reimburse CSR hereunder for amounts paid by CSR in Canadian Dollars, XM shall pay such amounts in Canadian Dollars.

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5.8 XM and CSR, respectively, shall be entitled to impose a late payment charge of one and one-half percent (1.5%) per month or the maximum amount permitted by law (whichever is less) on all past due amounts owed by CSR or XM hereunder. In the event that XM or CSR has to proceed with collection efforts to collect any past due amount, such party shall be entitled to be reimbursed for all costs of collection (including reasonable attorneys’ fees) incurred as a result of such collection efforts.

5.9 Neither CSR nor XM will setoff or offset against the other any undisputed amounts that are claimed to be due to it. Each of CSR and XM waives any right to setoff, offset or withhold payment of amounts payable to the other based on any claims for any undisputed amounts that are due to it under this Agreement or otherwise.

5.10 CSR shall maintain accurate and complete books and records of its financial activities under this Agreement sufficient to enable XM to verify CSR's performance under this Agreement and the fees and other amounts payable by CSR to XM hereunder. Such books and records shall include, without limitation, all records relating to the number of Subscribers, the sale of Services to Subscribers, the amounts collected therefrom, and the fee shares and other amounts payable by CSR to XM hereunder, and any other matters described in this Agreement as being subject to verification and audit. CSR shall maintain all such books and records at its principal administrative office in Canada, or at an offsite provider of data storage services, throughout the term of this Agreement and for a period of seven (7) years thereafter. Such books and records shall be maintained in accordance with prudent standards of good record keeping and in accordance with applicable Canadian generally accepted accounting principles (“GAAP”).

5.11 CSR shall provide to XM, its auditors (including internal and external auditors), inspectors, regulators and other representatives as XM may from time to time designate in writing, access at all reasonable times to CSR’s principal administrative office in Canada, and to books and records and other data relating to the Services, all as reasonably necessary for the purpose of enabling XM to perform audits and/or inspections thereof in order to: (1) verify the accuracy of the amounts paid by CSR to XM under this Agreement; and (2) CSR’s compliance with the other applicable terms of this Agreement. All financial/accounting audits shall be conducted during CSR's normal business hours and shall be conducted so as to reasonably avoid disruption to CSR’s business operations. Nothing in the Agreement shall limit or restrict either party's rights in discovery proceedings pursuant to any civil litigation. Such audits shall be conducted no more frequently than once per year, unless a prior audit has found material discrepancies or irregularities, in which case such audits may be conducted on a more frequent basis as is reasonable under the circumstances. In the event any audit indicates an underpayment, the discrepancy shall be paid within ten (10) business days from receipt of notice of such underpayment from the auditing party. If any audit finds material discrepancies or irregularities, CSR shall reimburse XM for the cost of such audit and all subsequent audits until one audit is completed without identifying any material discrepancies or irregularities. For purposes of this Article only, discrepancies or irregularities shall be considered material if they involve aggregate adjustments of 5% or more.

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5.12 As part of the consideration for the licence granted hereunder, CSR Holding agrees to guarantee the payment and performance by CSR of all amounts due and all obligations of CSR hereunder.

6.Repeater Network; Broadcast Facilities; Technology.

6.1 CSR has developed and provided to XM its master repeater plan, with roll-out schedules, for installing the terrestrial repeaters needed to extend the XM Satellite transmissions to mutually agreed locations within Canada. The parties understand that this master repeater plan will be revised from time to time based upon inputs from XM and CSR’ s authorized repeater-related vendors. CSR shall use reasonable commercial efforts to implement the master repeater plan, taking into account the guidance provided by XM’s engineers on coverage of the XM Satellites over the major metropolitan areas of Canada and the design and engineering support provided by XM. Notwithstanding the above, the Parties understand that a 99.3% Service availability will be required along pre-determined and mutually agreed drive test routes within the mutually agreed market area for each city in which a repeater network shall be designed, deployed and maintained for such city network to be deemed complete and ready for launch of Services. Any changes to the master repeater plan affecting Service availability, Service quality or timing of commencement of Services (including any modification to the 99.3% Service availability requirement over time) shall be subject to the approval of XM.

6.2 The master repeater plan contains roll-out phases, including phases relating to initial launch of the Services and phases for the extension and expansion of the repeater network over time following launch. CSR shall use reasonable commercial efforts to implement the master repeater plan diligently and in accordance with the pre-launch and post-launch roll-out schedules.

6.3 CSR shall use reasonable commercial efforts to cause the retransmissions of the Services within Canada of content via such repeaters to make the Services available to Subscribers twenty-four hours a day, seven days a week.

6.4 CSR shall use reasonable commercial efforts to provide operations and maintenance services, or ensure that such services are contracted for and provided for each repeater site in the repeater network throughout the Term of this Agreement. Such operations and maintenance services will be provided at a level substantially similar to that of XM’s operations and maintenance services within the U.S. and shall include both preventive and corrective maintenance.

6.5 CSR shall monitor, or cause to be monitored, each repeater site for performance and troubleshooting purposes on a twenty-four by seven, three hundred sixty five day per year basis and in a manner substantially similar to how XM conducts such monitoring.

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6.6 CSR has developed and provided to XM its master plan for its broadcast operations infrastructure, including studio facilities, related hardware and software requirements and procurement of dedicated connectivity between any and all CSR broadcast facilities and XM, with roll-out schedules, for constructing and deploying these facilities. The parties agree and understand that this master broadcast operations infrastructure plan will be revised from time to time based upon inputs from XM and CSR’ s authorized repeater-related vendors.

6.7 XM shall, in coordination with CSR, have primary responsibility for maintaining relationships and negotiating agreements with third party technology providers to acquire intellectual property rights required to enable radios or other devices to receive the Services within Canada throughout the term of this Agreement. Prior to obtaining such rights from any such third party technology provider, CSR and XM shall discuss the revenue share or other payment to be paid to each such provider for such rights, such payments to be set by reference to then-prevailing market practices with respect to sales of similar types of rights and to the payments paid by XM with respect to obtaining such rights within the U.S. Any resulting agreement will be entered into between CSR and such provider. CSR agrees to enter into any such agreement that is a reasonable business proposition, which shall be determined by CSR using a cost-benefit analysis based upon the CSR business plan, looking to the expected impact on CSR’s ability to obtain future Subscribers of obtaining such distribution rights, the costs of the same and CSR’s ability to fund such costs with its current or expected financial resources. CSR will provide to XM promptly all of the cost-benefit analyses performed by CSR regarding acquisition of intellectual property rights, and will consult with XM concerning each of these analyses prior to finalization. XM agrees to assist CSR with such cost-benefit analyses and CSR will use reasonable efforts to take into account XM’s views regarding such cost-benefit analyses.

6.8 If at any time there is a disruption in the satellite transmission of the Services in the Canadian footprint of the XM Satellites for a period of greater than five minutes as a result of an error, problem or failure with or originating with the XM Satellites or XM’s satellite network system, and not, for greater certainty, CSR’s terrestrial repeater network (a “Service Disruption”), CSR will immediately notify XM, and XM shall keep CSR advised of XM’s efforts to resolve the Service Disruption (provided that XM shall have no obligation to provide technical data to CSR).

6.9 XM agrees that in the event of a decision by XM to discontinue, in whole or in substantial part, offering U.S.-based SDARS, it shall provide CSR with such prior written notice that is reasonable under the circumstances.

7.Responsibilities for Activations and Deactivations, Billing and Customer Service, and System Coordination.

7.1 To activate new Subscribers, CSR shall provide XM, or direct that its distribution partners provide XM as mutually agreed, with an activation request, together with all information reasonably requested by XM or specified in any standard procedures prepared by XM and delivered to CSR. Activation requests to XM will be sent via computer system interface or other electronic transmission in a form reasonably requested by XM or specified in any standard procedures prepared by XM and delivered to CSR. XM will send notice to CSR via computer system interface or other electronic transmission after each Subscriber activation becomes effective. XM can only confirm that XM’s business and uplink systems have successfully processed the request and that over-the-air activation signals are being transmitted. The business systems and uplink systems will indicate that the state of the device is “activated”. Activation of the device requires reception of the "activation signal". Reception can be affected by a multitude of issues. XM shall have the right to assign or allocate radio identification codes to activate Subscribers, and to control all encryption and security functions related to receipt of service from the XM Satellites.

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7.2 CSR shall be responsible for advising XM of the need to deactivate Subscribers. CSR shall adopt (in consultation with XM) a policy of when to deactivate non-paying Subscribers, but agrees to provide a copy of such policy and any updates to such policy to XM and to implement such policy vigorously. The parties acknowledge that CSR shall be entitled for a credit for the period after it has advised XM in accordance with this Agreement of the need to deactivate Subscribers until a Subscriber is deactivated for purposes of the Subscriber fee formula in Article 5.1 above if, but only if, CSR submits to XM reasonably detailed information regarding the Subscribers that were deactivated and the time period between notification and deactivation. CSR shall indemnify and hold XM harmless from any and all loss, liability, cost, damages and expenses suffered, including reasonable legal fees and expenses, with respect to any third party claim based on any deactivation by XM based upon a deactivation request from CSR. To deactivate Subscribers, CSR shall provide XM with a deactivation request, together with all information reasonably requested by XM or specified in any standard procedures prepared by XM and delivered to CSR. Deactivation requests to XM will be sent via computer system interface or other electronic transmission in a form reasonably requested by XM or specified in any standard procedures prepared by XM and delivered to CSR. XM will send notice to CSR via computer system interface or other electronic transmission to notify CSR after each Subscriber deactivation becomes effective. The parties acknowledge that XM can only confirm that XM’s business and uplink systems have successfully processed the request and that over-the-air deactivation signals are being transmitted. The business systems and uplink systems will indicate that the state of the device is “deactivated”. Deactivation of the device requires reception of the "deactivation signal," and reception can be affected by a multitude of issues outside of the control of XM. There are situations where XM will seek to deactivate to limit fraud. Examples of this situation are "factory activated" devices that have been installed for more than a certain period of time but have never been activated by CSR, even after the vehicle in which the device is installed has been sold to a consumer.

7.3 Information needed for Subscriber activation and deactivation shall be in the format reasonably requested by XM and in accordance with Article 7.1 and Article 7.2, which may include computer data files formatted as specified by XM, and transmitted via computer system interface or other electronic transmission in a form reasonably requested by XM or specified in any standard procedures prepared by XM and delivered to CSR. Once information complying with the foregoing is received by XM, it will activate or deactivate Subscribers consistent with the level of effort and with the timing as XM uses for its own U.S.-based subscribers. XM shall have no liability to CSR for failures to activate or deactivate Subscribers within any specified period, and CSR shall be responsible for re-notifying XM if CSR has not received notice from XM confirming the Subscriber activation or deactivation.

7.4 The parties shall conduct a reconciliation of activated and deactivated Subscribers on at least a quarterly basis, or on such other basis as the parties may agree upon. Information needed for the reconciliation shall be in the format reasonably requested by XM, which may include computer data files formatted as specified by XM, and transmitted via computer system interface or other electronic transmission in a form reasonably requested by XM or specified in any standard procedures prepared by XM and delivered to CSR. When the reconciliation is completed, XM will send notice to CSR via computer system interface or other electronic transmission to notify CSR of any discrepancies identified by XM in the reconciliation. Following receipt of this notice, the parties shall promptly address whether additional Subscriber activation or deactivation requests need to be submitted to XM, or whether XM needs to process previously submitted activation or deactivation requests, and will report to each other on the resolution of such discrepancies.

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7.5 XM shall be responsible for managing Subscriber-related and partner-related data generated by the XM system only for the purposes of activating and deactivating or otherwise enabling Subscribers and/or Services. CSR shall have control over and be responsible for all other Subscriber management, and Subscriber lists including, but not limited to, all billing and collections with respect to Subscribers, and shall account to XM for the same as provided above in Article 5.09 and 5.10. XM shall not be liable to CSR for any failure to bill or collect from Subscribers, whether or not such failure is alleged to have arisen from information provided or not provided by XM. CSR shall be responsible for maintaining systems for financial, billing and collection (including credit card processing) matters, tax monitoring and other tax matters, settling revenue share or similar payments with distribution partners, human resources, vendor payments and the like. For greater certainty, the parties acknowledge that all Subscribers are CSR’s subscribers, and CSR has sole responsibility for such Subscribers.

7.6 CSR shall be responsible for providing to Subscribers information via email or other methods regarding new channels and programming, special events and the like. XM shall provide emails of information relating to the XM CPackage Channels to CSR, and CSR shall be responsible for tailoring this information for the Canadian market and for distribution of the relevant information, and information relating to the CSR Channels, to Subscribers. CSR shall be responsible for administering the websites relating to the Services. If XM provides to CSR promotional materials from third parties that are subject to terms and conditions concerning usage, XM shall notify CSR of such terms and conditions, and CSR shall comply with the same.

7.7 CSR shall be responsible for providing all first-level listener care and customer and technical support to its Subscribers to handle account-related issues, technical support issues and other issues that arise in connection with the Services. CSR and XM shall coordinate on the resolution of technical quality issues affecting Subscriber reception of the Services. XM shall be available to assist CSR in correcting technical problems relating to the terrestrial repeaters and elements of the overall transmission system located within Canada to the extent provided in the Technical Services Agreement.

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7.8 CSR shall adopt (in consultation with XM) policies and procedures regarding Subscriber management, listener care, billing, collections, activations and deactivations and other Subscriber-related functions. CSR agrees to provide a copy of each such policy to XM and any updates to such policy, and in general to comply with such policies.

7.9 CSR acknowledges that XM will have certain data fields in its music libraries and other databases intended to capture data regarding the content of certain channels or selections being Canadian originated, and other specific data designed to evidence compliance with the Canadian Licences. Except as provided below, CSR agrees to furnish such data in accordance with the terms of this Article 7. However, to the extent requested by XM, CSR agrees to input any such data directly into the XM database system to populate the Canadian content or other Canadian Licence information data fields. Unless otherwise mutually agreed, all data entry shall be made through a computer system interface developed or specified by XM, and to the extent XM has or acquires the rights needed to do so, XM hereby grants CSR a royalty free license to proprietary technology in the interface to the extent necessary for, and solely for the limited purpose of, making such data entry. CSR shall be solely responsible for the accuracy and completeness of any data it enters into the system. CSR shall not have the right to access or update any data fields in the XM database system that XM does not specifically authorize. CSR shall indemnify and hold XM harmless from any and all loss, liability, cost, damages and expenses suffered, including reasonable legal fees and expenses, with respect to any claim based on or arising out of CSR’s access and updates to the XM database system.

7.10 The parties shall coordinate from time to time with regard to computer system interfaces in order to maintain compatibility and expedite the activation and deactivation processes, transfer information needed for billing and like matters. XM will make available to CSR rights to generally commercially available technology licenses relating to the matters covered by this Article 7 to the extent permitted by the terms of such licenses. CSR will bear a proportional share of the cost of any such licenses used by CSR, and shall abide by all terms and conditions of such technology licenses. CSR shall be responsible for obtaining rights to all other technology licenses it needs for the matters covered by this Article 7. CSR acknowledges that XM must maintain a single, unified system for both U.S. and Canadian subscribers, that it is incumbent on CSR to choose (in consultation with XM, if appropriate) systems that are compatible with those currently deployed by XM or that may be deployed from time to time in the future by XM and that any failure to coordinate or maintain compatibility (and any resulting loss of or inability to process data transmitted by XM) shall be at CSR’s sole risk and expense.

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7.11 In addition to the Subscriber information required under Article 5.4, CSR shall provide to XM such aggregated anonymous information as XM may reasonably request regarding Subscribers to the Services, including demographic information, the distribution channel through which the Subscriber was originated and Subscriber churn, and agrees that, subject to applicable Canadian privacy and protection of personal information laws, XM may use such information for planning purposes and public disclosures regarding the users of XM’s satellite radio system. CSR shall be responsible for obtaining all approvals and consents from Subscribers necessary under applicable Canadian data and other privacy and protection of personal information laws for CSR to transmit the data outside Canada and into the U.S., for XM to receive data and process it in the manner discussed in this Article 7, and shall notify XM from time to time of the requirements of all such laws relevant to XM processing data in the manner discussed in this Article 7.

8.Launch of Service.

8.1 Each party shall expeditiously complete those activities assigned to it in this Agreement and in the other Transaction Documents as required to enable CSR to launch the Services within Canada as soon as practicable. CSR shall give XM at least 30 days prior written notice of the expected launch date, which launch date shall not be earlier than 30 days after CSR has all of the necessary facilities in place and ready for testing. If based on the testing XM reasonably concludes that the Services cannot be provided with a quality level both in accordance with Article 6.1 and substantially similar to the quality level of XM’s service within the U.S., XM shall have the right to provide a detailed written notice of the same to CSR. Following receipt of any such notice, CSR shall defer the launch of Services until it has adequately addressed XM’s concerns as set forth in the notice, and CSR shall comply again with the provisions of this paragraph with respect to the deferred launch of services.

8.2 With respect to CSR, such activities shall include the following:

8.2.1 Taking any further steps required with respect to the Canadian Licences required to provide the Services.

8.2.2 Installing the terrestrial repeaters contemplated by CSR’s master repeater plan to be installed and in service prior to launch of the Services.

8.2.3 Establishing all processes, procedures and systems, including but not limited to development, implementation and operation of information technology infrastructure and customer care operation, needed by CSR in order to perform its Subscriber-related functions as described in Article 7, including procuring and installing all necessary hardware and software, and providing XM with all the information it reasonably requests in a ready-to-process, compatible form based on XM’s reasonable specifications, as provided further in Article 7.

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8.2.4 Providing the CSR Channels as contemplated by the Programming Agreement and commencing delivery of the CSR Channels to XM’s ground uplink facilities as described in the Programming Agreement.

8.2.5 Successfully completing such tests of all terrestrial repeaters, broadcast operations, provisioning (including both activation and deactivation), Subscriber management, customer care and other systems and the Services as reasonably specified by and with results reasonably satisfactory to XM.

8.2.6 Completing the marketing plan contemplated by Article 9 and performing the pre-launch marketing and promotional activities in that plan.

8.2.7 Completing the build-out of broadcast operations infrastructure in accordance with the broadcast operations infrastructure plan, including studio facilities, related hardware and software requirements and procurement of dedicated connectivity between any and all CSR broadcast facilities and XM.

8.2.8 Entering into hardware agreements with XM-licenced hardware providers, including, but not limited to Delphi, to ensure adequate supply of XM radios in Canada, provided that the same can be obtained on commercially reasonable terms.

8.2.9 Entering into agreements with automobile manufacturers, radio manufacturers and other original equipment manufacturers (“OEMs”), including but not limited to General Motors of Canada Limited, for the installation of radios in automobiles, provided that such agreements are on commercially reasonable terms.

8.2.10 Entering into retail distribution agreements with national and regional retailers, including retailers required to ensure a CSR presence in the province of Quebec.

8.2.11 Acquire or create the content required under the Programming Agreement.

8.2.12 Completing updates to XM’s music library, in a manner reasonably acceptable to XM, as required to address Canadian content requirements and all conditions of the Canadian Licences and any requirements of performance rights organizations in the footprint of the XM Satellites (including in the U.S. and Canada) if precipitated by CSR’s business in Canada and/or the broadcast of the CSR Channels.

8.2.13 Completing a current version of CSR’s business plan as described in Article 11.1 below.

8.2.14 Having in place the personnel and expertise required to support the build-out, launch and continued operations of the business.

8.2.15 Fulfilling its obligations under the other Transaction Documents.

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8.3 With respect to XM, such activities shall include completing the radio frequency design and engineering work described in the Technical Services Agreement, setting up the processes and procedures required to provide Subscriber activation, channel blocking/package swapping and other support described in Article 7, putting in place the procedures required to broadcast the CSR Channels described in Article 4.1 and fulfilling its obligations under the other Transaction Documents, including the provisioning of terrestrial repeaters as required by such Transaction Documents.

8.4 CSR shall use reasonable commercial efforts to have an initial launch (defined as 4 cities) of the Services as soon as practicable after CSR has received sufficient authority to do so under the Canadian Licences, or on such other date as is mutually agreed upon between the parties (the “Launch Date”).

8.5 Subject to written approval by XM, CSR may implement an early entry market strategy under which CSR would provide Services on a limited geographic basis prior to the Launch Date. CSR will be responsible for developing an early entry plan and presenting such plan to XM. Any early entry plan will require CSR to have obtained all necessary regulatory approvals and licenses, including any licenses that are required to carry out the early entry plan that are in addition to the Canadian Licences. If CSR does not have all of the necessary operations and facilities in place and ready for testing within at least 30 days prior to any mutually agreed to early entry date, or if based on the testing XM reasonably concludes that the Services cannot be provided with a quality level substantially similar to that of XM’s service within the U.S., XM shall have the right to provide written notice of the same to CSR. Following receipt of any such notice, CSR shall defer the early entry commencement of Services until it has adequately addressed XM’s concerns as set forth in the notice, and CSR shall comply again with the provisions of this paragraph with respect to the early entry commencement of Services.

9.Promotion, Marketing and Distribution.

9.1 From and after the Launch Date, CSR shall vigorously promote the sales of the Services to Subscribers within Canada, and to maximize such sales. CSR will aggressively advertise the Services within Canada in accordance with a marketing plan to be developed in consultation with XM within sixty (60) days after the Effective Date (or within 30 days after the Effective Date for the relevant portion of the marketing plan applicable to any early entry plan), which marketing plan shall be based upon the business plan of CSR concerning the expected ability of CSR to fund such costs with its current or expected financial resources.

9.2 CSR will develop, at its expense, promotional or other written materials relating to the Services (including, at CSR’s option, adapting materials supplied by XM for use in Canada). CSR will obtain XM’s prior written consent to each reference in its promotional materials to XM, other than those supplied by XM to CSR. CSR will not use advertisements referring to XM or XM’s satellite radio service, its content or its features, other than those supplied by XM to CSR, that have not been pre-approved in writing by XM. CSR hereby assigns to XM (or waives, as necessary) all its right, title and interest in all such modified materials, including but not limited to all related copyrights and moral rights therein.

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9.3 CSR will at its expense: (i) upon the reasonable request of XM, attend and promote the Services jointly with XM in up to six of the industry trade shows, conventions and exhibits each year; (ii) attend significant sales meetings held by XM to which XM invites CSR with reasonable notice; and (iii) provide XM personnel periodic opportunities to provide sales and promotion information and make presentations in CSR's sales meetings. CSR will confer with XM from time to time at the request of XM on matters relating to market conditions, sales forecasting and product planning relating to the Services.

9.4 CSR will have primary responsibility, in consultation with XM, for maintaining relationships and negotiating distribution agreements for Canada with U.S.-based retailers that sell XM’s satellite radio services within the U.S. (such as the Canadian operations of Best Buy, Circuit City and Wal-Mart) and that have retail sales operations within Canada for such retailers to sell the Services offered by CSR within Canada. Prior to CSR authorizing any such retailer to sell the Services, CSR and XM shall discuss the commission, revenue share or other payment to be paid to each such retailer for generating any new Subscribers for the Services, with reference to then-prevailing market practices with respect to sales of similar types of services and to the commissions or other payments paid by XM with respect to sales of its satellite radio services within the U.S. Any resulting agreement will be entered into between CSR and such retailer, and will not (without the prior approval of XM) address arrangements outside of Canada. CSR agrees to accept any order for Services placed by a Subscriber in Canada through any such authorized retailer, and to thereafter provide Services to such Subscriber in accordance with this Agreement, and CSR’s standard Subscriber Agreement.

9.5 CSR will have primary responsibility, in consultation with XM, for maintaining relationships and negotiating strategic marketing agreements for Canada with U.S.-based airlines, hotels, cable companies and similar entities that wish to incorporate XM’s satellite radio services within the services offered by such entities to their patrons or customers in Canada. Prior to CSR authorizing any such retailer to sell the Services, CSR and XM shall discuss the commission, revenue share or other payments to be made in such agreement, with reference to then-prevailing market practices with respect to similar types of services and amounts paid in similar agreements to which XM is a party with respect to the U.S. Any resulting agreement will be entered into between CSR and such strategic marketing entity, and will not (without the prior approval of XM) address arrangements outside of Canada.

9.6 CSR shall, upon XM’s written instructions, authorize one or more automobile manufacturers, radio manufacturers and other OEMs to distribute the Services within Canada throughout the term of this Agreement. XM will have primary responsibility for maintaining relationships and negotiating distribution agreements for Canada with such OEMs, and CSR will have primary responsibility for negotiating joint or co-marketing arrangements with such OEMs in consultation with XM. Prior to authorizing any such OEM to distribute the Services, CSR and XM shall mutually agree with respect to the revenue share or other payment to be paid to each such OEM for generating any new Subscribers for the Services, such payments to be set by reference to then-prevailing market practices with respect to sales of similar types of services and to the payments paid by XM with respect to sales of its satellite radio services within the U.S. Any resulting agreement will be entered into among XM, CSR and such OEM. CSR agrees to accept any order for Services placed by a Subscriber in Canada through any such authorized OEM, and to thereafter provide Services to such Subscriber in accordance with this Agreement, and CSR’s standard Subscriber Agreement.

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9.7 The parties acknowledge and agree that many of the parties with which CSR needs to enter into arrangements, agreements or relationships relating to the Services, including radio manufacturers, retail distributors, strategic marketing entities, technology providers and others, also have or will have arrangements, agreements or relationships with XM relating to XM’s U.S. service (a “Shared Relationship”). With respect to any existing or proposed Shared Relationship, since the Shared Relationship relates to a single service, distributed in the United States and Canada, CSR agrees to cooperate and coordinate with XM to the extent and in the manner reasonably requested by XM to enable XM to maintain a successful relationship with such person or entity for the benefit of both XM’s U.S. service, and to coordinate the terms and conditions for the Canadian Service with those of XM’s U.S. service to obtain volume discounts and consistent arrangements for particular technologies, joint advertising and marketing, and the like.

9.8 CSR will enter into a subscriber agreement with each Subscriber that purchases Services from CSR (each a “Subscriber Agreement”). Each Subscriber Agreement will contain provisions, reasonably satisfactory to XM, providing generally that (i) XM makes no warranty, and shall have no liability, with respect to the provision or non-provision of the Services, the content of the Services or any other matter relating to CSR’s business or operations within Canada, and (ii) the Services are offered by CSR, not XM, and XM is not responsible for any commitments, agreements, representations or warranties by CSR.

9.9 Each party will: (i) conduct business in a manner that reflects favorably at all times on the Services and the good name, good will and reputation of the other; (ii) avoid deceptive, misleading or unethical practices that are or might be detrimental to the other, the Services or the public; (iii) make no false or misleading representations with regard to the other or the Services; (iv) not publish or employ, or cooperate in the publication or employment of, any misleading or deceptive advertising material with regard to the other or the Services; (v) make no representations, warranties or guarantees to customers or to the trade with respect to the specifications, features or capabilities of the Services that are inconsistent with the literature distributed by the other describing its satellite radio services; and (vi) not enter into any contract or engage in any practice detrimental to the interests of the other in the Services.

9.10 CSR will comply with all applicable national, state, regional, provincial and local laws and regulations in performing its duties hereunder and in any of its dealings with respect to the Services.

9.11 CSR will not seek to place U.S.-focused advertisements on the CSR Channels without coordinating with XM in advance and obtaining XM’s approval to do so, except as may be specifically contemplated by the Programming Agreement. However, in the event that CSR refers to XM any customer that purchases advertising from XM for placement in any of the XM CPackage Channels, XM shall pay to CSR a referral fee consistent with commissions paid by XM to its advertising sales force generally, provided that consent to payment of such fee is obtained from the customer after appropriate disclosure (and XM agrees to provide such disclosure and seek such consent). Similarly, in the event that XM refers to CSR any customer that purchases advertising from CSR for placement in any of the CSR Channels, CSR shall pay to XM a referral fee consistent with commissions paid by CSR to its advertising sales force generally, provided that consent to payment of such fee is obtained from the customer after appropriate disclosure (and CSR agrees to provide such disclosure and seek such consent).

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10. Other Regulatory Filings. XM shall consult and coordinate with CSR from time to time regarding filings with US or Canadian regulatory tribunals or ratemaking bodies in respect of the copyright rates that may be set for reproduction or retransmission of the Services in Canada.

11. Business Plan, Compliance.

11.1 The current version of CSR’s business plan has been provided to XM prior to execution of this Agreement, and CSR will provide to XM promptly all amended or updated versions of such business plan.

11.2 CSR will be responsible for ensuring that all financing of CSR’s business will be consistent with the requirements of the Canadian Licences, including all orders, decisions, rulings and policies of the CRTC requiring holders of CRTC licences to maintain a minimum investment from Canadian sources.

12.XM’s Representations, Warranties and Covenants. XM represents, warrants and covenants to CSR that:

12.1 XM owns or has sufficient rights in and to the XM Satellites, the satellite transmission spectrum, the associated regulatory licences, permits and regulatory approvals needed to operate the XM Satellites to grant the licence herein and enter into this Agreement.

12.2 XM has the full power and authority and has obtained all necessary rights and/or permissions to grant the licences contemplated in this Agreement. Without limiting the generality of the foregoing, XM has secured all necessary rights from talent or other third parties in order to grant CSR the licence to use the XM CPackage Channels and advertising included therein as described in this Agreement, and upon request from CSR, shall furnish appropriate documentation evidencing such rights. The XM CPackage Channelsand XM advertising in the form delivered by XM when used for the purpose and in the manner contemplated by this Agreement: (i) do not and will not infringe upon any United States, Canadian, or other foreign copyright, trade name, trademark, service mark, trade secret, literary or dramatic right or other proprietary right of any third person (including the right of privacy and publicity) in connection with the transmission of the XM CPackage Channel within the XM footprint; (ii) will not violate the terms of any music performance rights licence of XM (compulsory or otherwise); and (iii) will comply with all applicable governmental laws and regulations. XM shall comply with all applicable reporting processes and royalty payment requirements with respect to all applicable U.S. performance rights societies.

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12.3 XM shall use reasonable commercial efforts to make the XM CPackage Channels and CSR Channels available to CSR for distribution to its Subscribers via broadcast over XM’s satellites throughout the footprint of the XM Satellites within Canada twenty-four hours a day, seven days a week; provided that XM shall have no obligations or liability with respect to any satellite or other failures that cause the Services to be unavailable within Canada for any period.

12.4 XM shall use reasonable commercial efforts to make the signal quality and strength for the XM CPackage Channels and CSR Channels transmitted between the XM Satellites and the ground of high quality throughout the coverage beam of such satellites within Canada twenty-four hours a day, seven days a week; provided that CSR acknowledges that the XM Satellites do not cover the entire land area of Canada and that as with any satellites the quality of coverage declines with decreases in the “look angle” of the satellites below certain levels, and provided further that XM shall have no obligations or liability with respect to the quality of the re-transmissions from CSR’s terrestrial repeaters to other locations within Canada.

Subject to the exclusion set forth in Article 18.1, XM shall indemnify and hold CSR harmless from any and all loss, liability, cost, damages and expenses suffered including reasonable legal fees and expenses, with respect to any third party claim based on: (i) any breach or violation by XM or any of its agents of any of its obligations contained in this Agreement; or (ii) any negligence or willful misconduct by XM in connection with this Agreement that results in personal injury, death or tangible property damage. XM shall also defend CSR against such claims and pay all costs plus awards and damages or settlement amounts incurred by CSR as a result of such claims. XM shall have sole control of the defense and settlement of any such claim, and CSR shall cooperate with and assist XM, at XM’s expense in connection with such defense.

In addition, subject to the exclusion set forth in Article 18.1, XM shall indemnify and hold CSR harmless from any and all loss, liability, cost, damages and expenses suffered including reasonable legal fees and expenses with respect to any third party claim that the technology XM licenses to a manufacturer of radios that receive the Services in Canada (whether XM owns or licenses such technology) infringes any copyright, patent or trade secret, provided that CSR promptly notifies XM in writing of the claim. XM shall also defend CSR against such claims and pay all costs plus awards and damages or settlement amounts incurred by CSR as a result of such claims. XM shall have sole control of the defense and settlement of any such claim, and CSR shall cooperate with and assist XM, at XM’s expense in connection with such defense. In consideration for this indemnification, CSR agrees to reimburse XM on a pro-rata basis for all costs, losses and liabilities incurred by XM in defending such claim, based on the pro-rata use of the applicable technology in Canada, except where the costs, losses or liabilities resulted from XM’s gross negligence or willful misconduct. Notwithstanding the foregoing, the parties agree that to the extent XM is able to reach agreements with third party technology providers specifying that CSR is obtaining license rights directly from providers and that XM is not incurring a cost for inclusion of the third party technology in XM radios sold to Subscribers, (i) XM shall not include any such cost in the Activation Charge, and (ii) the indemnity and other agreements by XM in this paragraph shall not apply with respect to the technology licensed by CSR directly from the provider.

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13. CSR’s Representations, Warranties and Covenants. CSR Parent and CSR jointly and severally represent, warrant and covenant to XM that:

13.1 The Canadian Licences constitute all of the material licences, permits and approvals required by any national, provincial or local governmental, regulatory or other authority within Canada in order for CSR to provide the Services and to otherwise fulfill its obligations under this Agreement.

13.2 CSR has or will have, prior to making the Services available to Subscribers within Canada, the rights to distribute the Services within Canada as contemplated by Article 4.

13.3 CSR shall use reasonable commercial efforts to implement the marketing and business plans and to promote Subscriber growth.

13.4 Subject to the exclusion set forth in Article 18.1, CSR and CSR Parent shall indemnify and hold XM harmless from any and all loss, liability, cost, damages and expenses suffered including reasonable legal fees and expenses, with respect to any third party claim based on: (i) any breach or violation by CSR or CSR Parent or any of their agents of any of its obligations contained in this Agreement; (ii) any negligence or willful misconduct by CSR or CSR Parent in connection with this Agreement that results in personal injury, death or tangible property damage; or (iii) any Subscriber claim due to the provision, non-provision, interruption, degradation or use of the Services by any Subscriber not arising from a failure by XM to transmit the XM CPackage Channels and the CSR Channels within Canada at an acceptable quality level. CSR and CSR Parent shall also defend XM against such claims and pay all costs plus awards and damages or settlement amounts incurred by XM as a result of such claims. CSR shall have sole control of the defense and settlement of any such claim, and XM shall cooperate with and assist CSR, at CSR’s expense in connection with such defense.

14.Term and Termination

14.1 Term. Unless it is terminated at an earlier time pursuant to this Article 14, this Agreement shall commence on the Effective Date and shall continue in effect for a period of ten (10) years (the “Initial Term”). At least one year prior to termination of the Initial Term, provided that CSR’s CRTC Licence has been renewed at the end of the current licence term without any Adverse Modification (as defined below) and provided that CSR is not in breach of any provision of this Agreement and has not failed to cure any breach of a provision of this Agreement in accordance with its terms, CSR shall have the right to extend the Initial Term for a further five years on the same terms and conditions as this Agreement. The parties agree that if CSR’s CRTC Licence is renewed at the end of the current licence term but with an Adverse Modification,then the parties shall negotiate in good faith whether to extend the Initial Term. (The Initial Term and any extension(s) thereto are referred to collectively as the “Term.”)

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14.2 Termination by CSR. CSR may, in its sole discretion, terminate this Agreement upon written notice to XM in the event that:

14.2.1 XM materially breaches this Agreement and such breach is not remedied within sixty (60) days after XM receives from CSR a notice identifying the breach and requiring it to be remedied or longer if nature of the cure requires longer, provided XM is diligently pursuing the cure.

14.2.2 Any of the other Transaction Documents (excluding the Share Issuance Agreement) expire or are terminated for any reason (other than material default by CSR or expiration in accordance with its terms after performance by XM has been completed).

14.2.3 XM is no longer transmitting the XM CPackage Channels and the CSR Channels within Canada due to (i) loss or damage (including natural end of life) or technical problems with respect to the XM Satellites or any other element of XM’s satellite network system (including space and/or ground segments) reasonably needed to make such transmissions; (ii) loss of applicable governmental licences or other required regulatory approvals needed for XM to continue operating its satellite network system and/or to continue transmitting within Canada, or (iii) a decision by XM to discontinue, in whole or in substantial part, offering a U-S.-based SDARS service.

14.2.4 CSR can no longer provide the Services within Canada due to loss of applicable governmental licences or other required regulatory approvals, other than on a brief interim basis, or CSR has publicly announced a decision that due to changes to its governmental licences or regulatory requirements it is forced to discontinue providing the Services and will cease to carry on its business.

14.2.5 Any of the Trade-Mark Agreement, Technical Services Agreement or Programming Agreement expire or are terminated for material default by XM, or XM materially breaches the Shareholders Agreement.

14.2.6 XM has filed a petition in or has been assigned into bankruptcy or becomes an insolvent person within the meaning of any applicable bankruptcy or insolvency legislation, or makes any assignment for the benefit of creditors or makes any arrangements or otherwise becomes subject to any proceedings under applicable bankruptcy laws or insolvency laws with a trustee, or receiver appointed in respect of a substantial portion of the property of XM, or in the event XM liquidates or winds up its daily operations for any reason whatsoever.

14.3 Termination by XM. XM may, in its sole discretion, terminate this Agreement, by written notice to CSR in the event that:

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14.3.1 CSR materially breaches this Agreement other than a payment breach and such breach (if capable of being remedied) is not remedied within sixty (60) days after CSR receives from XM a written notice identifying the breach and requiring it to be remedied or longer if nature of the cure requires longer, provided CSR is diligently pursuing the cure.

14.3.2 CSR fails to pay any material amount payable hereunder when due and such failure is not remedied within thirty (30) days after CSR receives from XM a written notice identifying the failure and requiring it to be remedied, unless CSR has, in good faith, disputed in writing to XM the obligation to pay such amount and deposited the amount specified in such notice in an escrow under a customary agreement providing for release of such amount to the prevailing party, and such dispute has not been finally resolved.

14.3.3 Any of the Trade-Mark Agreement, Technical Services Agreement or Programming Agreement expire or are terminated for any reason (other than material default by XM or expiration in accordance with its terms after performance by CSR has been completed), or CSR materially breaches the Share Issuance Agreement or the Shareholders Agreement with respect to XM.

14.3.4 CSR fails to obtain distribution rights as needed to meet its CSR Channel commitments specified in the Programming Agreement by the Launch Date or subsequent to that date during the term of this Agreement, and such failure is not remedied within sixty (60) days (one hundred twenty (120) days in the case of the Launch Date) after CSR receives from XM a written notice identifying such failure and requiring it to be remedied.

14.3.5 The Launch Date does not occur by March 1, 2006.

14.3.6 CSR fails to capture and maintain during the one year period commencing on the later to occur of the second anniversary of the Effective Date and the OEM Condition Date (as defined below) and each subsequent one year period during the Term (each, a “Contract Year”), on average during such Contract Year, at least thirty-three percent (33%) of the actual SDARS subscribers within Canada, assuming there are only two SDARS providers in Canada, or at least twenty-five percent (25%) of the actual SDARS subscribers within Canada, assuming there are three or more subscription radio providers in Canada, (and, in each case, if less, 15 percentage points less than the percentage of actual SDARS subscribers within the U.S. held by XM on average during such Contract Year,) where the parties will measure the percentage of SDARS or subscription radio subscribers (as the case may be) at any given time using the subscriber numbers reported as of the end of each calendar quarter, or if no such numbers are reported, a reputable, independent, mutually agreed upon source of market share statistics for such matters; provided, however, that with respect to the first (and only the first) time CSR fails to meet the applicable subscriber requirements above in this paragraph (which, for greater certainty, shall not be earlier than the later of one year following the second anniversary of the Effective Date and the OEM Condition Date), CSR shall have a period of one Contract Year to seek to cure such default, and if during the immediately succeeding Contract Year CSR subscribers exceed the applicable threshold in this paragraph, XM shall not have the right to terminate for the prior failure. The OEM Condition Date shall be the first date on which CSR with the assistance of XM has entered into, has been offered the opportunity to enter into or is a party to agreements with automobile manufacturers with an aggregate thirty-three percent (33%) market share in Canada for the installation of satellite radios in automobiles.

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14.3.7 CSR undergoes a change of control, which shall mean for purposes of this Agreement (i) CSR Parent owning less than 100% of the equity of CSR, (ii) Canadian Satellite Radio Investments Inc. owning less than 15% of the voting shares or equity of CSR Parent, or (iii) John Bitove and Bitove Affiliates (as defined below) holding, directly or indirectly, less than 50.01% of the voting rights of Canadian Satellite Radio Investments Inc. (“CSR InvestCo”) or less than the lower of (x) 33-1/3% of the equity of CSR InvestCo or (y) 50% of the number of shares of CSR InvestCo that John Bitove and Bitove Affiliates own on the date hereof (as adjusted for any recapitalization), treating in the case of both (x) and (y) any portion of the equity of or shares in CSR InvestCo subject to a Hedge (as defined below) as not being held by John Bitove or Bitove Affiliates. “Bitove Affiliates” means John Bitove’s Family Members or a custodian, trustee (including an RRSP, RIF, IRA or similar retirement or investment fund) or other fiduciary for John Bitove and/or his Family Members or a corporation wholly owned by Bitove and/or other Bitove Affiliates, where “Family Members” means, in respect of an individual, any parent, spouse, child, spouse of a child, grandchild and/or sibling. “Hedge” means a forward sale, swap, cap or collar agreements, or other agreement or arrangement designed to protect against fluctuations in the value of equity or shares or under which a counterparty or person other than John Bitove or Bitove Affiliates has the primary economic interest in such equity or shares or any appreciation in the value thereof.

14.3.8 XM is no longer transmitting the XM CPackage Channels and the CSR Channels within Canada due to (i) loss or damage (including natural end of life) or technical problems with respect to the XM Satellites or any other element of XM’s satellite network system (including space and/or ground segments) reasonably needed to make such transmissions; (ii) loss of applicable governmental licences or other required regulatory approvals needed for XM to continue operating its satellite network system and/or to continue transmitting within Canada, or (iii) a decision by XM to discontinue, in whole or in substantial part, offering a U-S.-based SDARS service.

14.3.9 Any Canadian Licence, or any portion thereof, that is required for CSR to provide the Services within Canada expires or is terminated, or is challenged and overturned by the Governor in Council or the Federal Court of Canada or any other governmental or regulatory authority with jurisdiction over such matters, or is modified by the CRTC or Industry Canada in any material manner, including without limitation any manner that adversely affects the ability of CSR or XM to carry out the arrangements made under this Agreement, or that increases the Canadian content requirements or imposes additional conditions of licence beyond those specified in the licence award received by CSR from the CRTC in June 2005 (as modified to reflect the September 7, 2005 application to the CRTC submitted by CSR to the extent such application is approved by the CRTC) that, in XM’s reasonable determination, makes it technically less feasible or economically less attractive in any significant respect to perform under this Agreement (an “Adverse Modification”); provided, that before terminating under this paragraph following a Canadian License modification, XM must seek to conduct good faith negotiations with CSR to address any such modification that primarily has economic consequences with appropriate changes to this Agreement. Any differences between a new or renewed CRTC Licence and the licence award received by CSR from the CRTC in June 2005 as modified to reflect the September 7, 2005 application to the CRTC submitted by CSR to the extent such application is approved by the CRTC) would be considered a modification for purposes of this paragraph.

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14.3.10 CSR's business operations are curtailed by decisions or rulings under applicable law in Canada and in consequence CSR ceases carrying on or is compelled to discontinue all or substantially all of its business in Canada within a period of sixty (60) days or less.

14.3.11 CSR has filed a petition in or has been assigned into bankruptcy or becomes an insolvent person within the meaning of any applicable bankruptcy or insolvency legislation, or makes any assignment for the benefit of creditors or makes any arrangements or otherwise becomes subject to any proceedings under applicable bankruptcy laws or insolvency laws with a trustee, or receiver appointed in respect of a substantial portion of the property of CSR, or in the event CSR liquidates or winds up its daily operations for any reason whatsoever.

14.4 Arbitration. In the event that notice is provided by either CSR or XM as outlined in Articles 14.2 or 14.3 above, and the recipient of such notice disputes the right to terminate this Agreement pursuant to the same notice, then upon written demand at any time within the applicable notice period, such dispute shall be submitted to arbitration in accordance with Article 20 of this Agreement.

14.5 Reasonable Withdrawal of Services. In the event that XM has the right to terminate this Agreement pursuant to this Article 14, then XM and CSR shall consult, each acting reasonably, regarding a mutually acceptable schedule for CSR to cease distributing the Services and/or using the XM Satellite service and the manner by which CSR shall discontinue such distribution and use, which period shall not exceed ninety (90) days following notice of termination by XM and expiration of any cure periods.

14.6 Transfer in Lieu of Termination. In the event notice of termination of this Agreement by XM is given to CSR (other than under Article 14.3.8), the parties shall consult in good faith concerning whether it would be in their mutual best interest, in lieu of such a termination, for CSR Parent to transfer its interest in CSR (or effect another change of ownership of CSR Parent or CSR). If the parties reach a written agreement that such a transfer or change of ownership would be in their mutual best interest (assuming such transfer is approved by the CRTC), the termination of this Agreement hereunder shall be deferred for a period of one hundred twenty (120) days or such other period as may be agreed by the parties in writing, during which time CSR Parent and CSR will use all reasonable efforts to effect such a transfer (including engaging a nationally-recognized investment banker to conduct a sale process, if no transferee reasonably acceptable to XM has been identified by CSR Parent or CSR within the first sixty (60) days of the deferral period), subject to such prior approval as may be required from the CRTC. XM may propose one or more transferees eligible under the Broadcasting Act to acquire the interest in CSR. If any purchaser or transferee resulting from such process is not reasonably acceptable to XM or the CRTC, or if XM proposes eligible transferees and CSR Parent and CSR do not use all reasonable efforts to effect a transfer to one or more of such transferees within sixty (60) days after such transferees are proposed by XM, the deferral period shall accelerate and the termination by XM shall be effective immediately. If such process results in a transferee (or entity legally committed to become transferee subject only to conditions related to XM and the transferee entering into mutually acceptable agreements) reasonably acceptable to XM and the CRTC, and if the termination event has been cured (or in XM’s reasonable judgment is likely to be cured within a reasonably acceptable period) and no other events permitting termination by XM have occurred and are continuing, the deferral period shall be extended for up to an additional one hundred twenty (120) days, during which time XM and the resulting transferee will negotiate in good faith an assignment of CSR’s rights and obligations under this Agreement and other applicable Transaction Documents to the transferee (subject to consummation of the transfer), with modifications that are agreed upon by XM and such transferee.

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14.7 Other Remedies. Nothing in this Article 14 is intended to replace or derogate from any other remedy that a party hereto may have at law or in equity in consequence of any breach of or failure to observe and perform, any covenant, representation or warranty in this Agreement by the other party hereto.

15. Other S-DARS Services. During the Term, CSR shall not provide satellite radio services or digital terrestrial radio services in Canada by means of any other satellite radio or other transmission system without the prior written consent of XM. During such period XM shall not licence any other person or entity to provide SDARS in Canada, or provide Canada-focused marketing or promotion of XM’s satellite radio services, without the prior written consent of CSR.

16.Distribution of CSR’s Channels to XM’s Subscribers.

16.1 Pursuant to the Programming Agreement, and as partial consideration for the licence granted by XM hereunder, CSR is granting to XM a licence to distribute the CSR Channels on the terms and conditions set forth in the Programming Agreement.

