Exhibit 10.4
EXECUTION COPY
GUARANTY
THIS GUARANTY (this
“Guaranty”) dated as of February 13, 2007, is made
by XM Satellite Radio Holdings Inc., a Delaware corporation
(“Holdings”); XM Equipment Leasing LLC, a Delaware
limited liability company (“XM Leasing”); XM Radio
Inc., a Delaware corporation (“XM License”) and each
additional guarantor that has executed a Counterpart Agreement in
the Form of Annex A hereto (“Additional Guarantor”)
(Holdings, XM Leasing, XM License and the Additional Guarantors
being referenced to herein collectively as
“Guarantors”).
W I T N E S S E T H
:
WHEREAS, pursuant to the provisions
of a Trust Agreement, dated as of the date hereof between Wells
Fargo Bank Northwest, National Association, a national banking
association (in its individual capacity, “Trust
Company” and solely in its capacity as trustee thereunder,
“Owner Trustee”), and the Owner Participant identified
in Schedule I hereto (“Owner Participant”), Owner
Participant authorized Owner Trustee to enter into agreements for
the purchase, leasing and servicing of Buyer’s Transponders
(such term and all other capitalized terms used herein and not
otherwise defined having the meaning specified in Appendix A to the
Participation Agreement hereinafter referred