16.2 Save and except for the licence and other fees set forth in Article 5 hereto or as set forth in the Programming Agreement, there shall be no fees payable by CSR to XM or by XM to CSR for the transmission of the CSR Channels by the XM Satellites. The parties acknowledge that CSR will be obligated to deliver the CSR Channels in an agreed format for uplinking to the XM Satellites, and that any technical support provided by XM relating to the processing of the CSR Channels in preparation for uplinking may be the subject of an invoice and chargeable to CSR under the Technical Services Agreement.

17.Warranty Disclaimers.

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17.1 EXCEPT AS EXPRESSLY PROVIDED FOR HEREIN, XM MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, RELATED TO THIS AGREEMENT, THE CPACKAGE CONTENT, THE XM SATELLITES, THE SERVICES OR ANY OTHER MATTERS ARISING UNDER THIS AGREEMENT, AND XM EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT OR OTHERWISE THAT MIGHT OTHERWISE APPLY.

17.2 CSR HAS CONDUCTED DUE DILIGENCE ON THE POTENTIAL RISKS AND REWARDS OF ENTERING INTO THIS AGREEMENT, AND OF PROVIDING THE SERVICES WITHIN CANADA. CSR ACKNOWLEDGES AND AGREES THAT XM HAS MADE NO REPRESENTATION OR WARRANTY REGARDING THE ACTUAL OR LIKELY RETURNS TO BE OBTAINED BY CSR FROM THIS RELATIONSHIP, AND CSR ASSUMES ALL RISK RELATING TO SUCH MATTERS.

18. Limitations of Liability.

18.1 NO PARTY HERETO SHALL BE LIABLE TO ANY OTHER PARTY HERETO FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES OF ANY NATURE ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE, AND INCLUDING LOST REVENUES, LOST PROFITS, INTERRUPTION OF BUSINESS OR OTHERWISE, EVEN IF THE POSSIBILITY OF SUCH DAMAGES WERE FORESEEABLE.

19. Confidentiality.

19.1 “Confidential Information” includes, but is not limited to any information which any party hereto considers to be of a proprietary and confidential nature and includes, without limitation, know-how, data, process, technique, program, design, formula, marketing, advertising, financial, sales, customer or programming matter, compositions, drawings, diagrams, computer programs, studies, work in process, visual demonstrations, concepts, and other data, whether oral, written, graphic, or electronic form, which may be exchanged between the parties. For the purposes of this Agreement, “Confidential Information” shall include, without limitation, the existence or contents of this Agreement. Confidential Information does not include the following information:

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(i) information which is now or which hereafter becomes publicly known or available through no act or failure on the part of the receiving party;

(ii) information which is actually known to the receiving party at the time of the receipt of such Confidential Information without obligation of confidentiality; and

(iii) information which is hereafter furnished to the receiving party by a third party without obligation of confidentiality.

19.2 Each party hereto will not use the Confidential Information of the other party for any purpose other than to perform this Agreement, will not disclose the Confidential Information of another party hereto to third parties, except:

(i) to those third parties who have a need to know such information in order for the receiving party to perform this Agreement, and who have executed a written non-disclosure agreement with substantially similar protections to those contained herein; will protect the Confidential Information of the other parties hereto with at least the same degree of care as it uses in protecting its own confidential information; and will not copy the Confidential Information of any other party hereto without first getting the other’s written consent; or

(ii) disclosure as may be required by law, regulation, court of government agency of competent jurisdiction (however, if required to make such a disclosure, the receiving party agrees to give the disclosing party prompt notice prior to disclosure and make a reasonable effort to assist disclosing party in obtaining a protective order or in redacting specified information to the extent reasonably permitted by applicable law or regulation).

These obligations remain in effect after expiry or termination of this Agreement.

19.3 After termination or expiry of the term of this Agreement, any party hereto may require any other party hereto to returnimmediately or, as the applicable parties may agree, destroy all copies of its Confidential Information the other then has and certify to it the other has taken these steps.

19.4 In the event of breach of the confidentiality provisions of this Agreement by the receiving party, it acknowledges that the disclosing party will be irreparably harmed, and that the disclosing party shall, in addition to any other available remedies, be entitled to obtain equitable relief to prevent further disclosures without resorting to the dispute resolution procedures set forth below.

20.Dispute Resolution.

20.1 Subject to and in accordance with the provisions of this Article, any and all differences, disputes, claims or controversies arising out of or in any way connected with this Agreement, whether arising before or after the expiration or termination of this Agreement, and including without limitation, its negotiation, execution, delivery, enforceability, performance, breach, discharge, interpretation and construction, existence, validity and any damages resulting therefrom or the rights, privileges, duties and obligations of the parties under or in relation to this Agreement (including any dispute as to whether an issue is arbitrable) shall be referred to binding arbitration under the International Chamber of Commerce rules in effect at the time of the arbitration.

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(b) The right to seek to arbitrate any matter hereunder or to seek any remedy which may have been available pursuant to an arbitration hereunder shall be brought within 2 years from the date at which the facts giving rise to the subject matter proposed to be arbitrated were known or ought to have been known with reasonable diligence by the party seeking to invoke the arbitration or seeking the remedy.

(c) A party desiring arbitration hereunder shall give written notice of arbitration to the other party containing a concise description of the matter submitted for arbitration (“Notice of Arbitration”). Within 10 days after a party gives a Notice of Arbitration, the parties shall each appoint a single arbitrator and the two nominated arbitrators shall select the third arbitrator (the “Arbitration Tribunal”). If there is a dispute concerning the choosing or an arbitrator, an arbitrator(s) shall be designated by a judge of the Ontario Superior Court of Justice upon application by either party.

(d) The Arbitration Tribunal may determine: all questions of law, fact and jurisdiction with respect to the dispute or the arbitration (including questions as to whether a dispute is arbitrable) and all matters of procedure relating to the arbitration. The Arbitration Tribunal may grant legal and equitable relief (including injunctive relief and specific performance), award costs (including legal fees and the costs of the arbitration), and award interest and, without limiting the generality of the foregoing or the Arbitration Tribunal’s jurisdiction at law, may: (i) determine any question of good faith, dishonesty or fraud arising in the dispute; (ii) order any party to furnish further details of that party’s case, in fact or in law; (iii) proceed in the arbitration notwithstanding the failure or refusal of any party to comply with these Rules or with the Arbitration Tribunal’s orders or directions, or to attend any meeting or hearing, but only after giving that party written notice that the Arbitration Tribunal intends to do so; (iv) receive and take into account written or oral evidence tendered by the parties that the Arbitrator determines is relevant, whether or not strictly admissible in law; (v) make one or more interlocutory determinations in the nature of interlocutory injunctions, including, but not limited to, restraining the continuation of any breach or default or to compel compliance with any provisions of this Agreement; (vi) make interim damages awards and/or make interim orders to secure all or part of any amount in dispute in the arbitration; (vi) make one or more determinations in the nature of mandatory orders, including, but not limited to, restraining the continuation of any breach or default or to compel compliance with any provisions of this Agreement; (vii) hold meetings and hearings, and make a decision (including a final decision) in New York City (or elsewhere with the concurrence of the parties to the arbitration); (viii) order the parties to produce to the Arbitration Tribunal, and to each other for inspection, and to supply copies of, any documents or classes of documents in their possession or power that the Arbitration Tribunal determines to be relevant; and (ix) order the preservation, storage, sale or other disposal of any property or thing under the control of any of the parties.

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(e) The arbitration shall take place in New York City at such place therein and time as the Arbitration Tribunal may fix. The arbitration shall be conducted in English. Within 20 days of the appointment of the Arbitration Tribunal, the parties shall either agree on the procedure to be followed for the arbitration or the Arbitration Tribunal shall determine the appropriate procedure, in accordance with the principles of natural justice, to be followed. It is agreed that the arbitration and all matters arising directly or indirectly (including all documents exchanged, the evidence and the award) shall be kept strictly confidential by the parties and shall not be disclosed to any third party except as may be compelled by law.

(f) No later than 20 Business Days after hearing the representations and evidence of the parties, the Arbitration Tribunal shall make its determination in writing and deliver one copy to each of the parties. The decision of the Arbitration Tribunal shall be final and binding upon the parties in respect of all matters relating to the arbitration, the conduct of the parties during the proceedings, and the final determination of the issues in the arbitration.

(g) There shall be no appeal from the determination of the Arbitration Tribunal to any court of competent jurisdiction, whether in New York, United States, Canada, Ontario or elsewhere. Judgment upon any award rendered by the Arbitration Tribunal may be entered in any court having jurisdiction thereof.

(h) The costs of any arbitration hereunder shall be borne by the parties in the manner specified by the Arbitration Tribunal in his or her determination.

(i) Submission to arbitration under this Article is intended by the parties to preclude any action in matters, which may be arbitrated hereunder, save and except for enforcement of any arbitral award hereunder.

21. Publicity. All public notices to third parties and all other publicity concerning the transactions contemplated by this Agreement or the business of the other party hereto shall be jointly planned and coordinated by the parties hereto. No party shall act unilaterally in this regard, unless required by law or regulation to do so, and any party required to act within a particular time frame under applicable law or regulation will afford the other party such opportunity to consult as such time frame permits.

22.Force Majeure. Neither party shall be liable for any delay or failure in the performance of its obligations (excluding payment obligations) hereunder to the extent caused by any fire, weather, earthquake or other act of God, act of any governmental or regulatory agency, strike, lockout, shortage of labor, terrorist act, act of the common enemy or any other event beyond such party’s reasonable control, unless caused by the negligence or willful misconduct of the party seeking to be relieved from its obligations; provided that the affected party continues to use reasonable efforts to recommence performance as soon as possible and to mitigate the impact of the event.

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23. Costs and Expenses. Except as expressly provided herein or agreed to in writing by XM and CSR, each party will pay all costs and expenses incurred in the performance of its obligations under this Agreement. To the extent CSR has not previously reimbursed XM or XM Parent for certain costs associated with obtaining the Canadian Licences as provided in Article 2(b) of the Memorandum of Agreement (as defined below), CSR will make such reimbursement promptly.

24. Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York, provided that any matters regarding the requirements of Canadian laws shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein, except that regulatory matters relating to licences awarded by the government of Canada to CSR which shall be governed by and interpreted in accordance with the federal laws of Canada.

25. Successors/Assigns. This Agreement shall inure to the benefit of and shall be binding upon the successors and permitted assigns of the parties hereto. No party shall be entitled to assign this Agreement without the prior written consent of the other parties. Notwithstanding the foregoing, each party shall be entitled to assign this Agreement without such consent to a successor in interest (other than a direct competitor of XM) arising through merger, acquisition, reorganization or sale of all or substantially all of its assets or business, or to a lender as security for financing. Any attempted assignment made contrary to this Article shall be void.

26. Further Assurances. The parties hereto shall do, execute and deliver such further and other agreements, assurances, undertakings, acknowledgements or other documents in connection with this Agreement as may reasonably be required to give full force and effect to this Agreement. The parties acknowledge and agree that there are many instances in this Agreement in which items are specified by the delivery of notices, numbers are fixed based upon developments and such numbers may be recorded in further documents, schedules are revised or deemed revised to accurately reflect actions being taken by XM or CSR consistent with this Agreement, and so on. The parties agree that all such notices, acknowledgements, other documents, schedules and so on are considered part of this Agreement, rather than amendments or modifications hereof.

27. Notices. Any notice or other communication required or permitted to be given by this Agreement to a party hereto shall be in writing and shall be delivered by hand or registered mail to the recipient at the following addresses:

27.1 To XM:

XM SATELLITE RADIO INC.

1500 Eckington Place, NE

Washington, DC 20002

Attention:Joseph Titlebaum

    Executive Vice President, General Counsel

    Joseph Verbrugge

    Vice President, International Operations

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(c)To CSR:

CANADIAN SATELLITE RADIO INC.

Suite 2300, P.O. Box 222

Canada Trust Tower, BCE Place

161 Bay Street

Toronto, Ontario M5J 2S1

Attention:Legal Department

(d)To CSR Parent:

CANADIAN SATELLITE RADIO HOLDINGS INC.

Suite 2300, P.O. Box 222

Canada Trust Tower, BCE Place

161 Bay Street

Toronto, Ontario M5J 2S1

Attention:Legal Department

or at such other address of which that party shall have given notice. Proof of delivery by hand or registered mail shall constitute proof of receipt.

28. Independent Parties. This Agreement does not constitute and shall not be construed as constituting a partnership or joint venture between CSR and XM. Neither party shall have the right to obligate or bind the other in any manner whatsoever, save as herein specifically provided and nothing contained in this Agreement shall give or is intended to give any rights of any kind to persons not party to this Agreement.

29. Entire Agreement. This Agreement and the other Transaction Documents contain the entire agreement between the parties hereto with respect to the subject matter hereof, and expressly supersedes all prior or contemporaneous agreements, whether oral or written, relating to such subject matter. As of the Effective Date of this Agreement, (i) that certain Memorandum of Agreement (the “Memorandum of Agreement”) among John Bitove, CSR Parent, CSR, XM Parent and XM dated August 7, 2003, and (ii) that certain letter dated November 7, 2004 among XM or XM Parent, CSR and CSR Parent shall both automatically terminate. No modification of this Agreement shall be valid unless made in writing and duly executed by each of the parties hereto.

30. Execution in Counterpart. This Agreement may be executed in one or more counterparts, which counterparts may be executed and delivered by electronic facsimile. Each counterpart when so executed shall be deemed to be an original, and such counterparts together shall constitute a single instrument.

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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.

XM SATELLITE RADIO INC.

/s/ Gary M. Parsons

Name: Gary M. Parsons

Title: Chairman

CANADIAN SATELLITE RADIO

HOLDINGS INC.

/s/ John I. Bitove

Name: John I. Bitove

Title: Chairman and CEO

CANADIAN SATELLITE RADIO INC.

/s/ John I. Bitove

Name: John I. Bitove

Title: Chairman and CEO

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SCHEDULE A

Part 1

 No.Name 

1.    4     The 40s

2.    5     The 50s

3.    6     The 60s

4.    7     The 70s

5.    8  The 80s

6.    9     The 90s

7.    10America

8.    11Nashville

9.    12X Country

10.    13Hank’s Place

11.    14Bluegrass Junction

12.    15The Village

13.    16Highway 16

14.    2020 on 20

15.    21KISS

16.    22MIX

17.    23The Heart

18.    24Sunny

19.    25The Blend

20.    27Cinemagic

21.    28On Broadway

22.    29U Pop

23.    32The Fish

24.    33Spirit

25.    40Deep Tracks

26.    41Boneyard

27.    43XMU

28.    44Fred

29.    45XM Café

30.    46Top Tracks

31.    47Ethel

32.    48Squizz

33.    50The Loft

34.    51Musiclab

35.    53Fungus

36.    54Lucy

37.    60Soul Street

38.    62Suite 62

39.    65The Rhyme

40.    66Raw

41.    67The City

42.    70Real Jazz

43.    71Watercolors

44.    72Beyond Jazz

45.    73Frank’s Place

46.    74Bluesville

47.    75Hear Music

48.    76Fine Tuning

49.    77Audio Visions

50.    80The Move

51.    81BPM

52.    82The System

53.    83Chrome

54.    90Alegria

55.    94Caliente

56.    101  The Joint

57.    110   XM Classics

58.    113  XM Pops

59.    116  XM Kids

60.    121  FOX News

61.    122  CNN

62.    127  CNBC

63.    131  BBC World Service

64.    133  XM Public Radio

65.    142  Fox Sports Radio

66.    175  MLB Home Plate

67.    206  NHL Hockey Play-by-Play

68.    207  NHL Hockey Play-by-Play

69.    208  NHL Hockey Play-by-Play

70.    209  NHL Hockey Play-by-Play

71.    150  XM Comedy

72.    151  Laugh USA

73.    155  Take 5

74.    164  Radio Classics

75.    171  Open Road

76.    202  High Voltage

EX-10.3

EXHIBIT 10.3

EXECUTION VERSION

PROGRAMMING AGREEMENT

THIS PROGRAMMINGAGREEMENT (this“Agreement”) made as of the 17^th day of November 2005.

 B E T W E E N:

XM SATELLITE RADIO INC.

(hereinafter referred to as “XM”)

and

CANADIAN SATELLITE RADIO HOLDINGS INC.

(hereinafter referred to as the “CSR Parent”)

and

CANADIAN SATELLITE RADIO INC.

(hereinafter referred to as “CSR”)

WHEREAS, XM operates a satellite system along with a terrestrial repeater network (the “XM System”) that presently provides digital audio radio service (“DARS”) in the United States pursuant to authorizations issued by the Federal Communications Commission (the “FCC”); and

WHEREAS, CSR has received alicence award from the Canadian Radio-television and Telecommunications Commission (“CRTC”) to operate and provide DARS in Canada, the licence to come into effect when certain conditions are met (the “CRTC Licence”), and Industry Canada intends to make available all radio spectrum necessary to provide DARS in Canada (collectively, the “Canadian Licences”) for all radio spectrum authorizations that are necessary to provide DARS in Canada (the “CSR System”); and

WHEREAS, as part of its strategic partnership and option to invest in CSR, XM is effectively providing a portion of its capacity to CSR to distribute certain CSR audio channels within the footprint of its satellite system, subject to the terms and conditions set forth herein; and

WHEREAS, CSR desires to develop, produce, deliver and licence to XM certain programs (the “CSR Programs”) at no charge to be distributed over such audio channels as described in this Agreement (“CSR Channels”) of the XM System and the CSR System all on the terms and conditions set forth herein; and

WHEREAS, subject to and at such time as CSR commences commercial delivery of a subscription-based package of digital audio radio services using the CSR System, XM desires to carry the CSR Channels on the XM System, subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein, the parties, intending to be legally bound, hereby agree as follows:

ARTICLE ONE: PROGRAMS

1.1Program Supply and Carriage; Availability.

(a)CSR shall, at its own cost and expense, develop, produce, deliver and licence the CSR Channels to XM, and XM shall be authorized to carry such CSR Channels which initially shall be comprised of nine (9) CSR Channels, subject to the provisions of Exhibit A. Each of the CSR Channels shall be distinctive, of high quality and, at all times during the Term, meet the content requirements and guidelines set forth in the Canadian Licences and applicable CRTC decisions (the present conditions of the CRTC Licence being set forth in Exhibit B), CSR’s broadcast standards and practices as amended from time to time (CSR’s current standards and practices being attached as Exhibit C, as well as Section 1.3 and Exhibits A of this Agreement. CSR shall commence delivery of the CSR Channels to XM no later than fourteen (14) days prior to the date XM is to commence pre-launch testing of the Services (as such term is defined in the XM System Licence Agreement) to be provided in Canada, as specified in the XM System Licence Agreement dated as of the date hereofby and among XM, CSR, CSR Parent (the “XM System Licence Agreement”).

(b)CSR shall have complete and sole technical authority over the terrestrial repeaters located in Canada, and shall have the sole and exclusive right to authorize reception of the CSR Channels as well as the XM CPackage Channels (as defined in the XM System Licence Agreement) for CSR’s Canadian subscribers to the Services. The parties acknowledge that in keeping with U.S. regulatory requirements, XM shall have complete and sole technical authority over the XM System, including upload and broadcast of all CSR Channels, as well as the right to control, designate and modify the location and bandwidth allocation of the CSR Channels over which the CSR Programs are to be carried. XM will provide CSR with reasonable notice in the event of a change in channel placement of the CSR channels. Changes implemented by XM shall not impair the audio quality of CSR’s music-based channels relative the audio quality of XM’s music-based channels in comparable music formats, or impede CSR’s ability to provide the CSR Channels in accordance with the terms of the licence issued by the CRTC.

(c)So long as CSR is in compliance with its obligations under this Agreement and the XM System Licence Agreement, XM shall carry the CSR Channels as part of its DARS service made available to subscribers in the United States during the Term (as defined below).

(d)In the event XM wishes to increase the number of XM CPackage Channels as defined and provided under the XM System Licence Agreement beyond an aggregate of seventy-two (72) channels, plus four (4) part time channels consisting of play-by-play broadcasts corresponding to the seventh channel on Exhibit A, a time when the terms of the Canadian Licences prohibit more than nine (9) non-Canadian channels for each Canadian channel, the parties shall negotiate in good faith whether and on what terms to increase the number of CSR Channels beyond the initial nine (9) channels provided for herein. If the parties agree in writing to add additional channels to this Agreement, then such additional channels shall be considered part of the CSR Channels and as such subject to the same provisions of this Agreement as the initial CSR Channels.

1.2Grant of Rights to XM.

(a)CSR hereby grants to XM, its agents and contractors during the Term the right and licence (i) to transmit, distribute, use, receive and authorize XM subscribers to receive the CSR Programs over the XM System in the United States, the CSR System in Canada and other areas within the footprint of the XM satellites (the “Territory”), and (ii) to retransmit the CSR Channels, or certain CSR Programs selected by XM, over satellite television, cable television, on XM’s internet web streams and in any other manner in which XM programmingis being transmitted or retransmitted, in each case as part of or in conjunction with XM’s basic SDARS (as such term is defined in the XM System Licence Agreement) in the United States. Such licence shall include reception by XM System subscribers and CSR System subscribers in the Territory. Without limiting the foregoing and subject to Section 1.2(b) below, none of the CSR Channels or any of the CSR Programs contained therein shall be made available for distribution or transmission in the Territory by any means or media other than as part of the Services under the XM System Licence Agreement without XM’s prior written consent (i.e., XM’s rights shall be exclusive in the Territory), which consent may bewithheld or granted in XM’s sole discretion.

(b)During the Term, CSR shall not licence or permit the transmission of any of the CSR Channels or any CSR Programs comprising the CSR Channels in Canada via digital terrestrial radio, any Canadian DARS system, or any other media except for the CSR System owned and operated by CSR as part of or in conjunction with the Services under the XM System Licence Agreement.

1.3Program Content.

(a)CSR, at its sole expense, shall deliver to XM in accordance with Section 1.4 the CSR Channels, currently consisting of nine (9) channels, each of which shall be programmed twenty-four (24) hours per day, seven (7) days per week, subject to any limitations set forth in Exhibit A. All creative control with respect to the CSR Channels shall remain with CSR so long as the CSR Channels meet the content requirements and guidelines set forth in the Canadian Licences, CSR’s broadcast standards and practices as amended from time to time as well as in this Section 1.3 and Exhibits A and B (as amended from time-to-time as permitted by the CRTC) to this Agreement. Given that the CSR Channels may be broadcast in the United States under the XM brand to XM subscribers, CSR agrees to consult with XM regarding general creative direction, concerns and issues in connection with the nature, subject and production of the CSR Channels. Any audio feed by which the CSR Channels are delivered shall include or be accompanied by the programming associated data (i.e., PAD) required by XM from time to time to be broadcast with its audio channels (such as song title, artist and record label) in a format reasonably specified by XM from a technical perspective.

(b)Consistent with XM’s broadcast standards and practices as applied to XM’s third party programmers, on each CSR Channel, one 30-second liner shall be reserved for XM’s use at both the top and the bottom of each clock hour for channel identifications and non-commercial promotional announcements relating to the Service, the CSR Channels and/or other XM products and services available in Canada. In addition, in the event of any unsold commercial availabilities on any CSR Channels, CSR may offer XM, at its discretion, non-commercial promotional announcements during such unused availabilities. XM may also air two (2) additional 30-second promotional liners per hour on each CSR Channel, provided that they do not preempt any paid advertising. XM shall furnish CSR with these non-commercial promotional announcements at least three (3) days in advance, and CSR shall include the announcements within the CSR Channels. CSR shall only identify the XM System and the channels included in XM broadcasts consistent with XM’s own standards as developed and modified from time to time.

(c)As the CSR Programs and the CSR Channels will also be included as part of XM service in the United States, name branding of the CSR Programs and the CSR Channels and any related slogans (collectively, the “Channel Brand Names”) by CSR shall be subject to the approval of XM, not to be unreasonably withheld. CSR shall own the rights to the Channel Brand Names with respect to Canada, and XM shall own the rights to the Channel Brand Names with respect to all areas outside of Canada. CSR’s and XM’s respective rights in the Channel Brand Names shall be licensed to the other party under, and on the terms agreed to in, the Trademark Licence Agreement.

1.4Delivery of CSR Channels/Programs.

(a)During the Term, CSR shall, at its sole cost and expense cause the CSR Channels (the foregoing programming to the extent included on the Service, is referred to herein as the “CSR Programming”), to be digitized, compressed, transmitted and received in digital signal(s) format via satellite (or other means acceptable to XM) at a satellite uplink facility identified in writing by XM from time to time (“Uplink Facility”); and the signal(s) and facilities used in connection with the delivery of the CSR Programming to the Uplink Facility shall fully comply with all applicable technical and other requirements of XM and the FCC, including without limitation the technical specifications as required by XM (collectively, the “Technical Standards”). XM reserves the right to change such Technical Standards from time to time, upon reasonable notice to CSR.

(b)If CSR fails, for any reason, to comply with the Technical Standards, CSR shall immediately take all actions necessary to correct the deficiency. In circumstances of a failure to meet the XM Technical Standards within a reasonable time frame, CSR shall bear all reasonable expenses of XM relating to its monitoring or enhancement of CSR’s signal(s). In addition, during any period in which CSR shall fail to deliver (an) acceptable signal(s) to XM, CSR shall, subject to the provisions of Section 8.1 below, reimburse XM for any costs attributable to such failure.

(c)CSR shall, at its own cost and expense, provide to XM all data requested by XM for reporting to applicable performance rights organizations with respect to programming provided by CSR to XM for broadcast over the XM system. Such requirements currently includethe following information for each piece of music included in the CSR Program: the artist name, track name, CD or album title, record label name, catalog number of CD or album, International Sound Recording Code, track label (P-Line), UPC code, applicable performance rights society, and date and time of transmissions. CSR shall deliver such data through use of equipment specified by XM, or by use of music cue sheets, as XM may require from time to time.

ARTICLE TWO:  TERM

2.1Term. Subject to earlier termination in accordance with the terms of Sections 5.1, 5.2, 5.4 and 5.5 of this Agreement, this Agreement shall commence on the date set forth above and shall continue in effectfor the term of the XM System Licence Agreement (the “Term”); provided that if the term of the XM System Licence Agreement (or successor agreement) is extended, this Agreement shall continue on the same terms (unless the parties agree otherwise) for the revised term, plus any further extensions or continuations thereof.

ARTICLE THREE:  MARKETING AND PROMOTION OF SERVICE

3.1Marketing and Promotion. The parties agree to comply with the provisions regarding marketing and promotion in the XM System Licence Agreement

3.2Programming Research. CSR, in consultation and coordination with XM, may conduct programming research regarding the Services in Canada, the results of which it shall provide to XM on a quarterly basis. CSR may undertake anyresearch regarding the Services outside of Canada only with XM’s prior written consent, which consent may be withheld in XM’s sole discretion.

ARTICLE FOUR:  SALE OF ADVERTISING; COMPENSATION

4.1Sale of Advertising. In consideration of CSR’s full performance of its obligations hereunder, CSR shall be entitled to sell all advertising included on each CSR Channel (the “Advertising”) and to retain all revenues collected from such sales except as specified in Exhibit A, provided that (i) the amount of Advertising that can be included in each hour shall be consistent with the content requirements and guidelines set forth in Exhibits A and B hereto, and (ii) each music-oriented CSR Channel shall not include any Advertising inconsistent with XM’s commercial-free music policies. CSR shall be solely responsible, at its expense, for billing, collection and trafficking of all Advertising, and the insertion of the Advertising in each CSR Channel prior to delivery of each such CSR Channel to XM as provided in Section 1.4. Subject to the conditions of its CRTC Licence and applicable Canadian law, CSR’s sale of Advertising is subject to compliance with XM’s standards and policies, including without limitation, XM’s then-current standard advertising guidelines. CSR shall include as part of any advertisement or promotion that sells or promotes products or services available only in Canada a disclaimer disclosing such limited availability as required by applicable laws. Without limiting the foregoing, subject to the next sentence, in no event shall Advertising included on the CSR Channels be used (i) to advertise or promote goods or services that are intended to be used or consumed primarily in the United States, its territories or possessions (i.e., “US-focused”) without coordinating with XM in advance and obtaining XM’s approval to do so, except as may be specifically contemplated in Exhibit A hereto, or (ii) to advertise or promote other satellite radio broadcasters, or goods or services that could reasonably be deemed detrimental to the image of the Services or XM. CSR shall, be entitled to place U.S. focused advertisements on the NHL Talk Channel (Home Ice), the sixth channel on Exhibit A, so long as it forms part of the Services, without the consent or approval of XM. XM shall, be entitled to place U.S. focused advertisements on the NHL Play-by-Play Channel, the seventh channel on Exhibit A, so long as it forms part of the Services, without the consent or approval of CSR.

4.2XM Commissions. In the event XM refers to CSR any customer that purchases Advertising from CSR for placement in any or more CSR Channels, then CSR shall pay XM a referral fee consistent with commissions paid by CSR to its advertising sales force generally, provided that consent to payment of such fee is obtained from the customer after appropriate disclosure (and CSR agrees to provide such disclosure and seek such consent).

4.3Advertising Clearance. CSR shall clear and shall be responsible for all costs and expenses incurred to clear the rights to (including paying any talent royalties or payments for) all Advertising for broadcast in the United States and Canada.

4.4Performance Rights. CSR shall obtain and maintain and shallbe responsible for all costs and expenses incurred to obtain and maintain all performance rights, including all required payments to the Canadian equivalent of ASCAP, BMI, SESAC, and the RIAA and to all Canadian regulatory tribunals or ratemaking bodies in respect of the copyright rates that may be set for reproduction or retransmission of the XM CPackage in Canada. XM shall be responsible for such costs and expense with respect to broadcast of the Programs and the CSR Channels in the U.S.

ARTICLE FIVE:  TERMINATION

5.1Termination. Either party may terminate this Agreement (the “Terminating Party”) upon written notice to the other party (the “Defaulting Party”) in the event the Defaulting Party fails to perform any of its covenants or obligations hereunder in all material respects or makes any material misrepresentation hereunder, which failure or misrepresentation is not cured within sixty (60) days (or longer if CSR is diligently trying to cure) after written notice thereof is given by the other party, or in the event the Defaulting Party liquidates or winds up its daily operations for any reason whatsoever.

5.2Termination of XM System Licence Agreement. This Agreement shall terminate immediately upon the expiration or termination for any reason of the XM System Licence Agreement.

5.3Other Remedies. If this Agreement is terminated in accordance with the provisions set forth in Section 5.1 above, the non-Defaulting Party shall be entitled to exercise all remedies which may be available to it, either at law or in equity, or both, but subject to the limitation contained in Section 5.4.

5.4Limitations of Liability. NO PARTY HERETO SHALL BE LIABLE TO THE OTHER PARTY HERETO FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES OF ANY NATURE ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE, AND INCLUDING LOST REVENUES, LOST PROFITS, INTERRUPTION OF BUSINESS OR OTHERWISE, EVEN IF THE POSSIBILITY OF SUCH DAMAGES WERE FORESEEABLE.

ARTICLE SIX:  REPRESENTATIONS, WARRANTIES AND COVENANTS

6.1CSR’s Representations, Warranties and Covenants. CSR Parent and CSR jointly and severally represent, warrant and covenant to XM, as of the date hereof and throughout the Term, as follows:

(a)CSR has obtained or will obtain all necessary rights and/or permission to grant the licences contemplated in this Agreement and to perform fully its obligations hereunder. Without limiting the generality of the foregoing, CSR has secured or will secure all necessary rights from talent or other third parties in order to grant XM the licence to use the CSR Programming and Advertising as described in this Agreement, and upon request of XM, CSR shall furnish appropriate documentation evidencing such rights. The CSR Programming andAdvertising, including each of the CSR Programs, in the form delivered by CSR to XM when used for the purpose and in the manner contemplated by this Agreement: (i) do not and will not infringe upon any United States, Canadian, or other foreign copyright, trade name, trademark, service mark, trade secret, literary or dramatic right or other proprietary right of any third person (including the right of privacy and publicity) in connection with the transmission of the CSR Channel within the XM footprint; and (ii) will comply with all applicable governmental laws and regulations. CSR shall comply with all applicable reporting processes and royalty payment requirements with respect to all applicable Canadian performance rights societies.

(b)CSR shall maintain, at its own cost and expense, commercial insurance that is reasonable and customary for a company of its size and circumstances, including insurance covering the third party liability aspects of its obligations under this Agreement under an “errors and omissions” or similar commercially available policy. The insurance requirement in the prior sentence shall apply to the extent such insurance is available at a commercially reasonable cost in the commercial (as distinguished from specialty) insurance market. Nothing in this Agreement shall require CSR to obtain any special or unusual insurance coverage. Such insurance shall remain in force at all times during the Term hereof and for a period of five (5) years thereafter. Upon the reasonable request of XM, CSR shall provide XM with a certificate of insurance evidencing this coverage, or other appropriate proof of continuing insurance coverage.

6.2XM’s Representations, Warranties and Covenants. XM represents, warrants and covenants to CSR Parent and CSR, as of the date hereof and throughout the Term, that XM has obtained and will maintain all material FCC authorizations or other government approvals for the provision of the Services.

ARTICLE SEVEN:  INDEMNIFICATION

7.1Breach or Default. XM and CSR shall each indemnify, defend and forever hold harmless the other and the other’s affiliated companies and each of the other’s (and the other’s affiliated companies’) respective present and former officers, shareholders, directors, employees, partners and agents, from and against any and all losses, liabilities, claims, costs, damages, expenses, including without limitation, fines, forfeitures, attorneys’ fees, disbursements and court and/or administrative costs (collectively, “Loss and Expense”), arising out of any third-party claim based on its breach of or default under any term, warranty, covenant, representation or other obligation contained herein.

7.2Program or Mark-Related Indemnities.

(a)Without limiting the provisions of Section 7.1, CSR shall indemnify, defend and forever hold harmless XM and XM’s affiliated companies and each of XM’s (and its affiliated companies’) respective present and former officers, shareholders, directors, employees, partners and agents, from and against all Loss and Expense arising directly or indirectly out of: (i) the development, production or supply of, or negotiation for, the CSR Programming by CSR; or (ii) the content of the CSR Programming, including the Advertising, provided by CSR and/or any data or material included therein or arising out of CSR's delivery and XM's transmission of the CSR Programming pursuant to this Agreement, including without limitation, any alleged or proven libel, slander, defamation, invasion of the right of privacy or publicity, violation, infringement or misappropriation of any performance right, copyright, trade name, trademark, trade secret, patent right, literary or dramatic right, or obscenity or indecency contained in the CSR Programming as provided by CSR, including the Advertising; or (iii) the negligent or willful acts or omissions of CSR or its equipment and/or service vendors.

(b)Without limiting the provision of Section 7.1, XM shall indemnify, defend and forever hold harmless CSR and CSR’s affiliated companies and each of CSR’s (and its affiliated companies’) respective present and former officers, shareholders, directors, employees, partners and agents, from and against all Loss and Expense arising directly or indirectly out of: (i) the development, production or supply of, or negotiation for the XM programming; or (ii) the content of the XM programming, including the advertising, provided by XM and/or any data or material included therein or arising out of XM's transmission of the XM programming pursuant to this Agreement, including without limitation, any alleged or proven libel, slander, defamation, invasion of the right of privacy or publicity, violation, infringement or misappropriation of any performance right, copyright, trade name, trademark, trade secret, patent right, literary or dramatic right, or obscenity or indecency contained in the XM programming as provided by XM, including advertising; or (iii) the negligent or willful acts or omissions of XM or its equipment and/or service vendors.

(c)CSR and XM agree to notify the other in the event that either party discovers an unauthorized third-party’s retransmission the programming.

7.3Indemnification Procedures. Each party seeking indemnity hereunder (the “Indemnified Party”) shall give prompt written notice to the other party (the “Indemnifying Party”) of any circumstances which may give rise to any Loss or Expense under this Article 7 as soon as the Indemnified Party knows of such circumstances; provided, however, that unless prejudiced by the failure to give such notice, such failure shall not relieve the Indemnifying Party of its obligation to indemnify the Indemnified Party under this Article 7. The Indemnifying Party shall, at its own cost and expense and using counsel reasonably acceptable to the Indemnified Party, contest and assume responsibility for the defense of such litigation, provided that the Indemnified Party may, at the Indemnifying Party’s own cost and expense, participate in the defense of any such claim, action or suit. The Indemnifying Party shall have the right to control the defense and any settlement of such claim, action or suit. The Indemnifying Party shall pay all expenses and satisfy all judgments, including reasonable attorneys’ fees and litigation expenses, which may be incurred by or rendered against the Indemnified Party in connection therewith.

7.4Survival of Indemnification Obligation. The indemnification obligations of the parties under this Article 7 shall survive the expiration or termination of this Agreement.

ARTICLE EIGHT:  FORCE MAJEURE

8.1Force Majeure. Neither XM nor CSR shall have any rights against the other for any failure of or delay in performance due to causes beyond its control, including without limitation, failure of the XM System or any element thereof (including general satellite, transponder, repeater or radio failures), acts of God, fires, floods or other catastrophes; national emergencies, terrorism, insurrections, riots or wars; strikes, lockouts, work stoppages or other labor difficulties; and any law, order, regulation or other action of any governing authority or agency thereof. Carriage of the CSR Channels on the XM System may be preempted, interrupted or suspended due to unusual, abnormal or other unforeseen situations, or conditions or for reasons beyond XM’s control, including without limitation, maintenance requirements or emergency conditions experienced by XM; or to protect the XM System, its personnel, facilities or services (collectively, “Emergency Preemption”). Upon notice of or otherwise becoming aware of an Emergency Preemption, CSR shall, upon the request of XM, immediately cease transmission of the CSR Programming. XM may cause such Emergency Preemption to occur without liability to CSR; provided, however, that XM shall, to the extent possible, give reasonable notice thereof and use commercially reasonable efforts to restore full carriage as soon as practicable.

ARTICLE NINE:  CONFIDENTIALITY; PUBLICITY

9.1Confidentiality.

(a)“Confidential Information” includes, but is not limited to any information which any party hereto considers to be of a proprietary and confidential nature and includes, without limitation, know-how, data, process, technique, program, design, formula, marketing, advertising, financial, sales, customer or programming matter, compositions, drawings, diagrams, computer programs, studies, work in process, visual demonstrations, concepts, and other data, whether oral, written, graphic, or electronic form, which may be exchanged between the parties. For the purposes of this Agreement, “Confidential Information” shall include, without limitation, the existence or contents of this Agreement. Confidential Information does not include the following information:

(i) information which is now or which hereafter becomes publicly known or available through no act or failure on the part of the receiving party;

(ii) information which is actually known to the receiving party at the time of the receipt of such Confidential Information without obligation of confidentiality; and

(iii) information which is hereafter furnished to the receiving party by a third party without obligation of confidentiality.

(b)Each party hereto will not use the Confidential Information of the other party for any purpose other than to perform this Agreement, will not disclose the Confidential Information of another party hereto to third parties, except:

(i) to those third parties who have a need to know such information in order for the receiving party to perform this Agreement, and who have executed a written non-disclosure agreement with substantially similar protections to those contained herein; will protect the Confidential Information of the other parties hereto with at least the same degree of care as it uses in protecting its own confidential information; and will not copy the Confidential Information of any other party hereto without first getting the other’s written consent; or

(ii) disclosure as may be required by law, regulation, court of government agency of competent jurisdiction (however, if required to make such a disclosure, the receiving party agrees to give the disclosing party prompt notice prior to disclosure and make a reasonable effort to assist disclosing party in obtaining a protective order or in redacting specified information to the extent reasonably permitted by applicable law or regulation).

These obligations remain in effect after expiry or termination of this Agreement.

(c)After termination or expiry of the term of this Agreement, any party hereto may require any other party hereto to returnimmediately or, as the applicable parties may agree, destroy all copies of its Confidential Information the other then has and certify to it the other has taken these steps.

(d)In the event of breach of the confidentiality provisions of this Agreement by the receiving party, it acknowledges that the disclosing party will be irreparably harmed, and that the disclosing party shall, in addition to any other available remedies, be entitled to obtain equitable relief to prevent further disclosures without resorting to the dispute resolution procedures set forth below.

9.2Publicity. All public notices to third parties and all other publicity concerning the transactions contemplated by this Agreement shall be jointly planned and coordinated by the parties hereto. No party shall act unilaterally in this regard, unless required by law or regulation to do so, and any party required to act within a particular time frame under applicable law or regulation will afford the other party such opportunity to consult as such time frame permits.

9.3Survival. The parties’ obligations under this Article 9 shall survive the expiration or termination of this Agreement.

ARTICLE TEN:  MISCELLANEOUS

10.1Assignment. This Agreement shall inure to the benefit of and shall be binding upon the successors and permitted assigns of the parties hereto. No party shall be entitled to assign this Agreement without the prior written consent of the other parties. Notwithstanding the foregoing, each party shall be entitled to assign this Agreement without such consent to a successor in interest (other than a direct competitor of XM) arising through merger, acquisition, reorganization or sale of all or substantially all of its assets or business, or to a lender as security for financing. Any attempted assignment made contrary to this Article shall be void.

10.2Notices.

(a)Any notice or other communication required or permitted to be given by this Agreement to a party hereto shall be in writing and shall be delivered by hand or registered mail to the recipient at the following addresses:

To XM:

XM SATELLITE RADIO INC.

1500 Eckington Place, NE

Washington, DC 20002

Attention:Joseph Titlebaum

        Executive Vice President, General Counsel

        Joseph Verbrugge

        Vice President, International Operations

To CSR:

CANADIAN SATELLITE RADIO INC.

Suite 2300, P.O. Box 222

Canada Trust Tower, BCE Place

161 Bay Street

Toronto, Ontario M5J 2S1

Attention: Legal Department

or at such other address of which that party shall have given notice. Proof of delivery by hand or registered mail shall constitute proof of receipt.

10.3Law; Dispute Resolution.

(a)This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York, provided that any matters regarding the requirements of Canadian laws shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein, except that regulatory matters relating to licences awarded by the government of Canada to CSR which shall be governed by and interpreted in accordance with the federal laws of Canada.

(b)The parties agree that upon either party giving notice to the other, the matter shall be subject to arbitration. In case of any controversy or claim arising out of or related to this Agreement, the parties agree to meet to resolve such dispute in good faith. Should such a resolution not be reached, the parties further agree that the matter (other than claims for which injunctive relief is sought) shall be settled by arbitration in accordance with the provisions set forth in the XM System Licence Agreement.

10.4Waiver and Severability. Neither the waiver by either of the parties hereto of a breach of, or a default under, any of the provisions of this Agreement, nor the failure of either of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder shall thereafter be construed as a waiver of any preceding or subsequent breach or default of the same or any other obligation, or as a waiver of any provision, right, or privilege hereunder. Any waiver under this Agreement must be in writing. In the event that any one or more of the provisions of this Agreement shall be held by a court of competent jurisdiction to be invalid or unenforceable in any respect, such invalidity and unenforceability shall not affect any other provision of this Agreement, and the Agreement shall be construed as though such invalid and/or unenforceable provision(s) had never been contained herein.

10.6CSR Parent Guarantee. CSR Parent hereby guarantees performance by CSR of all obligations of CSR hereunder.

10.7Entire Agreement; Modification. This Agreement together with the Transaction Documents (as defined in the XM System Licence Agreement) contains the entire agreement between the parties hereto with respect to the subject matter hereof, and expressly supersedes all prior or contemporaneous agreements, whether oral or written, relating to such subject matter. No amendment of or modification to this Agreement shall be valid unless made in writing and signed by the authorized representative(s) of the parties.

10.8Attorneys’ Fees. If any suit, appeal, or other action is commenced by a party to establish, maintain, or enforce any right or remedy arising from this Agreement, the prevailing party shall be entitled to reimbursement from the other party of its reasonable attorneys’ fees and litigation or appeal expenses incurred therein.

10.9Headings. The headings and numbering of articles and sections in this Agreement are for convenience only and shall not be construed to define or limit any of the terms herein or affect the meaning or interpretation hereof. Any reference in this Agreement to an "Article," "Section" or an "Exhibit" shall, unless the context expressly requires otherwise, be a reference to an "Article," or "Section" in, or an "Exhibit" to, this Agreement.

10.10Further Assurances. The parties hereto shall do, execute and deliver such further and other agreements, assurances, undertakings, acknowledgements or other documents in connection with this Agreement as may reasonably be required to give full force and effect to this Agreement. The parties acknowledge and agree that there are instances in this Agreement in which items are specified by the delivery of notices, numbers are fixed based upon developments and such numbers may be recorded in further documents, schedules are revised or deemed revised to accurately reflect actions being taken by XM or CSR consistent with this Agreement, and so on. The parties agree that all such notices, acknowledgements, other documents, schedules and so on are considered part of this Agreement, rather than amendments or modifications hereof.

10.11Independent Parties. This Agreement does not constitute and shall not be construed as constituting a partnership or joint venture between CSR and XM. Neither party shall have rights to obligate or bind the other party in any manner whatsoever, save as herein specifically provided and nothing contained in this Agreement shall give or is intended to give any rights of any kind to persons not party to this Agreement.

10.12Counterparts. This Agreement may be executed either original or facsimile in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.

XM SATELLITE RADIO INC.

/s/ Gary M. Parsons

Name: Gary M. Parsons

Title: Chairman

CANADIAN SATELLITE RADIO

HOLDINGS INC.

/s/ John I. Bitove

Name: John I. Bitove

Title: Chairman and CEO

CANADIAN SATELLITE RADIO INC.

/s/ John I. Bitove

Name: John I. Bitove

Title: Chairman and CEO

EXHIBIT A: CHANNEL DESCRIPTIONS*

1) Music Channel (Unsigned):This English-language commercial-free, channel for 18-49 adults will showcase new and emerging music in the genres of rock..

2) Music Channel (Air Musique): This French-language youth-oriented commercial-free, music channel will focus on popular Canadian musical artists performing in French.

3)Music Channel (Sur la route): AFrench-language adult-oriented commercial-free music channel.

4) Comedy Talk Channel (Laugh Attack): This comedy channel will showcase comedians and comedy segments from the most popular comedians from the past and present with a special emphasis on Canadian comic talent.

5) French Talk Channel (Franc Parler): This French talk channel will target male listeners18-54 years of age focusing sports, news, business, health and technology.

6) **NHL Talk Channel (Home Ice): This magazine style, sports talk channel will be a dedicated full time (24/7) radio channel featuring original programming that will focus on all aspects of hockey.

7) ***NHLInfo Play-by-Play: This channel provides daily play-by-play coverage with games and channel numbers, as well as providing the latest in hockey news, including news, scores and statistics, across North America.

8) ****Canadian National News, Business, Sports, Entertainment and Weather (Canada 360): A 24/7 English language information channel that delivers news, business, sports, entertainment and national weather with a Canadian perspective, updated every hour. 

9) ****French Canadian Cultural News and Entertainment (Quoi de Neuf): A 24/7 French language information channel that delivers the latest arts and entertainment news. 

*The channels described above will comply with all CRTC programming rules and regulations. Talk channels may include advertising. Channel names are subject to change in accordance with Section 1.3(c) of the Agreement to which this Exhibit is attached.

**When this channel is airing, U.S. focused advertisements are permitted.

***This channel initially will air only during the NHL hockey season. XM reserves the right to withdraw this channel from the CSR Channels upon written notice to CSR, following which there shall only be eight (8) CSR Channels. Following such notice the parties will negotiate in good faith about whether to continue the production of the channel in an alternative format that may be desirable at that time, but such negotiations shall be without prejudice to XM’s right to withdraw the channel. This channel shall not be subject to any requirement that the audio quality be comparable to that of any other channel. CSR shall make available on such channel to XM 6 minutes per hour (or more if allowable by the CRTC) of advertising time for XM sale or XM Programming promotions. XM shall be entitled to sell advertisements on such channel and retain all revenues collected from all sales of U.S. focused advertisements on this channel.

****Comparable to a traffic and weather channel for audio quality purposes.

EXHIBIT B

Appendix to Broadcasting Decision CRTC 2005-246

Conditions of licence for the satellite subscription radio undertaking licenced to Canadian Satellite Radio Inc.(“licensee”)*

1.(a)The licensee shall provide a national satellite subscription radio undertaking consisting of original Canadian-produced channels and non-Canadian channels. The licensee is authorized to distribute the services of XM Satellite Radio Inc. in accordance with the terms of the conditions of licence set out below.

(b)The licensee shall distribute a minimum of eight original Canadian-produced channels.

(c)The licensee may distribute, to any Canadian subscriber, a maximum of nine non-Canadian-produced channels for each original Canadian-produced channel that it distributes.

(d)In no case may a subscriber receive a package of channels where original Canadian-produced-channels constitute less than 10 percent of total channels received.

For purposes of this condition of licence, an "original Canadian-produced channel" is a channel produced in Canada that consists of programming not less than 50% of which is produced for and broadcast for the first time on that channel.

2.The licensee shall, in a week, devote a minimum of 85% of the total musical selections broadcast on all Canadian-produced channels, considered together, to Canadian selections as defined in section 2.2(2) of the Radio Regulations, 1986.

3.The licensee shall, in a week, devote at least 85% of the total spoken word programming broadcast on all Canadian-produced channels, considered together, to Canadian spoken word programming.

For purposes of this condition of licence "Canadian spoken word programming" means programming other than musical selections or commercial messages that is produced in Canada and where a Canadian is the primary performer or speaker.

4.(a)The licensee shall distribute a minimum of three French-language original Canadian-produced channels.

(b)Not less than 25% of the original Canadian-produced channels distributed by the licensee shall consist of French-language original Canadian-produced channels.

For purposes of this condition of licence, an "original Canadian-produced channel" is a channel produced in Canada that consists of programming not less than 50% of which is produced for and broadcast for the first time on that channel.

5.The licensee shall, during a week, on each French-language channel, devote 65% or more of its vocal musical selections from content category 2 to musical selections in the French language and schedule them in a reasonable manner throughout each day.

6.The licensee shall devote, between 6 a.m. and midnight each week on each Canadian music channel, a minimum of 25% of the musical selections broadcast to new Canadian musical selections, and a minimum of 25% of the musical selections broadcast to Canadian selections by artists who have not had a musical selection that has reached a position on one or more of the charts identified in the list set out in Circular 445, 14 August 2001, as may be amended from time to time.

For the purposes of this condition of licence, a "new Canadian musical selection" is a Canadian selection that has been released in the 6 months prior to the date that the musical selection is broadcast. The Eastern time zone will be used for purposes of determining compliance with this condition of licence. The licensee will also be responsible for specifying on the music lists it provides to the Commission, the release date of all musical selections it broadcasts.

7.The licensee shall not broadcast any original local programming on a Canadian-produced channel. For the purposes of this condition of licence "original local programming" means programming produced by the licensee for broadcast on the satellite subscription radio undertaking that targets a particular geographic community and includes, but is not limited to, commercial messages, news, weather and traffic information.

8.The licensee shall broadcast no more than six minutes of national commercial messages during any clock hour on any Canadian-produced channel. For purposes of this condition of licence a "national commercial message" is a commercial message that is purchased at a national rate and receives national distribution on the service.

9.The licensee shall adhere to sections 3, 4, 6,10.1 (with respect to its terrestrial transmitters) and 11 of the Radio Regulations, 1986.

10.The licensee shall adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters’ (CAB) Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and approved by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee is a member in good standing of the Canadian Broadcast Standards Council.

11.The licensee shall adhere to the provisions of the CAB’s Broadcast Code for Advertising to Children, as amended from time to time and approved by the Commission.

12.The licensee shall, for each Canadian-produced channel, adhere to the provisions of sections 8(1), (2), (3), (4), (5) and (6) of the Radio Regulations, 1986.

13.The licensee shall, for any non-Canadian-produced channel that may be identified by the Commission from time to time, adhere to the provisions of sections 8(5) and (6) of the Radio Regulations, 1986.

14.(1)For the purposes of this condition of licence,

"Canadian musical selection" means a musical selection that meets the criteria set out in subsection 2.2(2) of the Radio Regulations, 1986.

(2) On or before November 30 of each year, the licensee shall submit to the Commission a statement of accounts, on the annual return of broadcasting licensee form, for the year ending on the previous August 31.

(3) For any Canadian-produced channel, the licensee shall, at the request of the Commission, submit for any period specified by the Commission in its request

(a) the information required by the most recent Station Self-assessment Report form issued by the Commission; and

(b) a list of the musical selections in the order in which they are broadcast by the licensee during that period that includes the title and performer of each musical selection and a legend that identifies

(i)any Canadian musical selection,

(ii)any instrumental selection,

(iii) any category 3 musical selection within the meaning of Public Notice CRTC 1991-19 of 14 February 1991 entitled Implementation of the FM Policy and published in the Canada Gazette Part I on 23 February 1991, and

(iv) the language of the musical selection, where the musical selection is not an instrumental selection.

(4) For any non-Canadian produced channel, the licensee shall, at the request of the Commission, submit for any period specified by the Commission in its request, the following information for each musical selection broadcast:

(i)the name of the artist;

(ii) the name of the album from which the musical selection is taken and the number of the track;

(iii) the year that the musical selection was released; and

(iv) the version of the track, where multiple versions exist.

(5) At the request of the Commission, the licensee shall provide the Commission with a response to any inquiry regarding the licensee’s programming, ownership or any other matter within the Commission's jurisdiction that relates to the licensee's undertaking.

15.For the purposes of all the conditions of licence set out above, the terms "broadcast day," "broadcast week," "commercial message," "content category," "content subcategory," "ethnic program," "licensed," and "musical selection," shall have the meaning set out in section 1 of the Radio Regulations, 1986. "Day" means the total number of hours devoted to broadcasting for a period beginning at 12:00 in the forenoon and ending at midnight of the same day. "Week" means seven consecutive days beginning on Sunday.

_____________________

CSR has also submitted an application, dated September 7, 2005 to the CRTC, which as of the date of this Agreement has not been approved by the CRTC or become part of the licence requirements. However, if that application is approved by the CRTC on terms substantially as applied for by CSR, the conditions of licence will be amended to require that:

1.From the date of service launch (planned for December 2005), a minimum of four of the eight Canadian programming channels to be provided by CSR will be French language programming channels.

2.From the date of service launch, a minimum of two of the four French language programming channels offered by CSR will be musical programming channels.

3.If, during the thirty-six (36) month period following service launch CSR is able to add additional Canadian programming channels, it will honour the principle of equality of linguistic service in respect of any additional Canadian programming channels it is able to offer.

4.If within that thirty-six (36) month period from the date of service launch CSR has exceeded by 25% or more its subscriber projections, as filed in its licensing application, but has been unable to introduce in that period at least two additional Canadian programming channels (i.e., one English language, one French language), CSR will commit from that date forward to provide 6% of its gross service revenues (rather than 5%) to the support of Canadian Talent Development (“CTD”) initiatives. Such additional funding for CTD initiatives shall be divided equally between French and English language CTD initiatives.

5.CSR will work closely with the relevant Canadian agencies in the field of emergency preparedness, and will be an active participant in Canada’s Public Safety and Emergency Preparedness programs.

EXHIBIT C

CSR’S CODE OF BROADCAST STANDARDS AND PRACTICES

All employees of CSR must adhere to the provisions of the Canadian Association of Broadcaster’s (the “CAB”) Broadcast Code for Advertising to Children, and the CAB’s Sex Role Portrayal Code for Television and Radio Programming, as these codes may be amended from time to time and approved by the CRTC. All employees of CSR shall also adhere to the CAB’s Code of Ethics, as approved by the CRTC. A copy of each of these codes is appended hereto and each forms a part of CSR’s Code of Broadcast Standards and Practices. CSR shall become a member in good standing of the Canadian Broadcast Standards Council (“CBSC”) and shall abide by any Code for subscription satellite radio broadcasters that it may develop. In addition, employees of CSR shall in the performance of their duties comply with the following policies relating to broadcast standards and practices.

All policies are subject to change.

Broadcast of Obscene Material: Obscene material may not be broadcast at any time. Broadcast material is "obscene" if (i) the average person, applying contemporary community standards, would find that the material applies to the prurient interest, (ii) the material describes or depicts sexual conduct in a patently offensive manner, or (iii) taken as a whole, the material lacks serious literary, artistic, political, or scientific value. The broadcast of obscene material is a very serious offence. Violators of this policy are subject to disciplinary action, including up to immediate termination of employment.

Broadcast of Indecent Material: The airing of indecent material is prohibited between the hours of 6 a.m. and 10 p.m. on those channels not designated as containing explicit language. Broadcast material is "indecent" if it depicts or describes, in terms patently offensive (as measured by contemporary community standards) sexual or excretory activities and organs. If any on-air talent is uncertain whether its intended broadcast may be deemed indecent or obscene, the station should immediately consult with the relevant CSR employee prior to broadcasting the programming.

Falsehoods: Any on-air talent that broadcasts falsehoods that injure a person’s reputation may be subject to disciplinary action, including up to termination of employment. All of the following are prohibited: anylibel, slander, defamation, invasion of the right of privacy or publicity, violation, infringement or misappropriation of any performance right, copyright, trade name, trademark, trade secret, literary or dramatic right.

Invasion of Privacy: Any on-air talent that broadcasts a private and intimate fact about a person without a newsworthy reason for doing so may be subject to disciplinary action, including up to termination of employment.

Recording and Broadcasting of Telephone Conversations: Prior to recording a telephone conversation for broadcast or broadcasting such a conversation live on the air (in whole or in part), the station must notify all parties to the call of the station's intention to broadcast the conversation. The only time prior express notification is not required is when the other party to the call is associated with CSR or XM (e.g., an employee or part-time reporter), or where the other party originates the call and it is obvious that the call is in connection with a program in which the station customarily broadcasts telephone conversations (e.g., a call-in show). A "conversation" begins whenever a party answers the telephone. Therefore, the prior notification requirement is violated when the party called answers the phone by saying "Hello" - even if the station announcer immediately informs the party called of the announcer's identity and the fact that the telephone conversation is being recorded for later broadcast or is being broadcast live. Live broadcast use of a telephone conversation prior to informing the other party of the station's intention to broadcast it, even with the intent of, and/or actually obtaining the party's permission during the broadcast, is unacceptable. The brevity of the conversation, even if it is as short as one word, is immaterial.

If CSR fails to notify a party of its intention to broadcast a telephone conversation prior to recording and/or broadcasting the conversation, it may be subject to civil lawsuits, and the Program Director or on-air talent responsible for such failure may be subject to disciplinary action, including up to immediate termination of employment.

Broadcast Hoaxes: It is prohibited to broadcast false information concerning a crime or a catastrophe if (i) the channel Program Director or on-air talent knows that the information is false, (ii) it is foreseeable that broadcast of the information will cause substantial public harm, and (iii) broadcast of the information does in fact directly cause substantial public harm. "Public harm" is defined as harm that causes direct and actual damage to property or to the health or safety of the general public or diverts law enforcement or other public health and safety authorities from their duties. Public harm is "foreseeable" if it can be expected with a significant degree of certainty that such harm will occur.

Listener Contests and Prizes: No contests, sweepstakes, giveaways, or similar prize-based initiatives may be conducted prior to their being approved by the [insert title] of CSR and the Vice President of Marketing and the Senior Vice President of Business Affairs of XM.

Payola/Plugola: FCC payola/plugola regulations prohibit receipt of money or other consideration by radio stations or employees thereof in exchange for playing specific programming or making favorable comments about products or services, unless the stations disclose on air the fact that such consideration was paid. Relevant CSR employees will be required to execute affidavits periodically confirming that no violations of this policy have occurred. Violators of this policy will be subject to disciplinary action, including up to immediate termination of employment.

Particular care must be taken where XM or CSR has an agreement or understanding with a record company, concert promoter, or program supplier that involves promotional announcements and/or airplay of records. With record company promotions and marketing programs, it is not always apparent whether consideration received by the station is in return for putting program matter on the air or is in return for something else. For that reason, any agreements or arrangements between stations and record companies, concert promoters or their representatives that in any way involve station airplay or concert performances must be submitted to the [insert title] of CSR and to the Vice President of Business Affairs of XM for review and approval before they are entered into.

Sponsor Identification: A sponsorship identification announcement must be made with any commercial spot, political spot, or other program matter for which CSR is paid valuable consideration. The announcement must: (a) state that the matter is sponsored, paid for, or furnished; and (b) fully and fairly disclose the true identity of the person(s) or entity(ies) by whom or on whose behalf the payment is made. In the case of commercial advertising spots, this requirement is deemed to be satisfied if the sponsor's corporate name, trade name, or product name is stated in the spot in a context where it is clear that the mention of the name constitutes a sponsorship identification (for example, "Drink ice-cold Coca-Cola"), and in such cases no additional sponsorship identification announcement is needed. But if the station is paid to broadcast a spot that promotes a commercial product generically, such as a spot touting the health benefits of drinking milk, then the sponsoring entity (e.g., the Dairy Farmers) must be specifically identified.Also, a paid spot that is in the nature of a public service announcement (PSA) must identify the sponsoring entity. The same is true for "teaser" announcements where the sponsor's identity is not otherwise apparent, such as an announcement that says "it's coming soon" without saying what "it" is.

Performance Complement: All programming must adhere to the broadcast restrictions unless the appropriate waiver is obtained in the U.S.Digital Millennium Copyright Act as follows:

·   On a particular channel, within any three hour period, the programming can contain no more than three selections from any one album or CD, and no more than two such selections can be played consecutively.

·   On a particular channel, within any three hour period, the programming can contain no more than four different selections by the same featured artist or from any set or compilation, and no more than three such selections can be played consecutively.

Describing the Service: The Services of CSR and XM should be described in ways that are consistent with the marketing messages of CSR and XM and in ways that do not misrepresent the capabilities of those Services to consumers. Use the printed marketing and advertising materials of CSR and XM for characterizations of the Services.

Chat Room Participation: CSR employees are prohibited from participating in any chat room, message board or other on-line communication forum relating to CSR or XM, even if such participation is conducted under a fictitious name. Online forum communications are public statements. Only authorized individuals are permitted to make public statements about or on behalf of CSR or XM. In addition, unauthorized online forum communications may inadvertently expose CSR or XM to legal liability based on, among other things, infractions ofsecurities laws, company contract violations, or torts based on misinformation, regardless of whether or not intentional. Any CSR employee found violating this policy will be subject to disciplinary action up to and including immediate dismissal.

CSR employees may post promotional material about CSR channels on websites, such as artist fan sites and other relevant sites. These postings must follow the same guidelines as those postings made to CSR or XM website channel pages.

Non-Program Related Communication with Subscribers: Programming staff communicates with subscribers over the air, on-line, and on the phone. Like chat room participation, these communications are public statements and must follow these guidelines:

No corporate information (e.g., relating to financing activities) other than what has been disclosed in securities filings. If there is an event that results in numerous listener inquiries, senior management will advise as to what, if any, answer is authorized. These answers will be consistent with LCC statements.

No technical information regarding CSR’s or XM’s broadcast operations, satellites, radio, or other technology.

·   No information about our business partners, business projects (whether consummated or in negotiations).

·   Other company confidential information à when in doubt, do not discuss.

Respectful of Faiths: The subject of religion and references to particular faiths and tenets shall be treated with respect at all times.

Donation Solicitations: Requests for donations in the form of a specific amount shall not be made if there is any suggestion that such donation will result in miracles, physical cures or life-long prosperity.

Compliance with Laws: The channels produced by CSR are broadcast both in Canada and the United States. It is necessary, therefore, for CSR’s employees to comply with the advertising and broadcasting laws of both countries. If you are uncertain of the law, ask your [manager] for instructions and guidance before taking any action.

EX-10.4

EXHIBIT 10.4

Execution Version

DISTRIBUTION AGREEMENT

THIS AGREEMENT, made as of the 10^th of November, 2005 (the “Effective Date”), is by and between General Motors of Canada Limited (“GMCL”), a Canadian corporation that is a wholly owned subsidiary of General Motors Corporation, a Delaware corporation (“GM”), Canadian Satellite Radio Inc., a Canadian corporation (“CSR”) that is a wholly owned subsidiary of Canadian Satellite Holdings Inc., an Ontario corporation (“CSR Holdings”) and XM Satellite Radio Inc., a Delaware corporation (“XM Radio”), that is a wholly owned subsidiary of XM Satellite Radio Holdings Inc., a Delaware corporation (“XM Holdings” and, collectively, “XM”).

RECITALS:

A.CSR has obtained licenses from XM for the technology and intellectual property rights necessary to provide an S-band Satellite Digital Audio Radio Service in the Territory pursuant to a license from the Canadian Radio-television and Telecommunications Commission (“CRTC”).

B.Distributor distributes GM Vehicles in the Territory.

C.CSR desires that Distributor factory-install XM receivers configured for Canadian subscription services (“CSR Receiver(s)”) in GM Vehicles.

D.Distributor desires to factory-install CSR Receivers in GM Vehicles.

E.CSR desires that Distributor promote the CSR Service in the Territory during the Term.

AGREEMENT:

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

1.   DEFINITIONS:

In addition to the terms defined elsewhere in this Agreement, and unless the context otherwise requires, the defined terms set forth below and used in this Agreement shall have the following meanings:

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“Agreement” means this Agreement, including Attachments hereto, which, by this reference, are incorporated in their entirety herein.

“Authorized CSR Manufacturer(s)” means a manufacturer(s) licensed from time to time by XM to produce CSR Receivers for the OEM vehicle radio market in the Territory.

“Base Subscription Service” means the combination of music, talk, sports and information audio channels referred to by CSR as the basic Canadian content package, excluding any premium audio channels, being offered by CSR in the Territory. From the Trigger Date and throughout the Term, it is agreed that the Base Subscription Service will be available for a monthly subscription fee of no more than the exchange-rate adjusted price of the comparable basic XM Radio Service, excluding any premium audio channels, being offered in the United States. The monthly subscription fee for the Base Subscription Service shall be subject to further adjustments which are appropriate in light of any content limitations or enhancements required by the CRTC or Industry Canada for the Territory. Except for changes made pursuant to the previous sentence, the Parties agree that the Base Subscription Service in the Territory will be substantially similar to the comparable basic XM Radio Service being offered in the United States.

“Control” (including the correlative terms “controls,” “controlled by,” “controlling” and “under common control with”) means the power to direct the management and policies of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

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“CRTC” has the meaning set forth in the Recitals.

“CSR” has the meaning set forth in the preamble of this Agreement.

“CSR Channel Line-Up” means the full line-up of music, talk, sports and information audio channels comprising the CSR Service, including the eight (8) Canadian content channels required by the CRTC license.

“CSR Holdings” has the meaning set forth in the preamble of this Agreement.

“CSR Receiver” has the meaning set forth in the Recitals.

“CSR Service” means the combination of all music, talk, sports and information audio channels, including the Base Subscription Service and any premium audio channels, being offered by CSR in the Territory.

“Distributor” means GMCL, and its subsidiaries.

“Effective Date” has the meaning set forth in the preamble of the Agreement.

“Enabled GM Vehicle” means a new or used GM Vehicle (excluding GM Affiliate Vehicles) manufactured for sales in the Territory with a CSR Receiver installed by or for the Distributor, including, without limitation, by authorized GMCL dealers through their authorized association with GMCL, or its Service Parts Operations.

“Four City Repeater Launch” means CSR's completion, to the satisfaction of the Parties acting reasonably, of CSR's terrestrial repeater network in the four (4) metropolitan areas identified as the “Initial Four Cities” in Attachment 2 hereto.

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“Full Repeater Launch” means CSR's completion, to the satisfaction of the Parties acting reasonably, CSR's terrestrial repeater network in the remainder of the metropolitan areas listed in Attachment 2 hereto.

“Full Repeater Launch Date” means the date of the Full Repeater Launch.

“GM” has the meaning set forth in the preamble of this Agreement or means General Motors and all of its brands, as applicable.

“GMCL” has the meaning set forth in the preamble of this Agreement.

“GM Affiliate” means an entity set forth on Attachment 1 hereto.

“GM Affiliate Vehicle” means a vehicle manufactured by or for a GM Affiliate and sold in the Territory under any GM Affiliate brand.

“GM Vehicle” means a vehicle manufactured by or for GMCL and sold in the Territory under any GM brand, including Saab. The term “GM Vehicle” includes GM Affiliate Vehicles unless expressly indicated to the contrary.

“GM/CSR Subscriber” means a subscriber to the CSR Service who receives the Base Subscription Service in an Enabled GM Vehicle, whether or not such subscriber receives any premium audio channels.

“Initial Four Cities” are the four (4) metropolitan cities identified as such in Attachment 2 hereto.

“Initial Funding” has the meaning set forth in Section 11(g) of this Agreement.

“Initial Funding Date” means the date when CSR has received the Initial Funding.

“Initial Purchase” means first sale or lease of a New Enabled GM Vehicle to a Purchaser, with a purchase date equal to the customer delivery date. In the case of a GMCL or authorized dealer company-owned or operated vehicle, the Initial Purchase will occur when such vehicle is no longer owned or operated by GMCL or the GMCL authorized dealer and is sold or leased to a third party. During the time that any Enabled GM Vehicle is owned or operated by GMCL or a GMCL authorized dealer, it is agreed that the CSR Service will be provided by CSR to such vehicle at no charge and GMCL and its authorized dealers will actively promote the CSR Service to potential customers.

“Installation Commission” has the meaning set forth in Section 4(a).

“IPO Funding” has the meaning set forth in Section 11(g).

“Letter of Credit” means a letter of credit in favour of CSR, with terms acceptable to Distributor, obtained and paid for by John Bitove or an entity controlled by John Bitove, which is issued by a major financial institution with a minimum issuer credit rating or senior unsecured debt rating of A from Standard & Poors, A.2 from Moody's, or A from Fitch.

“Model Year” means the twelve (12) month period traditionally designated from July 1 of the prior year to June 30 of the designated year.

“New Enabled GM Vehicle” means a new GM Vehicle (excluding GM Affiliate Vehicles) manufactured for sale in the Territory with a CSR Receiver installed by or for the Distributor, including, without limitation, by authorized GMCL dealers through their authorized association with GMCL or its Service Parts Operations, which have not had an owner other than the manufacturer and/or an authorized dealer, including, but not limited to, GMCL company-owned vehicles.

“Party(ies)” means CSR, XM and/or Distributor, as the context requires.

“Preliminary Prospectus Filing Date” means the date on which CSR files with the regulators its Preliminary Equity Prospectus for the IPO Funding.

“Purchase” means the purchase or lease of a New Enabled GM Vehicle.

“Purchaser(s)” means the individual(s) or entity(ies), including, but not limited to fleet customers (e.g., Avis), purchasing or leasing a New Enabled GM Vehicle from a GMCL authorized dealer.

“Qualifying GM/CSR Subscriber” has the meaning set forth in Section 4(b).

“Regulatory Force Majeure Event” means (a) any action taken by the CRTC to require receivers capable of receiving the transmission signal from the XM/CSR System to be interoperable with receivers capable of receiving the transmission signal of Sirius Satellite Radio Inc. (“Sirius Service”) (or any successor thereto or licensee thereof to provide the Sirius Service in the Territory) or any other SDARS in the Territory such that it shall become impermissible for Distributor to install CSR Receivers that are exclusively able to receive the signal from the XM/CSR System; or (b) any CRTC denial of the CSR license application (or equivalent action from Industry Canada) seeking the right to broadcast SDARS in the Territory, or approval or subsequent alteration of license with terms, conditions and/or restrictions that are not acceptable to either XM Radio or Distributor.

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“Revenue Share” has the meaning set forth in Section 4(c).

“SDARS” means Satellite Digital Audio Radio Service.

“Service Availability Level” has the meaning set forth in Attachment 2.

“Service Parts Organization” is a division of GMCL.

“Subscriber Bounty” has the meaning set forth in Section 4(b).

“Term” has the meaning set forth in Section 3(a).

“Territory” means Canada.

“Trigger Date” means the later to occur of (i) the date on which the CSR Service is made available for sale in the Territory and CSR has a functioning subscriber relations, activation, and billing system in place, and (ii) the completion of the Four City Repeater Launch (with items (i) and (ii) of this paragraph being referred to collectively as the “Trigger Date Conditions”).

“Triple Play” has the meaning set forth in Section 4(f).

“Vehicle Ship Date” means the date on which a GM Vehicle equipped with a CSR Receiver is put into transit from a GM or GM affiliate (e.g. CAMI) assembly facility for delivery to authorized GM dealers in the Territory.

“XM” has the meaning set forth in the preamble of this Agreement.

“XM Channel Line-up” means the music, talk, sports and information audio channels comprising the XM Service.

“XM Credit Facility” has the meaning set forth in Section 11(f).

“XM Holdings” has the meaning set forth in the preamble of this Agreement.

“XM Service” means the combination of all music, talk, sports and information audio channels, including any premium audio channels, being offered by XM in the United States.

“XM/CSR System” means the combined infrastructure of XM and CSR required to provide SDARS service in the Territory. The Parties understand and agree that different elements of the XM/CSR System will be owned, operated and maintained by either XM or CSR, respectively.

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2.   EXCLUSIVITY OBLIGATIONS:

During the Term and subject to Sections 3(b)(i) and 8 hereof, (a) Distributor agrees to install CSR Receivers in certain GM Vehicles and market the CSR Service in the Territory, and (b) subject to Section 3(b)(vi), Distributor will not install and market receivers in GM Vehicles in the Territory which are capable of receiving signals from another subscription radio service (including, but not limited to, those subscription radio services proposed by Sirius Satellite Radio and CHUM Communications). It is agreed that if there is any agreement or arrangement between GM and XM in the United States that contains any less restrictive exclusivity obligation than the one agreed to by Distributor in this Section 2, then the Parties agree that this Agreement will be amended to reflect the same agreement for the Territory.

3.   TERM:

(a)   Unless earlier terminated pursuant to the terms of this Agreement, the “Term” of this Agreement shall commence as of the date hereof and shall expire at the end of thirteen (13) years from the Full Repeater Launch Date.

(b)   Notwithstanding anything in this Agreement to the contrary, upon the occurrence of certain events, one or both Parties shall have the rights set forth below to trigger a renegotiation of certain terms of, or be excused from certain obligations under, this Agreement as follows:

(i)   Distributor Exclusivity. Provided Distributor uses commercially reasonable efforts to install CSR Receivers in GM Vehicles and market the CSR Service in the Territory, Distributor may, at is sole discretion, be relieved from its exclusivity obligations set forth in Section 2 if four (4) years following the Trigger Date, or if across any twelve month period during the Term thereafter, CSR's share of mobile aftermarket SDARS subscribers in the Territory is less than forty percent (40%), assuming only two (2) mobile aftermarket SDARS providers, and less than thirty-three percent (33%), assuming that there are three (3) mobile aftermarket SDARS providers. It is agreed that CSR will have a three-month period in which to cure any share deficiency described in the preceding sentence before Distributor may be relieved of its exclusivity obligations. CSR's share of mobile aftermarket SDARS subscribers shall be based on a mutually agreed upon source(s), and shall be based on the most recent figures available at the time of measurement.

(ii)   Installation-Triggered Renegotiation. Provided CSR maintains a high quality, cost-competitive service to GM/CSR Subscribers and continues to offer the CSR Channel Line-Up, CSR may trigger a renegotiation (with commercially reasonable efforts to conclude a deal) of this Agreement five (5) years following the Full Repeater Launch Date if, at that time, the cumulative total number of Enabled GM Vehicles sold or leased by Distributor is less than 300,000 units.

(iii)   Automatic Renegotiation. Upon the occurrence of a Force Majeure Event and pursuant to Section 8 hereof, CSR and Distributor agree to use commercially reasonable efforts to renegotiate mutually acceptable terms in light of the changed landscape arising from such Force Majeure Event.

(iv)   Renegotiation based on Financing. If, on or before the Initial Funding Date, CSR has not (i) obtained, pursuant to Section 11(g), the Initial Funding, and (ii) entered into the XM Credit Facility, or an alternative arrangement acceptable to Distributor, then Distributor, at its option, may trigger a renegotiation of this Agreement (with each party making commercially reasonable efforts to conclude a deal) and this shall not constitute a Force Majeure event under Section 8.

(v)   Renegotiation based on Trigger Date Conditions. If CSR has not met the Trigger Date Conditions on or before December 1, 2005, then Distributor, at its option, may trigger a renegotiation of this Agreement (with each party making commercially reasonable efforts to conclude a deal) and this shall not constitute a Force Majeure event under Section 8.

(vi)   Renegotiation based on Interoperable Radios. CSR may trigger a renegotiation of the terms of this Agreement at any time during the Term if GM elects to install interoperable radios (i.e. radios capable of receiving both the CSR Service and the Sirius Satellite Radio service, or other SDARS or subscription radio signals) in the absence of any regulatory requirement.

(c)   Upon at least sixty (60) days prior written notice, either Party shall have the right to terminate this Agreement if the other Party has breached any of its material obligations under this Agreement; provided, however, that if such breach is of the type that is curable, then such termination for material breach shall not be effective, and the notifying Party shall not exercise any of its other rights at law or in equity, unless the notified Party has failed to cure such material breach fully and to demonstrate to the notifying Party that such material breach has been cured within the sixty (60)-day period following the notice described in this Section 3(c).

(d)   If the CRTC, at any time, revokes CSR's SDARS license (or equivalent action is taken by Industry Canada) as a result of the action(s) or inaction(s) of CSR, then Distributor, at its option, shall have the right to declare CSR in material breach of this Agreement, and such revocation shall not constitute a Force Majeure event under Section 8.

4.   PAYMENTS TO DISTRIBUTOR

(a)   Installation Commission.

(i)   Subject to Section 4(g) below, CSR agrees to pay Distributor a one-time installation commission (the “Installation Commission”) as set forth in the table below for each New Enabled GM Vehicle. For the avoidance of doubt, the following payments shall not be payable to the extent Section 4(g) hereof is in effect:

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Year	One-time Payment for each New GM Enabled Vehicle
First Year Following Full Repeater Launch Date	C$50
Second Year Following Full Repeater Launch Date	C$25
Third Year Following Full Repeater Launch Date and thereafter	C$0

(ii)   Distributor shall invoice CSR (using a mutually agreed upon form) at the end of each calendar month for Installation Commissions earned during such month. Each invoice shall include the Vehicle Identification Number (“VIN”) of each GM Vehicle for which an Installation Commission is payable, the CSR Receiver identification number for each such GM Vehicle and any other information reasonably necessary to compute the Installation Commission. The invoice shall be due and payable within thirty (30) days following receipt by CSR. Distributor shall not invoice CSR for an Installation Commission covered in section 4(a) before the Vehicle Ship Date.

(b)   Subscriber Bounty. During the Term and subject to Section 4(g) below, separate from any Installation Commission payable, CSR agrees to pay Distributor a one-time fifty-Canadian dollar (C$50) commission (the “Subscriber Bounty”) for each Purchaser of a New Enabled GM Vehicle (excluding GM Affiliate Vehicles) who becomes a GM/CSR Subscriber. The GM/CSR Subscriber must subscribe to the CSR Service within twelve (12) months of the Initial Purchase of such New Enabled GM Vehicle (a “Qualifying GM/CSR Subscriber”). If a Qualifying GM/CSR Subscriber for whom a Subscriber Bounty is payable fails to pay CSR at least fifty-Canadian Dollars (C$50) for receipt of the Base Subscription Service, then CSR shall have the right to credit the difference between the Subscriber Bounty paid and the amount actually received by CSR on account of such Qualifying GM/CSR Subscriber to future Subscriber Bounty payments. The Subscriber Bounty shall be paid in two (2) equal installments (Activation and Loyalty), (i) the first of which (Activation) shall be due and payable no later than thirty (30) days following the end of the calendar month during which a Qualifying GM/CSR Subscriber initially subscribes to the CSR Service, and (ii) the second of which (Loyalty) shall be due and payable no later than thirty (30) days following the end of the calendar month during which such Qualifying GM/CSR Subscriber makes his initial three (3) month subscriber payment for receipt of the Base Subscription Service. In no event shall the Subscriber Bounty be payable more than one time with respect to any one CSR Receiver.

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(c)   Revenue Share for Enabled GM Vehicles. During the Term and subject to Section 4(g) below, Distributor shall receive a fifteen percent (15%) share of the revenue billed to GM/CSR Subscribers by CSR for the Base Subscription Service (excluding subscription fees generated from GM Affiliate Vehicles), less bad debt and refunds for subscription cancellations (the “Revenue Share”).

The Revenue Share shall be due and payable to Distributor no later than thirty (30) days after the end of each calendar month during the Term based upon subscriber revenues billed to GM/CSR Subscribers during such month.

(d)   Revenue Share (or other Compensation) for GM Affiliate Vehicles. During the Term and subject to Section 4(g) below, revenue share, if any, (or other compensation, if any) payable with respect to revenue collected by CSR from Base Subscription Service subscribers in GM Affiliate Vehicles that are enabled to receive the CSR Service, less any bad debt and refunds for subscription cancellations, shall be mutually agreed to from time to time by CSR and the applicable GM Affiliate, and consented to in writing by XM.

(e)   Market Support Funds. CSR shall allocate to Distributor amounts as set forth in the table below (“Market Support Funds”). The annual budget for Market Support Funds is to be generally distributed to Distributor evenly in each quarter of the applicable year and will be utilized for mutually agreed marketing efforts including vehicle literature, dealer training and incentives. Before initiating agency work, both Parties will mutually agree to a general strategy and terms for the initiatives agreed to be undertaken. The Parties will meet as needed to discuss any issues which have arisen regarding prior use of the Market Support Funds and will work together with a view to reaching an understanding regarding the future use of Market Support Funds.

Year	Market Support Funds for Year
Effective Date through First Anniversary of Trigger Date	C$2,000,000, of which up to C$1,000,000 may be spent prior to the Trigger Date (the “Launch Fund”). As part of this C$2,000,000, CSR to reimburse GMCL within 10 business days of the Effective Date for expenditures incurred prior to the Effective Date.
First Anniversary of Trigger Date through Second Anniversary of Trigger Date	C$1,500,000
Each additional twelve-month period thereafter	The amount payable hereunder for the prior twelve month period, plus a 3% increase (prorated for any final period less than twelve months)

Any unused portion of Market Support Fund dollars in any given twelve (12) month period will be carried forward into the subsequent twelve (12) month period. Both CSR and the Distributor will mutually agree on the use of carryover funds that are allocated into subsequent twelve (12) month periods. In the event that Market Support funds are re-distributed, formal documentation in writing of the mutual decision is required including, but not limited to, the dollar value being re-distributed.

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Distributor agrees to provide CSR with monthly reporting of Market Support Fund activities, monies spent, committed, forecast and performance against budget.

(f)   Initial Free Service. Distributor shall use commercially reasonable efforts to have all Purchasers of Enabled GM Vehicles subscribe to the CSR Service. As an incentive to increase subscriptions to the CSR Service by Purchasers of New Enabled GM Vehicles, Distributor is authorized to offer Purchasers of New Enabled GM Vehicles (excluding GM Affiliate Vehicles) up to three (3) months of free trial service to the Base Subscription Service (referred to as “Triple Play”). If Distributor elects to offer a free trial service to Purchasers of New Enabled GM Vehicles, then, within a reasonable period of time following receipt of the report described in Section 5(a), CSR will activate the CSR Receivers in the New Enabled GM Vehicles identified in such report and Distributor will pay CSR for the second and third months of the Triple Play.

(g)   First Three Years of the Term. Notwithstanding the preceding portions of this Section 4 and subject to Section 11(h), it is agreed by the Parties that for the first three (3) years of the Term following the Full Repeater Launch Date, each of the Installation Commission, the Revenue Share and the Loyalty portion of the Subscriber Bounty will not be payable by CSR to Distributor. The Revenue Share and Loyalty portion of the Subscriber Bounty will resume after this period and shall be payable on all GM/CSR Subscribers thereafter, including Revenue Share payments for those that became GM/CSR Subscribers during the first three (3) years of the Term and remain GM/CSR Subscribers thereafter. It is agreed that for the first three (3) years following the Full Repeater Launch any amounts, on an aggregate basis, paid by Distributor under Section 4(f), will not exceed the aggregate amount payable by CSR to Distributor for the Activation portion of the Subscriber Bounty during that time period.

(h)   If CSR breaches any of its material obligations under this Agreement during the Term and fails to cure such breach in accordance with Section 3(c) and the time period described therein (or another time period mutually agreed by the Parties), then CSR will pay to Distributor any amounts which were not paid by CSR to Distributor as a result of the operation of Section 4(g).

(i)   As an incentive to increase the number of installations and subsequent subscribers, CSR will pay Distributor a one-time incentive payment based on the following:

(a)   If at the end of the third year of the Term there are 200,000 GM/CSR Subscribers, excluding those on Triple Play, CSR will pay Distributor a one-time payment of $1,000,000, or

(b)   If at the end of the third year of the Term there are 250,000 GM/CSR Subscribers, excluding those on Triple Play, CSR will pay Distributor a one-time payment of $2,000,000 (for greater certainty, payment under (a) above would not apply), or

(c)   If at the end of the third year of the Term there are 300,000 GM/CSR subscribers, excluding those on Triple Play, CSR will pay Distributor a one-time payment of $3,000,000 (for greater certainty, payments made under (a) or (b) above would not apply).

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5.   CUSTOMER RELATIONSHIP:

(a)   Upon installation of a CSR Receiver in an Enabled GM Vehicle, Distributor shall provide both CSR and XM with a daily report (the format and content of which shall be mutually agreed upon and in a form substantially similar to what GM currently provides XM) that, at a minimum, shall include the following information with respect to each Enabled GM Vehicle (excluding GM Affiliate Vehicles, unless the Parties otherwise agree) in which a CSR Receiver has been installed: (i) the make, model and VIN of such Enabled GM Vehicle and (ii) the CSR Receiver identification number of the CSR Receiver installed in such Enabled GM Vehicle.

(b)   Upon the Purchase of an Enabled GM Vehicle, Distributor shall provide both CSR and XM with a daily report (the format and content of which shall be mutually agreed upon and in a form substantially similar to what GM currently provides XM) that, at a minimum, shall include the following information with respect to each Enabled GM Vehicle (excluding GM Affiliate Vehicles, unless the Parties otherwise agree) sold in the Territory during such month: (i) the make, model and VIN of such Enabled GM Vehicle, (ii) the CSR Receiver identification number of the CSR Receiver installed in such Enabled GM Vehicle, and (iii) the name and address of the Purchaser, and, to the extent available and permitted by applicable law, the telephone number and email address of such Purchaser.

(c)   Distributor agrees that in connection with customer calls relating to the CSR Service, its customer service representatives shall handle customer requests, questions and complaints promptly and professionally and with the same level of care with which such representatives handle customer requests, questions and complaints regarding the OnStar service.

(d)   CSR, at its expense, shall be responsible for the billing of the CSR Service purchased by GM/CSR Subscribers, as well as any associated disputes and/or discrepancies.

(e)   CSR agrees that all interactions between CSR and GM/CSR Subscribers, including contracts, promotional materials, and customer support, will be made available in both the English and French languages.

6.   INSTALLATION; TECHNICAL SPECIFICATIONS; TRADEMARKS:

(a)   Distributor shall use commercially reasonable efforts to make CSR Receivers available as a factory-installed option in as many vehicle lines as possible in the 2006 Model Year (a list of such vehicles is provided in Attachment 3) and at least ninety percent (90%) of its vehicle lines commencing with the 2007 Model Year. Adjustments will be made dependent on Trigger Date. The Parties understand and agree that such list may change from time to time and that such changes will be communicated to CSR during the meetings described in Section 6(b) or otherwise in a timely fashion.

(b)   To assist CSR with its business planning, Distributor agrees to meet with representatives from CSR on at least a quarterly basis to discuss its projections for installations of CSR Receivers in GM Vehicles for the subsequent twelve (12) month period, including (i) Distributor's forecast as to the number of CSR Receivers it plans to install in GM Vehicles for the subsequent twelve (12) months, (ii) the makes and models in which Distributor is installing or proposing to install CSR Receivers, and (iii) the types of packages in which the CSR Service may be included. Distributor and CSR acknowledge a planning cumulative volume target of 230,000 Enabled GM Vehicles during the first three years of the Agreement. CSR acknowledges that nothing contained in this Agreement, including the prior sentence, shall be construed as obligating Distributor to fulfill any of the projections or plans discussed with CSR at such meetings, provided that the provisions of Sections 3(b)(ii) and 6(a) shall continue to apply.

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(c)   Distributor and CSR shall meet on a quarterly basis to review the installation rates of CSR Receivers in GM Vehicles, the manner in which CSR Receivers are packaged with various GM Vehicles and the percentage of purchasers of such Enabled GM Vehicles who become GM/CSR Subscribers. In the event that fewer than fifty percent (50%) of the purchasers of Enabled GM Vehicles over any six-month period become GM/CSR Subscribers in connection with the purchase of such Enabled GM Vehicles, then (i) Distributor may, in its sole discretion, redirect the moneys payable by CSR to Distributor hereunder to advertising and/or marketing efforts intended to increase the percentage of such purchasers of Enabled GM Vehicles who become GM/CSR Subscribers, and (ii) CSR and Distributor shall meet to review installation forecasts and marketing plans relating to CSR Receivers and the CSR Service, with the purpose of making adjustments intended to increase the percentage of such purchasers of Enabled GM Vehicles who become GM/CSR Subscribers.

(d)   Distributor shall purchase CSR Receivers for installation only from Authorized CSR Manufacturers that meet the reasonable requirements of GM's Worldwide Purchasing Organization. Installation of the CSR Receivers shall be in accordance with reasonable requirements and quality assurances provided by the Authorized CSR Manufacturers or CSR, including, without limitation, positioning of the antenna and antenna shape; provided, however, that such requirements and assurances meet the manufacturing requirements of Distributor.

(e)   Distributor acknowledges that neither CSR nor XM manufactures CSR Receivers and cannot guarantee availability or delivery thereof on any specific date. In addition, Distributor acknowledges that neither CSR nor XM shall have any liability for any use, property, ad valorem, value added, stamp or other taxes, charges or withholdings arising out of the CSR Receivers or the delivery thereof by Authorized CSR Manufacturers to Distributor.

(f)   The technical specifications for the CSR Receivers will be determined by XM in conjunction with the Authorized CSR Manufacturers; provided, however, that XM agrees that its internal technology group will work with GM and the Authorized CSR Manufacturers of GM's choice to consult in the development and testing of XM/CSR System-capable OEM radio/communications systems for GM Vehicles.

(g)   CSR, Distributor and XM acknowledge and represent that each Party owns certain names, trademarks, service marks, copyrights and other intellectual property, and owns or has obtained certain rights in and to the trademarks, tradenames, copyrights, rights to publicity and other such rights of third parties (“Marks”). It is understood that in promoting the CSR Service, CSR and Distributor may make various references to and may display the Marks of CSR, XM and Distributor. Each party hereto grants to the other a nonexclusive, non-transferable license to use its Marks during the term of this Agreement and subject to the terms and conditions hereinafter set forth, solely in connection with advertising and promoting the CSR Service and the joint activities of Distributor and CSR.

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CSR and Distributor must agree in writing as to the form and content of any promotional or advertising materials and the media in which such materials are to be used prior to their use, which approval the Parties shall not unreasonably withhold; and such use may be subject to such reasonable conditions as either party may impose, including, but not limited to, restrictions and requirements concerning the use of Marks and conditions affording each party adequate protection of its Marks. Upon termination or expiration of this Agreement, the Parties shall cease all use of the Marks of the other party as soon as practicable, but in any event within thirty (30) days unless the particular media which has been approved requires a longer lead time, but in no event longer than ninety (90) days.

No Party will impugn, challenge or assist in any challenge to the validity of another Party's Marks, any registrations thereof, or the ownership thereof. Each Party will be solely responsible for taking such actions as it deems appropriate to obtain trademark, service mark or copyright registration for its respective Marks. All uses of or references to the Marks shall inure to the benefit of the respective owner, and all rights with respect to the Marks not specifically granted in this Agreement shall be and are hereby reserved to the respective owner.

No Party is granted any right or license under this Agreement to sell, or otherwise distribute for sale, any of the promotional or advertising materials, or items related thereto. If a Party desires to sell, or distribute for sale, any of such materials or other merchandising or novelty items bearing the names, trademarks, copyrights or other intellectual property of another Party, then it shall request permission to do so from the other Party, and if granted, the Parties shall negotiate in good faith a separate licensing agreement covering such materials or items before they may be sold or distributed for sale.

7.   WARRANTIES AND INDEMNITIES:

(a)   Each Party represents and warrants to the other that (i) it is duly organized, validly existing and in good standing under the laws of the state or Province under which it is organized, (ii) it has the power and authority to enter into this Agreement and to perform fully its obligations hereunder; (iii) it is under no contractual or other legal obligation that shall in any way interfere with its full, prompt and complete performance hereunder; (iv) the individual executing this Agreement on its behalf has the authority to do so; and (v) the obligations created by this Agreement, insofar as they purport to be binding on it, constitute legal, valid and binding obligations enforceable in accordance with their terms.

(b)   NEITHER CSR NOR XM IS A MANUFACTURER OF CSR RECEIVERS AND NEITHER MAKE ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, NATURE OR DESCRIPTION, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS OF ANY OF THE CSR RECEIVERS FOR ANY PARTICULAR PURPOSE, OR ANY OTHER WARRANTY REGARDING THE DESIGN, CONDITION, CAPABILITY OR PERFORMANCE OF CSR RECEIVERS, AND XM AND CSR HEREBY DISCLAIM THE SAME. CSR and XM shall not be responsible for any loss or damage resulting from any defect of or in CSR Receivers, latent or otherwise, or resulting from any failure of CSR Receivers to operate or faulty operation of CSR Receivers, nor for any direct, indirect, consequential, incidental or other similar damage (including lost profits) resulting from the transportation, installation, service, operation or use of CSR Receivers, and shall not be responsible for any such loss or damage resulting from the maintenance or repair of CSR Receivers. Rather, warranty claims relating to CSR Receivers installed in GM Vehicles shall be handled by the Authorized CSR Manufacturers, in accordance with Distributor's standard practices with suppliers. In addition, CSR and XM shall not be responsible for any breach of any Authorized CSR Manufacturer's warranties, indemnities or supply agreements, and no breach thereof shall affect the limitation on liabilities, rights and obligations of the Parties set forth in this Agreement.

(c)   CSR, XM and Distributor shall each indemnify, defend and forever hold harmless the other, the other's affiliated companies and each of the other's (and the other's affiliated companies') respective present and former officers, shareholders, directors, employees, partners and agents (“CSR Indemnitees”, “XM Indemnitees” and “Distributor Indemnitees”, respectively), against and from any and all losses, liabilities, claims, costs, damages and expenses, including, without limitation, fines, forfeitures, attorneys' fees, disbursements and court or administrative costs (collectively, “Costs”), arising out of any breach (of the indemnifying party) of any term of this Agreement or any warranty, covenant or representation contained herein.

(d)   CSR Indemnification.

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(i)   If any Distributor Indemnitee is charged with infringement of a third party's intellectual property rights, including patent, trademark, copyright, industrial design right, or other proprietary right, or misuse or misappropriation of trade secret rights, as a result of the installation, use, sale, offer for sale or import of CSR Receivers in or for use in GM Vehicles, and if such alleged infringement arises in any way from an aspect or function of the CSR Receiver that meets a requirement or specification of CSR for receipt of the CSR Service by the CSR Receiver, CSR will, at no expense to Distributor: (i) defend, hold harmless and indemnify the Distributor Indemnitees against any Costs relating to such charge or claim, including, but not limited to, Costs for past infringement; and (ii) to the extent appropriate, either, (A) procure for Distributor the right to continue the installation, use, sale, offer for sale or import of CSR Receivers in GM Vehicles, (B) procure for Distributor the availability of modified or replacement CSR Receivers such that CSR Receivers no longer infringe, provided that such modification can be done without substantially impairing its functionality or performance, or (C) with Distributor's consent, terminate the use of the CSR Receivers which allegedly infringe upon such third party rights, without liability, upon written notice to Distributor.

(ii)   With respect to claims arising under this Section 7(d), Distributor will promptly notify CSR in writing of any claim of infringement or indemnification and will provide CSR with the authority, information and assistance necessary to defend or settle such claim; provided, however, that Distributor will have the right to participate in such defense and to approve any proposed settlement in advance. Distributor will have the right to take over from CSR the defense of a claim at any time, provided that Distributor releases CSR in writing from any further obligation of defense or indemnification in connection with such claim unless otherwise mutually agreed.

(iii)   The obligations of CSR and Distributor under this Section 7(d) will survive termination of this Agreement with respect to CSR Receivers installed in GM Vehicles.

(e)   A Party claiming indemnity under this Section 7 must give the indemnifying party prompt notice of any claim, and the indemnifying party shall have the right to assume the full defense of any claims to which its indemnity applies. The indemnified party, at the indemnifying party's cost, will cooperate fully with the indemnifying party in such defense of any such claim. If the indemnified party compromises or settles any such claim without the prior written consent of the indemnifying party, then the indemnifying party shall be released from its indemnity obligations with respect to the claim so settled.

(f)   The representations, warranties and indemnities contained in this Section 7 shall continue throughout the Term and the indemnities shall survive the termination of this Agreement regardless of the reason for such termination.

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8.   FORCE MAJEURE:

Neither CSR, XM nor Distributor shall have any rights against the other Party for the non-operation of facilities, the non-furnishing of the CSR Service, or its inability to perform its terms and obligations under this Agreement if such non-operation, non-furnishing or inability is due to an act of God or other cause beyond such Party's reasonable control, including, but not limited to, the occurrence of a Regulatory Force Majeure Event.

9.   NOTICES:

Any notice or report given under this Agreement shall be in writing, shall be sent postage prepaid by certified mail with return receipt requested, or by hand delivery, or by Federal Express or similar overnight delivery service, or by facsimile transmission, to the other Party, at the following address (unless the Parties, at any time or times, designates another address for itself by notifying the other Parties by certified mail, in which case all notices to such Party thereafter shall be given at its most recently so designated address):

To CSR:	Canadian Satellite Radio Inc. 161 Bay Street Suite 2300 Canada Trust Tower Toronto, Ontario, M5J 2S1 Facsimile Number: 416-361-6018 Attention: Chief Executive Officer cc: Executive Vice-President
To Holdings or XM:	XM Satellite Radio 1500 Eckington Place, N.E. Washington, D.C. 20002 Facsimile Number: 202-380-4500 Attention: President & CEO cc: General Counsel
To Distributor:	President, General Motors of Canada Limited 1908 Colonel Sam Drive Oshawa, Ontario, L1H 8P7 Facsimile Number: 905-644-7772 cc: General Counsel

Notice or report given by hand delivery shall be deemed received on delivery. Notice or report given by mail shall be deemed received on the earlier to occur of actual receipt or on the fifth day following mailing if sent in accordance with the notice requirements of this Section 9. Notice or report given by Federal Express or similar overnight delivery service shall be deemed received on the next business day following delivery of the notice or report to such service with instructions for overnight delivery. Notice or report given by facsimile transmission shall be deemed received when there is personal confirmation of receipt by the person to whom such notice or report is sent.

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10.   CONFIDENTIALITY AND PRIVACY:

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(a)   Neither CSR, XM nor Distributor shall disclose (whether orally or in writing, or by press release or otherwise) to any third party any information with respect to the terms and provisions of this Agreement or any information contained in any data or report required or delivered hereunder or any materials related thereto, except (a) disclosure as may be required by law, regulation, court or government agency of competent jurisdiction (redacted to the greatest extent possible); (b) disclosure to each Party's respective officers, directors, employees and attorneys, in their capacity as such; provided, however, that the disclosing Party agrees to be responsible for any breach of the provisions of this Section 10 by such officers, directors, employees or attorneys; (c) disclosure by CSR or XM in connection with its bona fide financing activities, (d) in the event that CSR becomes subject to financial information reporting requirements, this Agreement may be made publicly available by CSR to investors in accordance with applicable rules and. regulations under Canadian securities or similar laws, (e) disclosure in the form of a public statement or press release approved by the other Party hereto in advance of such statement or release; (f) general marketing information releases describing the nature of this Agreement in general terms; and (g) as mutually agreed upon, in writing, by CSR, XM and Distributor in advance of such disclosure. This confidentiality provision shall remain in effect for the full Term of the Agreement whether or not there is an early termination of this Agreement.

(b)   In relation to the subject matter of this Agreement, each Party agrees to comply with applicable privacy laws, to comply with their own privacy policies and statements, and to cooperate with the other Parties in this regard. Such cooperation will include, but will not be limited to, making commercially reasonable efforts to obtain the appropriate form of privacy consent from consumers which is necessary or desirable for the other Party. Unless otherwise agreed to by the Parties in writing, the information that Distributor provides to both CSR and XM under Section 5(a) and Section 5(b) of this Agreement shall be used by CSR and XM exclusively to facilitate the enrolment of such customers; specifically, CSR and XM may use this information to (i) set up the customer's account, (ii) provide informational material to them regarding the service they have selected including details of the service, how to use the service, and how to continue receiving the service after the promotional period, and (iii) to match radio IDs that have been installed and activated. If one of the Parties requests it, the Parties will cooperate toward entering into a separate and mutually acceptable Privacy Agreement or Letter of Understanding.

11.   OTHER MATTERS:

(a)   Pursuant to Section 11(c) below and the resulting share issuance agreement to be entered into between Distributor and CSR and CSR Holdings (the “Share Issuance Agreement)” and Director Nomination Agreement to be entered into by CSR Holdings, Distributor, XM Holdings and Canadian Satellite Radio Investments Inc. (the “Director Nomination Agreement”), it is understood and agreed that for the Term of this Agreement, the Distributor shall be granted the right to nominate one person to serve on CSR Holdings' Board of Directors, provided there has not been an Installation-Triggered Renegotiation as described in Section 3(c)(ii) and subject to the provisions of the Director Nomination Agreement.

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(b)   Prior to Distributor being granted the right to select one person to serve on CSR Holdings' Board of Directors under the Director Nomination Agreement, a representative of the Distributor or GM shall be permitted to observe all CSR Board meetings.

(c)   Pursuant to the Share Issuance Agreement, CSR Holdings shall issue to the Distributor at no cost a number of its Class A Shares that represents a seven percent (7%) fully diluted economic equity interest in CSR Holdings (calculated as of the transfer date), with dilution protection as set forth in the Share Issuance Agreement.

(d)   If CSR Holdings shall not have issued to an automaker distribution partner of CSR other than Distributor at the direction of XM an option to acquire a three percent (3%) equity interest in CSR Holdings (calculated on the same basis as described in (c) above) on or before March 31, 2006, such option shall be assigned to Distributor. Such option will have a nominal strike price and expire after a period not to exceed 60 days, and shall be in substantially the form of the Share Issuance Agreement (except that it shall be an option).

(e)   Any commercial arrangements between CSR and any other vehicle manufacturer will be no more favourable than the terms provided by CSR to GM, including, but not limited to, on a timing of payment basis.

(f)   No later than the Initial Funding Date, CSR will enter into a credit facility with XM in substantially the form set out as Attachment 4 hereto (the “XM Credit Facility”), with such XM Credit Facility subject to XM Board approval, or will enter into an alternative arrangement which is acceptable to Distributor.

(g)   CSR will obtain C$15 Million of equity capital from John Bitove or an entity controlled by John Bitove on or before the Initial Funding Date. In addition, CSR will obtain C$50 Million of equity capital (the “IPO Funding”), in a form satisfactory to Distributor, no later than the Initial Funding Date as described below. The IPO Funding may include equity or equity-like support from XM. If for any reason the IPO Funding falls short of C$50 Million or is not received by CSR by the Initial Funding Date, then CSR agrees, within three (3) business days of the Initial Funding Date, to issue and draw upon the Letter of Credit up to C$15 Million to cover any shortfall up to C$15 Million. (The IPO Funding plus the additional C$15 Million from John Bitove is referred to herein as the “Initial Funding”.)

In relation to the IPO Funding, CSR agrees that the Preliminary Prospectus Filing Date is November 4, 2005. The Initial Funding Date will be no later than seven (7) weeks following the actual Preliminary Prospectus Filing Date. CSR will notify Distributor of the Preliminary Prospectus Filing Date and will keep Distributor apprised of the progress in relation to the Initial Funding. CSR acknowledges that Distributor is relying on CSR's commitment to obtain the Initial Funding by the Initial Funding Date in making a decision (following the Preliminary Prospectus Filing Date) to commence the production of Enabled Vehicles prior to the Initial Funding Date.

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(h)   If CSR obtains firm, binding commitments for a total of C$90 Million in capital (the Initial Funding plus an additional C$25 Million in equity and/or debt financing in a form satisfactory to Distributor) by or before the Trigger Date, CSR may elect, in its sole discretion, to require the Parties to enter into an amendment to this Agreement, in a form mutually acceptable to the Parties, which eliminates Sections 4(g) and 11(0 of this Agreement, and amends the reference to “thirteen (13) years” in Section 3(a) to “ten (10) years”.

(i)   CSR and XM agree not to directly or indirectly market, promote or endorse any company that distributes radio hardware of any description on an after-market basis to Distributor's authorized motor vehicle dealers without the prior written consent of Distributor, and will not communicate or interact with such dealers except for the purposes outlined in this Agreement or with the prior written consent of Distributor.

(j)   CSR agrees to provide a high quality, cost-competitive service to GM/CSR Subscribers and agrees that it is responsible for offering the CSR Channel Line-Up in the Territory throughout the Term. It is agreed that Distributor will only be responsible for installing CSR Receivers of the type installed by GM in vehicles produced for the United States, and CSR will be responsible for ensuring that the XM/CSR System and the CSR Channel Line-Up are consistent with such receivers.

(k)   CSR agrees to fulfill the Trigger Date Conditions on or before December 1, 2005, and complete the Full Repeater Launch on or about March 1, 2006 (and no later than April 15, 2006). CSR acknowledges that Distributor is relying on CSR's commitments in this Section 11(k) in making its decision to commence the production and marketing of XM Enabled Vehicles prior to December 1, 2005.

(l)   CSR agrees to provide the Service Availability Level as defined in Attachment 2 throughout the Term (i) for the Initial Four Cities commencing on the Four City Launch Date, and (ii) for the remaining metropolitan cities on Attachment 2 commencing on the Full Repeater Launch Date. The Parties will form a committee to consider customer and dealer complaints regarding service levels in the Territory.

(m)   CSR agrees to offer free trial service of the Base Subscription Service to all Purchasers who Purchase prior to the Full Repeater Launch until the date of the Full Repeater Launch. Such free trial service will be at CSR's expense and will be followed by Triple Play commencing on the date of Full Repeater Launch.

12.   MISCELLANEOUS:

(a)   Audit Rights. (i) During the Term and for a period of one year thereafter, any Party or its authorized representative shall have the right, at its expense, to inspect, audit, and copy any such books and records of any other Party, at the other Party's offices, during normal business hours upon not less than thirty (30) days prior written notice, that relate to the performance of the other Party's obligations hereunder. In the event any such audit indicates a discrepancy between amounts previously paid and the amounts rightfully due and payable at such time, the audited Party shall have ten (10) days from the date of receipt of notice from the auditing Party that such underpayment or overpayment has occurred to pay the discrepancy to the auditing Party. If the amount of the discrepancy is greater than five percent (5%) of the amount due for the period being audited, the audited Party shall reimburse the auditing Party for the reasonable costs and expenses of such audit.

(b)   Assignment: Binding Effect; Reorganization. This Agreement shall be binding on the respective transferees and successors of the Parties hereto, except that neither this Agreement nor any Party's rights or obligations hereunder shall be assigned or transferred by any Party without the prior written consent of the other Parties (which consent shall not be unreasonably withheld); provided, however, no consent is necessary in the event of an assignment to a successor entity resulting from a merger, acquisition or consolidation by any Party or assignment to an entity under common control; controlled by or in control of any Party.

(c)   Regulated Entity. It is understood by the Parties that the business of CSR is regulated by the CRTC and that nothing set forth in this Agreement shall be construed (i) to require CSR to act in a manner inconsistent with rules or regulations of CRTC, or the informal interpretations thereof communicated from time to time by the staff of CRTC (provided that CSR represents and warrants that nothing contained in this Agreement is. inconsistent therewith as of the date first above written), or (ii) to prevent CSR from taking positions on issues relating to its license or other rules and regulations applicable to CSR, or the appropriate interpretation thereof. If the CRTC determines that the method of reconfiguring the CSR Receivers in New GM Enabled Vehicles to receive the CSR Service (as opposed to the XM Service) is deficient, the Parties will cooperate and will make commercially reasonable efforts to address the concerns of the CRTC.

(d)   Entire Agreement; Amendments; Waivers; Cumulative Remedies. This Agreement contains the entire understanding of the Parties hereto and supersedes and abrogates all contemporaneous and prior understandings of the Parties, whether written or oral, relating to the subject matter hereof. This Agreement may not be modified except in a writing executed by the Parties hereto. Any waiver of any provision of this Agreement must be in writing and signed by the Party whose rights are being waived. No waiver of any breach of any provision hereof shall be or be deemed to be a waiver of any preceding or subsequent breach of the same or any other provision of this Agreement. The failure of Distributor, CSR or XM to enforce or seek enforcement of the terms of this Agreement following any breach shall not be construed as a waiver of such breach. All remedies, whether at law, in equity or pursuant to this Agreement shall be cumulative.

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(e)   Governing Law. This Agreement and all matters or issues collateral thereto shall be governed by the laws of the Province of Ontario and the laws of Canada applicable therein, without regard to its choice of law rules.

(f)   Disputes and Interpretation. In the event of any dispute or question of interpretation under this Agreement, each of the Parties agrees that prior to commencing any legal action in any court of competent jurisdiction, it shall first refer the matter for review and consideration by the Parties' respective operating executives, who shall initially be (i) on behalf of Distributor, the General Counsel or his or her delegate, (ii) on behalf of CSR, the President & COO or his or her delegate and (iii) on behalf of XM, the General Counsel or his or her delegate. In the event that such operating executives fail to resolve the dispute or question of interpretation within 30 days of the matter being referred to them, then the Parties shall be free to pursue judicial action in a court of competent jurisdiction.

(g)   Relationship. No Party shall be, or hold itself out as, the agent of another or as joint venturers under this Agreement.

(h)   Severability. The invalidity under applicable law of any provision of this Agreement shall not affect the validity of any other provision of this Agreement, and in the event, that any provision hereof is determined to be invalid or otherwise illegal, this Agreement shall remain effective and shall be construed in accordance with its terms as if the invalid or illegal provision were not contained herein.

(i)   No Inference Against Author. CSR, XM and Distributor each acknowledge that this Agreement was fully negotiated by the Parties and, therefore, no provision of this Agreement shall be interpreted against any Party because such Party or its legal representative drafted such provision.

(j)   No Third Party Beneficiaries. The provisions of this Agreement are for the exclusive benefit of the Parties hereto and their permitted assigns, and no third party shall be a beneficiary of, or have any rights by virtue of, this Agreement.

(k)   Headings. The titles and headings of the sections in this Agreement are for convenience only and shall not in any way affect the interpretation of this Agreement. Any reference in this Agreement to a “Section” or “Attachment” shall, unless the context expressly requires otherwise, be a reference to a “Section” in, or an “Attachment” to, this Agreement.

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(l)   Non-Recourse. Notwithstanding anything contained in this Agreement to the contrary, it is expressly understood and agreed by the Parties hereto that each and every representation, warranty, covenant, undertaking and agreement made in this Agreement was not made or intended to be made as a personal representation, undertaking, warranty, covenant, or agreement on the part of any individual, and any recourse, whether in common law, in equity, by statute or otherwise, against any individual is hereby forever waived and released.

(m)   Counterparts and Fax or Email Delivery. This Agreement may be executed by the Parties in counterparts and may be delivered by fax or email, provided each Party will thereafter deliver an original executed Agreement to each other Party by courier.

The Parties hereto have executed this Agreement as of the date first above written and the signatories below represent that they have authority to bind their respective corporations.

CANADIAN SATELLITE RADIO INC.:		GENERAL MOTORS OF CANADA LIMITED:
By:	/s/ John I. Bitove	By:	/s/ Michael A. Grimaldi
Name:	John I. Bitove	Name:	Michael A. Grimaldi
Title:	Chairman and CEO	Title:	President
Date:	November 30, 2005	Date:	November 30, 2005
XM SATELLITE RADIO INC.:
By:	/s/ Joseph M. Titlebaum	By:	/s/ Marc J. Comeau
Name:	Joseph M. Titlebaum	Name:	Marc J. Comeau
Title:	Executive Vice-President, General Counsel	Title:	Vice President, Sales, Service, Marketing
Date:	November 30, 2005	Date:	November 30, 2005

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Attachment 1: GM Affiliates (As of Effective Date)

Affiliates with Canadian Distribution:

1.Isuzu

2.Suzuki

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Attachment 2

The sixteen (16) Metropolitan Areas Designated for Terrestrial Repeater Network Build-outs are listed below and each will have a combination of high power repeaters and low power repeaters. CSR agrees that all cities, with the possible exception of Calgary, will have at least one high power repeater installed. The Initial Four Cities are identified with an asterisk.

1.Ottawa*

2.Calgary

3.Toronto*

4.Montreal*

5.Vancouver*

6.Edmonton

7.Quebec City

8.Winnipeg

9.Hamilton

10.London

11.Kitchener

12.St. Catharines

13.Halifax

14.Victoria

15.Windsor

16.St. John's

SERVICE AVAILABILITY LEVEL:

For those cities listed in this Attachment 2, CSR, utilizing the XM Satellites as augmented by the CSR Terrestrial Repeater Network, shall provide 99% availability (or better) for the mobile usage model along designated drive routes within the respective metropolitan areas (polygons) as defined in coverage maps (with such drive routes to be determined based on the final terrestrial repeater network design for each metropolitan area). Availability is defined as percentage of marginal-to-good coverage as defined by XM Standard Analysis (no Reed Solomon block errors) over a test drive route that is representative of the primary, secondary and tertiary routes within the urban coverage polygon and shall be agreed by the Parties to be representative before the test is conducted. The representative drive test shall not exceed 250 kilometres per urban coverage polygon. The test vehicle shall be a GM mid-size vehicle with a sunroof and a representative (OEM) XM receiver and antenna. The test vehicle, representative (OEM) XM receiver and antenna shall be greed by the Parties to be representative before the test is conducted.

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Attachment 3

2006 Model Year

Chevrolet:

Avalanche, Cobalt, Colorado, Corvette, Equinox, HHR, Impala, Malibu, Malibu Maxx, Monte-Carlo, Silverado, Suburban, Tahoe, Trailblazer, Trailblazer EXT, Uplander

Cadillac:

CTS, DTS, Escalade, Escalade EXT, Escalade ESV, SRX, STS, XLR

Buick:

Allure, Lucerne, Rainier, Rendezvous, Terraza

GMC:

Canyon, Denali, Denali XL, Envoy, Envoy XL, Sierra, Yukon, Yukon XL

Hummer:

H2, H2 SUT, H3

Pontiac:

Grand Prix, G6, Montana SV6, Pursuit, Solstice, Torrent, Vibe

Saab:

SAAB 9-3, SAAB 9-5, SAAB 9-7

Saturn:

ION, Relay, VUE

2007 Model Year

At least 90% of Distributor's vehicle lines in the 2007 model year.

Attachment 4: XM Credit Facility

EX-10.5

EXHIBIT 10.5

EXECUTION VERSION

CANADIAN SATELLITE RADIO HOLDINGS INC.

SHAREHOLDERS AGREEMENT

THIS SHAREHOLDERS AGREEMENT is made as of the 17^th day of November, 2005 between Canadian Satellite Radio Holdings Inc., a corporation incorporated under the laws of the Province of Ontario (the “Corporation”), Canadian Satellite Radio Inc., a corporation incorporated under the laws of Canada (“CSR”), Canadian Satellite Radio Investments Inc., a corporation existing under the laws of the Province of Ontario (“CSR InvestCo”), XM Satellite Radio Holdings Inc., a Delaware corporation (“XM Holdings”),and any person who is permitted by this Agreement to become a party after the date hereof and becomes a party hereto by executing an acknowledgement in the form annexed hereto as Schedule A (each, an “Additional Party”).

RECITALS:

WHEREAS the parties hereto other than the Corporation and CSR together currently own, directly or indirectly, all of the issued and outstanding shares in the capital of the Corporation, with CSR InvestCo owning at least two thirds of such shares and the other parties hereto owning no more than one third of such shares;

AND WHEREAS the Corporation owns all of the issued and outstanding shares of its operating subsidiary, CSR;

AND WHEREAS the parties have entered into this Agreement to record their agreement as to the manner in which the Corporation’s affairs are to be conducted and to grant certain rights and obligations with respect to the ownership of the shares of the Corporation;

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and the mutual covenants and agreements herein contained the parties hereto covenant and agree as follows:

ARTICLE 1

DEFINITIONS AND PRINCIPLES OF INTERPRETATION

1.1Definitions

Whenever used in this Agreement, the following words and terms have the meanings set out below:

(a)   “Act” means the Business Corporations Act (Ontario), as the same may be amended from time to time;

(b)   “affiliate” has the meaning ascribed to such term in the Act;

(c)   “Agreement” means this Shareholders Agreement and all attached schedules and all instruments supplemental to or in amendment or confirmation of this Agreement;

(d)   “arm’s length” has the meaning that it has for purposes of the Income Tax Act (Canada);

(e)   “Articles” means the articles of incorporation of the Corporation, as amended from time to time, the form of which that will be in effect immediately following the Initial Public Offering (or if no Initial Public Offering has occurred, by December 16, 2005) is set forth as Exhibit 1 hereto;

(f)   “Bitove” means John Bitove, a Canadian citizen residing in Toronto;

(g)   “Bitove Affiliates” means Bitove’s Family Members or a custodian, trustee (including an RRSP, RIF, IRA or similar retirement or investment fund) or other fiduciary for Bitove and/or his Family Members or a corporation wholly owned by Bitove and/or other Bitove Affiliates;

(h)   “Board” means the board of directors of CSR or the Corporation, as applicable;

(i)   “Business Day” means any day except Saturday, Sunday or any statutory holiday in the Province of Ontario;

(j)   “Capital Stock” means, with respect to any Person, any and all shares of the Person issued or issuable upon the exercise of any warrants, options, or any other rights to acquire shares (however designated, whether voting or non-voting) of such Person, whether now outstanding or issued subsequent hereto, including, without limitation, all series and classes of common stock and preferred stock.

(k)   “Class A Shares” means Class A Subordinate Voting Shares in the capital of the Corporation and includes the Class A Subordinate Voting Shares of the Corporation currently issued, as well as any additional Class A Subordinate Voting Shares in the capital of the Corporation that may hereafter be issued, the terms of which are described in the Articles, including having one (1) vote per share;

(l)   “Class B Shares” means Class B Voting Shares in the capital of the Corporation and includes the Class B Voting Shares of the Corporation currently issued, as well as any additional Class B Voting Shares in the capital of the Corporation that may hereafter be issued, the terms of which are described in the Articles, including having one (1) vote per share and each three (3) Class B Voting Shares being convertible into one (1) Class A Share;

(m)   “Class C Shares”means Class C Shares in the capital of the Corporation that may hereafter be issued, the terms of which are described in the constating documents of the Corporation.

(n)   “CRTC” mean the Canadian Radio-television and Telecommunications Commission;

(o)   “CSR InvestCo Change of Control” means Bitove and Bitove Affiliates holding, directly or indirectly, less than 50.01% of the voting rights of CSR InvestCo or less than the lower of (x) 33-1/3% of the equity of CSR InvestCo or (y) 50% of the number of shares of CSR InvestCo that Bitove and Bitove Affiliates own on the date hereof (as adjusted for any recapitalization), treating in the case of both (x) and (y) any portion of the equity of or shares in CSR InvestCo subject to a Hedge as not being held by Bitove or Bitove Affiliates.

(p)   “Family Members” means, in respect of an individual, any parent, spouse, child, spouse of a child, grandchild and/or sibling;

(q)   “Hedge” means a forward sale, swap, cap or collar agreements, or other agreement or arrangement designed to protect against fluctuations in the value of equity or shares or under which a counterparty or person other than Bitove or Bitove Affiliates has the primary economic interest in such equity or shares or any appreciation in the value thereof;

(r)   “Independent,” with reference to a director, means an “independent” director meeting all corporate governance requirements for independence of each stock exchange on which the Shares are then listed or proposed to be listed, and all independence requirements of each regulatory agency with corporate governance rules or regulations binding on the Corporation, and with reference to a director or otherindividual, meets the following requirements: (i) owns less than 5% of the shares of any Shareholder; (ii) is not an officer or employee of the Corporation or CSR; and (iii) is not an associate, officer, director, principal, partner or employee of any Shareholder;

(s)   “Initial Debt Offering” shall mean the Corporation’s or CSR’s first offering of its debt securities that closes on or before March 1, 2006 and is pursuant to any of the following: a prospectus filed under applicable Canadian securities laws in respect of which a (final) receipt has been obtained and/or a registration statement that has been declared effective under the United States Securities Act of 1933, as amended (the “Securities Act”) or an offering memorandum under Rule 144A of the Securities Act;

(t)   “Initial Public Offering” shall mean the Corporation’s first public offering of its securities that closes on or before March 1, 2006 and is pursuant to any of the following: a prospectus filed under applicable Canadian securities laws in respect of which a (final) receipt has been obtained and/or a registration statement that has been declared effective under the Securities Actor any other equity financing or other public offering of securities (including a reverse take-over) directly or indirectly involving the Corporation that has been duly authorized by the Corporation’s Board in which the aggregate offering proceeds equals or exceeds Cdn$50,000,000, accompanied by the listing of the Class A Shares on the Toronto Stock Exchange, the Nasdaq National Market or the New York Stock Exchange;

(u)   “Parties” means, collectively, the Shareholders, the Corporation, CSR and any Additional Party, and “Party” means any one of them;

(v)   “Permitted Additional Securities” means (i) any options, shares or other securities issued or issuable to employees, directors, officers or consultants under a Stock Plan, (ii) any options, warrants, shares or other securities issued or issuable to suppliers or business partners for consideration other than cash as part of a commercial arrangement in the ordinary course of the Corporation’s or CSR’s satellite radio business (which shall be understood to include without limitation any facets of the satellite radio business as conducted by XM Holdings), (iii) any securities issued as a dividend or distribution on all of the Shares, (iv) any securities issuable to XM Holdings, General Motors of Canada Limited (“GM Canada”) or any other original equipment manufacturer (whether directly or to a trust for the benefit of such manufacturer), all as contemplated by a Share Issuance Agreement dated on or about the date hereof, among the Corporation, CSR and XM Holdings (the “Share Issuance Agreement”), (v) any securities issued in the Initial Public Offering including any over-allotment option relating thereto, (vi) securities issued to CSR InvestCo in transactions resulting in the cash contribution referred to in clause (i) of the definition of the Required Equity Funding Date and (vii) securities listed on the schedule of Shares or rights to purchase Shares granted prior to the Required Equity Funding Date as to which XM Holdings has agreed in writing would be included in Permitted Additional Securities;

(w)   “Person” includes any individual, partnership, corporation, joint venture, limited liability company, association, trust, unincorporated organization, or government or agency or political subdivision thereof;

(x)   “Required Equity Funding Date”means the date immediately after the Corporation has issued Capital Stock for consideration, in cash, of at least Cdn $65,000,000, which shall include (i) at least Cdn $15,000,000 in cash contributed by or on behalf of CSR InvestCo, either after the date of this Agreement or before the date of this Agreement for the procurement of property and services for CSR’s satellite radio business, and (ii) at least Cdn $50,000,000 in net cash proceeds from a public offering of Class A Shares. For greater certainty, any over-allotment option and any securities issued upon exercise of such over-allotment option in connection with a public offering shall (1) be deemed to be part of the public offering and to have taken place on the same date as the initial closing of the public offering in the event that the net cash proceeds of such over-allotment option, when added to the net cash proceeds of the Class A Shares sold at the initial closing of the offering, causes the sum of such net cash proceeds to equal or exceed Cdn $50,000,000, and (2) be deemed not to be part of the public offering and to have taken place subsequent to the date of the initial closing of the public offering in the event that the net cash proceeds of the Class A Shares sold at the initial closing of the offering equals or exceeds Cdn$50,000,000.

(y)   “Shareholder” means each of the following, to the extent that it is an owner of Shares: CSR InvestCo and XM Holdings and the Additional Parties, and “Shareholders” means all of such Persons collectively;

(z)   “Shares” means Class A Shares, Class B Shares and Class C Shares, as applicable, of the Corporation, provided that for purposes of any formula where the number of Class B Shares is added to the number of Class A Shares and Class C Shares to arrive at a total number of Shares, (1) since each three (3) Class B Shares are convertible into one (1) Class A Share, the Class B Shares shall be treated as on an as-converted to Class A Shares basis (for greater certainty, the number of Class B Shares effectively shall be divided by three (3) before being added to the number of Class A Shares, and (2) since each Class C Share is economically equivalent to a Class A Share (even though non-voting and non-convertible into Class A Shares), each Class C Share shall be counted the same as a Class A Share);

(aa)   “Stock Plan” means any incentive plan established by the Corporation or CSR and approved by the Board and, if required by applicable rules or regulations (including without limitation those of a stock exchange on which the Shares are then listed or proposed to be listed), by the shareholders of the Corporation and includes for greater certainty the Corporation’s existing stock option plan;

(bb)   “Takeover Restrictions” means any restrictions under the Securities Act (Ontario) that would limit CSR InvestCo’s ability to purchase additional Class A Shares without making an offer to purchase all of the Class A Shares.

(cc)   “Transfer” means any disposition, transfer, sale, exchange, assignment, gift, bequest, disposition, mortgage, charge, pledge, encumbrance, grant of security interest, or any arrangement by which possession, legal title or beneficial ownership passes, directly or indirectly, from one person or entity to another, or to the same person or entity in a different capacity, whether or not voluntary and whether or not for value, and includes any agreement to effect the foregoing.

1.2Additional Definitions

Unless there is something inconsistent in the subject matter or context, or unless otherwise provided in this Agreement, all other words and terms used in this Agreement that are defined in the Act have the meanings set out in the Act.

1.3Certain Rules of Interpretation

In this Agreement:

(a)   Consent - Whenever a provision of this Agreement requires an approval or consent and such approval or consent is not delivered within the applicable time limit, then, unless otherwise specified, the Party whose consent or approval is required is conclusively deemed to have withheld its approval or consent.

(b)   Governing Law - This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario, without regard to the province’s conflict of law provisions, and each of the Parties irrevocably agrees to submit to the exclusive jurisdiction of the courts of such province for and in connection with any proceedings relating to this Agreement.

(c)   Headings - Headings of articles and sections are inserted for convenience of reference only and do not affect the construction or interpretation of this Agreement.

(d)   Including - Where the word “including” or the word “includes” is used in this Agreement, it means “including (or includes) without limitation”.

(e)   Number and Gender - Unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders.

(f)   Severability - If, in any jurisdiction, any provision of this Agreement or its application to any Party or circumstance is restricted, prohibited or unenforceable, such provision is, as to such jurisdiction, ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions of this Agreement and without affecting the validity or enforceability of such provision in any other jurisdiction or without affecting its application to other Parties or circumstances.

(g)   Time - Time is of the essence in the performance of the Parties’ respective obligations.

(h)   Time Periods - Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done are calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the following Business Day if the last day of the period is not a Business Day.

(i)   Currency - Unless otherwise indicated all dollar amounts referred to in this Agreement, including the symbol “$”, refer to lawful money of Canada.

ARTICLE 2

PURPOSE AND SCOPE

2.1Compliance with Agreement

Each Shareholder agrees to vote and act as a shareholder of the Corporation to fulfil the provisions of this Agreement and in all other respects to comply with, and use all reasonable efforts to cause the Corporation to comply with, this Agreement. The Shareholders further undertake that they will use their influence as Shareholders to cause such meetings of the Corporation to be held, resolutions passed, by-laws enacted, agreements and other documents signed and acts or things performed or done as may be necessary or desirable to ensure that the provisions of this Agreement are implemented and given full force and effect. Each of the Corporation and CSR undertakes to carry out and be bound by the provisions of this Agreement to the full extent that it has the capacity and power at law to do so.

2.2Canadian Ownership

Notwithstanding any other provisions of this Agreement, including those relating to share transfers, the Corporation and CSR will act to ensure that all requirements relating to the ownership and control of broadcasting undertakings as set out in the Broadcasting Act (Canada) and related regulations, rules and regulatory policies, directions and decisions in effect from time to time and the terms of licenses granted to the Corporation or CSR by the CRTC or Industry Canada (the “Restrictions”), are complied with at all times, including as required by the Broadcasting Act (Canada) and including the establishment of an independent programming committee of CSR that meets regulatory approval and such other mechanisms that will ensure the Corporation and CSR are controlled in fact by Canadian entities. The Corporation and CSR will act to ensure that, other than the issuance of Shares to XM Holdings under the Share Issuance Agreement dated on or about the date hereof, no transfer or issuance of Shares or other securities of the Corporation or CSR shall be permitted if such transfer or issuance would cause CSR, after giving effect to the issuance of the Shares to XM Holdings under the Share Issuance Agreement, to cease to be a “qualified corporation” in the context of “The Direction to the CRTC (Ineligibility of Non-Canadians)” dated April 8, 1997 or the equivalent under successor legislation, regulation, rules or regulatory policies, directions or decisions and unless such Transfer is in compliance with the Investment Canada Act (Canada). The Corporation and CSR will act to ensure that XM Holdings shall not be required by the Restrictions or the constating documents of the Corporation (unless XM Holdings is then the only non-Canadian) to sell, transfer or divest any of the Shares acquired under the Share Issuance Agreement without violation of the Restrictions, and in each instance when there is a proposed transfer or issuance of Class B Shares to XM Holdings that the Corporation or XM Holdings reasonably concludes might be prohibited by the Restrictions but would not be prohibited if the Shares to be transferred or issued were Class A Shares, the Parties shall use all reasonable efforts and take such reasonable actions to permit XM Holdings to acquire Class A Shares in lieu of the Class B Shares. The Corporation and CSR acknowledge and agree that the covenants and agreements in this Section may limit the Corporation’s ability to issue shares of the Corporation or CSR to other non-Canadian investors through the Required Equity Funding Date, and that they will include provisions in the Articles, obtain agreements from other non-Canadian investors or take other actions as may be necessary such that in the event of a violation of the Restrictions or CSR ceasing to be a “qualified corporation” as described above, the Corporation will be able to take such actions as may be necessary, including preventing non-Canadians from voting their shares and to the extent permitted by applicable law, requiring non-Canadians to sell, transfer or divest their ownership interests in the Corporation as needed (in each case such non-Canadian investors to be selected in inverse order as provided in the Articles, and the Corporation will ensure that XM Holdings is registered first so that it will be the last non-Canadian that can be prevented from voting or required to sell under the Articles) so that XM Holdings can receive and retain the Shares acquired under the Share Issuance Agreement without violation of the Restrictions.

2.3Conflict with Articles or By-laws

In the event of any conflict between the provisions of this Agreement and the provisions of the Articles or the by-laws of the Corporation or CSR, the provisions of this Agreement shall prevail, and the Shareholders shall take such steps as are required to amend the Articles and by-laws of the Corporation or CSR so as to ensure conformity with the terms of this Agreement.

2.4No Indirect Public Offerings

Unless otherwise agreed in writing by each of CSR InvestCo and XM Holdings, neither CSR InvestCo nor any other Person through which Bitove owns Shares shall undertake any public offering of securities prior to an initial (and subsequent) public offering(s) of Class A Shares by the Corporation in which the aggregate gross proceeds to the Corporation equals or exceeds Cdn$50 million, accompanied by the listing of the Class A Shares on the Toronto Stock Exchange, the Nasdaq National Market or the New York Stock Exchange.

2.5OEM Stakeholders

The Parties agree that pursuant to a Share Issuance Agreement dated on or about the date hereof General Motors of Canada Limited (“GM Canada”) will acquire Shares representing a 7% fully diluted economic interest in the Corporation as of the date hereof (as defined and with dilution protection as described therein until the Required Equity Funding Date), subject to GM Canada entering into or being a party to a distribution agreement with CSR. The Parties also agree thatupon issuance of stock to GM Canada, the Corporation, XM Holdings, GM Canada and CSR InvestCo will be entering into a Director Nomination Agreement on customary terms and conditions under which GM Canada will be entitled to nominate one of the directors of the Corporation for as long as GM Canada owns either (i) at least 5% of the outstanding Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share) or (ii) at least 50% of the number of Shares GM Canada acquires pursuant to a Share Issuance Agreement (as adjusted for any recapitalization prior to the Required Equity Funding Date). The Parties acknowledge that the Corporation is or will be entering into a settlement with the trustee named therein under which an option to purchase, for nominal consideration and for a period not to exceed 60 days, Class A Shares representing 3% of the fully diluted economic equity interest in the Corporation as of the date hereof (as defined and with dilution protection as described therein until the Required Equity Funding Date) is being or will be deposited into the trust created by such settlement to be assigned upon instructions by XM to one or more automotive distribution partners that are expected to become distributors of CSR’s services in Canada (“OEM Stakeholders”), in whole or in parts, subject to such OEM Stakeholders entering into or being parties to distribution agreements with CSR.

ARTICLE 3

MANAGEMENT OF THE CORPORATION

3.1Board of Directors of CSR and the Corporation

(a)   Unless otherwise permitted by applicable Canadian law, a majority of Board members of the Corporation, at least 80 percent of Board members of CSR and the Chairman of the Board of each of CSR and the Corporation shall be “Canadians” (as defined under “The Direction to the CRTC (Ineligibility of Non-Canadians)” dated April 8, 1997) (the “Residency Requirements”).

(b)   The Board of the Corporation initially shall be comprised of nine members. The Board of CSR shall be comprised of five members. For as long as CSR InvestCo owns at least 33-1/3% of the outstanding Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share) and has not undergone a CSR InvestCo Change of Control, CSR InvestCo shall be entitled to: (i) nominate a total of three of the nine directors of the Corporation and four of the five directors of CSR; (ii) increase the size of the Board of the Corporation to 12 members; and (iii) nominate six of the 12 directors of the Corporation if the size of the Board has been increased to 12 members. If CSR InvestCo owns less than 33-1/3% of the outstanding Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share) but owns either (i) at least 15% of the outstanding Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share) or (ii) at least 50% of the number of Shares CSR InvestCo owns on the date hereof (as adjusted for any recapitalization or additional capital contribution prior to the Required Equity Funding Date) and has not undergone a CSR InvestCo Change of Control, CSR InvestCo will be entitled to nominate three directors of the Corporation and four of the five directors of CSR. For as long as XM Holdings owns either (i) at least 10% of the outstanding Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share) or (ii) at least 50% of the number of Shares XM Holdings owns on the date hereof (as adjusted for any recapitalization prior to the Required Equity Funding Date and all Shares acquired pursuant to a Share Issuance Agreement dated on or about the date hereof) XM Holdings will be entitled to nominate two of the directors of the Corporation and one of the five directors of CSR. GM Canada will be entitled to nominate one of the directors of the Corporation upon becoming a holder of Shares as provided in Section 2.5. At least three of the directors of the Corporation will be Independent directors of recognized expertise and stature reasonably acceptable to CSR InvestCo (so long as CSR InvestCo has not undergone a CSR InvestCo Change of Control) and to XM Holdings and meeting all corporate governance requirements of each stock exchange on which the Shares are then listed or proposed to be listed, and of each regulatory agency with corporate governance rules or regulations binding on the Corporation, including any requirement that they be “financially literate” within the meaning of Canadian securities laws. For the initial Board of the Corporation, CSR InvestCo will only nominate three of the six directors it is entitled to nominate under this paragraph. All nominees for either Board shall have a personal and professional reputation, qualifications and experience suitable to serving as a director in a company that will become publicly listed in the near future and a willingness and ability to devote time and resources to fulfill his or her duties as a member of the Board. Fulfillment of the Residency Requirements shall be accomplished solely by the appointment of the nominees of CSR InvestCo and the Independent directors and not XM Holdings or GM Canada.

Each Shareholder shall vote its Shares to elect the directors nominated in accordance with this Agreement.

3.2Removal and Replacement of Nominees

Any Shareholder entitled to nominate and elect a director may require the removal of any such director by notice to such director, the other Shareholders and to each of CSR and the Corporation. Any vacancy occurring on a Board by reason of the death, disqualification, inability to act, resignation or removal of any director may be filled only by a further nominee of the Shareholder or Shareholders whose nominee’s departure caused such vacancy, so as to maintain a Board consisting of the nominees specified in Section 3.1.

3.3Meetings of Board

Each Board shall meet at least once in every quarter during the term of this Agreement, and the Chairman shall call a special meeting of the applicable Board upon the request of any director nominated by a Shareholder.

3.4Notice of Meetings

In addition to any notice required by the By-laws, CSR or the Corporation, as applicable, shall notify each director nominated by a Shareholder, in writing, of the intended date of any meeting of a Board at least 5 Business Days prior to the date of such intended meeting unless such requirement is waived by the Shareholder nominating such director. If any director nominated by a Shareholder notifies CSR or the Corporation, as applicable, in writing, on or before the day immediately preceding the day of the intended meeting, requesting a delay of the intended meeting, CSR or the Corporation, as applicable, shall delay the intended meeting at least three calendar days from the day originally scheduled for the intended meeting or such earlier date as may be contained in such notice. Notice of a Board meeting to a director nominated by a Shareholder shall be accompanied by an agenda together with copies of any documents to be considered at such meeting.

3.5Quorum

A quorum for meetings of a Board consists of a majority of the members of the Board, provided that: (i) to the extent required by applicable law or regulation, a majority of directors present and entitled to vote are resident Canadians who are either Independent members of the Board or (so long as CSR InvestCo has not undergone a CSR InvestCo Change of Control) nominees of CSR InvestCo; (ii) at any time when XM Holdings has the right under this Agreement to nominate one or more directors, at least one director present and entitled to vote is a nominee of XM Holdings; and (iii) at any time when CSR InvestCo has the right under this Agreement to nominate one or more directors, at least one director present and entitled to vote is a nominee of CSR InvestCo. If a quorum is not obtained at any meeting, the meeting shall be adjourned and may be reconvened upon two business days written notice to the directors, at which reconvened meeting the quorum is a majority of the directors for the purposes of all business set forth in the agenda for the original adjourned meeting, provided that, to the extent required by applicable law or regulation, a majority of directors present and entitled to vote at the reconvened meeting are resident Canadians who are either Independent members of the Board or (so long as CSR InvestCo has not undergone a CSR InvestCo Change of Control) nominees of CSR InvestCo.

3.6Committees of the Board

Representation on committees of the Board shall be in accordance with the rules and regulations of any stock exchange on which the Shares are then listed or proposed to be listed, and all independence requirements of each regulatory agency with corporate governance rules or regulations binding on the Corporation. In addition, all members of the audit committee shall be Independent and will be “financially literate” within the meaning of Canadian securities laws. To the extent required by the terms of CSR’s licence from the CRTC, the Board of CSR will have a programming committee with the powers and responsibilities specified in such licence.

3.7Telephone Meetings

Any or all directors may participate in a meeting of a Board or any committee thereof by means of such telephone, electronic or other communication facilities as permit all Persons participating in the meeting to hear and communicate with each other simultaneously, and a director participating in such a meeting by such means is deemed to be present at the meeting.

3.8Annual Budget

The annual operating plan in any financial year of and in respect of CSR and the Corporation shall be subject to the approval of the Board of each of CSR and the Corporation, respectively.

ARTICLE 4

SPECIAL CONSENT RIGHTS

Except to the extent the following covenants and provisions of this Article 4 are waived in writing in any instance by each Party holding consent rights, each of the Corporation and CSR covenants and agrees that (1) for as long as XM Holdings owns either (i) at least 10% of the outstanding Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share) or (ii) at least 50% of the number of Shares XM Holdings owns on the date hereof (as adjusted for any recapitalization prior to the Required Equity Funding Date and all Shares acquired pursuant to a Share Issuance Agreement dated on or about the date hereof) (the “XM Ownership Threshold”), the prior written consent of XM Holdings shall be required, and (2) if CSR InvestCo owns less than 33-1/3% of the outstanding Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share) but owns either (i) at least 15% of the outstanding Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share) or (ii) at least 50% of the number of Shares CSR InvestCo owns on the date hereof (as adjusted for any recapitalization or additional capital contribution prior to the Required Equity Funding Date) (the “CSR InvestCo Ownership Threshold”) and has not undergone a CSR InvestCo Change of Control, the prior written consent of CSR InvestCo shall be required, in each case for the following actions:

(a)   Any merger or consolidation or sale, transfer, assignment, conveyance or other disposition to a third party of all or substantially all of the property and assets of the Corporation, CSR or any direct or indirect subsidiary of the Corporation or CSR;

(b)   the dissolution or winding-up of the Corporation, CSR or any direct or indirect subsidiary of the Corporation or CSR or adoption of a plan of liquidation for the Corporation, CSR or any direct or indirect subsidiary of the Corporation or CSR;

(c)   the making of loans or advances to, transferring properties (other than in the ordinary course of business) to, or guaranteeing any debt of any other person in any amount by the Corporation or CSR (other than in connection with the Initial Debt Offering or a credit facility to be provided to the Corporation or CSR by XM Holdings), which loans, advances, transfers and guarantees would exceed USD $1.0 million in the aggregate at any time outstanding;

(d)   the authorization or filing of articles of amendment or articles of amalgamation for the Corporation or CSR;

(e)   any action or transaction not in the ordinary course of the Corporation’s or CSR’s satellite radio business, which shall be understood to include without limitation any facets of the satellite radio business as conducted by XM Holdings;

(f)   the issuance of shares of CSR to any Person other than the Corporation;

(g)   the incurrence of any indebtedness for borrowed money or the issuance of any debt securities by the Corporation or CSR, other than under a credit facility provided to the Corporation or CSR by XM Holdings, the Initial Debt offering, intercompany indebtedness and working capital facilities not to exceed USD $5.0 million (“Excluded Debt Issuances”), which when combined with all incurrences of any indebtedness for borrowed money and issuances of debt securities by the Corporation or CSR within the preceding two years other than Excluded Debt Issuances, would exceed USD $50.0 million in the aggregate;

(h)   the issuance of Class A Shares, Class B Shares or other equity securities (or securities convertible into equity securities) by the Corporation other than Permitted Additional Securities (or Shares issued upon exercise or conversion of the same) and Shares issued upon conversion by XM Holdings of amounts at any time outstanding under a credit facility provided to the Corporation or CSR by XM Holdings which, when combined with all other equity issuances by the Corporation issued within the preceding two years, other than Permitted Additional Securities (or Shares issued upon exercise or conversion of the same) and Shares issued upon conversion by XM Holdings of amounts at any time outstanding under a credit facility provided to the Corporation or CSR by XM Holdings, would exceed Cdn $50.0 million in the aggregate; and

(i)   any transaction between the Corporation or CSR and a Shareholder or an affiliate of a Shareholder involving aggregate consideration in excess of Cdn $1.0 million.

ARTICLE 5

DEALING WITH SHARES

5.1Restrictions on Transfer of Shares

(a)   Notwithstanding any provision in this Agreement and without limiting the powers of the Board of the Corporation under the Articles to restrict the issue, transfer and voting of Shares, the Corporation shall not issue Shares to any person and a Shareholder may not Transfer any Shares unless such issuance or transfer has received all required approvals of the CRTC and of any other regulatory authority having jurisdiction.

(b)   Except as may otherwise be agreed in writing by CSR InvestCo (so long as CSR InvestCo has not undergone a CSR InvestCo Change of Control) and XM Holdings, and except for the transfers discussed in Section 5.4, Section 5.5 and Section 5.6, no Shareholder shall Transfer any Shares, or any of its rights or obligations under this Agreement, to any Person, except as specifically permitted by this Agreement and only in accordance with the terms of this Agreement. The Corporation shall not be required: (A) to Transfer on its books any Shares, nor (B) to treat as the owner of the Shares, or otherwise to accord voting or dividend rights to, any transferee to whom the Shares have been Transferred in contravention of this Agreement.

(c)   Notwithstanding any other term of this Agreement, every Transfer of Shares held by a Shareholder to an Affiliate of such Shareholder is subject to the condition that the proposed transferee, if not already bound by the terms of this Agreement, first agrees, in writing, to become a party to and be bound by the terms of this Agreement by signing an acknowledgment substantially in the form annexed hereto as Schedule “A”.

(d)   In the event that any Shareholder files for protection from creditors under the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), Chapter 11 of the U.S. Bankruptcy Code or similar process, this Agreement shall remain in force, but all restrictions on share Transfers imposed by this Agreement shall no longer be in force (except for corporate and regulatory restrictions).

5.2Endorsement on Certificates

In addition to such legends as may be required by applicable securities laws or the Articles, share certificates of the Corporation that are issued to the Shareholders shall bear the following language either as an endorsement or on the face of such share certificate:

“The shares represented by this certificate are subject to all the terms and conditions of a Shareholders Agreement made November 17, 2005 as it may be amended from time to time, which agreement contains, among other things, restrictions on the right of the holder hereof to transfer or sell the shares. A copy of such agreement is on file at the registered office of the Corporation.”

5.3Pre-Emptive Rights

(a)   Other than Shares to be issued in the Initial Public Offering, and subject to the Restrictions and applicable regulatory approvals, if any additional Shares or options, rights, warrants or other instruments to purchase Shares or securities convertible into or exchangeable for Shares (collectively referred to in this Section as “Additional Securities”), are to be issued by the Corporation for cash, the Corporation shall first offer to each of CSR InvestCo (so long as CSR InvestCo has not undergone a CSR InvestCo Change of Control and owns a number of Shares at least equal to the CSR InvestCo Ownership Threshold) and to XM Holdings (to the extent permitted by applicable Canadian laws and so long as XM Holdings owns a number of Shares at least equal to the XM Ownership Threshold), such portion of the Additional Securities as will enable them to continue to hold the same percentage (on a fully diluted basis) of Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share) following the issuance of the Additional Securities as held by CSR InvestCo and XM Holdings prior to the issuance of the Additional Securities, by written notice (the “Pre-Emptive Rights Notice”) given to it of the Corporation’s intention to issue Additional Securities and the number and purchase price of such Additional Securities to be so issued; provided, however, that CSR InvestCo, to the extent it wishes to purchase Additional Securities consisting of Class A Shares or rights to purchase Class A Shares, shall be permitted to purchase a combination of Class A Shares and Class B Shares (or rights to purchase the same) that most nearly approximates the voting percentage then held by CSR InvestCo (the “Voting Equivalent Shares”). Each of CSR InvestCo and XM Holdings shall have 10 Business Days from the date the Pre-Emptive Rights Notice is given to give a notice to the Corporation of its intention to purchase all or any of the Additional Securities to which it is entitled and shall indicate in such notice the maximum number of Additional Securities that it is willing to purchase. The transaction of purchase and sale by the Corporation of Additional Securities shall be completed on the date specified by the Board, provided that such date shall not be more than 45 days after the date of the Pre-Emptive Rights Notice.

(b)   The Corporation may issue Additional Securities without complying with the provisions of subsection (a) of this Section 5.3:

(i)   if such Additional Securities are Permitted Additional Securities; or

(ii)   if the application of Section 5.3(a) is waived in writing by CSR InvestCo and XM Holdings.

(c)   Subject to Section 5.3(b)(i) and despite Section 5.3(a), if applicable Canadian laws change so as to permit XM Holdings to hold greater than 33-1/3% of the Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share), then after such date if any Additional Securities which XM Holdings would be permitted to purchase under applicable Canadian laws (collectively referred to in this Section as “Law Change Additional Securities”) are to be issued, the Corporation shall, subject to applicable regulatory requirements, first offer 50% of such Law Change Additional Securities to XM Holdings and the other 50% to CSR InvestCo by written notice given to it of the Corporation’s intention to issue Law Change Additional Securities and the number and purchase price of such Law Change Additional Securities to be so issued, provided, however, that CSR InvestCo, to the extent it wishes to purchase Law Change Additional Securities consisting of Class A Shares or rights to purchase Class A Shares, shall be permitted to purchase the Voting Equivalent Shares. XM Holdings and CSR InvestCo shall have 10 Business Days from the date such notice is given to give a notice to the Corporation of its intention to purchase all or any of the Law Change Additional Securities offered to it pursuant to this Section to which it is entitled and shall indicate in such notice the maximum number of Law Change Additional Securities offered to it pursuant to this Section that it is willing to purchase.

5.4Permitted Transfers

(a)   CSR InvestCo may, after giving notice to the Corporation, Transfer all or any part of the Shares owned by CSR InvestCo:

(i)   to a Bitove Affiliate who agrees to be bound by and become a party to this Agreement in accordance with Section 5.1; or

(ii)   into the public market through a broker or underwriter in compliance with applicable securities laws (provided, that if only one class of Shares is publicly traded, any Shares not of the publicly traded class shall first be converted to the publicly traded class of Shares prior to being transferred).

provided, in the case of (i) above, the transferee agrees to be bound by, and become a party to, this Agreement in accordance with Section 5.1.

(b)   XM Holdings may, after giving notice to the Corporation, Transfer all or any part of the Shares of the Corporation owned by it:

(i)   to any affiliate of XM Holdings that agrees to be bound by and become a party to this Agreement in accordance with Section 5.1; or

(ii)   into the public market through a broker or underwriter in compliance with applicable securities laws.

(c)   Section 5.5 of this Agreement shall not apply to any transfer permitted under Section 5.4(a)(i) or Section 5.4 (b)(i), and Section 5.6 of this Agreement shall not apply to any transfer permitted under paragraphs (a) or (b). For greater certainty, Section 5.5 of this Agreement shall apply to any transfer permitted under Section 5.4(a)(ii) or Section 5.4(b)(ii).

5.5Right of First Refusal

(a)   To the extent permitted by applicable Canadian laws, if any Shareholder (a “Selling Shareholder”) receives from a third party (the “Third Party”), acting as principal and dealing at arm’s length with the Selling Shareholder, a bona fide written offer (the “Third Party Offer”) to purchase for cash all or any of the Shares of the Corporation then owned by the Selling Shareholder, which Third Party Offer the Selling Shareholder wishes to accept(subject to compliance with the provisions of this Section 5.5), or if the Selling Shareholder wishes to sell into the public market all or any of the Shares of the Corporation then owned by the Selling Shareholder, then such Selling Shareholder shall deliver a notice in writing (the “Notice of Sale”) to the other Shareholders (“Other Shareholders”) offering to sell to the Other Shareholders the Shares proposed to be sold by the Selling Shareholder (the “Offered Shares”) at the same price and in all other respects on the same terms and conditions as provided in the Third Party Offer (except that the Notice of Sale shall be deemed to contain the provisions of Section 6.1) or proposed sale into the public market. The offer contained in the Notice of Sale shall be irrevocable except with the consent of the Other Shareholders and shall be open for acceptance for a period of 10 Business Days after the date upon which the Notice of Sale was delivered to the Other Shareholders (the “Acceptance Period”).

(b)   Upon the Notice of Sale being given, the Other Shareholders have the right to purchase all, or less than all, of the Offered Shares in proportion to the numbers of Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share) then held by the Other Shareholders or such other proportions that they may agree upon. Such right to purchase such Offered Shares shall be subject to the Restrictions and shall not apply to the extent such right would conflict with the requirements of the Restrictions; provided, however, that if XM Holdings is prevented from purchasing Offered Shares by the Restrictions or could not purchase such Offered Shares without triggering a requirement under the Takeover Restrictions to offer to purchase all Class A Shares, XM Holdings shall have the right to assign its right to purchase Offered Shares to a Person that would be able to purchase such Offered Shares without such a conflict or requirement, subject to the consent of CSR InvestCo (so long as CSR InvestCo has not undergone a CSR InvestCo Change of Control) not to be unreasonably withheld; and provided, further, that if CSR InvestCo could not purchase such Offered Shares without triggering a requirement under the Takeover Restrictions to offer to purchase all Class A Shares, CSR InvestCo shall have the right to assign its right to purchase Offered Shares to a Person that would be able to purchase such Offered Shares without such a requirement, subject to the consent of XM Holdings not to be unreasonably withheld.

(c)   Within the Acceptance Period, but subject to paragraph (b), each of the Other Shareholders may give to the Selling Shareholder a notice in writing (an “Acceptance Notice”) accepting in full or in part the offer contained in the Notice of Sale.

(d)   If any of the Other Shareholders gives an Acceptance Notice within the Acceptance Period confirming its agreement to purchase all or less than all of the Offered Shares, the sale of the Offered Shares to such Other Shareholder shall be completed within 20 Business Days of the expiry of the Acceptance Period. An Other Shareholder that gives an Acceptance Notice may not exercise its rights pursuant to Section 5.6 hereof. If the Selling Shareholder does not receive an Acceptance Notice from the Other Shareholders within the Acceptance Period confirming their agreement to purchase all of the Offered Shares, the right of the Other Shareholders to purchase the Offered Shares not the subject of an Acceptance Notice shall cease and the Selling Shareholder may, within 30 Business Days after the Acceptance Period, sell the Offered Shares to the Third Party at the price and upon the terms and conditions specified in the Third Party Offer or into the public market (for greater certainty, if the Third Party Offer or Notice of Sale sets forth a price or terms determined by reference to the market price, the sale of the Offered Shares may be at a similarly determined price or terms even though the market price may have changed prior to the sale), as applicable.

5.6Co-Sale Rights

(a)   Subject to Section 5.5(d) and the condition in Section 5.6(c), if any Shareholder (a “Co-Sale Shareholder”) receives a Third Party Offer that it wishes to accept, then, prior to the acceptance of the Third Party Offer, the Co-Sale Shareholder shall notify the other Shareholders of such proposed sale and the terms of such proposed sale and the Co-Sale Shareholder shall, if required by the other Shareholders, obtain from the Third Party within five (5) days of the receipt of such notice a bona fide offer addressed to the other Shareholders, on terms and conditions at least as favourable as those contained in the Third Party Offer, to purchase from the other Shareholders (the “Co-Sale Offer”): (i) that number of Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share) that is the same proportion of the total number of Shares held by the other Shareholders as the number of Shares proposed to be sold by the Co-Sale Shareholder pursuant to the Third Party Offer bears to the total number of Shares then held by the Co-Sale Shareholder, or (ii) if the Third Party Offer relates to a limited number of Shares only, such limited number of Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share) multiplied by the quotient of X/Y, where X is equal to the total number of Shares then held by the other Shareholders and Y is equal to sum of all Shares held by the Shareholders.

(b)   The Co-Sale Shareholder as applicable shall deliver the Co-Sale Offer to the other Shareholders, together with a copy of the Third Party Offer. The Co-Sale Offer shall be irrevocable and shall be open for acceptance by the other Shareholders for five (5) days after the delivery thereof to the other Shareholders.

(c)   The Co-Sale Shareholder and the other Shareholders wishing to make transfers under this Section 5.6 shall be permitted to make a transfer to which this Section 5.6 shall apply only if the purchaser of Shares is a credit worthy Canadian and qualified corporation in good standing that is not a competitor to XM Holdings and is reasonably acceptable to each of the Shareholders.

5.7Minimum Ownership Thresholds

The provisions of Section 5.3 through 5.6 shall cease to apply to (i) CSR InvestCo when it holds a number of Shares less than the CSR InvestCo Ownership Threshold or there has been a CSR InvestCo Change of Control, (ii) XM Holdings when it holds a number of Shares less than the XM Ownership Threshold, and (iii) any other Shareholder when such Shareholder no longer holds at least 5% of the outstanding Shares (treating all Shares as a single class of Class A Shares on an as-converted basis, including counting each Class C Share as one Class A Share).

5.8Lock-up

If requested in writing by the underwriters or agents for an Initial Public Offering of the Corporation, each Shareholder shall agree not to Transfer any of its securities of the Corporation without the consent of such underwriters or agents, for a period not to exceed 180 days following the effective date of such Initial Public Offering; provided, however, that the Corporation shall have used its best efforts to obtain agreements from all persons holding in excess of 1% of the capital stock of the Corporation on a fully diluted, as-converted basis (counting each Class C Share as one Class A Share) and all executive officers and directors of the Corporation not to sell publicly their shares of the Corporation under the circumstances and pursuant to the terms set forth in this Section.

5.9Regulatory Approvals

Notwithstanding any time period otherwise specified in Section 5.3, Section 5.5, or Section 5.6 in respect of the closing date for the purchase and sale of Shares, such closing date shall be automatically extended for such period of time as shall be necessary to receive the necessary approval of the purchase and sale of Shares as contemplated by the applicable Section of the Agreement by the CRTC and by any other regulatory authority having jurisdiction. If such approvals are not obtained within 180 days of submission of an application, the Corporation or any Shareholder who is purchasing or selling shares may elect not to close. Each of the Shareholders who is purchasing or selling shares and the Corporation agrees to use commercially reasonable efforts to obtain all such CRTC and other regulatory approvals and to co-operate in the provision of information to obtain such approvals.

ARTICLE 6

ARRANGEMENTS REGARDING DISPOSITIONS

6.1Closing

The following provisions apply to any Transfer of Shares pursuant to this Agreement:

(a)   The Transfer shall be completed at the Corporation’s registered office on the date specified for closing. At such time, the transferor(s) shall Transfer to the transferee(s) good title to the Shares being transferred free and clear of all liens, charges and encumbrances and deliver to the transferee(s) certificates and other documents of title evidencing ownership of the Shares being transferred, duly endorsed in blank for transfer by the holders of record. In addition, if the transferor is disposing of all or substantially all of its Shares, the transferor(s) shall deliver to the Corporation all records, accounts and other documents in its possession belonging to the Corporation and the resignations and releases of its nominees on the Board, all such resignations to be effective no later than the time of delivery. The transferee(s) shall deliver to the transferor(s) full payment of the purchase price (subject to any escrow or holdback requirement) payable for the Shares being transferred.

(b)   If, at the time of closing, a transferor fails to complete the subject transaction of purchase and sale, the transferee shall have the right, if not in default under this Agreement, without prejudice to any other rights that it may have, upon payment of that part of the purchase price payable to the transferor at the time of closing to the credit of the transferor in the main branch of the Corporation’s bank, to execute and deliver, on behalf of and in the name of the transferor, such deeds, transfers, share certificates, resignations or other documents that may be necessary to complete the subject transaction and the transferor hereby irrevocably appoints the transferee its attorney in that behalf. Such appointment and power of attorney, being coupled with an interest, shall not be revoked by the insolvency or bankruptcy of the transferor and the transferor hereby ratifies and confirms and agrees to ratify and confirm all that the transferee may lawfully do or cause to be done by virtue of such appointment and power.

6.2Repayment of Debt

(a)   In the event that at the time of the sale of any Shares under any provision of this Agreement, the vendor thereof is indebted to the Corporation or any affiliate thereof, the vendor shall assign and set over to the Corporation or such affiliate and shall direct the purchaser to pay to the Corporation or such affiliate, if requested by the Corporation to do so, the purchase price of such Shares to the extent required to discharge the vendor’s indebtedness to the Corporation or such affiliate.

(b)   In the event that at the time of the sale of any Shares under any provision of this Agreement, the Corporation or any affiliate thereof is indebted to the vendor, the Corporation or such affiliate shall pay all such indebtedness to the vendor (unless it otherwise agrees in writing and other than any indebtedness under a credit facility to be provided to the Corporation or CSR by XM Holdings) at the time of closing herein provided for.

ARTICLE 7

INSPECTION RIGHTS AND REPORTING

7.1Inspection

Subject to the requirements of applicable Canadian securities laws, the Corporation and CSR shall permit the Shareholders and any agents or representatives thereof to visit and inspect the properties of each of the Corporation and CSR, to examine and make abstracts from any of each of the Corporation’s and CSR’s books and records (including agreements, licences, and similar documents) at any reasonable time and as often as the Shareholders or such agents or representatives may reasonably request, and to discuss the business, operations, prospects, assets, properties, and condition (financial or otherwise) of the Corporation and CSR with any of the officers, directors, employees, agents, or representatives of the Corporation or CSR.

7.2Books and Records

Each of the Corporation and CSR shall keep and maintain adequate and proper books and records of account, in which complete entries are made in accordance with generally accepted accounting principles consistently applied and in accordance with all applicable laws, rules, and regulations, reflecting all financial and other transactions of the Corporation and CSR normally or customarily included in books and records of account of companies engaged in the same or similar businesses and activities as the Corporation or CSR. All financial statements that the Corporation and CSR shall prepare and deliver pursuant to this Agreement (i) shall be true, correct, and complete in all material respects, (ii) shall be in accordance with the books and records of CSR in all material respects, (iii) subject, in the case of quarterly financial statements, to year-end adjustments, which shall not, in the aggregate, be material, shall present fairly the financial position of the Corporation and CSR as of the respective dates and the results of operations and changes in financial positions of the Corporation and CSR for the respective periods indicated, and (iv) shall have been prepared in accordance with generally accepted accounting principles applied on a consistent basis.

7.3Inspection Rights

(a)   The Corporation and CSR shall furnish to the Shareholders: as soon as available and in any event within ninety (90) days after the end of each fiscal year of the Corporation and CSR, a copy of the audited balance sheet of each of the Corporation and CSR as of the end of such fiscal year and the related audited statements of income, stockholders' equity, and changes in financial condition for such fiscal year, all prepared in reasonable detail and in accordance with the requirements of Section 7.2 hereof, and certified by independent certified public accountants of recognized international standing as presenting fairly the financial position of each of the Corporation and CSR and approved by the Board of Directors of the Corporation and CSR; and as soon as available and in any event within forty-five (45) days after the end of each fiscal quarter of CSR (other than the last quarter of each fiscal year), a copy of the unaudited balance sheet of each of the Corporation and CSR as of the end of such quarter and the related unaudited statements of income, stockholders' equity, and changes in financial condition of each of the Corporation and CSR for the periods commencing at the end of the previous quarter and ending at the end of such quarter and commencing at the beginning of the fiscal year and ending at the end of such quarter, in each case including footnotes and setting forth in comparative form the corresponding figures for the corresponding period of the preceding fiscal year and the figures for such period set forth in the operating plan and budget delivered by the Corporation and CSR pursuant to paragraph (b)(iv), all prepared in reasonable detail and duly certified by the chief financial officer of each of the Corporation and CSR as having been prepared in accordance with the requirements of Section 7.2 hereof.

(b)   The Corporation and CSR shall furnish to the Shareholders, subject to the requirements of applicable Canadian securities laws:

(i)   promptly after the commencement thereof, notice of all actions, suits, and proceedings before or by any court, other governmental authority, or arbitrator affecting the Corporation, CSR or any of their Subsidiaries;

(ii)   promptly upon the occurrence of a material adverse change in the business, operations, prospects, assets, properties, or condition (financial or otherwise) of the Corporation or CSR, a statement of the chief financial officer of the Corporation and CSR setting forth the details thereof and the action that the Corporation or CSR proposes to take with respect thereto;

(iii)   promptly after the sending or filing thereof, copies of all financial statements and reports that the Corporation or CSR sends to its stockholders and copies of all regular, periodic, and special reports which the Corporation or CSR files with any governmental authority;

(iv)   as soon as available and in any event no later than forty-five (45) days prior to the first day of each fiscal year of the Corporation and CSR, an annual operating plan and budget (including cash flow data) for the Corporation and CSR for such fiscal year, each prepared in reasonable detail, as each such operating plan and budget has been approved by the Board of Directors of the Corporation and CSR;

(v)   as soon as available and in any event no later the sixtieth (60^th) day of each fiscal year, an updated five-year business plan for the Corporation and CSR, each prepared in reasonable detail, as each such updated business plan has been approved by the Board of Directors of the Corporation and CSR; and

(vi)   promptly upon receipt of a reasonable good faith request from the Shareholders therefor, such other information respecting the business, operations, prospects, assets, properties or condition (financial or otherwise) of CSR as the Shareholders from time to time reasonably may request.

ARTICLE 8

GENERAL

8.1Application of this Agreement

The terms of this Agreement shall apply mutatis mutandis to any Shares that may hereafter be issued by the Corporation to the Shareholders and to any shares or other securities:

(a)   resulting from the conversion, reclassification, redesignation, subdivision, consolidation of other change to the Shares held by the Shareholders; or

(b)   of the Corporation or any successor body corporate that may be received by the Shareholders on a merger, amalgamation, arrangement or other reorganization of or including the Corporation;

and prior to any action referred to in (a) or (b) above being taken the Parties shall give due consideration to any changes that may be required to this Agreement in order to give effect to the intent of this Section 8.1.

8.2Confidentiality

(a)   “Confidential Information” includes, but is not limited to any information which any party hereto considers to be of a proprietary and confidential nature and includes, without limitation, know-how, data, process, technique, program, design, formula, marketing, advertising, financial, sales, customer or programming matter, compositions, drawings, diagrams, computer programs, studies, work in process, visual demonstrations, concepts, and other data, whether oral, written, graphic, or electronic form, which may be exchanged between the parties. For the purposes of this Agreement, “Confidential Information” shall include, without limitation, the existence or contents of this Agreement. Confidential Information does not include the following information: (i) information which is now or which hereafter becomes publicly known or available through no act or failure on the part of the receiving party; (ii) information which is actually known to the receiving party at the time of the receipt of such Confidential Information without obligation of confidentiality; and (iii) information which is hereafter furnished to the receiving party by a third party without obligation of confidentiality.

(b)   Each party hereto will not use the Confidential Information of the other party for any purpose other than to perform this Agreement, will not disclose the Confidential Information of another party hereto to third parties, except:

(i)   to those third parties who have a need to know such information in order for the receiving party to perform this Agreement, and who have executed a written non-disclosure agreement with substantially similar protections to those contained herein; will protect the Confidential Information of the other parties hereto with at least the same degree of care as it uses in protecting its own confidential information; and will not copy the Confidential Information of any other party hereto without first getting the other’s written consent; or

(ii)   disclosure as may be required by law, regulation, court of government agency of competent jurisdiction (however, if required to make such a disclosure, the receiving party agrees to give the disclosing party prompt notice prior to disclosure and make a reasonable effort to assist disclosing party in obtaining a protective order or in redacting specified information to the extent reasonably permitted by applicable law or regulation).

These obligations remain in effect after expiry or termination of this Agreement.

(c)   After termination or expiry of the term of this Agreement, any party hereto may require any other party hereto to returnimmediately or, as the applicable parties may agree, destroy all copies of its Confidential Information the other then has and certify to it the other has taken these steps.

(d)   In the event of breach of the confidentiality provisions of this Agreement by the receiving party, it acknowledges that the disclosing party will be irreparably harmed, and that the disclosing party shall, in addition to any other available remedies, be entitled to obtain equitable relief to prevent further disclosures without resorting to the dispute resolution procedures set forth below.

8.3Undertaking

The Parties undertake to sign and complete all such deeds, documents, resolutions, minutes and other instruments and to do all such acts as are necessary to give full effect to the terms, conditions and restrictions contemplated by this Agreement and to make them binding on the Parties as well as on third parties who are not privy to the terms hereof.

8.4Notices

Any notice, consent or approval required or permitted to be given in connection with this Agreement (in this Section referred to as a “Notice”) must be in writing and is sufficiently given if delivered (whether in person, by courier service or other personal method of delivery), or if transmitted by fax:

(a)   in the case of a Notice to the Corporation at:

Suite 2300, P.O. Box 222

Canada Trust Tower, BCE Place

161 Bay Street

Toronto, Ontario M5J 2S1

Attention: Legal Department

Fax: (416) 361-6018

(b)   in the case of a Notice to CSR InvestCo at:

Suite 2300, P.O. Box 222

Canada Trust Tower, BCE Place

161 Bay Street

Toronto, Ontario M5J 2S1

Attention:

Fax: (416) 361-6018

(c)   in the case of a Notice to XM Holdings at:

1500 Eckington Place, N.E.

Washington, D.C. 20002

Attention:Joseph Titlebaum

       Executive Vice President, General Counsel

       Joseph Verbrugge

       Vice President, International Operations

Fax: (202) 380-4500

(d)   in the case of any other Shareholder, at the address contained in the records of the Corporation with respect to such Shareholder.

Any Notice made or given by personal delivery shall be conclusively deemed to have been given on the day of actual delivery thereof and, if made or given by courier, on the second Business Day following the deposit thereof with the courier and, if made or given by fax, on the day of transmittal thereof (provided the original copy is immediately forwarded by courier).

8.5Amendment

No amendment, supplement or modification of this Agreement and, unless otherwise specified, no waiver, consent or approval by any Party, is binding unless approved by the Corporation’s Board, and approved in writing by CSR InvestCo and XM Holdings, and any amendment, supplement, modification, waiver, consent or approval so approved shall be binding upon each of the Parties.

8.6Execution and Delivery

This Agreement may be executed by the Parties in counterparts and may be executed and delivered by fax, and all such counterparts and facsimiles together constitute one agreement.

8.7Benefit of the Agreement

This Agreement enures to the benefit of and is binding upon the respective heirs, executors, administrators, successors and permitted assigns of the Parties.

8.8Assignment

Except as expressly provided in this Agreement, none of the Parties to this Agreement may assign its rights, benefits, remedies and obligations under this Agreement without the prior written consent of the Corporation, CSR and CSR InvestCo (so long as CSR InvestCo has not undergone a CSR InvestCo Change of Control) and XM Holdings other than in a transfer permitted under Section 5.4(a)(i) or (ii) or Section 5.4 (b)(i) and upon the transferee entering into an agreement reasonably acceptable to the Parties to be bound by this Agreement. The rights granted under Article 4 are personal to XM Holdings and to CSR InvestCo and shall not be assignable or otherwise transferable other than in a transfer permitted under Section 5.4(a)(i) or (ii) or Section 5.4 (b)(i) and upon the transferee entering into an agreement reasonably acceptable to the Parties to be bound by this Agreement.

8.9Termination

This Agreement terminates upon the first to occur of:

(a)   the date the Agreement is replaced by a new agreement between the Parties;

(b)   the date this Agreement is terminated by the written approval of all Shareholders;

(c)   the date that the Corporation is wound-up, liquidated or dissolved, whether voluntarily or involuntarily; and

(d)   that date that one Person becomes the beneficial owner of all of the Shares;

except that the provisions of Section 5.8 continue upon a termination of this Agreement.

[The remainder of this page is intentionally left blank.]

Counterpart Signature Page To Shareholder Agreement

IN WITNESS OF WHICH the Parties have duly executed this Agreement.

	CANADIAN SATELLITE RADIO HOLDINGS INC.
Date:	By:	/s/ John I. Bitove
		Name:John I. Bitove
		Title:Chairman and CEO

	CANADIAN SATELLITE RADIO INVESTMENTS INC.
Date:	By:	/s/ John I. Bitove
		Name:John I. Bitove
		Title:President

	XM SATELLITE RADIO HOLDINGS INC.
Date:	By:	/s/ Gary M. Parsons
		Name:Gary M. Parsons
		Title:Chairman

	CANADIAN SATELLITE RADIO INC.
Date:	By:	/s/ John I. Bitove
		Name:John I. Bitove
		Title:Chairman and CEO

SCHEDULE “A”

FORM OF JOINDER

To: The parties to the Shareholders Agreement (the “Agreement”) made as of the [ ] day of  [ ], 2005 between Canadian Satellite Radio Holdings Inc. (the “Corporation”), Canadian Satellite Radio Inc. and certain shareholders of the Corporation specified therein.

The undersigned, , having purchased certain shares of the Corporation [previously held by], in consideration of the approval by the Board of Directors of the Corporation of the transfer [or issuance] of such shares to the undersigned and other good and valuable consideration (receipt of which is hereby acknowledged), hereby agrees to be an Additional Party to and bound by all of the provisions of the Shareholders Agreement as if the undersigned were an original party thereto.

DATED at ____________________, this __________ day of __________ , 200.

SIGNED, SEALED AND DELIVERED                     )

in the presence of                                                       )

)  _______________________________________

)

_________________________________

OR

       l

Per: ______________________________c/ 

EX-10.6

EXHIBIT 10.6

EMPLOYMENT AGREEMENT

Employment Agreement dated December 5, 2005 (the “Effective Date”) between Canadian Satellite Radio Inc. (the “Corporation”) and John I. Bitove (the “Executive”).

RECITALS

(a)       The Executive has been employed by the Corporation since June 4, 2003, in the position of Chief Executive Officer;

(b)       Canadian Satellite Radio Holdings Inc. (“CSR Holdings”), the parent of the Corporation, is conducting a public offering of subordinate voting shares of CSR Holdings (the “IPO”);

(c)       As a term of the IPO the Corporation and the Executive are required to enter into and be bound by the terms of this Agreement;

(d)       As a whole, this Agreement contains terms and conditions which are more favourable to the Executive than those presently applicable to him.

In consideration of the mutual covenants and agreements contained in this Agreement (the receipt and adequacy of which are acknowledged), the parties agree as follows.

ARTICLE 1- DEFINITIONS

Section 1.1Defined Terms.

As used in this Agreement, the following terms have the following meanings:

“Business” means (i) the business of providing subscription based satellite radio entertainment; and (ii) any other principle line business conducted by the Corporation after the Effective Date up to the termination of the Executive’s employment.

“Cause” means:

(a)   a breach by the Executive of any of the restrictions or covenants contained in Articles 5, 6 and 7;

(b)   any material breach by the Executive of his obligations under any code of ethics, any other code of business conduct or any lawful policies or procedures of the Corporation; or

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(c)   any act or omission of the Executive which would in law permit the Corporation, without notice or payment in lieu of notice, to terminate the employment of the Executive.

“Change of Control” means:

(a)   any sale, reorganization, amalgamation, merger or other transaction as a result of which an Entity or group of Entities acting jointly or in concert (whether by means of a shareholder agreement or otherwise) or Entities associated or affiliated with any such Entity or group within the meaning of the Business Corporations Act (Ontario), other than Canadian Satellite Radio Investments Inc., the Executive and his associates, becomes the owner, legal or beneficial, directly or indirectly, of fifty (50%) percent or more of the shares of the Corporation or exercises control or direction over fifty (50%)percent or more of the shares of the Corporation; (other than solely involving the Corporation and one or more of its affiliates) or

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(b)   a sale, lease or other disposition of all or substantially all of the property or assets of the Corporation other than to an affiliate which assumes all of the obligations of the Corporation in respect of the Executive including the assumption of this Agreement; or

(c)   a change in the composition of the Corporation’s Board of Directors which occurs at a single meeting of the shareholders of the Corporation or upon the execution of a shareholder’s resolution, such that individuals who are independent members of the Board of Directors immediately prior to such meeting or resolution cease to constitute a majority of the independent members of the Board of Directors, without the Board of Directors, as constituted immediately prior to such meeting or resolution, having approved of such change.

“Confidential Information” means all information owned, possessed or controlled by the Corporation and/or its affiliates including, without limitation, all information related to developments, inventions, enhancements, financial, scientific, technical, manufacturing, process know-how and marketing information and all names of or lists of customers and suppliers howsoever received by the Executive from, through or relating to the Corporation and/or its affiliates and in whatever form (whether oral, written, machine readable or otherwise), which pertains to the Corporation and/or its affiliates; provided, however, that the phrase “Confidential Information” shall not include information which:

(a)   was in the public domain prior to the date of receipt by the Executive;

(b)   becomes part of the public domain by publication or otherwise, not due to any unauthorized act or omission of the Executive; or

(c)   the Executive is required by law to disclose, provided that, unless prohibited by law, the Executive first notifies the Board of Directors (as herein defined) at the first reasonable opportunity that he is required to disclose such Confidential Information.

“Customer” means any Entity who has (i) purchased or licensed from the Corporation(with the Executive’s knowledge) any product produced or service supplied, sold, licensed or distributed by the Corporation or, (ii) supplied to the Corporation (with the Executive’s knowledge) any product to be produced, sold, licensed or distributed by the Corporation; provided that after the termination of the Executive’s employment for any reason, Customers shall only include any Entity who was a Customer during the twelve (12) months preceding the date of the termination of the Executive’s employment.

“Development” means any discovery, invention, design, improvement, concept, specification, creation, development, treatment, computer program, method, process, apparatus, specimen, formula, formulation, product, hardware or firmware, any drawing, report, memorandum, article, letter, notebook and any other work of authorship and ideas (whether or not patentable or copyrightable) and legally recognized proprietary rights (including, but not limited to, patents, copyrights, trademarks, topographies, know-how and trade secrets), and all records and copies of records relating to the foregoing, that:

(a)   result or derive from the Executive’s employment or from the Executive’s knowledge or use of Confidential Information;

(b)   are conceived or made by the Executive (individually or in collaboration with others) in the course of his employment;

(c)   result from or derive from the use or application of the resources of the Corporation; or

(d)   relate to the business operations of actual or demonstrably anticipated research and development by the Corporation.

"Disability" means the Executive’s inability to substantially fulfil his duties on behalf of the Corporation for a continuous period of six (6) months or more or the Executive’s inability to substantially fulfil his duties on behalf of the Corporation for an aggregate period of six (6) months or more during any consecutive twelve (12) month period, which the parties agree would cause undue hardship to the Corporation which cannot be accommodated; and if there is any disagreement between the Corporation and the Executive as to the Executive’s Disability or as to the date any such Disability began or ended, the same shall be determined by a physician mutually acceptable to the Corporation and the Executive whose determination shall be conclusive evidence of any such Disability and of the date any such Disability began or ended.

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“Entity” means a natural person, partnership, limited liability partnership, corporation, joint stock company, trust, unincorporated association, joint venture or other entity or governmental entity, and pronouns have a similarly extended meaning.

“Good Reason” means constructive dismissal in accordance with the common law, provided, however that the following shall not constitute Good Reason for the purposes of this Agreement:

(a)   any change or series of changes in the responsibilities, authority, status or reporting relationship of the Executive with the Corporation during the first eighteen (18) months from the Effective Date; or

(b)   a reduction by the Corporation in the Executive’s annual Base Salary which is part of a general reduction in the Base Salary of all or substantially all of the senior executives of the Corporation which:

(i)   occurs during the first eighteen (18) months from the Effective Date;

(ii)   affects the Executive in substantially the same manner as the other senior executives who are also affected by such general reduction; and

(iii)   does not constitute more than fifteen percent (15%) of his Base Salary; or

(c)   any requirement by the Corporation that the Executive’s principal office be relocated to any major urban centre in Canada, provided the Corporation reimburses the Executive for all reasonable relocation expenses.

“Intellectual Property Rights” means all worldwide intellectual and industrial property rights in connection with the Developments including, without limitation:

(i)   patents, inventions, discoveries and improvements;

(ii)   ideas, whether patentable or not;

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(iii)   copyrights;

(iv)   trademarks;

(v)   trade secrets;

(vi)   industrial and artistic designs; and

(vii)   proprietary, possessory and ownership rights and interests of all kinds whatsoever;

including, without limitation, the right to apply for registration or protection of any of the foregoing.

“Prospective Customers” means (i) any Entity solicited by the Executive on behalf of the Corporation for any purpose relating to the Business, and (ii) any Entity solicited by the Corporation with the Executive's knowledge for any purpose relating to the Business; provided that after termination of the Executive’s employment for any reason, Prospective Customers shall only include any Entity who was a Prospective Customer during the twelve (12) months preceding the date of the termination of the Executive’s employment.

“Territory” means Canada.

ARTICLE 2 - EMPLOYMENT

Section 2.1Position

On the terms and subject to the conditions hereinafter contained, the Executive will continue in the employ of the Corporation as its Chief Executive Officer.

Section 2.2Duties of Employment

The Executive shall report to and be subject to the general direction of the Board of Directors of the Corporation (the “Board of Directors”) and shall have such duties and responsibilities which will be commensurate with his position as are delegated to him by the Board of Directors.

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Section 2.3Full and Faithful Service

The Executive shall well and faithfully serve the Corporation and use his best efforts to promote the interests of the Corporation and during the term of this Agreement, the Executive shall devote his full time and energy to the Corporation and shall not, directly or indirectly, render services to any Entity other than services with regard to charitable or community service organizations, or any other organizations that are approved by the Corporation, provided such activities do not interfere with Executive’s duties hereunder. The Executive further acknowledges that he will comply with (i) the lawful policies and procedures established by the Corporation, from time to time, including any code of ethics or business conduct adopted by the Corporation (including any future revisions of such policies, procedures or other codes of business conduct), and (ii) all applicable laws, rules and regulations, and all requirements of all applicable regulatory, self-regulatory and administrative bodies.

Section 2.4Term

This Agreement shall be effective from the Effective Date and shall continue in effect until the date the Agreement is terminated in accordance with Article 4 hereof.

ARTICLE 3 - REMUNERATION AND BENEFITS

Section 3.1Salary

The Corporation shall pay to the Executive a salary (the “Base Salary”) at the rate of $250,000 per annum, payable to the Executive in accordance with the payroll practices of the Corporation for its senior management as are in effect from time to time. The Executive’s Base Salary may be increased by the Board of Directors from time to time and once increased shall thereafter be the Base Salary hereunder.

Section 3.2Bonus

The Executive shall be eligible to participate in the Corporation’s bonus plan for senior management (the “Bonus Plan”) in accordance with the terms and conditions of such plan. Such participation shall be at a level such that the Executive shall have the potential to receive, at target, a bonus of up to 75% of his Base Salary with a maximum bonus of up to 100% of his Base Salary based on achievement of the goals established pursuant to the Bonus Plan.

Section 3.3Stock Options

The Executive shall, subject to the terms and conditions of the stock option plan of the Corporation adopted in 2005 (as same may be amended from time to time), participate in such plan as determined by the Board of Directors of the Corporation.

Section 3.4Health and Insurance Benefits

The Executive shall be eligible to participate in such health, medical, dental, disability and life insurance coverage as the Corporation has in effect for its senior management from time to time.

Section 3.5Expenses

The Corporation will pay or reimburse the Executive for all reasonable travelling and other out-of-pocket expenses incurred by the Executive in connection with his employment hereunder in accordance with the policies of the Corporation in effect from time to time.

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Section 3.6Vacation

During each full calendar year of this Agreement, the Executive will be entitled to four (4) weeks vacation with pay to be taken at a time(s) mutually agreeable to the Executive and the Corporation. The Executive will be allowed to carry forward any unused vacation time into the next year to the extent same is permitted by the policies of the Corporation or by the Board of Directors.

ARTICLE 4 - TERMINATION

Section 4.1Termination by the Corporation

This Agreement and the employment contemplated hereunder may (and in the case of Section 4.1(d), shall) be terminated, at any time, in the following manner and in the following circumstances:

(a)   by the Executive, by providing four (4)weeks written notice of resignation to the Corporation (the “Notice of Resignation Period”), in which case, subject to Section 4.1(b), this Agreement and the Executive’s employment shall terminate at the end of the Notice of Resignation Period;

(b)   during the Notice of Resignation Period, the Corporation may waive such Notice of Resignation Period, in whole or in part, in which case this Agreement and the Executive’s employment shall terminate immediately upon receipt by the Executive of a written notice from the Corporation;

(c)   by the Corporation, for Cause, in which case this Agreement and the Executive’s employment shall terminate immediately upon receipt of a written notice by the Executive from the Corporation setting out the cause for termination;

(d)   automatically without further notice, upon the death of the Executive, in which case the Executive’s employment and this Agreement shall terminate on the date of the Executive’s death;

(e)   by the Corporation, in the event of a material violation of this Agreement (other than one constituting Cause) by the Executive where such violation has not been cured within ten (10) working days following receipt of written notice thereof by the Executive from the Corporation. This Agreement and the Executive’s employment shall terminate ten (10) days following receipt by the Executive of written notice from the Corporation of a material violation of this Agreement (other than a material violation that constitutes Cause) if such material violation of this Agreement has not been cured to the satisfaction of the Corporation by the Executive;

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(f)   by the Corporation, without Cause and other than for the circumstances in Section 4.1(b), (d), (e) or (h), in which case this Agreement and the Executive’s employment shall terminate immediately upon receipt by the Executive of a written notice of termination from the Corporation;

(g)   by the Executive, within thirty (30) days of the occurrence of any event constituting Good Reason, in which case this Agreement and the Executive’s employment shall terminate immediately upon receipt by the Executive of a written notice of termination by the Executive; or

(h)   by the Corporation, in the event of frustration of this Agreement due to the Executive’s Disability, in which case this Agreement and the Executive’s employment shall terminate immediately upon receipt of a written notice by the Executive from the Corporation.

Section 4.2Payment Upon Termination

In the event the Executive’s employment is terminated pursuant to Section 4.1, the Executive shall only be entitled to the following compensation and benefits upon termination:

(a)   Should this Agreement be terminated pursuant to Section 4.1(a) or (b), the Executive shall only be entitled to (i) payment of the Executive’s Base Salary for the period from the date of termination by the Corporation to the end of the Notice of Resignation Period; (ii) continued health and welfare insurance benefits coverage in which the Executive was participating at the date of termination by the Corporation to the end of the Notice of Resignation Period; (iii) the value of the pro-rated vacation leave with pay for that portion of the calendar year up to the end of the Notice of Resignation Period and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive’s accrued vacation entitlement has not been used by him at the time of termination; (iv) any accrued but unpaid business expenses at the date of termination by the Corporation required to be reimbursed under Section 3.5 of this Agreement; and (v) any entitlements in accordance with the terms of any stock option plans in which he participated at the date of termination.

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(b)   Should this Agreement be terminated pursuant to Section 4.1(c) or (e), the Executive shall only be entitled to (i) payment of the Executive's Base Salary earned up to the date of termination; (ii) the value of the pro-rated vacation leave with pay for that portion of the calendar year in which the employment of the Executive hereunder is terminated that the Executive was actively employed and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive’s accrued vacation entitlement has not been used by him at the time of termination; and (iii) any accrued but unpaid business expenses at the date of termination required to be reimbursed under Section 3.5 of this Agreement.

(c)   Should this Agreement be terminated pursuant to Section 4.1(d) or Section 4.1(h), the Corporation’s only obligations shall be to:

(i)   pay to the Executive (w) any accrued but unpaid Base Salary for services rendered to the date of termination; (x) a bonus for that portion of the year in which the Executive was actively employed; (y) any accrued but unpaid expenses at the date of termination required to be reimbursed under Section 3.5 of this Agreement; and (z) the value of the pro-rated vacation leave with pay for that portion of the calendar year in which the employment of the Executive hereunder is terminated that the Executive was actively employed and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive’s accrued vacation entitlement has not been used by him at the time of termination. The amount of the bonus payable under this Section 4.2(c)(i) shall be calculated as follows: the product of (s) the average bonus paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by twelve (12), and (t) the number of months the Executive was actively employed in the fiscal year in which his employment is terminated. In the event the Executive’s employment is terminated in the first twelve (12) months following the Effective Date, the value of such bonus shall be calculated as follows: the product of (s) the target bonus (75% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated, divided by twelve, and (t) the number of months the Executive was actively employed in the fiscal year in which his employment is terminated;

(ii)   pay to the Executive an amount equal to six (6) months of his Base Salary as at the date of termination, to be paid either by lump sum within thirty days of the date of termination or by way of salary continuance on the Corporation’s regular pay day, and in accordance with its payroll practices at the date of termination, as is determined by the Corporation;

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(iii)   pay to the Executive an amount in lieu of the value of any annual bonus the Executive would have earned had he been employed for the six (6) months immediately following the date of termination. Such amount shall be paid six (6) months following the date of termination and shall be the average bonus (excluding any retention bonus) paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by two (2). In the event the Executive’s employment is terminated in the first twelve (12) months following the Effective Date, the value of such bonus shall be the target bonus (75% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated divided by two (2); and

(iv)   continue the Executive’s entitlements in accordance with the terms of any stock option plans in which he participated at the date of termination.

(d)   Should the Agreement be terminated pursuant to Section 4.1(f) or (g), the Corporation’s only obligations shall be to:

(i)   pay to the Executive (w) any accrued but unpaid Base Salary for services rendered to the date of termination; (x) a bonus for that portion of the year in which the Executive was actively employed (excluding the Notice Period); (y) any accrued but unpaid expenses at the date of termination required to be reimbursed under Section 3.5 of this Agreement; and (z) the value of the pro-rated vacation leave with pay for that portion of the calendar year in which the employment of the Executive hereunder is terminated that the Executive was actively employed and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive’s accrued vacation entitlement has not been used by him at the time of termination. The amount of the bonus payable under this Section 4.2(d)(i) shall be calculated as follows: the product of (s) the average bonus paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by twelve (12), and (t) the number of months the Executive was actively employed (excluding the Notice Period) in the fiscal year in which his employment is terminated. In the event the Executive’s employment is terminated in the first twelve (12) months following the Effective Date, the amount of the bonus payable hereunder shall be calculated as follows: the product of (s) the target bonus (75% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated divided by twelve (12), and (t) the number of months the Executive was actively employed (excluding the Notice Period) in the fiscal year in which his employment is terminated;

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(ii)   pay to the Executive an amount equal to twenty-four (24) months (the “Notice Period”) of his Base Salary as at the date of termination. Payment of the Executive’s Base Salary during the Notice Period shall be made either by lump sum within thirty days of the date of termination or by way of salary continuance on the Corporation’s regular pay day, and in accordance with its payroll practices at the date of termination, as is determined by the Corporation;

(iii)   pay to the Executive an amount in lieu of the value of any annual bonus the Executive would have earned had he been employed for the length of the Notice Period. Such amount shall be paid at the end of the Notice Period and shall be calculated as follows: the product of (s) the average bonus (excluding any retention bonus) paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by twelve (12), and (t) the number of months in the Notice Period. In the event the Executive’s employment is terminated in the first twelve (12) months following the Effective Date, the value of such bonus shall be calculated as follows: the product of (s) the target bonus (75% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated divided by twelve (12), and (t) the number of months in the Notice Period;

(iv)   continue the Executive’s participation in the health and welfare benefit plans (excluding short-term disability, long term disability benefits and life insurance coverage which shall cease on the date of termination) in which the Executive was participating at the date of termination, until the earlier of (x) the end of the Notice Period; or (y) the date the Executive becomes covered under the benefit plans of another employer. The Corporation’s obligation hereunder is conditional on the Executive continuing to pay his share of the premiums; and

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(v)   continue the Executive’s entitlements in accordance with the terms of any stock option plans in which he participated at the date of termination.

Section 4.3Termination Upon a Change of Control

In lieu of and not in addition to the termination payments and benefits provided for in Section 4.2(d) herein, if within twelve (12) months following a Change of Control, the Executive’s employment with the Corporation is terminated for any reason whatsoever other than as a result of a termination pursuant to Section 4.1(a), (b), (c), (d), (e) or (h), the Corporation’s only obligations shall be to:

(a)   pay to the Executive (i) any accrued but unpaid Base Salary for services rendered to the date of termination, (ii) a bonus for that portion of the year in which the Executive was actively employed (excluding the Notice Period); (iii) any accrued but unpaid expenses at the date of termination required to be reimbursed under Section 3.5 of this Agreement, and (iv) the value of the pro-rated vacation leave with pay for that portion of the calendar year in which the employment of the Executive hereunder is terminated that the Executive was actively employed and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive’s accrued vacation entitlement has not been used by him at the time of termination. The amount of the bonus payable under this Section 4.3(a) shall be calculated as follows: the product of (s) the average bonus paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by twelve (12), and (t) the number of months the Executive was actively employed (excluding the Notice Period) in the fiscal year in which his employment is terminated. In the event the Executive’s employment is terminated in the first twelve (12) months following the Effective Date, the amount of the bonus payable hereunder shall be calculated as follows: the product of (s) the target bonus (75% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated divided by twelve (12), and (t) the number of months the Executive was actively employed (excluding the Notice Period) in the fiscal year in which his employment is terminated; and

(b)   pay to the Executive those amounts and provide the benefits referenced in Section 4.2(c)(ii), (iii) and (iv) above.

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Section 4.4Mitigation

The Executive shall not be required to mitigate the amount of any payments or the entitlement to any benefits provided for under Section 4.2(d) or Section 4.3 by seeking other employment nor shall any payment or benefit provided for in such Section be reduced by any compensation or remuneration and/or benefits earned by the Executive as a result of employment by another employer or the rendering of services after the date of termination.

Section 4.5Effect of Termination

Upon termination of his employment for any reason whatsoever, the Executive shall thereupon be deemed to have immediately resigned any position the Executive may have as an officer, director or employee of the Corporation together with any other office, position or directorship which the Executive may hold with any of the Corporation’s affiliates or related entities. In such event, the Executive shall, at the request of the Corporation, forthwith execute any and all documents appropriate to evidence such resignations. The Executive shall not be entitled to any payments in respect of such resignations in addition to those provided for herein.

Section 4.6Payment Upon Termination

Notwithstanding Section 4.2 and Section 4.3, the Executive shall not receive less than that which he is entitled to upon a termination of employment in accordance with applicable employment standards legislation. The payments referred to in Section 4.2(c)(ii), Section 4.2(d)(ii) and Section 4.3(b) are inclusive of any termination and/or severance payments that may be required under employment standards legislation and have been agreed upon with reference to the Executive’s length of service with the Corporation.

Section 4.7Release

The Executive agrees that payment by the Corporation of the amounts set out in Section 4.2(c), Section 4.2(d) or Section 4.3 shall be in full and final settlement of any and all actions, causes of actions, suits, claims, demands and entitlements whatsoever which the Executive has or may have against the Corporation, its affiliates and any of their respective directors, officers, employees, representatives, successors and assigns arising out of his hiring, his employment and the termination of his employment or this Agreement.

Section 4.8Suspension or Termination of Benefits and Compensation

In the event that the Executive has breached any provisions of ARTICLE 5 , ARTICLE 6 , ARTICLE 7 or ARTICLE 9 , the Corporation shall have the right to suspend or terminate any or all remaining payments and/or benefits, if any, referenced in Section 4.2(d) and Section 4.3(b) of this Agreement, which are over and above the Executive’s entitlements upon termination of employment mandated by applicable employment standard legislation. Such suspension or termination of payments and/or benefits shall be in addition to and shall not limit any and all other rights and remedies as set out in Section 10.2 of this Agreement that the Corporation may have against the Executive.

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ARTICLE 5 - CONFIDENTIAL INFORMATION

Section 5.1Confidentiality

1              During the term of this Agreement and following the termination thereof, the Executive shall not use, divulge, diffuse, sell, transfer, give, circulate, or otherwise distribute to any Entity whatsoever or whomsoever, or otherwise make public, any Confidential Information.

2              Notwithstanding any provision of this Agreement to the contrary, the Executive shall have the right to use Confidential Information in relation to the performance of his duties, in which event, the Executive shall, at all times, take all reasonable measures in order to prevent the disclosure or non-authorized use of such Confidential Information.

3              Except when authorized in accordance with the performance of his duties, under no circumstances shall the Executive reproduce any Confidential Information without the prior written consent of the Board of Directors. All reproductions of Confidential Information shall be governed by this Agreement and shall be treated as Confidential Information hereunder.

4              The Executive shall not publish or release or allow the publication or release of any material containing Confidential Information without the prior written consent of the Board of Directors.

5              The Executive shall not install, copy or receive any Confidential Information into his own or any other computer or computer system not owned and controlled by the Corporation, without the express written permission of the Corporation. Where an Executive has received permission from the Board of Directors to so install, copy or receive Confidential Information, the Executive shall be solely responsible to the Corporation for the security of such Confidential Information and shall follow any and all directions given by the Corporation.

Section 5.2Corporation Property

Confidential Information (including any reproduction thereof) shall remain the sole property of the Corporation and shall be returned to the Corporation immediately upon request or upon the termination of the Executive’s employment, for any reason.

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ARTICLE 6 - NON-COMPETITION

Section 6.1Non-Competition

The Executive shall not, during the term of this Agreement and for a period of twenty-four (24) months following the termination of his employment, for any reason, on his own behalf or on behalf of any Entity, whether directly or indirectly, in any capacity whatsoever, alone, through or in connection with any Entity, carry on or be engaged in or have any financial or other interest in or be otherwise commercially involved in any endeavour, activity or business in all or part of the Territory which is competitive, in any way, with the Business.

Section 6.2Exception

The Executive shall, however, not be in default under Section 6.1 by virtue of the Executive holding, strictly for portfolio purposes and as a passive investor, no more than one percent (1%) of the issued and outstanding shares of or any other interest in, any body corporate which is listed on any recognized stock exchange, the business of which body corporate is in competition, in whole or in part, with the Corporation.

ARTICLE 7 - NON-SOLICITATION

Section 7.1Non-Solicitation of Customers or Employees

The Executive shall not, during the term of this Agreement and for a period of twenty-four (24) months following the termination of his employment, for any reason, on his own behalf or on behalf of or in connection with any other Entity, without the prior written consent of the Corporation, directly or indirectly, in any capacity whatsoever, alone through or in connection with any Entity:

(a)   canvass or solicit the business of (or procure or assist the canvassing or soliciting of the business of) any Customer or Prospective Customer or customer of the Corporation’s affiliates for any purpose which is competitive with the Business; or

(b)   accept (or procure or assist the acceptance of) any business from any Customer or Prospective Customer or customer of the Corporation’s affiliates which business is competitive with the Business; or

(c)   supply (or procure or assist the supply of) any goods or services to any Customer or Prospective Customer or customer of the Corporation’s affiliates for any purpose which is competitive with the Business; or

(d)   employ, engage, offer employment or engagement to or solicit the employment or engagement of or otherwise entice away from the employment or engagement of the Corporation or any of its affiliates, any individual who is employed or engaged by the Corporation or any of its affiliates whether or not such individual would commit any breach of his contract or terms of employment or engagement by leaving the employ or the engagement of the Corporation or any of its affiliates; or

(e)   procure or assist any Entity to employ, engage, offer employment or engagement or solicit the employment or engagement of any individual who is employed or engaged by the Corporation or any of its affiliates or otherwise entice away from the employment or engagement of the Corporation or any of its affiliates any such individual.

ARTICLE 8 - NON-DISPARAGEMENT

Section 8.1Non-Disparagement

The Executive covenants and agrees that he shall not engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks (including, without limitation, the repetition or distribution of derogatory rumours, allegations, negative reports or comments) which are disparaging, deleterious or damaging to the integrity, reputation or goodwill of the Corporation, its affiliates or its and their management.

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ARTICLE 9 - INTELLECTUAL PROPERTY

Section 9.1Ownership of Intellectual Property

(1)   All rights, titles and interests in or to the Developments shall vest and are owned exclusively by the Corporation immediately on its creation and regardless of the stage of its completion. The Executive irrevocably grants, transfers and assigns to the Corporation all of his right, title and interest, if any, in any and all Developments, including rights to translation and reproductions in all forms or formats and all Intellectual Property Rights thereto, if any, and he agrees that the Corporation may copyright said materials in the Corporation's name and secure renewal, reissues and extensions of such copyrights for such periods of time as the law may permit.

(2)   At all times hereafter, the Executive agrees promptly to disclose to the Corporation all Developments, to execute separate written transfers or assignments to the Corporation at the Corporation's request, and to assist the Corporation in obtaining any Intellectual Property Right in Canada, the United States and in any other countries, on any Developments granted, transferred or assigned to the Corporation that the Corporation, in its sole discretion, seeks to register. The Executive also agrees to sign all documents, and do all things necessary to obtain such Intellectual Property Rights, to further assign them to the Corporation, and to reasonably protect the Corporation against infringement by other parties at the Corporation’s expense with the Corporation’s prior written approval.

(3)   The Executive shall keep complete, accurate, and authentic information and records on all Developments in the manner and form reasonably requested by the Board of Directors. Such information and records, and all copies thereof, shall be the property of Corporation as to any Developments assigned to the Corporation. The Executive agrees to promptly surrender such information and records at the request of the Board of Directors. All these materials will be Confidential Information upon their creation.

Section 9.2Moral Rights

The Executive hereby irrevocably waives, in favour of the Corporation, its successors, assigns and nominees, all moral rights arising under the Copyright Act (Canada) as amended (or any successor legislation of similar effect) or similar legislation in any applicable jurisdiction, or at common law, to the full extent that such rights may be waived in each respective jurisdiction, that the Executive may have now or in the future with respect to the Developments.

ARTICLE 10 - RECOGNITION

Section 10.1Recognition

1              The Executive expressly recognizes that Articles 5, 6, 7 and 9 of this Agreement are of the essence of this Agreement, and that the Corporation would not have entered into this Agreement without the inclusion of the said Articles.

2              The Executive further recognizes and expressly acknowledges that: (i) the application of the Articles 5, 6, 7, 8 and 9 of this Agreement will not have the effect of prohibiting him from earning a living in a satisfactory manner in the event of the termination his employment and of this Agreement, and (ii) the Corporation would be subject to an irreparable prejudice should one or several of the said Articles be infringed, or should the Executive be in breach of any of his obligations thereunder.

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3             The Executive further recognizes and expressly acknowledges that the Articles 5, 6, 7, 8 and 9 of this Agreement grant to the Corporation only such reasonable protection as is admittedly necessary to preserve the legitimate interests of the Corporation and the Executive equally recognizes, in this respect, that the description of the Business is reasonable.

Section 10.2Remedies

The Executive hereby recognizes and expressly acknowledges that the Corporation would be subject to irreparable harm should any of the provisions of Article 5, 6, 7 or 9 be infringed, or should any of the Executive's obligations thereunder be breached by the Executive, and that damages alone will be an inadequate remedy for any breach or violation thereof and that the Corporation, in addition to all other remedies, shall be entitled as a matter of right to equitable relief, including temporary or permanent injunction to restrain such breach.

ARTICLE 11 - CONFLICTING OBLIGATIONS

Section 11.1No Conflicting Obligations

The Executive represents and warrants to the Corporation that:

(a)   there exists no agreement or contract and he is not subject to any obligation, which restricts him from (i) being employed by the Corporation; or (ii) from performing the duties assigned to him pursuant to this Agreement; or (iii) from soliciting the clients or customers of a third party; or (iv) from using information within his knowledge or control which may be useful in the performance of his duties for the Corporation;

(b)   in the performance of his duties for the Corporation, he shall not improperly bring to the Corporation or use any trade secrets, confidential information or other proprietary information of any third party; and

(c)   he will not infringe the intellectual property rights of any third party.

Section 11.2Indemnity

The Executive acknowledges that the Corporation has relied upon the representations outlined in Section 11.1 above. The Executive agrees to indemnify and hold the Corporation, its directors, officers, employees, agents and/or consultants harmless against any and all claims, liabilities, losses, damages, costs, fees and/or expenses including reasonable legal fees incurred by the Corporation, its directors, officers, employees, agents and/or consultants by reason of an alleged violation by the Executive of any of the representations contained in Section 11.1 of this Agreement.

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ARTICLE 12 - GENERAL

Section 12.1Notice Provisions

Except as otherwise expressly provided herein, all notices relating to this Agreement shall be in writing and either delivered by hand, courier service or facsimile transmission and addressed as follows:

The Executive: John I. Bitove

177 Forest Hill Road

Toronto, Ontario M5P 2N3

The Corporation: 161 Bay Street

BCE Place, Suite 2300

Toronto, Ontario M5J 2S1

Attention:   Board of Directors

Any address referred to in this Section 12.1 may be changed by notice given in accordance with the provisions of this Section. Any notice which is delivered by hand, courier service or facsimile transmission shall be effective when delivered.

Section 12.2Entire Agreement

This Agreement contains the entire agreement between the Corporation and the Executive and supersedes all previous negotiations, understandings and agreements whether verbal or written, with respect to the terms and conditions of employment between the Corporation and the Executive.

Section 12.3Survival

It is expressly agreed by the parties hereto that the provisions of Articles 4, 5, 6, 7, 8, 9, 10, 11 and 12 shall survive the termination of this Agreement and the termination of the Executive’s employment, for any reason.

Section 12.4Privacy

By accepting employment with the Corporation, the Executive consents to the Corporation collecting, using and disclosing his personal information for purposes relating to the maintenance of the employment relationship. The purposes of the Corporation’s collection, use and disclosure include, but are not limited to:

(a)   ensuring that the Executive is properly remunerated for his services to the Corporation which shall include disclosure to third party payroll providers;

(b)   administering and/or facilitating the provision of any benefits to which the Executive is or may become entitled, including bonuses, benefits, pensions, registered retirement savings plan, short, medium and long-term incentive plans; this shall include the disclosure of the Executive’s personal information to the Corporation’s third party service providers and administrators;

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(c)   ensuring that the Corporation is able to comply with any regulatory, reporting and withholding requirements relating to the Executive’s employment;

(d)   performance and promotion;

(e)   monitoring the Executive’s access to and use of the Corporation’s electronic media services in order to ensure that the use of such services is in compliance with the Corporation’s policies and procedures and is not in violation of any applicable laws;

(f)   complying with the Corporation’s obligations to report improper or illegal conduct by any director, officer, employee or agent of the Corporation under any applicable securities, criminal or other law; and

(g)   any other purpose for which the Executive is given notice and which is reasonably related to the maintenance of the Executive’s employment relationship.

If the Executive’s specific consent to the collection, use or disclosure of his personal employee information is required under applicable law, the Executive hereby agrees to provide such consent. If the Executive refuses or withdraws his consent, the Executive acknowledges that his employment with the Corporation may be negatively affected.

Section 12.5Governing Law

This Agreement shall be governed by and interpreted in accordance with the laws of the Province of Ontario.

Section 12.6Successors and Assigns

This Agreement may not be assigned by the Executive. This Agreement and the rights and obligations hereunder may, without the further express consent of the Executive, be assigned by the Corporation to any Entity which succeeds to all or substantially all of the business, assets or property of the Corporation.

Section 12.7Execution of Further Documents

The Corporation and Executive agree that they shall, from time to time and at all times, do all such further acts and execute and deliver all such further documents and assurances as shall be reasonably required in order to fully perform and carry out the terms of this Agreement.

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Section 12.8Amendments and Waivers

No supplement, modification, amendment or waiver of this Agreement shall be binding unless executed in writing by the Executive and the Corporation. No waiver of any of the provisions of this Agreement shall be deemed to constitute a waiver of any other provision (whether or not similar), nor shall such waiver constitute a waiver or continuing waiver unless otherwise expressly provided in writing duly the party to be bound thereby.

Section 12.9Severability

In the event that any provision or any part of any provision hereof is deemed to be invalid by reason of the operation of any law or by reason of the interpretation placed thereon by a court, this Agreement shall be construed as not containing such provision or part of such provision and the invalidity of such provision or such part shall not affect the validity of any other provision or the remainder of such provision hereof. All other provisions hereof which are otherwise lawful and valid shall remain in full force and effect.

Section 12.10Legal Advice

The Executive acknowledges that he has been afforded the opportunity to obtain independent legal advice with respect to this Agreement and that he fully understands the nature and consequences of this Agreement.

Section 12.11Currency

All amounts expressed herein are in Canadian dollars unless otherwise noted and all payments hereunder are subject to all applicable and required deductions.

Section 12.12Preamble/Recital

The Executive and the Corporation acknowledge and agree that the provisions contained in the preamble/recital section of this Agreement shall form part of this Agreement and may be relied upon by either party.

Section 12.13Counterparts

This Agreement may be executed by the parties in one or more counterparts, each of which when so executed and delivered shall be deemed to be an original and such counterparts shall together constitute one and the same instrument.

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IN WITNESS WHEREOF the parties have caused this Agreement to be executed as of the effective date first above written.

CANADIAN SATELLITE RADIO INC.
Per:	/s/ Michael Washinushi
	Michael Washinushi
	Title

/s/ Maria Yeh	/s/ John I. Bitove
(Witness)	John I. Bitove

EX-10.7

EXHIBIT 10.7

EMPLOYMENT AGREEMENT

Employment Agreement dated December 5, 2005 (the “Effective Date”) between Canadian Satellite Radio Inc. (the “Corporation”) and Stephen Tapp (the “Executive”).

RECITALS

(a)   The Executive has been employed by the Corporation since September 7, 2004, in the position of President and Chief Operating Officer;

(b)   Canadian Satellite Radio Holdings Inc. (“CSR Holdings”), the parent of the Corporation, is conducting a public offering of subordinate voting shares of CSR Holdings (the “IPO”);

(c)   As a term of the IPO the Corporation and the Executive are required to enter into and be bound by the terms of this Agreement;

(d)   As a whole, this Agreement contains terms and conditions which are more favourable to the Executive than those presently applicable to him.

In consideration of the mutual covenants and agreements contained in this Agreement (the receipt and adequacy of which are acknowledged), the parties agree as follows.

ARTICLE 1- DEFINITIONS

Section 1.1Defined Terms.

As used in this Agreement, the following terms have the following meanings:

“Business” means (i) the business of providing subscription based satellite radio entertainment; and (ii) any other principle line business representing at least 25% of the Corporation’s revenue conducted by the Corporation after the Effective Date up to the termination of the Executive’s employment.

“Cause” means:

(a)   a breach by the Executive of any of the restrictions or covenants contained in Articles 5, 6 and 7;

(b)   any material breach by the Executive of his obligations under any code of ethics, any other code of business conduct or any lawful policies or procedures of the Corporation; or

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(c)   any act or omission of the Executive which would in law permit the Corporation, without notice or payment in lieu of notice, to terminate the employment of the Executive.

“Change of Control” means:

(a)   any sale, reorganization, amalgamation, merger or other transaction as a result of which an Entity or group of Entities acting jointly or in concert (whether by means of a shareholder agreement or otherwise) or Entities associated or affiliated with any such Entity or group within the meaning of the Business Corporations Act (Ontario), other than Canadian Satellite Radio Investments Inc., John Bitove, the Executive and his associates, becomes the owner, legal or beneficial, directly or indirectly, of fifty (50%) percent or more of the shares of the Corporation or exercises control or direction over fifty (50%)percent or more of the shares of the Corporation; (other than solely involving the Corporation and one or more of its affiliates) or

(b)   a sale, lease or other disposition of all or substantially all of the property or assets of the Corporation other than to an affiliate which assumes all of the obligations of the Corporation in respect of the Executive including the assumption of this Agreement; or

(c)   a change in the composition of the Corporation’s Board of Directors which occurs at a single meeting of the shareholders of the Corporation or upon the execution of a shareholder’s resolution, such that individuals who are [independent] members of the Board of Directors immediately prior to such meeting or resolution cease to constitute a majority of the [independent members of the] Board of Directors, without the Board of Directors, as constituted immediately prior to such meeting or resolution, having approved of such change.

“Confidential Information” means all information owned, possessed or controlled by the Corporation and/or its affiliates including, without limitation, all information related to developments, inventions, enhancements, financial, scientific, technical, manufacturing, process know-how and marketing information and all names of or lists of customers and suppliers howsoever received by the Executive from, through or relating to the Corporation and/or its affiliates and in whatever form (whether oral, written, machine readable or otherwise), which pertains to the Corporation and/or its affiliates; provided, however, that the phrase “Confidential Information” shall not include information which:

(a)   was in the public domain prior to the date of receipt by the Executive;

(b)   becomes part of the public domain by publication or otherwise, not due to any unauthorized act or omission of the Executive; or

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(c)   the Executive is required by law to disclose, provided that, unless prohibited by law, the Executive first notifies the Reporting Officer (as defined herein) at the first reasonable opportunity that he is required to disclose such Confidential Information.

“Customer” means any Entity who has (i) purchased or licensed from the Corporation(with the Executive’s knowledge) any product produced or service supplied, sold, licensed or distributed by the Corporation or, (ii) supplied to the Corporation (with the Executive’s knowledge) any product to be produced, sold, licensed or distributed by the Corporation; provided that after the termination of the Executive’s employment for any reason, Customers shall only include any Entity who was a Customer during the twelve (12) months preceding the date of the termination of the Executive’s employment.

“Development” means any discovery, invention, design, improvement, concept, specification, creation, development, treatment, computer program, method, process, apparatus, specimen, formula, formulation, product, hardware or firmware, any drawing, report, memorandum, article, letter, notebook and any other work of authorship and ideas (whether or not patentable or copyrightable) and legally recognized proprietary rights (including, but not limited to, patents, copyrights, trademarks, topographies, know-how and trade secrets), and all records and copies of records relating to the foregoing, that:

(a)   result or derive from the Executive’s employment or from the Executive’s knowledge or use of Confidential Information;

(b)   are conceived or made by the Executive (individually or in collaboration with others) in the course of his employment;

(c)   result from or derive from the use or application of the resources of the Corporation; or

(d)   relate to the business operations of actual or demonstrably anticipated research and development by the Corporation.

"Disability" means the Executive’s inability to substantially fulfil his duties on behalf of the Corporation for a continuous period of six (6) months or more or the Executive’s inability to substantially fulfil his duties on behalf of the Corporation for an aggregate period of six (6) months or more during any consecutive twelve (12) month period, which the parties agree would cause undue hardship to the Corporation which cannot be accommodated; and if there is any disagreement between the Corporation and the Executive as to the Executive’s Disability or as to the date any such Disability began or ended, the same shall be determined by a physician mutually acceptable to the Corporation and the Executive whose determination shall be conclusive evidence of any such Disability and of the date any such Disability began or ended.

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“Entity” means a natural person, partnership, limited liability partnership, corporation, joint stock company, trust, unincorporated association, joint venture or other entity or governmental entity, and pronouns have a similarly extended meaning.

“Good Reason” means constructive dismissal in accordance with the common law, provided, however that the following shall not constitute Good Reason for the purposes of this Agreement:

(a)   any change or series of changes in the responsibilities, authority, status or reporting relationship of the Executive with the Corporation during the first eighteen (18) months from the Effective Date; or

(b)   a reduction by the Corporation in the Executive’s annual Base Salary which is part of a general reduction in the Base Salary of all or substantially all of the senior executives of the Corporation which:

(i)   occurs during the first eighteen (18) months from the Effective Date;

(ii)   affects the Executive in substantially the same manner as the other senior executives who are also affected by such general reduction; and

(iii)   does not constitute more than fifteen percent (15%) of his Base Salary; or

(c)   any requirement by the Corporation that the Executive’s principal office be relocated to any major urban centre in Canada, provided the Corporation reimburses the Executive for all reasonable relocation expenses.

“Intellectual Property Rights” means all worldwide intellectual and industrial property rights in connection with the Developments including, without limitation:

(i)   patents, inventions, discoveries and improvements;

(ii)   ideas, whether patentable or not;

(iii)   copyrights;

(iv)   trademarks;

(v)   trade secrets;

(vi)   industrial and artistic designs; and

(vii)   proprietary, possessory and ownership rights and interests of all kinds whatsoever;

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including, without limitation, the right to apply for registration or protection of any of the foregoing.

“Prospective Customers” means (i) any Entity solicited by the Executive on behalf of the Corporation for any purpose relating to the Business, and (ii) any Entity solicited by the Corporation with the Executive's knowledge for any purpose relating to the Business; provided that after termination of the Executive’s employment for any reason, Prospective Customers shall only include any Entity who was a Prospective Customer during the twelve (12) months preceding the date of the termination of the Executive’s employment.

“Territory” means Canada.

ARTICLE 2 - EMPLOYMENT

Section 2.1Position

On the terms and subject to the conditions hereinafter contained, the Executive will continue in the employ of the Corporation as its President and Chief Operating Officer.

Section 2.2Duties of Employment

The Executive shall report to and be subject to the general direction of the Chief Executive Officer of the Corporation (the “Reporting Officer”) and shall have such duties and responsibilities as are delegated to him by the Reporting Officer.

Section 2.3Full and Faithful Service

The Executive shall well and faithfully serve the Corporation and use his best efforts to promote the interests of the Corporation and during the term of this Agreement, the Executive shall devote his full time and energy to the Corporation and shall not, directly or indirectly, render services to any Entity other than services with regard to charitable or community service organizations, or any other organizations that are approved by the Corporation, provided such activities do not interfere with Executive’s duties hereunder. The Executive further acknowledges that he will comply with (i) the lawful policies and procedures established by the Corporation, from time to time, including any code of ethics or business conduct adopted by the Corporation (including any future revisions of such policies, procedures or other codes of business conduct), and (ii) all applicable laws, rules and regulations, and all requirements of all applicable regulatory, self-regulatory and administrative bodies.

Section 2.4Term

This Agreement shall be effective from the Effective Date and shall continue in effect until the date the Agreement is terminated in accordance with Article 4 hereof.

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ARTICLE 3 - REMUNERATION AND BENEFITS

Section 3.1Salary

The Corporation shall pay to the Executive a salary (the “Base Salary”) at the rate of $400,000 per annum, payable to the Executive in accordance with the payroll practices of the Corporation for its senior management as are in effect from time to time. The Executive’s Base Salary may be increased by the Reporting Officer from time to time and once increased shall thereafter be the Base Salary hereunder.

Section 3.2Bonus

The Executive shall be eligible to participate in the Corporation’s bonus plan for senior management (the “Bonus Plan”) in accordance with the terms and conditions of such plan. Such participation shall be at a level such that the Executive shall have the potential to receive, at target, a bonus of up to 75% of his Base Salary with a maximum bonus of up to 100% of his Base Salary based on achievement of the goals established pursuant to the Bonus Plan.

Section 3.3Stock Options

The Executive shall, subject to the terms and conditions of the stock option plan of the Corporation adopted in 2005 (as same may be amended from time to time), participate in such plan as determined by the Board of Directors of the Corporation.

Section 3.4Health and Insurance Benefits

The Executive shall be eligible to participate in such health, medical, dental, disability and life insurance coverage as the Corporation has in effect for its senior management from time to time.

Section 3.5Expenses

The Corporation will pay or reimburse the Executive for all reasonable travelling and other out-of-pocket expenses incurred by the Executive in connection with his employment hereunder in accordance with the policies of the Corporation in effect from time to time.

Section 3.6Vacation

During each full calendar year of this Agreement, the Executive will be entitled to four (4) weeks vacation with pay to be taken at a time(s) mutually agreeable to the Executive and the Corporation. The Executive will be allowed to carry forward any unused vacation time into the next year to the extent same is permitted by the policies of the Corporation or by the Reporting Officer.

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ARTICLE 4 - TERMINATION

Section 4.1Termination by the Corporation

This Agreement and the employment contemplated hereunder may (and in the case of Section 4.1(d), shall) be terminated, at any time, in the following manner and in the following circumstances:

(a)   by the Executive, by providing four (4)weeks written notice of resignation to the Corporation (the “Notice of Resignation Period”), in which case, subject to Section 4.1(b), this Agreement and the Executive’s employment shall terminate at the end of the Notice of Resignation Period;

(b)   during the Notice of Resignation Period, the Corporation may waive such Notice of Resignation Period, in whole or in part, in which case this Agreement and the Executive’s employment shall terminate immediately upon receipt by the Executive of a written notice from the Corporation;

(c)   by the Corporation, for Cause, in which case this Agreement and the Executive’s employment shall terminate immediately upon receipt of a written notice by the Executive from the Corporation setting out the cause for termination;

(d)   automatically without further notice, upon the death of the Executive, in which case the Executive’s employment and this Agreement shall terminate on the date of the Executive’s death;

(e)   by the Corporation, in the event of a material violation of this Agreement (other than one constituting Cause) by the Executive where such violation has not been cured within ten (10) working days following receipt of written notice thereof by the Executive from the Corporation. This Agreement and the Executive’s employment shall terminate ten (10) days following receipt by the Executive of written notice from the Corporation of a material violation of this Agreement (other than a material violation that constitutes Cause) if such material violation of this Agreement has not been cured to the satisfaction of the Corporation by the Executive;

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(f)   by the Corporation, without Cause and other than for the circumstances in Section 4.1(b), (d), (e) or (h), in which case this Agreement and the Executive’s employment shall terminate immediately upon receipt by the Executive of a written notice of termination from the Corporation;

(g)   by the Executive, within thirty (30) days of the occurrence of any event constituting Good Reason, in which case this Agreement and the Executive’s employment shall terminate immediately upon receipt by the Executive of a written notice of termination by the Executive; or

(h)   by the Corporation, in the event of frustration of this Agreement due to the Executive’s Disability, in which case this Agreement and the Executive’s employment shall terminate immediately upon receipt of a written notice by the Executive from the Corporation.

Section 4.2Payment Upon Termination

In the event the Executive’s employment is terminated pursuant to Section 4.1, the Executive shall only be entitled to the following compensation and benefits upon termination:

(a)   Should this Agreement be terminated pursuant to Section 4.1(a) or (b), the Executive shall only be entitled to (i) payment of the Executive’s Base Salary for the period from the date of termination by the Corporation to the end of the Notice of Resignation Period; (ii) continued health and welfare insurance benefits coverage in which the Executive was participating at the date of termination by the Corporation to the end of the Notice of Resignation Period; (iii) the value of the pro-rated vacation leave with pay for that portion of the calendar year up to the end of the Notice of Resignation Period and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive’s accrued vacation entitlement has not been used by him at the time of termination; (iv) any accrued but unpaid business expenses at the date of termination by the Corporation required to be reimbursed under Section 3.5 of this Agreement; and (v) any entitlements in accordance with the terms of any stock option plans in which he participated at the date of termination.

(b)   Should this Agreement be terminated pursuant to Section 4.1(c) or (e), the Executive shall only be entitled to (i) payment of the Executive's Base Salary earned up to the date of termination; (ii) the value of the pro-rated vacation leave with pay for that portion of the calendar year in which the employment of the Executive hereunder is terminated that the Executive was actively employed and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive’s accrued vacation entitlement has not been used by him at the time of termination; and (iii) any accrued but unpaid business expenses at the date of termination required to be reimbursed under Section 3.5 of this Agreement.

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(c)   Should this Agreement be terminated pursuant to Section 4.1(d) or Section 4.1(h), the Corporation’s only obligations shall be to:

(i)   pay to the Executive (w) any accrued but unpaid Base Salary for services rendered to the date of termination; (x) a bonus for that portion of the year in which the Executive was actively employed; (y) any accrued but unpaid expenses at the date of termination required to be reimbursed under Section 3.5 of this Agreement; and (z) the value of the pro-rated vacation leave with pay for that portion of the calendar year in which the employment of the Executive hereunder is terminated that the Executive was actively employed and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive’s accrued vacation entitlement has not been used by him at the time of termination. The amount of the bonus payable under this Section 4.2(c)(i) shall be calculated as follows: the product of (s) the average bonus paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by twelve (12), and (t) the number of months the Executive was actively employed in the fiscal year in which his employment is terminated. In the event the Executive’s employment is terminated in the first twelve (12) months following the Effective Date, the value of such bonus shall be calculated as follows: the product of (s) the target bonus (75% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated divided by twelve, and (t) the number of months the Executive was actively employed in the fiscal year in which his employment is terminated;

(ii)   pay to the Executive an amount equal to six (6) months of his Base Salary as at the date of termination, to be paid either by lump sum within thirty days of the date of termination or by way of salary continuance on the Corporation’s regular pay day, and in accordance with its payroll practices at the date of termination, as is determined by the Corporation;

(iii)   pay to the Executive an amount in lieu of the value of any annual bonus the Executive would have earned had he been employed for the six (6) months immediately following the date of termination. Such amount shall be paid six (6) months following the date of termination and shall be the average bonus (excluding any retention bonus) paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by two (2). In the event the Executive’s employment is terminated in the first twelve (12) months following the Effective Date, the value of such bonus shall be the target bonus (75% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated divided by two (2); and

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(iv)   continue the Executive’s entitlements in accordance with the terms of any stock option plans in which he participated at the date of termination.

(d)   Should the Agreement be terminated pursuant to Section 4.1(f) or Section 4.1(g), the Corporation’s only obligations shall be to:

(i)   pay to the Executive (w) any accrued but unpaid Base Salary for services rendered to the date of termination; (x) a bonus for that portion of the year in which the Executive was actively employed (excluding the Notice Period); (y) any accrued but unpaid expenses at the date of termination required to be reimbursed under Section 3.5 of this Agreement; and (z) the value of the pro-rated vacation leave with pay for that portion of the calendar year in which the employment of the Executive hereunder is terminated that the Executive was actively employed and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive’s accrued vacation entitlement has not been used by him at the time of termination. The amount of the bonus payable under this Section 4.2(d)(i) shall be calculated as follows: the product of (s) the average bonus paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by twelve (12), and (t) the number of months the Executive was actively employed (excluding the Notice Period) in the fiscal year in which his employment is terminated. In the event the Executive’s employment is terminated in the first twelve (12) months following the Effective Date, the amount of the bonus payable hereunder shall be calculated as follows: the product of (s) the target bonus (75% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated divided by twelve (12), and (t) the number of months the Executive was actively employed (excluding the Notice Period) in the fiscal year in which his employment is terminated;

(ii)   pay to the Executive an amount equal to twenty-four (24) months (the “Notice Period”) of his Base Salary as at the date of termination. Payment of the Executive’s Base Salary during the Notice Period shall be made either by lump sum within thirty days of the date of termination or by way of salary continuance on the Corporation’s regular pay day, and in accordance with its payroll practices at the date of termination, as is determined by the Corporation;

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(iii)   pay to the Executive an amount in lieu of the value of any annual bonus the Executive would have earned had he been employed for the length of the Notice Period. Such amount shall be paid at the end of the Notice Period and shall be calculated as follows: the product of (s) the average bonus (excluding any retention bonus) paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by twelve (12), and (t) the number of months in the Notice Period. In the event the Executive’s employment is terminated in the first twelve (12) months following the Effective Date, such bonus shall be calculated as follows: the product of (s) the target bonus (75% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated divided by twelve (12), and (t) the number of months in the Notice Period;

(iv)   continue the Executive’s participation in the health and welfare benefit plans (excluding short-term disability, long term disability benefits and life insurance coverage which shall cease on the date of termination) in which the Executive was participating at the date of termination, until the earlier of (x) the end of the Notice Period; or (y) the date the Executive becomes covered under the benefit plans of another employer. The Corporation’s obligation hereunder is conditional on the Executive continuing to pay his share of the premiums; and

(v)   continue the Executive’s entitlements in accordance with the terms of any stock option plans in which he participated at the date of termination.

Section 4.3Termination Upon a Change of Control

In lieu of and not in addition to the termination payments and benefits provided for in Section 4.2(d) herein, if within twelve (12) months following a Change of Control, the Executive’s employment with the Corporation is terminated for any reason whatsoever other than as a result of a termination pursuant to Section 4.1(a), (b), (c), (d), (e) or (h), the Corporation’s only obligations shall be to:

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(a)   pay to the Executive (i) any accrued but unpaid Base Salary for services rendered to the date of termination, (ii) a bonus for that portion of the year in which the Executive was actively employed (excluding the Notice Period); (iii) any accrued but unpaid expenses at the date of termination required to be reimbursed under Section 3.5 of this Agreement, and (iv) the value of the pro-rated vacation leave with pay for that portion of the calendar year in which the employment of the Executive hereunder is terminated that the Executive was actively employed and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive’s accrued vacation entitlement has not been used by him at the time of termination. The amount of the bonus payable under this Section 4.3(a) shall be calculated as follows: the product of (s) the average bonus paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by twelve (12), and (t) the number of months the Executive was actively employed (excluding the Notice Period) in the fiscal year in which his employment is terminated. In the event the Executive’s employment is terminated in the first twelve (12) months following the Effective Date, the amount of the bonus payable hereunder shall be calculated as follows: the product of (s) the target bonus (75% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated divided by twelve (12), and (t) the number of months the Executive was actively employed (excluding the Notice Period) in the fiscal year in which his employment is terminated; and

(b)   pay to the Executive, in a lump sum paymentthose amounts referenced in Section 4.2(d)(ii)and(iii), and continue those benefits and entitlements referenced in Section 4.2(d)(iv) and (v).

Section 4.4Mitigation

The Executive shall not be required to mitigate the amount of any payments or the entitlement to any benefits provided for under Section 4.2(d) or Section 4.3 by seeking other employment nor shall any payment or benefit provided for in such Section be reduced by any compensation or remuneration and/or benefits earned by the Executive as a result of employment by another employer or the rendering of services after the date of termination.

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Section 4.5Effect of Termination

Upon termination of his employment for any reason whatsoever, the Executive shall thereupon be deemed to have immediately resigned any position the Executive may have as an officer, director or employee of the Corporation together with any other office, position or directorship which the Executive may hold with any of the Corporation’s affiliates or related entities. In such event, the Executive shall, at the request of the Corporation, forthwith execute any and all documents appropriate to evidence such resignations. The Executive shall not be entitled to any payments in respect of such resignations in addition to those provided for herein.

Section 4.6Payment Upon Termination

Notwithstanding Section 4.2 and Section 4.3, the Executive shall not receive less than that which he is entitled to upon a termination of employment in accordance with applicable employment standards legislation. The payments referred to in Section 4.2(c)(ii), Section 4.2(d)(ii), and Section 4.3(b) are inclusive of any termination and/or severance payments that may be required under employment standards legislation and have been agreed upon with reference to the Executive’s length of service with the Corporation.

Section 4.7Release

The Executive agrees that payment by the Corporation of the amounts set out in Section 4.2(c), Section 4.2(d) or Section 4.3 shall be in full and final settlement of any and all actions, causes of actions, suits, claims, demands and entitlements whatsoever which the Executive has or may have against the Corporation, its affiliates and any of their respective directors, officers, employees, representatives, successors and assigns arising out of his hiring, his employment and the termination of his employment or this Agreement.

Section 4.8Suspension or Termination of Benefits and Compensation

In the event that the Executive has breached any provisions of ARTICLE 5, ARTICLE 6, ARTICLE 7 or ARTICLE 9, the Corporation shall have the right to suspend or terminate any or all remaining payments and/or benefits, if any, referenced in Section 4.2(d) and Section 4.3(b) of this Agreement, which are over and above the Executive’s entitlements upon termination of employment mandated by applicable employment standard legislation. Such suspension or termination of payments and/or benefits shall be in addition to and shall not limit any and all other rights and remedies as set out in Section 10.2 of this Agreement that the Corporation may have against the Executive.

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ARTICLE 5 - CONFIDENTIAL INFORMATION

Section 5.1Confidentiality

(1)   During the term of this Agreement and following the termination thereof, the Executive shall not use, divulge, diffuse, sell, transfer, give, circulate, or otherwise distribute to any Entity whatsoever or whomsoever, or otherwise make public, any Confidential Information.

(2)   Notwithstanding any provision of this Agreement to the contrary, the Executive shall have the right to use Confidential Information in relation to the performance of his duties, in which event, the Executive shall, at all times, take all reasonable measures in order to prevent the disclosure or non-authorized use of such Confidential Information.

(3)   Except when authorized in accordance with the performance of his duties, under no circumstances shall the Executive reproduce any Confidential Information without the prior written consent of the Reporting Officer. All reproductions of Confidential Information shall be governed by this Agreement and shall be treated as Confidential Information hereunder.

(4)   The Executive shall not publish or release or allow the publication or release of any material containing Confidential Information without the prior written consent of the Reporting Officer.

(5)   The Executive shall not install, copy or receive any Confidential Information into his own or any other computer or computer system not owned and controlled by the Corporation, without the express written permission of the Corporation. Where an Executive has received permission from the Board of Directors to so install, copy or receive Confidential Information, the Executive shall be solely responsible to the Corporation for the security of such Confidential Information and shall follow any and all directions given by the Corporation.

Section 5.2Corporation Property

Confidential Information (including any reproduction thereof) shall remain the sole property of the Corporation and shall be returned to the Corporation immediately upon request or upon the termination of the Executive’s employment, for any reason.

ARTICLE 6- NON-COMPETITION

Section 6.1Non-Competition

The Executive shall not, during the term of this Agreement and for a period of twenty-four (24) months following the termination of his employment, for any reason, on his own behalf or on behalf of any Entity, whether directly or indirectly, in any capacity whatsoever, alone, through or in connection with any Entity, carry on or be engaged in or have any financial or other interest in or be otherwise commercially involved in any endeavour, activity or business in all or part of the Territory which is competitive, in any way, with the Business.

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Section 6.2Exception

The Executive shall, however, not be in default under Section 6.1 by virtue of the Executive holding, strictly for portfolio purposes and as a passive investor, no more than one percent (1%) of the issued and outstanding shares of or any other interest in, any body corporate which is listed on any recognized stock exchange, the business of which body corporate is in competition, in whole or in part, with the Corporation.

ARTICLE 7 - NON-SOLICITATION

Section 7.1Non-Solicitation of Customers or Employees

The Executive shall not, during the term of this Agreement and for a period of twenty-four (24) months following the termination of his employment, for any reason, on his own behalf or on behalf of or in connection with any other Entity, without the prior written consent of the Corporation, directly or indirectly, in any capacity whatsoever, alone through or in connection with any Entity:

(a)   canvass or solicit the business of (or procure or assist the canvassing or soliciting of the business of) any Customer or Prospective Customer or customer of the Corporation’s affiliates for any purpose which is competitive with the Business; or

(b)   accept (or procure or assist the acceptance of) any business from any Customer or Prospective Customer or customer of the Corporation’s affiliates which business is competitive with the Business; or

(c)   supply (or procure or assist the supply of) any goods or services to any Customer or Prospective Customer or customer of the Corporation’s affiliates for any purpose which is competitive with the Business; or

(d)   employ, engage, offer employment or engagement to or solicit the employment or engagement of or otherwise entice away from the employment or engagement of the Corporation or any of its affiliates, any individual who is employed or engaged by the Corporation or any of its affiliates whether or not such individual would commit any breach of his contract or terms of employment or engagement by leaving the employ or the engagement of the Corporation or any of its affiliates; or

(e)   procure or assist any Entity to employ, engage, offer employment or engagement or solicit the employment or engagement of any individual who is employed or engaged by the Corporation or any of its affiliates or otherwise entice away from the employment or engagement of the Corporation or any of its affiliates any such individual.

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ARTICLE 8 - NON-DISPARAGEMENT

Section 8.1Non-Disparagement

The Executive covenants and agrees that he shall not engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks (including, without limitation, the repetition or distribution of derogatory rumours, allegations, negative reports or comments) which are disparaging, deleterious or damaging to the integrity, reputation or goodwill of the Corporation, its affiliates or its and their management.

ARTICLE 9 - INTELLECTUAL PROPERTY

Section 9.1Ownership of Intellectual Property

(1)   All rights, titles and interests in or to the Developments shall vest and are owned exclusively by the Corporation immediately on its creation and regardless of the stage of its completion. The Executive irrevocably grants, transfers and assigns to the Corporation all of his right, title and interest, if any, in any and all Developments, including rights to translation and reproductions in all forms or formats and all Intellectual Property Rights thereto, if any, and he agrees that the Corporation may copyright said materials in the Corporation's name and secure renewal, reissues and extensions of such copyrights for such periods of time as the law may permit.

(2)   At all times hereafter, the Executive agrees promptly to disclose to the Corporation all Developments, to execute separate written transfers or assignments to the Corporation at the Corporation's request, and to assist the Corporation in obtaining any Intellectual Property Right in Canada, the United States and in any other countries, on any Developments granted, transferred or assigned to the Corporation that the Corporation, in its sole discretion, seeks to register. The Executive also agrees to sign all documents, and do all things necessary to obtain such Intellectual Property Rights, to further assign them to the Corporation, and to reasonably protect the Corporation against infringement by other parties at the Corporation’s expense with the Corporation’s prior written approval.

(3)   The Executive shall keep complete, accurate, and authentic information and records on all Developments in the manner and form reasonably requested by the Reporting Officer. Such information and records, and all copies thereof, shall be the property of Corporation as to any Developments assigned to the Corporation. The Executive agrees to promptly surrender such information and records at the request of the Reporting Officer. All these materials will be Confidential Information upon their creation.

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Section 9.2Moral Rights

The Executive hereby irrevocably waives, in favour of the Corporation, its successors, assigns and nominees, all moral rights arising under the Copyright Act (Canada) as amended (or any successor legislation of similar effect) or similar legislation in any applicable jurisdiction, or at common law, to the full extent that such rights may be waived in each respective jurisdiction, that the Executive may have now or in the future with respect to the Developments.

ARTICLE 10 - RECOGNITION

Section 10.1Recognition

(1)   The Executive expressly recognizes that Articles 5, 6, 7 and 9 of this Agreement are of the essence of this Agreement, and that the Corporation would not have entered into this Agreement without the inclusion of the said Articles.

(2)   The Executive further recognizes and expressly acknowledges that: (i) the application of the Articles 5, 6, 7, 8 and 9 of this Agreement will not have the effect of prohibiting him from earning a living in a satisfactory manner in the event of the termination his employment and of this Agreement, and (ii) the Corporation would be subject to an irreparable prejudice should one or several of the said Articles be infringed, or should the Executive be in breach of any of his obligations thereunder.

(3)   The Executive further recognizes and expressly acknowledges that the Articles 5, 6, 7, 8 and 9 of this Agreement grant to the Corporation only such reasonable protection as is admittedly necessary to preserve the legitimate interests of the Corporation and the Executive equally recognizes, in this respect, that the description of the Business is reasonable.

Section 10.2Remedies

The Executive hereby recognizes and expressly acknowledges that the Corporation would be subject to irreparable harm should any of the provisions of Article 5, 6, 7 or 9 be infringed, or should any of the Executive's obligations thereunder be breached by the Executive, and that damages alone will be an inadequate remedy for any breach or violation thereof and that the Corporation, in addition to all other remedies, shall be entitled as a matter of right to equitable relief, including temporary or permanent injunction to restrain such breach.

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ARTICLE 11- CONFLICTING OBLIGATIONS

Section 11.1No Conflicting Obligations

The Executive represents and warrants to the Corporation that:

(a)   there exists no agreement or contract and he is not subject to any obligation, which restricts him from (i) being employed by the Corporation; or (ii) from performing the duties assigned to him pursuant to this Agreement; or (iii) from soliciting the clients or customers of a third party; or (iv) from using information within his knowledge or control which may be useful in the performance of his duties for the Corporation;

(b)   in the performance of his duties for the Corporation, he shall not improperly bring to the Corporation or use any trade secrets, confidential information or other proprietary information of any third party; and

(c)   he will not infringe the intellectual property rights of any third party.

Section 11.2Indemnity

The Executive acknowledges that the Corporation has relied upon the representations outlined in Section 11.1, above. The Executive agrees to indemnify and hold the Corporation, its directors, officers, employees, agents and/or consultants harmless against any and all claims, liabilities, losses, damages, costs, fees and/or expenses including reasonable legal fees incurred by the Corporation, its directors, officers, employees, agents and/or consultants by reason of an alleged violation by the Executive of any of the representations contained in Section 11.1 of this Agreement.

ARTICLE 12 - GENERAL

Section 12.1Notice Provisions

Except as otherwise expressly provided herein, all notices relating to this Agreement shall be in writing and either delivered by hand, courier service or facsimile transmission and addressed as follows:

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The Executive:Stephen Tapp

            [Address]  

The Corporation:161 Bay Street

BCE Place, Suite 2300

Toronto, Ontario M5J 2S1

Attention: Chief Executive Officer

Any address referred to in this Section 12.1 may be changed by notice given in accordance with the provisions of this Section. Any notice which is delivered by hand, courier service or facsimile transmission shall be effective when delivered.

Section 12.2Entire Agreement

This Agreement contains the entire agreement between the Corporation (or its affiliates) and the Executive and supersedes all previous negotiations, understandings and agreements whether verbal or written, with respect to the terms and conditions of employment between the Corporation and the Executive, including without limitation, the employment agreement between the Executive and Canadian Satellite Radio Inc. dated September 7, 2004.

Section 12.3Survival

It is expressly agreed by the parties hereto that the provisions of Articles 4, 5, 6, 7, 8, 9, 10, 11 and 12 shall survive the termination of this Agreement and the termination of the Executive’s employment, for any reason.

Section 12.4Privacy

By accepting employment with the Corporation, the Executive consents to the Corporation collecting, using and disclosing his personal information for purposes relating to the maintenance of the employment relationship. The purposes of the Corporation’s collection, use and disclosure include, but are not limited to:

(a)   ensuring that the Executive is properly remunerated for his services to the Corporation which shall include disclosure to third party payroll providers;

(b)   administering and/or facilitating the provision of any benefits to which the Executive is or may become entitled, including bonuses, benefits, pensions, registered retirement savings plan, short, medium and long-term incentive plans; this shall include the disclosure of the Executive’s personal information to the Corporation’s third party service providers and administrators;

(c)   ensuring that the Corporation is able to comply with any regulatory, reporting and withholding requirements relating to the Executive’s employment;

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(d)   performance and promotion;

(e)   monitoring the Executive’s access to and use of the Corporation’s electronic media services in order to ensure that the use of such services is in compliance with the Corporation’s policies and procedures and is not in violation of any applicable laws;

(f)   complying with the Corporation’s obligations to report improper or illegal conduct by any director, officer, employee or agent of the Corporation under any applicable securities, criminal or other law; and

(g)   any other purpose for which the Executive is given notice and which is reasonably related to the maintenance of the Executive’s employment relationship.

If the Executive’s specific consent to the collection, use or disclosure of his personal employee information is required under applicable law, the Executive hereby agrees to provide such consent. If the Executive refuses or withdraws his consent, the Executive acknowledges that his employment with the Corporation may be negatively affected.

Section 12.5Governing Law

This Agreement shall be governed by and interpreted in accordance with the laws of the Province of Ontario.

Section 12.6Successors and Assigns

This Agreement may not be assigned by the Executive. This Agreement and the rights and obligations hereunder may, without the further express consent of the Executive, be assigned by the Corporation to any Entity which succeeds to all or substantially all of the business, assets or property of the Corporation.

Section 12.7Execution of Further Documents

The Corporation and Executive agree that they shall, from time to time and at all times, do all such further acts and execute and deliver all such further documents and assurances as shall be reasonably required in order to fully perform and carry out the terms of this Agreement.

Section 12.8Amendments and Waivers

No supplement, modification, amendment or waiver of this Agreement shall be binding unless executed in writing by the Executive and the Corporation. No waiver of any of the provisions of this Agreement shall be deemed to constitute a waiver of any other provision (whether or not similar), nor shall such waiver constitute a waiver or continuing waiver unless otherwise expressly provided in writing duly the party to be bound thereby.

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Section 12.9Severability

In the event that any provision or any part of any provision hereof is deemed to be invalid by reason of the operation of any law or by reason of the interpretation placed thereon by a court, this Agreement shall be construed as not containing such provision or part of such provision and the invalidity of such provision or such part shall not affect the validity of any other provision or the remainder of such provision hereof. All other provisions hereof which are otherwise lawful and valid shall remain in full force and effect.

Section 12.10Legal Advice

The Executive acknowledges that he has been afforded the opportunity to obtain independent legal advice with respect to this Agreement and that he fully understands the nature and consequences of this Agreement.

Section 12.11Currency

All amounts expressed herein are in Canadian dollars unless otherwise noted and all payments hereunder are subject to all applicable and required deductions.

Section 12.12Preamble/Recital

The Executive and the Corporation acknowledge and agree that the provisions contained in the preamble/recital section of this Agreement shall form part of this Agreement and may be relied upon by either party.

Section 12.13Counterparts

This Agreement may be executed by the parties in one or more counterparts, each of which when so executed and delivered shall be deemed to be an original and such counterparts shall together constitute one and the same instrument.

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IN WITNESS WHEREOF the parties have caused this Agreement to be executed as of the effective date first above written.

CANADIAN SATELLITE RADIO INC.
Per:	/s/ John I. Bitove John I. Bitove

/s/ Stewart Lyons	/s/  Stephen Tapp
Stewart Lyons	Stephen Tapp
(Witness)

EX-10.8

EXHIBIT 10.8

EMPLOYMENT AGREEMENT

Employment Agreement dated December 5, 2005 (the “Effective Date”) between Canadian Satellite Radio Inc. (the “Corporation”) and Michael Washinushi (the “Executive”).

RECITALS

(a)   The Executive has been employed by the Corporation since November 14, 2005 in the position of Chief Financial Officer;

(b)   Canadian Satellite Radio Holdings Inc. (“CSR Holdings”), the parent of the Corporation, is conducting a public offering of subordinate voting shares of CSR Holdings (the “IPO”);

(c)   As a term of the IPO the Corporation and the Executive are required to enter into and be bound by the terms of this Agreement;

(d)   As a whole, this Agreement contains terms and conditions which are more favourable to the Executive than those presently applicable to him.

In consideration of the mutual covenants and agreements contained in this Agreement (the receipt and adequacy of which are acknowledged), the parties agree as follows.

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ARTICLE 1 - DEFINITIONS

Section 1.1Defined Terms.

As used in this Agreement, the following terms have the following meanings:

“Business” means (i) the business of providing subscription based satellite radio entertainment; and (ii) any other principle line business conducted by the Corporation after the Effective Date up to the termination of the Executive's employment.

“Cause” means:

(a)   a breach by the Executive of any of the restrictions or covenants contained in Articles 5, 6 and 7;

(b)   any material breach by the Executive of his obligations under any code of ethics, any other code of business conduct or any lawful policies or procedures of the Corporation; or

(c)   any act or omission of the Executive which would in law permit the Corporation, without notice or payment in lieu of notice, to terminate the employment of the Executive.

“Change of Control” means:

(a)   any sale, reorganization, amalgamation, merger or other transaction as a result of which an Entity or group of Entities acting jointly or in concert (whether by means of a shareholder agreement or otherwise) or Entities associated or affiliated with any such Entity or group within the meaning of the Business Corporations Act (Ontario), other than Canadian Satellite Radio Investments Inc., John Bitove, the Executive and his associates, becomes the owner, legal or beneficial, directly or indirectly, of fifty (50%) percent or more of the shares of the Corporation or exercises control or direction over fifty (50%) percent or more of the shares of the Corporation (other than solely involving the Corporation and one or more of its affiliates); or

(b)   a sale, lease or other disposition of all or substantially all of the property or assets of the Corporation other than to an affiliate which assumes all of the obligations of the Corporation in respect of the Executive including the assumption of this Agreement; or

(c)   a change in the composition of the Corporation's Board of Directors which occurs at a single meeting of the shareholders of the Corporation or upon the execution of a shareholder's resolution, such that individuals who are independent members of the Board of Directors immediately prior to such meeting or resolution cease to constitute a majority of the independent members of the Board of Directors, without the Board of Directors, as constituted immediately prior to such meeting or resolution, having approved of such change.

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“Confidential Information” means all information owned, possessed or controlled by the Corporation and/or its affiliates including, without limitation, all information related to developments, inventions, enhancements, financial, scientific, technical, manufacturing, process know-how and marketing information and all names of or lists of customers and suppliers howsoever received by the Executive from, through or relating to the Corporation and/or its affiliates and in whatever form (whether oral, written, machine readable or otherwise), which pertains to the Corporation and/or its affiliates; provided, however, that the phrase “Confidential Information” shall not include information which:

(a)   was in the public domain prior to the date of receipt by the Executive;

(b)   becomes part of the public domain by publication or otherwise, not due to any unauthorized act or omission of the Executive; or

(c)   the Executive is required by law to disclose, provided that, unless prohibited by law, the Executive first notifies the Reporting Officer (as defined herein) at the first reasonable opportunity that he is required to disclose such Confidential Information.

“Customer” means any Entity who has (i) purchased or licensed from the Corporation (with the Executive's knowledge) any product produced or service supplied, sold, licensed or distributed by the Corporation or, (ii) supplied to the Corporation (with the Executive's knowledge) any product to be produced, sold, licensed or distributed by the Corporation; provided that after the termination of the Executive's employment for any reason, Customers shall only include any Entity who was a Customer during the twelve (12) months preceding the date of the termination of the Executive's employment.

“Development” means any discovery, invention, design, improvement, concept, specification, creation, development, treatment, computer program, method, process, apparatus, specimen, formula, formulation, product, hardware or firmware, any drawing, report, memorandum, article, letter, notebook and any other work of authorship and ideas (whether or not patentable or copyrightable) and legally recognized proprietary rights (including, but not limited to, patents, copyrights, trademarks, topographies, know-how and trade secrets), and all records and copies of records relating to the foregoing, that:

(a)   result or derive from the Executive's employment or from the Executive's knowledge or use of Confidential Information;

(b)   are conceived or made by the Executive (individually or in collaboration with others) in the course of his employment;

(c)   result from or derive from the use or application of the resources of the Corporation; or

(d)   relate to the business operations of actual or demonstrably anticipated research and development by the Corporation.

“Disability” means the Executive's inability to substantially fulfil his duties on behalf of the Corporation for a continuous period of six (6) months or more or the Executive's inability to substantially fulfil his duties on behalf of the Corporation for an aggregate period of six (6) months or more during any consecutive twelve (12) month period, which the parties agree would cause undue hardship to the Corporation which cannot be accommodated; and if there is any disagreement between the Corporation and the Executive as to the Executive's Disability or as to the date any such Disability began or ended, the same shall be determined by a physician mutually acceptable to the Corporation and the Executive whose determination shall be conclusive evidence of any such Disability and of the date any such Disability began or ended.

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“Entity” means a natural person, partnership, limited liability partnership, corporation, joint stock company, trust, unincorporated association, joint venture or other entity or governmental entity, and pronouns have a similarly extended meaning.

“Good Reason” means constructive dismissal in accordance with the common law, provided, however that the following shall not constitute Good Reason for, the purposes of this Agreement:

(a)   any change or series of changes in the responsibilities, authority, status or reporting relationship of the Executive with the Corporation during the first eighteen (18) months from the Effective Date; or

(b)   a reduction by the Corporation in the Executive's annual Base Salary which is part of a general reduction in the Base Salary of all or substantially all of the senior executives of the Corporation which:

(i)   occurs during the first eighteen (18) months from the Effective Date;

(ii)   affects the Executive in substantially the same manner as the other senior executives who are also affected by such general reduction; and

(iii)   does not constitute more than fifteen percent (15%) of his Base Salary; or

(c)   any requirement by the Corporation that the Executive's principal office be relocated to any major urban centre in Canada, provided the Corporation reimburses the Executive for all reasonable relocation expenses.

“Intellectual Property Rights” means all worldwide intellectual and industrial property rights in connection with the Developments including, without limitation:

(i)   patents, inventions, discoveries and improvements;

(ii)   ideas, whether patentable or not;

(iii)   copyrights;

(iv)   trademarks;

(v)   trade secrets;

(vi)   industrial and artistic designs; and

(vii)   proprietary, possessory and ownership rights and interests of all kinds whatsoever;

including, without limitation, the right to apply for registration or protection of any of the foregoing.

“Prospective Customers” means (i) any Entity solicited by the Executive on behalf of the Corporation for any purpose relating to the Business, and (ii) any Entity solicited by the Corporation with the Executive's knowledge for any purpose relating to the Business; provided that after termination of the Executive's employment for any reason, Prospective Customers shall only include any Entity who was a Prospective Customer during the twelve (12) months preceding the date of the termination of the Executive's employment.

“Territory” means Canada.

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ARTICLE 2 - EMPLOYMENT

Section 2.1Position

On the terms and subject to the conditions hereinafter contained, the Executive will continue in the employ of the Corporation as its Chief Financial Officer.

Section 2.2Duties of Employment

The Executive shall report to and be subject to the general direction of the Chief Executive Officer of the Corporation (the “Reporting Officer”) and shall have such duties and responsibilities as are delegated to him by the Reporting Officer.

Section 2.3Full and Faithful Service

The Executive shall well and faithfully serve the Corporation and use his best efforts to promote the interests of the Corporation and during the term of this Agreement, the Executive shall devote his full time and energy to the Corporation and shall not, directly or indirectly, render services to any Entity other than services with regard to charitable or community service organizations, or any other organizations that are approved by the Corporation, provided such activities do not interfere with Executive's duties hereunder. The Executive further acknowledges that he will comply with (i) the lawful policies and procedures established by the Corporation, from time to time, including any code of ethics or business conduct adopted by the Corporation (including any future revisions of such policies, procedures or other codes of business conduct), and (ii) all applicable laws, rules and regulations, and all requirements of all applicable regulatory, self-regulatory and administrative bodies.

Section 2.4Term

This Agreement shall be effective from the Effective Date and shall continue in effect until the date the Agreement is terminated in accordance with Article 4 hereof.

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ARTICLE 3 - REMUNERATION AND BENEFITS

Section 3.1Salary

The Corporation shall pay to the Executive a salary (the “Base Salary”) at the rate of $250,000 per annum, payable to the Executive in accordance with the payroll practices of the Corporation for its senior management as are in effect from time to time. The Executive's Base Salary may be increased by the Reporting Officer from time to time and once increased shall thereafter be the Base Salary hereunder.

Section 3.2Bonus

The Executive shall be eligible to participate in the Corporation's bonus plan for senior management (the “Bonus Plan”) in accordance with the terms and conditions of such plan. Such participation shall be at a level such that the Executive shall have the potential to receive, at target, a bonus of up to 40% of his Base Salary with a maximum bonus of up to 60% of his Base Salary based on achievement of the goals established pursuant to the Bonus Plan.

Section 3.3Stock Options

The Executive shall, subject to the terms and conditions of the stock option plan of the Corporation adopted in 2005 (as same may be amended from time to time), participate in such plan as determined by the Board of Directors of the Corporation.

Section 3.4Health and Insurance Benefits

The Executive shall be eligible to participate in such health, medical, dental, disability and life insurance coverage as the Corporation has in effect for its senior management from time to time.

Section 3.5Expenses

The Corporation will pay or reimburse the Executive for all reasonable travelling and other out-of-pocket expenses incurred by the Executive in connection with his employment hereunder in accordance with the policies of the Corporation in effect from time to time.

Section 3.6Vacation

During each full calendar year of this Agreement, the Executive will be entitled to four (4) weeks vacation with pay to be taken at a time(s) mutually agreeable to the Executive and the Corporation. The Executive will be allowed to carry forward any unused vacation time into the next year to the extent same is permitted by the policies of the Corporation or by the Reporting Officer.

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ARTICLE 4 - TERMINATION

Section 4.1Termination by the Corporation

This Agreement and the employment contemplated hereunder may (and in the case of Subsection 4.1(d), shall) be terminated, at any time, in the following manner and in the following circumstances:

(a)   by the Executive, by providing four (4) weeks written notice of resignation to the Corporation (the “Notice of Resignation Period”), in which case, subject to Section 4.1(b), this Agreement and the Executive's employment shall terminate at the end of the Notice of Resignation Period;

(b)   during the Notice of Resignation Period, the Corporation may waive such Notice of Resignation Period, in whole or in part, in which case this Agreement and the Executive's employment shall terminate immediately upon receipt by the Executive of a written notice from the Corporation;

(c)   by the Corporation, for Cause, in which case this Agreement and the Executive's employment shall terminate immediately upon receipt of a written notice by the Executive from the Corporation setting out the cause for termination;

(d)   automatically without further notice, upon the death of the Executive, in which case the Executive's employment and this Agreement shall terminate on the date of the Executive's death;

(e)   by the Corporation, in the event of a material violation of this Agreement (other than one constituting Cause) by the Executive where such violation has not been cured within ten (10) working days following receipt of written notice thereof by the Executive from the Corporation. This Agreement and the Executive's employment shall terminate ten (10) days following receipt by the Executive of written notice from the Corporation of a material violation of this Agreement (other than a material violation that constitutes Cause) if such material violation of this Agreement has not been cured to the satisfaction of the Corporation by the Executive;

(f)   by the Corporation, without Cause and other than for the circumstances in subsection 4.1(b), (d), (e) or (h), in which case this Agreement and the Executive's employment shall terminate immediately upon receipt by the Executive of a written notice of termination from the Corporation;

(g)   by the Executive, within thirty (30) days of the occurrence of any event constituting Good Reason, in which case this Agreement and the Executive's employment shall terminate immediately upon receipt by the Executive of a written notice of termination by the Executive; or

(h)   by the Corporation, in the event of frustration of this Agreement due to the Executive's Disability, in which case this Agreement and the Executive's employment shall terminate immediately upon receipt of a written notice by the Executive from the Corporation.

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Section 4.2Payment Upon Termination

In the event the Executive's employment is terminated pursuant to Section 4.1, the Executive shall only be entitled to the following compensation and benefits upon termination:

(a)   Should this Agreement be terminated pursuant to Subsection 4.1(a) or (b), the Executive shall only be entitled to (i) payment of the Executive's Base Salary for the period from the date of termination by the Corporation to the end of the Notice of Resignation Period; (ii) continued health and welfare insurance benefits coverage in which the Executive was participating at the date of termination by the Corporation to the end of the Notice of Resignation Period; (iii) the value of the pro-rated vacation leave with pay for that portion of the calendar year up to the end of the Notice of Resignation Period and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive's accrued vacation entitlement has not been used by him at the time of termination; (iv) any accrued but unpaid business expenses at the date of termination by the Corporation required to be reimbursed under Section 3.5 of this Agreement; and (v) any entitlements in accordance with the terms of any stock option plans in which he participated at the date of termination.

(b)   Should this Agreement be terminated pursuant to Subsection 4.1(c) or (e), the Executive shall only be entitled to (i) payment of the Executive's Base Salary earned up to the date of termination; (ii) the value of the pro-rated vacation leave with pay for that portion of the calendar year in which the employment of the Executive hereunder is terminated that the Executive was actively employed and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive's accrued vacation entitlement has not been used by him at the time of termination; and (iii) any accrued but unpaid business expenses at the date of termination required to be reimbursed under Section 3.5 of this Agreement.

(c)   Should this Agreement be terminated pursuant to Subsection 4.1(d) or 4.1(h), the Corporation's only obligations shall be to:

(i)   pay to the Executive (w) any accrued but unpaid Base Salary for services rendered to the date of termination; (x) a bonus for that portion of the year in which the Executive was actively employed; (y) any accrued but unpaid expenses at the date of termination required to be reimbursed under Section 3.5 of this Agreement; and (z) the value of the pro-rated vacation leave with pay for that portion of the calendar year in which the employment of the Executive hereunder is terminated that the Executive was actively employed and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive's accrued vacation entitlement has not been used by him at the time of termination. The amount of the bonus payable under this Subsection 4.2(c)(i) shall be calculated as follows: the product of (s) the average bonus paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by twelve (12), and (t) the number of months the Executive was actively employed in the fiscal year in which his employment is terminated. In the event the Executive's employment is terminated in the first twelve (12) months following the Effective Date, the value of such bonus shall be calculated as follows: the product of (s) the target bonus (40% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated, divided by twelve, and (t) the number of months the Executive was actively employed in the fiscal year in which his employment is terminated;

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(ii)   pay to the Executive an amount equal to six (6) months of his Base Salary as at the date of termination, to be paid either by lump sum within thirty days of the date of termination or by way of salary continuance on the Corporation's regular pay day, and in accordance with its payroll practices at the date of termination, as is determined by the Corporation;

(iii)   pay to the Executive an amount in lieu of the value of any annual bonus the Executive would have earned had he been employed for the six (6) months immediately following the date of termination. Such amount shall be paid six (6) months following the date of termination and shall be the average bonus (excluding any retention bonus) paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by two (2). In the event the Executive's employment is terminated in the first twelve (12) months following the Effective Date, the value of such bonus shall be the target bonus (40% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated divided by two (2); and

(iv)   continue the Executive's entitlements in accordance with the terms of any stock option plans in which he participated at the date of termination.

(d)   Should the Agreement be terminated pursuant to Subsection 4.1(f) or 4.1(g), the Corporation's only obligations shall be to:

(i)   pay to the Executive (w) any accrued but unpaid Base Salary for services rendered to the date of termination; (x) a bonus for that portion of the year in which the Executive was actively employed (excluding the Notice Period); (y) any accrued but unpaid expenses at the date of termination required to be reimbursed under Section 3.5 of this Agreement; and (z) the value of the pro-rated vacation leave with pay for that portion of the calendar year in which the employment of the Executive hereunder is terminated that the Executive was actively employed and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive's accrued vacation entitlement has not been used by him at the time of termination. The amount of the bonus payable under this Subsection 4.2(d)(i) shall be calculated as follows: the product of (s) the average bonus paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by twelve (12), and (t) the number of months the Executive was actively employed (excluding the Notice Period) in the fiscal year in which his employment is terminated. In the event the Executive's employment is terminated in the first twelve (12) months following the Effective Date, the amount of the bonus payable hereunder shall be calculated as follows: the product of (s) the target bonus (40% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated divided by twelve (12), and (t) the number of months the Executive was actively employed (excluding the Notice Period) in the fiscal year in which his employment is terminated;

(ii)   pay to the Executive an amount equal to twelve (12) months (the “Notice Period”) of his Base Salary as at the date of termination. Payment of the Executive's Base Salary during the Notice Period shall be made either by lump sum within thirty days of the date of termination or by way of salary continuance on the Corporation's regular pay day, and in accordance with its payroll practices at the date of termination, as is determined by the Corporation;

(iii)   pay to the Executive an amount in lieu of the value of any annual bonus the Executive would have earned had he been employed for the length of the Notice Period. Such amount shall be paid at the end of the Notice Period and shall be calculated as follows: the product of (s) the average bonus (excluding any retention bonus) paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by twelve (12), and (t) the number of months in the Notice Period. In the event the Executive's employment is terminated in the first twelve (12) months following the Effective Date, the value of such bonus shall be calculated as follows: the product of (s) the target bonus (40% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated divided by twelve (12), and (t) the number of months in the Notice Period;

(iv)   continue the Executive's participation in the health and welfare benefit plans (excluding short-term disability, long term disability benefits and life insurance coverage which shall cease on the date of termination) in which the Executive was participating at the date of termination, until the earlier of (x) the end of the Notice Period; or (y) the date the Executive becomes covered under the benefit plans of another employer. The Corporation's obligation hereunder is conditional on the Executive continuing to pay his share of the premiums; and

(v)   continue the Executive's entitlements in accordance with the terms of any stock option plans in which he participated at the date of termination.

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Section 4.3Termination Upon a Change of Control

In lieu of and not in addition to the termination payments and benefits provided for in Section 4.2(d) herein, if within twelve (12) months following a Change of Control, the Executive's employment with the Corporation is terminated for any reason whatsoever other than as a result of a termination pursuant to Subsection 4.1(a), (b), (c), (d), (e) or (h), the Corporation's only obligations shall be to:

(a)   pay to the Executive (i) any accrued but unpaid Base Salary for services rendered to the date of termination, (ii) a bonus for that portion of the year in which the Executive was actively employed (excluding the Change of Control Notice Period, as defined below); (iii) any accrued but unpaid expenses at the date of termination required to be reimbursed under Section 3.5 of this Agreement, and (iv) the value of the pro-rated vacation leave with pay for that portion of the calendar year in which the employment of the Executive hereunder is terminated that the Executive was actively employed and any vacation from previous years carried forward in accordance with Section 3.6 of this Agreement, to the extent the Executive's accrued vacation entitlement has not been used by him at the time of termination. The amount of the bonus payable under this Subsection 4.3(a) shall be calculated as follows: the product of (s) the average bonus paid to the Executive for the three (3) fiscal years prior to the fiscal year in which his employment is terminated divided by twelve (12), and (t) the number of months the Executive was actively employed (excluding the Change of Control Notice Period, as defined below) in the fiscal year in which his employment is terminated. In the event the Executive's employment is terminated in the first twelve (12) months following the Effective Date, the amount of the bonus payable hereunder shall be calculated as follows: the product of (s) the target bonus (40% of Base Salary) that the Executive would have been entitled to receive in the year his employment was terminated divided by twelve (12), and (t) the number of months the Executive was actively employed (excluding the Change of Control Notice Period, as defined below) in the fiscal year in which his employment is terminated; and

(b)   pay to the Executive those amounts and provide the benefits referenced in Subsections 4.2(c)(ii), (iii) and (iv) above, calculated as if the Notice Period was eighteen (18) months (the “Change of Control Notice Period”) rather than twelve (12) months.

Section 4.4Mitigation

The Executive shall not be required to mitigate the amount of any payments or the entitlement to any benefits provided for under Section 4.2(d) or 4.3 or by seeking other employment nor shall any payment or benefit provided for in such Section be reduced by any compensation or remuneration and/or benefits earned by the Executive as a result of employment by another employer or the rendering of services after the date of termination.

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Section 4.5 Effect of Termination

Upon termination of his employment for any reason whatsoever, the Executive shall thereupon be deemed to have immediately resigned any position the Executive may have as an officer, director or employee of the Corporation together with any other office, position or directorship which the Executive may hold with any of the Corporation's affiliates or related entities. In such event, the Executive shall, at the request of the Corporation, forthwith execute any and all documents appropriate to evidence such resignations. The Executive shall not be entitled to any payments in respect of such resignations in addition to those provided for herein.

Section 4.6Payment Upon Termination

Notwithstanding Sections 4.2 and 4.3, the Executive shall not receive less than that which he is entitled to upon a termination of employment in accordance with applicable employment standards legislation. The payments referred to in Subsections 4.2(c)(ii), 4.2(d)(ii) and 4.3(b) are inclusive of any termination and/or severance payments that may be required under employment standards legislation and have been agreed upon with reference to the Executive's length of service with the Corporation.

Section 4.7Release

The Executive agrees that payment by the Corporation of the amounts set out in Subsection 4.2(c), Subsection 4.2(d) or Section 4.3 shall be in full and final settlement of any and all actions, causes of actions, suits, claims, demands and entitlements whatsoever which the Executive has or may have against the Corporation, its affiliates and any of their respective directors, officers, employees, representatives, successors and assigns arising out of his hiring, his employment and the termination of his employment or this Agreement.

Section 4.8Suspension or Termination of Benefits and Compensation

In the event that the Executive has breached any provisions of Section 5, 6, 7 or 9, the Corporation shall have the right to suspend or terminate any or all remaining payments and/or benefits, if any, referenced in Sections 4.2(d) and 4.3(d) of this Agreement, which are over and above the Executive's entitlements upon termination of employment mandated by applicable employment standard legislation. Such suspension or termination of payments and/or benefits shall be in addition to and shall not limit any and all other rights and remedies as set out in Section 10.2 of this Agreement that the Corporation may have against the Executive.

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ARTICLE 5 - CONFIDENTIAL INFORMATION

Section 5.1Confidentiality

(1)   During the term of this Agreement and following the termination thereof, the Executive shall not use, divulge, diffuse, sell, transfer, give, circulate, or otherwise distribute to any Entity whatsoever or whomsoever, or otherwise make public, any Confidential Information.

(2)   Notwithstanding any provision of this Agreement to the contrary, the Executive shall have the right to use Confidential Information in relation to the performance of his duties, in which event, the Executive shall, at all times, take all reasonable measures in order to prevent the disclosure or non-authorized use of such Confidential Information.

(3)   Except when authorized in accordance with the performance of his duties, under no circumstances shall the Executive reproduce any Confidential Information without the prior written consent of the Reporting Officer. All reproductions of Confidential Information shall be governed by this Agreement and shall be treated as Confidential Information hereunder.

(4)   The Executive shall not publish or release or allow the publication or release of any material containing Confidential Information without the prior written consent of the Reporting Officer.

(5)   The Executive shall not install, copy or receive any Confidential Information into his own or any other computer or computer system not owned and controlled by the Corporation, without the express written permission of the Corporation. Where an Executive has received permission from the Board of Directors to so install, copy or receive Confidential Information, the Executive shall be solely responsible to the Corporation for the security of such Confidential Information and shall follow any and all directions given by the Corporation.

Section 5.2Corporation Property

Confidential Information (including any reproduction thereof) shall remain the sole property of the Corporation and shall be returned to the Corporation immediately upon request or upon the termination of the Executive's employment, for any reason.

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ARTICLE 6 - NON-COMPETITION

Section 6.1Non-Competition

The Executive shall not, during the term of this Agreement and for a period of twelve (12) months following the termination of his employment, for any reason, on his own behalf or on behalf of any Entity, whether directly or indirectly, in any capacity whatsoever, alone, through or in connection with any Entity, carry on or be engaged in or have any financial or other interest in or be otherwise commercially involved in any endeavour, activity or business in all or part of the Territory which is competitive, in any way, with the Business.

Section 6.2Exception

The Executive shall, however, not be in default under Section 6.1 by virtue of the Executive holding, strictly for portfolio purposes and as a passive investor, no more than one percent (1%) of the issued and outstanding shares of or any other interest in, any body corporate which is listed on any recognized stock exchange, the business of which body corporate is in competition, in whole or in part, with the Corporation.

ARTICLE 7 - NON-SOLICITATION

Section 7.1Non-Solicitation of Customers or Employees

The Executive shall not, during the term of this Agreement and for a period of twelve (12) months following the termination of his employment, for any reason, on his own behalf or on behalf of or in connection with any other Entity, without the prior written consent of the Corporation, directly or indirectly, in any capacity whatsoever, alone through or in connection with any Entity:

(a)   canvass or solicit the business of (or procure or assist the canvassing or soliciting of the business of) any Customer or Prospective Customer or customer of the Corporation's affiliates for any purpose which is competitive with the Business; or

(b)   accept (or procure or assist the acceptance of) any business from any Customer or Prospective Customer or customer of the Corporation's affiliates which business is competitive with the Business; or

(c)   supply (or procure or assist the supply of) any goods or services to any Customer or Prospective Customer or customer of the Corporation's affiliates for any purpose which is competitive with the Business; or

(d)   employ, engage, offer employment or engagement to or solicit the employment or engagement of or otherwise entice away from the employment or engagement of the Corporation or any of its affiliates, any individual who is employed or engaged by the Corporation or any of its affiliates whether or not such individual would commit any breach of his contract or terms of employment or engagement by leaving the employ or the engagement of the Corporation or any of its affiliates; or

(e)   procure or assist any Entity to employ, engage, offer employment or engagement or solicit the employment or engagement of any individual who is employed or engaged by the Corporation or any of its affiliates or otherwise entice away from the employment or engagement of the Corporation or any of its affiliates any such individual.

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ARTICLE 8 - NON-DISPARAGEMENT

Section 8.1Non-Disparagement

The Executive covenants and agrees that he shall not engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks (including, without limitation, the repetition or distribution of derogatory rumours, allegations, negative reports or comments) which are disparaging, deleterious or damaging to the integrity, reputation or goodwill of the Corporation, its affiliates or its and their management.

ARTICLE 9 - INTELLECTUAL PROPERTY

Section 9.1Ownership of Intellectual Property

(1)   All rights, titles and interests in or to the Developments shall vest and are owned exclusively by the Corporation immediately on its creation and regardless of the stage of its completion. The Executive irrevocably grants, transfers and assigns to the Corporation all of his right, title and interest, if any, in any and all Developments, including rights to translation and reproductions in all forms or formats and all Intellectual Property Rights thereto, if any, and he agrees that the Corporation may copyright said materials in the Corporation's name and secure renewal, reissues and extensions of such copyrights for such periods of time as the law may permit.

(2)   At all times hereafter, the Executive agrees promptly to disclose to the Corporation all Developments, to execute separate written transfers or assignments to the Corporation at the Corporation's request, and to assist the Corporation in obtaining any Intellectual Property Right in Canada, the United States and in any other countries, on any Developments granted, transferred or assigned to the Corporation that the Corporation, in its sole discretion, seeks to register. The Executive also agrees to sign all documents, and do all things necessary to obtain such Intellectual Property Rights, to further assign them to the Corporation, and to reasonably protect the Corporation against infringement by other parties at the Corporation's expense with the Corporation's prior written approval.

(3)   The Executive shall keep complete, accurate, and authentic information and records on all Developments in the manner and form reasonably requested by the Reporting Officer. Such information and records, and all copies thereof, shall be the property of Corporation as to any Developments assigned to the Corporation. The Executive agrees to promptly surrender such information and records at the request of the Reporting Officer. All these materials will be Confidential Information upon their creation.

Section 9.2Moral Rights

The Executive hereby irrevocably waives, in favour of the Corporation, its successors, assigns and nominees, all moral rights arising under the Copyright Act (Canada) as amended (or any successor legislation of similar effect) or similar legislation in any applicable jurisdiction, or at common law, to the full extent that such rights may be waived in each respective jurisdiction, that the Executive may have now or in the future with respect to the Developments.

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ARTICLE 10 - RECOGNITION

Section 10.1Recognition

(1)   The Executive expressly recognizes that Articles 5, 6, 7 and 9 of this Agreement are of the essence of this Agreement, and that the Corporation would not have entered into this Agreement without the inclusion of the said Articles.

(2)   The Executive further recognizes and expressly acknowledges that (i) the application of the Articles 5, 6, 7, 8 and 9 of this Agreement will not have the effect of prohibiting him from earning a living in a satisfactory manner in the event of the termination his employment and of this Agreement, and (ii) the Corporation would be subject to an irreparable prejudice should one or several of the said Articles be infringed, or should the Executive be in breach of any of his obligations thereunder.

(3)   The Executive further recognizes and expressly acknowledges that the Articles 5, 6, 7, 8 and 9 of this Agreement grant to the Corporation only such reasonable protection as is admittedly necessary to preserve the legitimate interests of the Corporation and the Executive equally recognizes, in this respect, that the description of the Business is reasonable.

Section 10.2Remedies

The Executive hereby recognizes and expressly acknowledges that the Corporation would be subject to irreparable harm should any of the provisions of Article 5, 6, 7 or 9, be infringed, or should any of the Executive's obligations thereunder be breached by the Executive, and that damages alone will be an inadequate remedy for any breach or violation thereof and that the Corporation, in addition to all other remedies, shall be entitled as a matter of right to equitable relief, including temporary or permanent injunction to restrain such breach.

15

ARTICLE 11 - CONFLICTING OBLIGATIONS

Section 11.1No Conflicting Obligations

The Executive represents and warrants to the Corporation that:

(a)   there exists no agreement or contract and he is not subject to any obligation, which restricts him from (i) being employed by the Corporation; or (ii) from performing the duties assigned to him pursuant to this Agreement; or (iii) from soliciting the clients or customers of a third party; or (iv) from using information within his knowledge or control which may be useful in the performance of his duties for the Corporation;

(b)   in the performance of his duties for the Corporation, he shall not improperly bring to the Corporation or use any trade secrets, confidential information or other proprietary information of any third party; and

(c)   he will not infringe the intellectual property rights of any third party.

Section 11.2Indemnity

The Executive acknowledges that the Corporation has relied upon the representations outlined in Section 11.1, above. The Executive agrees to indemnify and hold the Corporation, its directors, officers, employees, agents and/or consultants harmless against any and all claims, liabilities, losses, damages, costs, fees and/or expenses including reasonable legal fees incurred by the Corporation, its directors, officers, employees, agents and/or consultants by reason of an alleged violation by the Executive of any of the representations contained in Section 11.1 of this Agreement.

16

ARTICLE 12 - GENERAL

Section 12.1Notice Provisions

Except as otherwise expressly provided herein, all notices relating to this Agreement shall be in writing and either delivered by hand, courier service or facsimile transmission and addressed as follows:

The Executive:	Michael Washinushi [Address]
The Corporation:	161 Bay Street BCE Place, Suite 2300 Toronto, Ontario M5J 2S1 Attention: Chief Executive Officer

Any address referred to in this Section 12.1 may be changed by notice given in accordance with the provisions of this Section. Any notice which is delivered by hand, courier service or facsimile transmission shall be effective when delivered.

Section 12.2Entire Agreement

This Agreement contains the entire agreement between the Corporation and the Executive and supersedes all previous negotiations, understandings and agreements whether verbal or written, with respect to the terms and conditions of employment between the Corporation and the Executive.

17

Section 12.3Survival

It is expressly agreed by the parties hereto that the provisions of Articles 4, 5, 6, 7, 8, 9, 10, 11 and 12 shall survive the termination of this Agreement and the termination of the Executive's employment, for any reason.

Section 12.4Privacy

By accepting employment with the Corporation, the Executive consents to the Corporation collecting, using and disclosing his personal information for purposes relating to the maintenance of the employment relationship. The purposes of the Corporation's collection, use and disclosure include, but are not limited to:

(a)   ensuring that the Executive is properly remunerated for his services to the Corporation which shall include disclosure to third party payroll providers;

(b)   administering and/or facilitating the provision of any benefits to which the Executive is or may become entitled, including bonuses, benefits, pensions, registered retirement savings plan, short, medium and long-term incentive plans; this shall include the disclosure of the Executive's personal information to the Corporation's third party service providers and administrators;

(c)   ensuring that the Corporation is able to comply with any regulatory, reporting and withholding requirements relating to the Executive's employment;

(d)   performance and promotion;

(e)   monitoring the Executive's access to and use of the Corporation's electronic media services in order to ensure that the use of such services is in compliance with the Corporation's policies and procedures and is not in violation of any applicable laws;

(f)   complying with the Corporation's obligations to report improper or illegal conduct by any director, officer, employee or agent of the Corporation under any applicable securities, criminal or other law; and

(g)   any other purpose for which the Executive is given notice and which is reasonably related to the maintenance of the Executive's employment relationship.

If the Executive's specific consent to the collection, use or disclosure of his personal employee information is required under applicable law, the Executive hereby agrees to provide such consent. If the Executive refuses or withdraws his consent, the Executive acknowledges that his employment with the Corporation may be negatively affected.

18

Section 12.5Governing Law

This Agreement shall be governed by and interpreted in accordance with the laws of the Province of Ontario.

Section 12.6Successors and Assigns

This Agreement may not be assigned by the Executive. This Agreement and the rights and obligations hereunder may, without the further express consent of the Executive, be assigned by the Corporation to any Entity which succeeds to all or substantially all of the business, assets or property of the Corporation.

Section 12.7Execution of Further Documents

The Corporation and Executive agree that they shall, from time to time and at all times, do all such further acts and execute and deliver all such further documents and assurances as shall be reasonably required in order to fully perform and carry out the terms of this Agreement.

Section 12.8Amendments and Waivers

No supplement, modification, amendment or waiver of this Agreement shall be binding unless executed in writing by the Executive and the Corporation. No waiver of any of the provisions of this Agreement shall be deemed to constitute a waiver of any other provision (whether or not similar), nor shall such waiver constitute a waiver or continuing waiver unless otherwise expressly provided in writing duly the party to be bound thereby.

Section 12.9Severability

In the event that any provision or any part of any provision hereof is deemed to be invalid by reason of the operation of any law or by reason of the interpretation placed thereon by a court, this Agreement shall be construed as not containing such provision or part of such provision and the invalidity of such provision or such part shall not affect the validity of any other provision or the remainder of such provision hereof. All other provisions hereof which are otherwise lawful and valid shall remain in full force and effect.

19

Section 12.10Legal Advice

The Executive acknowledges that he has been afforded the opportunity to obtain independent legal advice with respect to this Agreement and that he fully understands the nature and consequences of this Agreement.

Section 12.11Currency

All amounts expressed herein are in Canadian dollars unless otherwise noted and all payments hereunder are subject to all applicable and required deductions.

Section 12.12Preamble/Recital

The Executive and the Corporation acknowledge and agree that the provisions contained in the preamble/recital section of this Agreement shall form part of this Agreement and may be relied upon by either party.

Section 12.13Counterparts

This Agreement may be executed by the parties in one or more counterparts, each of which when so executed and delivered shall be deemed to be an original and such counterparts shall together constitute one and the same instrument.

20

IN WITNESS WHEREOF the parties have caused this Agreement to be executed as of the effective date first above written.

CANADIAN SATELLITE RADIO INC.
Per:	/s/ John I. Bitove
	John I. Bitove

/s/ Stewart Lyons	/s/ Michael Washinushi
Stewart Lyons	Michael Washinushi
Witness

EX-21.1

EXHIBIT 21.1

CANADIAN SATELLITE RADIO HOLDINGS INC.

LIST OF SUBSIDIARIES

·   Canadian Satellite Radio Inc.

EX-23.1

             EXHIBIT 23.1

CONSENT OF STIKEMAN ELLIOTT LLP

See Exhibit 5.1.

EX-23.2

EXHIBIT 23.2

COVINGTON & BURLING

1330 Avenue of the Americas	NEW YORK
New York, NY  10019	WASHINGTON
Tel: 212.841.1000	SAN FRANCISCO
Fax: 212.841.1010	LONDON
www.cov.com	BRUSSELS

  June 27, 2006

Canadian Satellite Radio Holdings Inc.

Suite 2300, Canada Trust Tower

BCE Place, 161 Bay Street

Toronto, Ontario, Canada

M5J 2S1

Re:Canadian Satellite Radio Holdings Inc.—

12.75% Senior Notes due February 15, 2014

Ladies and Gentlemen:

We have acted as special United States counsel to Canadian Satellite Radio Holdings Inc., a company amalgamated under the laws of the Province of Ontario (the “Company”), in connection with the offering by the Company of up to US$100,000,000 of new 12.75% Senior Notes due February 15, 2014 (the “Exchange Notes”) in exchange for the Company’s outstanding 12.75% Senior Notes due February 15, 2014 issued on February 10, 2006 (the “Original Notes”). The Company has filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”), a Registration Statement on Form F-4 (the “Registration Statement”) relating to the Company’s offer to exchange the Exchange Notes for the Original Notes as set forth in the prospectus forming a part of the Registration Statement (the “Prospectus”).

We hereby consent to the reference to our firm under the heading “Legal Matters” in the Prospectus. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.

 Very truly yours,
 

/s/ Covington & Burling

Covington & Burling

                                    
60;                        

EX-23.3

EXHIBIT 23.3

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Amendment No. 1 to the Registration Statement on Form F-4 (No. 333-134004) of Canadian Satellite Radio Holdings Inc. of our report dated December 2, 2005, except for notes1,4,7,9, and 11 which are as of  April 13, 2006, relating to the financial statements, which appear in such Registration Statement. We also consent to the references to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP 

Toronto, Canada

June 28, 2006.

EX-23.4

EXHIBIT 23.4

[LETTERHEAD OF BORDEN LADNER GERVAIS LLP]

June 27, 2006

Canadian Satellite Radio Holdings Inc.

Suite 2300, Canada Trust Tower

BCE Place, 161 Bay Street

Toronto, Ontario, Canada

M5J 2S1

Ladies and Gentlemen:

Re: Canadian Satellite Radio Holdings Inc. — 12.75% Senior Notes Due February 15, 2014

We have acted as Canadian tax counsel to Canadian Satellite Radio Holdings Inc. (the “Company”), a company amalgamated under the laws of the Province of Ontario, in connection with the Company’s new 12.75% Senior Notes due February 15, 2014 (the “Exchange Notes”) in aggregate principal amount of up to US$100,000,000. The Company has filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”), a Registration Statement on Form F-4 (the “Registration Statement”) relating to the Company’s offer to exchange the Exchange Notes for all of its outstanding 12.75% Senior Notes due February 15, 2014 issued on February 10, 2006 as set forth in the prospectus forming a part of the Registration Statement (the “Prospectus”).

We hereby consent to the reference to our firm under the heading “Legal Matters” in the Prospectus. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.

Very truly yours,

/s/ Borden Lander Gervais LLP

Borden Ladner Gervais LLP

EX-25.1

EXHIBIT 25.1

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY

UNDER THE TRUST INDENTURE ACT OF 1939 OF A

CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE

ELIGIBILITY OF A TRUSTEE PURSUANT TO

SECTION 305 (B) (2)

THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK

(Exact name of trustee as specified in its charter)

New York	13-5691211
(Jurisdiction of incorporation or organization if not a U.S. national bank)	( I.R.S. employer Identification number)
One Liberty Plaza New York, N.Y.	10006
(Address of principal executive office)	( Zip code)
N/A Name, address and telephone number of agent for service Canadian Satellite Radio Holdings Inc. (Exact name of obligor as specified in its charter) Canada (State or other jurisdiction of incorporation or organization) N/A (I.R.S. employer identification no.) BCE Place, 161 Bay Street Suite 2300
Toronto, ON, Canada	M5J 2S1
(Address of principal executive offices)	(Postal Code)
Senior Notes (Title of the indenture securities)

1

Item 1.	General Information
	Furnish the following information as to the trustee:
	(a) Name and address of each examining or supervising authority to which it is subject.
	Board of Governors of the Federal Reserve System
	Washington, D.C.
	State of New York Banking Department
	State House, Albany, N.Y.
	(b) Whether it is authorized to exercise corporate trust powers.
	The Trustee is authorized to exercise corporate trust powers.
Item 2.	Affiliation with the Obligor.
	If the obligor is an affiliate of the trustee, describe each such affiliation.
	The obligor is not an affiliate of the Trustee.
Item 3  through Item 15. Not applicable.
Item 16.	List of Exhibits.
	List below all exhibits filed as part of this statement of eligibility.
	Exhibit 1 -  Copy of the Organization Certificate of the Trustee as now in effect.
	(Exhibit 1 to T-1 to Registration Statement No. 333-6688).
	Exhibit 2 -  Copy of the Certificate of Authority of the Trustee to commerce business.
	(Exhibit 2 to T-1 to Registration Statement No. 333-6688).
	Exhibit 3 -  None; authorization to exercise corporate trust powers is contained in
	the documents identified above as Exhibit 1 and 2.
	Exhibit 4 -  Copy of the existing By-Laws of the Trustee.
	(Exhibit 4 to T-1 to Registration Statement No. 333-6688).
	Exhibit 5 -  Not applicable.
	Exhibit 6 -  The consent of the Trustee required by Section 321 (b) of the Trust Indenture Act of 1939.
	(Exhibit 6 to T-1 to Registration Statement No. 333-27685).
	Exhibit 7 -  Copy of the latest Report of Condition of the Trustee as of December 31, 2005

2

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, The Bank of Nova Scotia Trust Company of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York, and State of New York, on the 22nd day of April, 2006.

THE BANK OF NOVA SCOTIA TRUST  COMPANY OF NEW YORK
By:	/s/ John F. Neylan
	John F. Neylan
	Trust Officer

3

The Bank of Nova Scotia Trust Company of New York

Legal Title of Bank

New York

City

New York 10006

State    Zip Code

FDIC Certificate Number /_/_/_/_/_/

Consolidated Report of Condition for Insured Commercial

and State-Chartered Savings Banks for December 31, 2005

All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter.

SCHEDULE RC-BALANCE SHEET

Dollar Amounts in Thousands		RCON	Bil	Mil	Thou
ASSETS
1.Cash and balances due from depository institutions (from Schedule RC-A):
a.Noninterest-bearing balances and currency and coin(1)		0081			202	1.a.
b. Interest-bearing balances(2)		0071		6	000	1.b.
2.Securities:
a.Held-to-maturity securities (from Schedule RC-B, column A)		1754		6	861	2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)		1773			0	2.b.
3.Federal funds sold and securities purchased under agreement to resell		1350
a.Federal Funds sold		B987			000	3.a.
b.Securities purchased under agreements to resell(3)		B989		1	000	3.b.
4.Loans and lease financing receivable (from Schedule RC-C):
a.Loans and leases held for sale		5369			0	4.a.
b. Loans and leases, net of unearned income	B528					4.b.
c.LESS: Allowance for loan and lease losses	3123					4.c.
d.Loans and leases, net of unearned income and allowance (item 4.b minus 4.c)		B529			0	4.d.
5.Trading assets (from Schedule RC-D)		3545			0	5.
6.Premises and fixed assets (including capitalized leases)		2145			0	6.
7.Other real estate owned (from Schedule RC-M)		2150			0	7.
8.Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M)		2130			0	8.
9.Customers' liability to this bank on acceptances outstanding		2155			0	9.
10.Intangible assets:
a.Goodwill		3163			0	10.a.
b.Other intangible assets (from Schedule RC-M)		0426			0	10.b.
11.Other assets (from Schedule RC-F)		2160			91	11.
12.Total assets (sum of items 1 through 11)		2170		14	154	12.

_____

(1) Includes cash items in process of collection and unposted debits.

(2) Includes time certificates of deposit not held for trading.

(3) Includes all securities resale agreements, regardless of maturity.

4

SCHEDULE RC-CONTINUED

Dollar Amounts in Thousands		RCON	Bil	Mil		Thou
LIABILITIES
13.Deposits:
a.In domestic offices (sum of totals of columns A and C from Schedule RC-E)		2200				0	13.a.
(1)Noninterest-bearing(l)	6631						13.a.(1)
(2)Interest-bearing	6636						13.a.(2)
b.Not applicable
14.Federal funds purchased and securities sold under agreements to repurchase		2800				0	14.
a.Federal Funds purchased(2)		B993				0	14.a.
b.Securities sold under agreements to purchase(3)		B995				0	14.b.
15.Trading liabilities (from Schedule RC-D)		3548				0	15.
16.Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases)(from Schedule RC-M)		3190				0	16.
17.Not applicable
18.Bank's liability on acceptances executed and outstanding		2920				0	18.
19.Subordinated notes and debentures(4)		3200				0	19.
20.Other liabilities (from Schedule RC-G)		2930				416	20.
21.Total liabilities (sum of items 13 through 20)		2948				416	21.
22.Minority interest in consolidated subsidiaries		3000				0	22.
EQUITY CAPITAL
23.Perpetual preferred stock and related surplus		3838				0	23.
24.Common stock		3230			1	000	24.
25.Surplus (exclude all surplus related to preferred stock)		3839			10	030	25.
26.a.Retained earnings		3632			2	708	26.a.
b. Accumulated other comprehensive income(5)		B530				0	26.b.
27.Other equity capital components(6)		A130				0	27.
28. Total equity capital (sum of items 23 through 27)		3210			13	738	28.
29.Total liabilities, minority interest, and equity capital (sum of items 21, 22, and 28)		3300			14	154	29.

Memorandum

To be reported with the March Report of Condition.

	RCON	Number
1.Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed far the bank by independent external auditors as of any date during 2004	6724	M.1.

1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report an the bank

2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately)

3 = Attestation on bank management's assertion on the effectiveness of the bank's internal control over financial reporting by a certified public accounting firm

4 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority)

5

5 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority)

6 = Review of the bank's financial statements by external auditors

7 = Compilation of the bank's financial statements by external auditors

8 = Other audit procedures (excluding tax preparation work)

9 = No external audit work

___________

(1) Includes total demand deposits and noninterest-bearing time and savings deposits.

(2) Report overnight Federal Home Loan Bank advances in Schedule RC, item 16, “Other borrowed money.”

(3) Includes all securities repurchase agreements, regardless of maturity.

(4) Includes limited-life preferred stock and related surplus.

(5) Includes net unrealized holding gains (losses) on available-for-sale securities, accumulated net gains (losses) on cash flow hedges, and minimum pension liability adjustments.

(6) Includes treasury stock and unearned Employee Stock Ownership Plans

6

EX-99.1

EXHIBIT 99.1

LETTER OF TRANSMITTAL

Canadian Satellite Radio Holdings Inc.

Offer to Exchange US$100,000,000

12.75% Senior Notes due 2014 (the "Exchange Notes")

which have been registered under the Securities Act of 1933, as amended,

for any and all of its outstanding 12.75% Senior Notes due 2014

which have not been registered under the Securities Act of 1933

(the "Initial Notes")

Pursuant to the Prospectus, dated        , 2006

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON          , 2006 OR SUCH LATER DATE AND TIME TO WHICH THE EXCHANGE OFFER MAY BE EXTENDED (THE "EXPIRATION DATE").

The Exchange Agent for the Exchange Offer is

The Bank of Nova Scotia Trust Company of New York

Deliveries should be made as follows:

By Mail, Overnight Courier or Hand:

The Bank of Nova Scotia Trust Company of New York

One Liberty Plaza

New York, NY 10006

Attention: Patricia Keane

By Facsimile for Eligible Institutions (as defined in Instruction 3):

(212) 225-5436

For confirmation and/or information call:

(212) 225-5427

Attention: Patricia Keane

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.

PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL

CAREFULLY BEFORE COMPLETING ANY BOX BELOW

List below the Initial Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, the certificate numbers and principal amount of Initial Notes should be listed on a separate signed schedule and then affixed to this Letter of Transmittal.

DESCRIPTION OF INITIAL NOTES	(1)	(2)	(3)
Name(s) and Address(es) of Registered Holder(s) exactly as name(s) appear(s) on Initial Note(s)  (Please fill in, if blank)	Certificate Number(s)*	Principal Amount of Initial Notes	Principal Amount of Initial Notes Tendered (if less than all)**
*Need not be completed by book-entry holders. **Unless otherwise indicated, the holder will be deemed to have tendered the full aggregate principal amount represented by such Initial Notes.

1

The undersigned acknowledges that he or she has received and reviewed the prospectus, dated      , 2006 (the "Prospectus"), of Canadian Satellite Radio Holdings Inc., an Ontario corporation (the "Company"), and this Letter of Transmittal (the "Letter"), which together constitute the Company's offer (the "Exchange Offer") to exchange up to US$100,000,000 aggregate principal amount of its 12.75% Senior Notes due 2014 (the "Exchange Notes") for a like principal amount of the Company's issued and outstanding 12.75% Senior Notes due 2014 (the "Initial Notes").

The undersigned has completed the appropriate boxes above and below and signed this Letter to indicate the action the undersigned desires to take with respect to the Exchange Offer.

This Letter is to be used either if certificates of Initial Notes are to be forwarded herewith or if delivery of Initial Notes is to be made by book-entry transfer to an account maintained by the Exchange Agent at The Depository Trust Company (the "DTC"), pursuant to the procedures set forth in "The Exchange Offer - Terms of the Exchange Offer" and "The Exchange Offer - Procedures for Tendering Initial Notes" in the Prospectus. Delivery of this Letter and any other required documents should be made to the Exchange Agent. Delivery of documents to a book-entry transfer facility does not constitute delivery to the Exchange Agent.

Holders whose Initial Notes are not immediately available or who cannot deliver their Initial Notes and all other documents required hereby to the Exchange Agent on or prior to the Expiration Date must tender their Initial Notes according to the guaranteed delivery procedure set forth in the Prospectus under the captions "The Exchange Offer - Terms of the Exchange Offer" and "The Exchange Offer - Procedures for Tendering Initial Notes." See Instruction 1.

o CHECK HERE IF INITIAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:

Name of Tendering Institution_________________________________________________________________

Account Number___________________________________________________________________________

Transaction Code Number____________________________________________________________________

o CHECK HERE IF INITIAL NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:

Name of Registered Holder(s)__________________________________________________________________

Name of Eligible Institution that Guaranteed Delivery________________________________________________

If delivered by book-entry transfer:

Account Number___________________________________________________________________________

Date of execution of Notice of Guaranteed Delivery__________________________________________________

o CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

Name:_______________________________________________________________

Address:_______________________________________________________________

If the undersigned is not a broker-dealer, the undersigned represents that it is acquiring the Exchange Notes in the ordinary course of business of the undersigned, that it is not engaged in, and does not intend to engage in, or has no arrangement or understanding with any person to participate in, a distribution of the Exchange Notes, and that it is not an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"). If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Initial Notes that were acquired as a result of market-making activities or other trading activities, it may be deemed to be an "underwriter" within the meaning of the Securities Act and must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.

2

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Company the aggregate principal amount of Initial Notes indicated above. Subject to, and effective upon, the acceptance for exchange of the Initial Notes tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Initial Notes as are being tendered hereby.

The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Initial Notes being tendered as set forth in this Letter and that the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by the Company. The undersigned will, upon request, execute and deliver any additional documents deemed by the Company or the Exchange Agent to be necessary or desirable to complete the sale, assignment and transfer of the Initial Notes tendered hereby.

The undersigned also acknowledges that this Exchange Offer is being made in reliance on the Company's belief, based on interpretations by the staff of the Securities and Exchange Commission (the "SEC") to third parties in unrelated transactions, that the Exchange Notes issued in exchange for the Initial Notes pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by holders of the Initial Notes (other than (i) any holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act or (ii) any broker-dealer that purchases Notes from the Company to resell pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other available exemption) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holders’ business and such holders have no arrangement or understanding with any person to participate in the distribution of such Exchange Notes and are not participating in, and do not intend to participate in, the distribution of such Exchange Notes. The undersigned further acknowledges that any holder of Initial Notes using the Exchange Offer to participate in a distribution of the Exchange Notes (i) cannot rely on the position of the staff of the SEC enunciated in its interpretive letter with respect to Exxon Capital Holdings Corporation (available May 13, 1989) or similar letters and (ii) must comply with the registration and prospectus requirements of the Securities Act in connection with a secondary resale transaction.

The undersigned represents that (i) the Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is the holder, (ii) such holder or such other person has no arrangement or understanding with any person to participate in the distribution of such Exchange Notes within the meaning of the Securities Act and is not participating in, and does not intend to participate in, the distribution of such Exchange Notes within the meaning of the Securities Act, and (iii) such holder or such other person is not an "affiliate," as defined in Rule 405 under the Securities Act, of the Company or, if such holder or such other person is an affiliate, such holder or such other person will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable.

All authority conferred or agreed to be conferred in this Letter and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. This tender may be withdrawn only in accordance with the procedures set forth in the instructions contained in this Letter.

3

The undersigned understands that tenders of the Initial Notes pursuant to any one of the procedures described under the captions "The Exchange Offer - Terms of the Exchange Offer" and "The Exchange Offer Procedures for Tendering Initial Notes" in the Prospectus and in the instructions in this Letter will constitute a binding agreement between the undersigned and the Company in accordance with the terms and subject to the conditions of the Exchange Offer.

The undersigned recognizes that, under certain circumstances set forth in the Prospectus under the caption "The Exchange Offer - Conditions to the Exchange Offer," the Company may not be required to accept for exchange any of the Initial Notes tendered. Initial Notes not accepted for exchange, or withdrawn, will be returned to the undersigned at the address set forth below unless otherwise indicated under "Special Delivery Instructions" below.

Unless otherwise indicated in the box entitled "Special Issuance Instructions" below, please issue the Exchange Notes (and, if applicable, substitute certificates representing Initial Notes for any Initial Notes not exchanged) in the name of the undersigned. Similarly, unless otherwise indicated in the box entitled "Special Delivery Instructions" below, please deliver the Exchange Notes (and, if applicable, substitute certificates representing Initial Notes for any Initial Notes not exchanged) to the undersigned at the address shown above in the box entitled "Description of Initial Notes."

THE BOOK-ENTRY TRANSFER FACILITY, AS THE HOLDER OF RECORD OF CERTAIN INITIAL NOTES, HAS GRANTED AUTHORITY TO BOOK-ENTRY TRANSFER FACILITY PARTICIPANTS WHOSE NAMES APPEAR ON A SECURITY POSITION LISTING WITH RESPECT TO SUCH INITIAL NOTES AS OF THE DATE OF TENDER OF SUCH INITIAL NOTES TO EXECUTE AND DELIVER THE LETTER OF TRANSMITTAL AS IF THEY WERE THE HOLDERS OF RECORD. ACCORDINGLY, FOR PURPOSES OF THIS LETTER OF TRANSMITTAL, THE TERM "HOLDER" SHALL BE DEEMED TO INCLUDE SUCH BOOK-ENTRY TRANSFER FACILITY PARTICIPANTS.

THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF INITIAL NOTES" ABOVE AND SIGNING THIS LETTER AND DELIVERING SUCH NOTES AND THIS LETTER TO THE EXCHANGE AGENT, WILL BE DEEMED TO HAVE TENDERED THE INITIAL NOTES AS SET FORTH IN SUCH BOX ABOVE.

4

PLEASE SIGN HERE(TO BE COMPLETED BY ALL TENDERING HOLDERS)

(Complete Accompanying Substitute Form W-9)

Dated:

X____________________________________

X________________________________________________________________________

^{Signature(s) of Owner(s)/or Authorized SignatoryDate}

Area Code and Telephone Number:_______________________________________

If a holder is tendering any Initial Notes, this Letter must be signed by the registered holder(s) as the name(s) appear(s) on the certificate(s) for the Initial Notes or by any person(s) authorized to become registered holder(s) by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, officer or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 3.

Name(s)

(Please Type or Print)

Capacity:

Address:

(Include Zip Code)

SIGNATURE GUARANTEE

(If required by Instruction 3)

Signature(s) Guaranteed by

an Eligible Institution:

(Authorized Signature)

(Title)

(Name of Firm)

Dated:

5

SPECIAL ISSUANCE INSTRUCTIONS (See Instructions 3 and 4)	SPECIAL DELIVERY INSTRUCTIONS (See Instructions 3 and 4)
To be completed ONLY if certificates for Exchange Notes are to be issued in the name of and sent to someone other than the person or persons whose signature(s) appear on this Letter above.	To be completed ONLY if certificates for Exchange Notes are to be sent to someone other than the person or persons whose signature(s) appear(s) on this Letter above or to such person or persons at an address other than shown in the box entitled "Description of Initial Notes" on this Letter above.
Issue Exchange Notes to:	Mail Exchange Notes to:
Name(s):
(Please Type or Print)	(Please Type or Print)
(Please Type or Print)	(Please Type or Print)
Address:	Address:
(Zip Code)	(Zip Code)
Social Security Number:
(Complete Substitute Form W-9)

 IMPORTANT: UNLESS GUARANTEED DELIVERY PROCEDURES ARE COMPLIED WITH, THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE (IN EACH CASE, TOGETHER WITH THE CERTIFICATE(S) FOR INITIAL NOTES OR A CONFIRMATION OF BOOK-ENTRY TRANSFER OF SUCH INITIAL NOTES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.

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INSTRUCTIONS

Forming Part of the Terms and Conditions of the Exchange Offer

1.Delivery of this Letter and Initial Notes; Guaranteed Delivery Procedure.

This Letter is to be used to forward, and must accompany, all certificates representing Initial Notes tendered pursuant to the Exchange Offer, unless such certificates are accompanied by an Agent's Message (as defined under the captions "The Exchange Offer - Terms of the Exchange Offer" and "The Exchange Offer Procedures for Tendering Initial Notes" in the Prospectus) in which case you need not submit this Letter to the Exchange Agent. Certificates representing the Initial Notes in proper form for transfer (or a confirmation of book-entry transfer of such Initial Notes into the Exchange Agent's account at the book-entry transfer facility) must be received by the Exchange Agent at its address set forth herein on or before the Expiration Date. A tender will not be deemed to have been timely received when the tendering holder's properly completed and duly signed Letter, or an Agent's Message accompanied by the Initial Notes, is mailed prior to the Expiration Date but is received by the Exchange Agent after the Expiration Date.

The method of delivery of this Letter, the Initial Notes and all other required documents is at the election and risk of the tendering holders, and the delivery will be deemed made only when actually received or confirmed by the Exchange Agent. Instead of delivery by mail, Canadian Satellite Radio Holdings Inc. recommends that tendering holders use overnight or hand delivery service. If tendering holders choose the mail, Canadian Satellite Radio Holdings Inc. recommends that registered mail properly insured, with return receipt requested, be used. In all cases, sufficient time should be allowed to permit timely delivery.

If a holder desires to tender Initial Notes and such holder's Initial Notes are not immediately available or time will not permit such holder's Letter of Transmittal, Initial Notes (or a confirmation of book entry transfer of Initial Notes into the Exchange Agent's account at the book-entry transfer facility with an Agent's Message) or other required documents to reach the Exchange Agent on or before the Expiration Date, such holder may still tender in the Exchange Offer if:

(a)   you tender through an Eligible Institution (as defined below);

(b)   on or prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Letter of Transmittal (or facsimile of it) and Notice of Guaranteed Delivery, substantially in the form provided by us (by facsimile transmission, mail or hand delivery), setting forth your name and address as holder of the Initial Notes and the amount of Initial Notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange trading days after the Expiration Date the certificates for all physically tendered Initial Notes, in proper form for transfer, or a book-entry confirmation with an Agent's Message, as the case may be, and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent; and

(c)   the certificates for all physically tendered Initial Notes, in proper form for transfer, or a book-entry confirmation as the case may be, and all other documents required by this Letter of Transmittal are received by the Exchange Agent within five business days after the Expiration Date.

See "The Exchange Offer - Terms of the Exchange Offer" and "The Exchange Offer - Procedures for Tendering Initial Notes" in the Prospectus.

2.Withdrawals.

Any holder who has tendered Initial Notes may withdraw the tender by delivering written notice of withdrawal (which may be sent by facsimile (receipt confirmed by telephone and an original delivered by guaranteed overnight courier)) to the Exchange Agent prior to the close of business on the Expiration Date and prior to acceptance for exchange thereof by us. For a withdrawal to be effective, a written notice of withdrawal must (i) specify the name of the person having tendered the Initial Notes to be withdrawn (the "Depositor"), (ii) identify the Initial Notes to be withdrawn (including the certificate number or numbers and principal amount of such Initial Notes), (iii) be signed by the holder in the same manner as the original signature on the Letter by which such Initial Notes were tendered or as otherwise set forth in Instruction 3 below (including any required signature guarantees), or be accompanied by documents of transfer sufficient to have the Trustee (as defined in the Prospectus) register the transfer of such Initial Notes pursuant to the terms of the Indenture into the name of the person withdrawing the tender and (iv) specify the name in which any such Initial Notes are to be registered, if different from that of the Depositor. If Initial Notes have been tendered pursuant to the procedure for book-entry transfer, any notice of withdrawal must specify the name and number of the participant's account at the book-entry transfer facility to be credited, if different from that of the Depositor, with the withdrawn Initial Notes or otherwise comply with the book-entry transfer facility's procedures. See "The Exchange Offer - Withdrawal of Tenders" in the Prospectus.

7

3.Signatures on this Letter; Bond Powers and Endorsements; Guarantee of Signatures.

If this Letter is signed by the registered holder of the Initial Notes tendered hereby, the signature must correspond with the name as written on the face of the certificates without alteration, enlargement or any change whatsoever.

If this Letter is signed by a participant in DTC, the signature must correspond with the name as it appears on the security position listing as the holder of the Initial Notes.

If this Letter or any Initial Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing. Unless waived by us, evidence satisfactory to us of their authority to so act must also be submitted with the Letter of Transmittal.

If any tendered Initial Notes are owned of record by two or more joint owners, all such owners must sign this Letter.

The signatures on this Letter or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor" institution within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (each, an "Eligible Institution"), unless the Initial Notes are tendered: (i) by a registered holder (or by a participant in DTC whose name appears on a security position listing as the owner) who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on this Letter and the Exchange Notes are being issued directly to such registered holder (or deposited into the participant's account at DTC), or (ii) for the account of an Eligible Institution.

4.Special Issuance and Delivery Instructions.

Tendering holders of Initial Notes should indicate in the applicable box the name and address to which Exchange Notes issued pursuant to the Exchange Offer are to be issued or sent, if different from the name or address of the person signing this Letter. In the case of issuance in a different name, the employer identification or social security number of the person named must also be indicated. If no such instructions are given, any Exchange Notes will be issued in the name of, and delivered to, the name or address of the person signing this Letter and any Initial Notes not accepted for exchange will be returned to the name or address of the person signing this Letter.

5.Backup Federal Income Tax Withholding and Substitute Form W-9.

United States federal income tax laws generally require that a tendering holder provide the Exchange Agent with such holder's correct Taxpayer Identification Number ("TIN") on IRS Substitute Form W-9 below. If the tendering holder is a non-resident alien or a foreign entity, other requirements will apply.

8

Under the United States federal income tax laws, payments that may be made by the Company on account of Exchange Notes issued pursuant to the Exchange Offer may be subject to "backup withholding" at the specified rate, currently 28%. In order to avoid backup withholding of United States income tax on such payments, each tendering holder should complete and sign the Substitute Form W-9 included in this Letter and certify, under penalties of perjury, that the TIN provided on Substitute Form W-9 is correct (or that such holder is awaiting a TIN), and that (i) the holder is exempt from backup withholding, (ii) the holder has not been notified by the Internal Revenue Service (the "IRS") that the holder is subject to backup withholding as a result of failure to report all interest or dividends or (iii) the IRS has notified the holder that the holder is no longer subject to backup withholding. If a holder has been notified by the IRS that such holder is subject to backup withholding, such holder must cross out item (2) of the certification box of the Substitute W-9, unless such holder has since been notified by the IRS that it is no longer subject to backup withholding. If the Notes are in more than one name or are not in the name of the actual owner, such holder should consult the W-9 Guidelines for information on which TIN to report. If the correct TIN is not provided, or if any other information is not correctly provided, a $50 penalty may be imposed on the holder by the IRS and payments made by the Company on account of Exchange Notes issued pursuant to the Exchange Offer may be subject to backup withholding at the specified rate, currently 28%.

The TIN for an individual United States citizen or resident is generally the individual's social security number; the TIN for non-individual United States persons is generally such person's employer identification number. If a holder does not have a TIN, such holder should consult the W-9 Guidelines for instructions on applying for a TIN and write "Applied For" in the space reserved for the TIN. Note: Writing "Applied For" on the IRS Substitute Form W-9 means that such holder has already applied for the TIN or that such holder intends to apply for one in the near future. If "Applied For" is written in the space reserved for the TIN and such holder does not provide its TIN to the Exchange Agent within 60 days, backup withholding may result at the specified rate, currently 28%, on the gross amount of payments made until a TIN is provided.

Exempt persons (including, among others, corporations and certain foreign individuals) are not subject to backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, such holder must submit a statement, signed under penalties of perjury, attesting as to that status. A holder should consult its own tax advisor as to the holder's qualification for an exemption from backup withholding and the procedure for obtaining such exemption.

Backup withholding is not an additional United States income tax. Rather, the United States income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund may be obtained provided that the required information is furnished to the IRS.

For further information regarding backup withholding and instructions for completing Substitute Form W-9, consult the enclosed W-9 Guidelines.

A tendering holder that is a non-resident alien or foreign entity must submit the appropriate completed IRS Form W-8 (generally IRS Form W-8BEN) to avoid backup withholding. The appropriate form may be obtained via the IRS website at www.irs.gov or by contacting the Exchange Agent at the address on the face of this Letter.

FAILURE TO COMPLETE IRS SUBSTITUTE FORM W-9, IRS FORM W-8BEN OR ANOTHER APPROPRIATE FORM MAY RESULT IN BACKUP WITHHOLDING AT THE SPECIFIED RATE, CURRENTLY 28%, ON ANY PAYMENTS MADE TO A HOLDER PURSUANT TO THE EXCHANGE OFFER.

6.Transfer Taxes.

The Company will pay all transfer taxes, if any, applicable to the transfer of Initial Notes to it or its order pursuant to the Exchange Offer. If, however, Exchange Notes and/or substitute Initial Notes not exchanged or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Initial Notes tendered hereby, or if tendered Initial Notes are registered in the name of any person other than the person signing this Letter, or if a transfer tax is imposed for any reason other than the transfer of Initial Notes to the Company or its order pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be deducted from payments to the tendering holder unless satisfactory evidence of payment of such taxes or exemption therefrom is submitted herewith.

Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Initial Notes specified in this Letter.

9

7.Waiver of Conditions.

Conditions enumerated in the Prospectus may be waived by the Company, in whole or in part, at any time from time to time in its reasonable discretion.

8.No Conditional Tenders.

No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders of Initial Notes, by execution of this Letter, shall waive any right to receive notice of the acceptance of their Initial Notes for exchange.

Neither the Company nor any other person is obligated to give notice of defects or irregularities in any tender, nor shall any of them incur any liability for failure to give any such notice.

9.Inadequate Space.

If the space provided herein is inadequate, the aggregate principal amount of Initial Notes being tendered and the certificate number or numbers (if available) should be listed on a separate schedule attached hereto and separately signed by all parties required to sign this Letter.

10.Mutilated, Lost, Stolen or Destroyed Initial Notes.

If any certificate has been lost, mutilated, destroyed or stolen, the holder should promptly notify The Bank of Nova Scotia Trust Company of New York at the telephone number indicated above. The holder will then be instructed as to the steps that must be taken to replace the certificate(s). This Letter and related documents cannot be processed until the Initial Notes have been replaced.

11.Requests for Assistance or Additional Copies.

Questions relating to the procedure for tendering, as well as requests for additional copies of the Prospectus and this Letter, maybe directed to The Bank of Nova Scotia Trust Company of New York at the address and telephone number indicated above.

10

TO BE COMPLETED BY TENDERING HOLDERS THAT ARE U.S. PERSONS

(INCLUDING U.S. RESIDENT ALIENS)

(See “Guidelines for Certification of TIN on Substitute Form W-9” below)

SUBSTITUTE Form W-9 Department of the Treasury Internal Revenue Service Payer’s Request for Taxpayer Identification Number (TIN) and Certification	Part I - PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION NUMBER IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. See the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for instructions.	__________________________ Social Security Number(s) OR ________________________ Employer Identification Number(s) (If awaiting TIN, write “Applied for”)
Please Fill in Your Name, Address and Status Below Name: ___________________________________ Address (Number and Street) ___________________________________ City, State and Zip Code ___________________________________ Status (individual, corporation, partnership, other)	PART II - CERTIFICATION UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT: 1.The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and 2.I am not subject to backup withholding because (a) I am exempt from backup withholding, (b) I have not been notified by the Internal Revenue Service (“IRS”) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding, and 3.I am a U.S. person (including a U.S. resident alien). Signature: ______________________________ Date: ___________________
CERTIFICATION GUIDELINES - You must cross out item (2) of the above certification if you have been notified by the IRS that you are subject to backup withholding because of under reporting of interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS stating that you are no longer subject to back withholding, do not cross out item (2).

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number to the payer, the specified rate of all payments made to me shall be retained until I provide a taxpayer identification number to the payer and that, if I do not provide my taxpayer identification number within sixty (60) days, such retained amounts shall be remitted to the Internal Revenue Service as backup withholding and the specified rate of all reportable payments made to me thereafter will be withheld and remitted to the Internal Revenue Service until I provide a taxpayer identification number.

Signature: ______________________________ Date: ________________________

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF THE SPECIFIED RATE OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE ENCLOSED “ GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9” FOR ADDITIONAL DETAILS.

11

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION

NUMBER ON SUBSTITUTE FORM W-9

Guidelines for Determining the Proper Identification Number to Give the Payer - Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer.

For this type of account:	Give the SOCIAL SECURITY NUMBER OF -	For this type of account:	Give the EMPLOYER IDENTIFICATION NUMBER OF -
1.An individual’s account	The individual	6.A valid trust, estate, or pension trust	The legal entity (do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title)(4)
2.Two or more individuals (joint account)	The actual owner of the account or, if combined funds, the first individual on the account(1)	7.Corporate account and/or LLC electing corporate status on Form 8832	The corporation
3.Custodian account of a minor (Uniform Gift to Minors Act)	The minor(2)	8.Association, club, religious, charitable, or educational or other tax-exempt organization account	The organization
4.a. The usual revocable savings trust   account (grantor is also trustee) b. So-called trust account that is not a legal or valid trust under State law	The grantor-trustee(1) The actual owner(1)	9.Partnership account or multi-member LLC	The partnership
5.  Sole proprietorship account or single-	The owner(1)	10.  A broker or registered nominee	The broker or nominee
owner LLC
		11.  Account with the Department of griculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments	The public entity

^{1List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person’s number must be furnished.}

^{2 Circle the minor’s name and furnish the minor’s social security number.}

^{3 You must show your individual name, but you may also enter your business name or “doing business as” name. You may use either your Social Security number or your Employer Identification number (if you have one).}

^{4List first and circle the name of the legal trust, estate, or pension trust.}

^{NOTE: If no name is circled when there is more than one name listed, the number will be considered to be that of the first name listed.}

12

Obtaining a Number

Obtaining a Number	·An entity registered at all times during the tax year under the Investment Company Act of 1940.
	·A foreign central bank of issue.
If you don't have a taxpayer identification number or you don't know your number, obtain
Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for	Payments Exempt from Backup Withholding
Employer Identification Number, at the local office of the Social Security Administration or	Payment of dividends and patronage dividends not generally subject to backup
the Internal Revenue Service (the "IRS") and apply for a number. U.S. resident aliens who	withholding include the following:
cannot obtain a social security number must apply for an ITIN (individual taxpayer	·Payments to non-resident aliens subject to withholding under Section 1441 of the
identification number) or Form W-7, Application for IRS Individual Taxpayer Identification	Code.
Number.	·     Payments to partnerships not engaged in a trade or business in the U.S. an that have at
	least one non-resident partner.
Payee Exempt from Backup Withholding	·Payments of patronage dividends where the amount received is not paid in money.
Payees exempted from backup withholding on ALL payments including the following:	·Payments made by certain foreign organizations.
·An organization exempt from tax under Section 501(a) of the Internal Revenue Code of	Payments of interest not generally subject to backup withholding include the following:
1986, as amended (the "Code"), or any IRA or a custodial account under Section 403(b	·Payment of tax-exempt Payment of interest on obligations issued by individuals.
(7)of the Code, if the account satisfies the requirements of Section 401(f)(2) of the
Code.	Note: You may be subject to backup withholding if this interest is $600 or more and is paid\
	in the course of the payer's trade or business and you have not provided your correct
·The United States or any agency or instrumentality thereof.	taxpayer identification number to the payer.
·A State, the District of Columbia, a possession of the United States, or any
subdivision  or instrumentality thereof.	·Payment of tax-exempt interest (including exempt interest dividends under Section 852
	of the code
·A foreign government, a political subdivision of a foreign government, or any agency	·Payment described in Section 6049(b)(5) of the Code to non-resident aliens.
or instrumentality thereof.	·Payments on tax-free covenant bonds under Section 1451 of the Code.
	·Payments made by certain foreign organizations.
·An international organization or any agency or instrumentality thereof.
	Exempt payees described above should file Form W-9 to avoid possible erroneous backup
Other payees that may be exempt from backup withholding include:	withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
·A corporation.	IDENTIFICATION NUMBER, WRITE "EXEMPT" ON AND RETURN IT TO THE PAYER.
·A financial institution.	IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO
·A futures commission merchant registered with the Commodity Futures Trading	BACKUP WITHHOLDING, FILE WITH THE PAYER A COMPLETED INTERNAL
Commission	REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
·A middleman known in the investment community as a nominee or custodian.	Certain payments other than interest, dividends, and patronage dividends, that are
·A dealer in securities or commodities required to register in the U.S., the District of	not subject to information reporting are also not subject to backup withholding. For details,
Columbia or a possession of the U.S.	see Sections 6041, 6041A(a), 6045, and 6050A of the Code and the regulations promulgated
·A real estate investment trust.	thereunder.
·A common trust fund operated by a bank under Section 584(a) of the Code.
·A trust exempt from tax under Section 664 of the Code, or a trust described in
Section 4947 of the Code.

13

 Privacy Act Notice - Section 6109 requires most recipients of dividends, interest, or other payments to give correct taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of tax returns. The IRS may also provide this information to the Department of Justice for civil and criminal litigation, and to cities, states and the District of Columbia to carry out their tax laws. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 28% (or such other rate specified by the Code) of taxable interest, dividends, and certain other payments to a payee who does not furnish a correct taxpayer identification number to a payer. Certain penalties may also apply.

Penalties

(1) Penalty for Failure to Furnish Taxpayer Identification Number: If you fail to famish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

(2) Civil Penalty for False Information With Respect to Withholding. If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500.

(3) Criminal Penalty for Falsifying Information.Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

(4) Misuse of TINs. If the register discloses or uses TINS inn violation of Federal law, the register may be subject to civil and criminal penalties.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE.

EX-99.2

EXHIBIT 99.2

NOTICE OF GUARANTEED DELIVERY

Regarding

Offer to Exchange US$100,000,000

12.75% Senior Notes due 2014

which have been registered under the Securities Act of 1933

for any and all of its outstanding 12.75% Senior Notes due 2014

which have not been registered under the Securities Act of 1933

of

Canadian Satellite Radio Holdings Inc.

Registered holders of outstanding 12.75% Senior Notes due 2014 (the “Initial Notes”) who wish to tender their Initial Notes in exchange for a like principal amount of 12.75% Senior Notes due 2014 (the “Exchange Notes”) and whose Initial Notes are not immediately available or who cannot deliver their Initial Notes and Letter of Transmittal (and any other documents required by the Letter of Transmittal) to The Bank of Nova Scotia Trust Company of New York (the “Exchange Agent”) prior to the Expiration Date, may use this Notice of Guaranteed Delivery or one substantially equivalent to it. This Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile transmission (receipt confirmed by telephone and an original delivered by guaranteed overnight courier) or letter to the Exchange Agent. See “The Exchange Offer - Terms of the Exchange Offer” and “The Exchange Offer - Procedures for Tendering Initial Notes” in the prospectus of Canadian Satellite Radio Holdings Inc. dated       , 2006 (the “Prospectus”).

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON          , 2006 UNLESS EXTENDED (THE “EXPIRATION DATE”). INITIAL NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN, SUBJECT TO THE PROCEDURES DESCRIBED IN THE PROSPECTUS, AT ANY TIME PRIOR TO THE EXPIRATION DATE.

The Exchange Agent for the Exchange Offer is:

THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK

By Mail, Overnight Courier or Hand:

The Bank of Nova Scotia Trust Company of New York

One Liberty Plaza

New York, NY 10006

Attention: Patricia Keane

By Facsimile for Eligible Institutions:

(212) 225-5436

For confirmation and/or information call:

(212) 225-5427

Attention: Patricia Keane

Delivery of this Notice of Guaranteed Delivery to an address other than as set forth above or transmission of instructions via a facsimile transmission to a number other than as set forth above will not constitute a valid delivery.

This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution (as defined under the captions “The Exchange Offer - Terms of the Exchange Offer” and “The Exchange Offer - Procedures for Tendering Initial Notes” in the Prospectus), such signature guarantee must appear in the applicable space provided on the Letter of Transmittal for Guarantee of Signatures.

Ladies and Gentlemen:

The undersigned hereby tenders the principal amount of Initial Notes indicated below, upon the terms and subject to the conditions contained in the prospectus dated        , 2006 of Canadian Satellite Radio Holdings Inc. (the “Prospectus”), receipt of which is hereby acknowledged.

DESCRIPTION OF SECURITIES TENDERED

Name and address of registered holder as it appears on the 12.75% Senior Notes due 2014 (“Initial Notes”)   (Please Print)   Certificate Number(s) of Initial Notes Tendered   Aggregate Principal Amount Represented by Initial Notes   Principal Amount of Initial Notes Tendered  

THE FOLLOWING GUARANTEE MUST BE COMPLETED

GUARANTEE OF DELIVERY

(Not to be used for signature guarantee)

The undersigned, a firm that is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office, branch, agency or correspondent in the United States, hereby guarantees to deliver to the Exchange Agent at one of its addresses set forth, above, the certificates representing the Initial Notes, together with a properly completed and duly executed Letter of Transmittal (or facsimile of it), with any required signature guarantees, and any other documents required by the Letter of Transmittal within three New York Stock Exchange trading days after the date of execution of this Notice of Guaranteed Delivery.

Name of Firm: ______________________________	___________________________________________ (Authorized Signature)
Address: ___________________________________	Title: __________________________________
____________________________________________ (Zip Code)	Name: __________________________________ (Please type of print)
Area Code and Telephone Number: ____________________________________________	Date: ___________________________________

NOTE: DO NOT SEND INITIAL NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. INITIAL NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.

EX-99.3

EXHIBIT 99.3

INSTRUCTION TO REGISTERED HOLDER FROM BENEFICIAL OWNER of

outstanding 12.75% Senior Notes due 2014 of

Canadian Satellite Radio Holdings Inc.

To the Registered Holder:

The undersigned hereby acknowledges receipt of the prospectus, dated          , 2006 (the "Prospectus"), of Canadian Satellite Radio Holdings Inc. (the "Company") and the accompanying letter of transmittal (the "Letter of Transmittal") in connection with the offer by the Company (the "Exchange Offer") to exchange US$100,000,000 aggregate principal amount of its 12.75% Senior Notes due 2014 (the "Exchange Notes"), which have been registered under the Securities Act of 1933 (the "Securities Act"), for a like aggregate principal amount of its issued and outstanding 12.75% Senior Notes due 2014 (the "Initial Notes"), which have not been registered under the Securities Act, upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal.

This will instruct you, the registered holder, as to the action to be taken by you relating to the Exchange Offer with respect to the Initial Notes held by you for the account of the undersigned.

The aggregate principal amount of the Initial Notes held by you for the account of the undersigned is (fill in amount):

$______________________________________(principal amount).

With respect to the Exchange Offer, the undersigned hereby instructs you (check appropriate box):

o TO TENDER the following Initial Notes held by you for the account of the undersigned (insert principal amount of Initial Notes to be tendered):

$______________________________________.

o NOT TO TENDER any Initial Notes held by you for the account of the undersigned.

If the undersigned instructs you to tender Initial Notes held by you for the account of the undersigned, it is understood that you are authorized to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations and warranties contained in the Letter of Transmittal that are to be made with respect to the undersigned as a beneficial owner, including but not limited to the representations, that 1. the Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is the undersigned, 2. neither the undersigned nor any such other person is engaged in, has an arrangement or understanding with any person to participate in, or otherwise intends to participate in, the distribution of such Exchange Notes, 3. if the undersigned is not a broker-dealer or is a broker-dealer but will not receive Exchange Notes for its own account in exchange for Initial Notes, neither the undersigned nor any such other person is engaged in or intends to participate in a distribution of the Exchange Notes and 4. neither the undersigned nor any such other person is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act or, if the undersigned or such other person is an "affiliate," that the undersigned or such other person will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the undersigned is a broker-dealer (whether or not it is also an "affiliate") that will receive Exchange Notes for its own account in exchange for Initial Notes, it represents that such Initial Notes were acquired as a result of market-making activities or other trading activities, and it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes, the undersigned is not deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

Name(s) of beneficial owner(s) (please print):______________________________________________________________________________________________

Signature(s):______________________________________________________________________________________________________________________

Address:_________________________________________________________________________________________________________________________

Telephone Number:__________________________________________________________

Taxpayer identification or Social Security Number:___________________________________

Date: ____________________________________________________________________

EX-99.4

EXHIBIT 99.4

CANADIAN SATELLITE RADIO HOLDINGS INC.

Regarding

Offer to Exchange US$100,000,000

12.75% Senior Notes due 2014

which have been registered under the Securities Act of 1933

for any and all of its outstanding 12.75% Senior Notes due 2014

which have not been registered under the Securities Act of 1933

To Registered Holders:

We are enclosing the material listed below in connection with the offer (the “Exchange Offer”) by Canadian Satellite Radio Holdings Inc. (the “Company”) to exchange its 12.75% Senior Notes due 2014 (the “Exchange Notes”), which have been registered under the Securities Act of 1933 (the “Securities Act”), for a like aggregate principal amount of its issued and outstanding 12.75% Senior Notes due 2014 (the “Initial Notes”), which have not been registered under the Securities Act, upon the terms and subject to the conditions set forth in the prospectus, dated        , 2006 (the “Prospectus”), and the related letter of transmittal (the “Letter of Transmittal”).

Enclosed are copies of the following documents:

1.   Prospectus;

2.   Letter of Transmittal;

3.   Notice of Guaranteed Delivery;

4.   Instruction to Registered Holder from Beneficial Owner; and

5.   A letter that may be sent to your clients for whose account you hold Initial Notes in your name or in the name of your nominee, to accompany the instruction form referred to above, for obtaining such client's instruction with regard to the Exchange Offer.

We urge you to contact your clients promptly. Please note that the Exchange Offer will expire at 5:00 p.m., New York City time, on        , 2006, unless extended by the Company in its sole discretion.

The Exchange Offer is not conditional upon any minimum number of Initial Notes being tendered.

Pursuant to the Letter of Transmittal, each holder of Initial Notes will represent to the Company that (i) the Exchange Notes acquired in the Exchange Offer are being obtained in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is such holder, (ii) neither the holder of the Initial Notes nor any such other person has an arrangement or understanding with any person to participate in the distribution of such Exchange Notes, (iii) if the holder is not a broker-dealer or is a broker-dealer but will not receive Exchange Notes for its own account in exchange for Initial Notes, neither the holder nor any such other person is engaged in or intends to participate in a distribution of the Exchange Notes and (iv) neither the holder nor any such other person is an “affiliate” of the Company within the meaning of Rule 405 under the Securities Act or, if such holder is an “affiliate”, that such holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the tendering holder is a broker-dealer (whether or not it is also an ”affiliate”) that will receive Exchange Notes for its own account in exchange for Initial Notes, such tendering holder will represent that the Initial Notes to be exchanged for the Exchange Notes were acquired by it as a result of market-making activities or other trading activities, and acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. The enclosed Instruction to Registered Holder from Beneficial Owner contains an authorization by the beneficial owner of the Initial Notes for you to make the foregoing representations.

The Company will not pay any fee or commission to any broker or dealer or to any other persons (other than the Exchange Agent (as defined below) for the Exchange Offer) in connection with the solicitation of tenders of Initial Notes pursuant to the Exchange Offer. The Company will pay or cause to be paid any transfer taxes payable on the transfer of Initial Notes to it, except as otherwise provided in Instruction 6 of the enclosed Letter of Transmittal.

Any inquiries you may have with respect to the Exchange Offer may be addressed to, and additional copies of the enclosed materials may be obtained from, The Bank of Nova Scotia Trust Company of New York (the “Exchange Agent”) in the manner set forth below.

The Bank of Nova Scotia Trust Company of New York

One Liberty Plaza

New York, NY 10006

Attention: Patricia Keane

Telephone: (212) 225-5427

Facsimile: (212) 225-5436

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU TO BE THE AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON THEIR BEHALF IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.

EX-99.5

EXHIBIT 99.5

CANADIAN SATELLITE RADIO HOLDINGS INC.

Regarding

Offer to Exchange US$100,000,000

12.75% Senior Notes due 2014

which have been registered under the Securities Act of 1933

for any and all of its outstanding 12.75% Senior Notes due 2014

which have not been registered under the Securities Act of 1933

To Our Clients:

We are enclosing a prospectus, dated        , 2006 (the "Prospectus"), of Canadian Satellite Radio Holdings Inc. (the "Company"), and a related letter of transmittal (the "Letter of Transmittal," which, together with the Prospectus, constitutes the "Exchange Offer Documents") relating to the offer (the "Exchange Offer") by the Company to exchange US$100,000,000 aggregate principal amount of its 12.75% Senior Notes due 2014 (the "Exchange Notes"), which have been registered under the Securities Act of 1933 (the "Securities Act"), for a like aggregate principal amount of its issued and outstanding 12.75% Senior Notes due 2014 (the "Initial Notes"), which have not been registered under the Securities Act, upon the terms and subject to the conditions set forth in the Exchange Offer Documents.

Please note that the Exchange Offer will expire at 5:00 p.m., New York City time, on          , 2006 unless extended by the Company in its sole discretion.

The Exchange Offer is not conditional upon any minimum number of Initial Notes being tendered.

We are the holder of record of Initial Notes held by us for your account. A tender of such Initial Notes can be made only by us as the record holder and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Initial Notes held by us for your account.

We request instructions as to whether you wish to tender any or all of the Initial Notes held by us for your account pursuant to the terms and conditions of the Exchange Offer. Please so instruct us by completing, executing and returning to us the enclosed Instruction to Registered Holder from Beneficial Owner. We also request that you confirm with such instruction form that we may on your behalf make the representations contained in the Letter of Transmittal.

Pursuant to the Letter of Transmittal, each holder of Initial Notes will represent to the Company that 1. the Exchange Notes acquired in the Exchange Offer are being obtained in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is such holder, 2. neither the holder of the Initial Notes nor any such other person has an arrangement or understanding with any person to participate in the distribution of such Exchange Notes, 3. if the holder is not a broker-dealer or is a broker-dealer but will not receive Exchange Notes for its own account in exchange for Initial Notes, neither the holder nor any such other person is engaged in or intends to participate in a distribution of the Exchange Notes and 4. neither the holder nor any such other person is an “affiliate” of the Company within the meaning of Rule 405 under the Securities Act or, if such holder is an “affiliate”, that such holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the tendering holder is a broker-dealer (whether or not it is also an “affiliate”) that will receive Exchange Notes for its own account in exchange for Initial Notes, we will represent on behalf of such broker-dealer that the Initial Notes to be exchanged for the Exchange Notes were acquired by it as a result of market-making activities or other trading activities, and acknowledge on behalf of such broker-dealer that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.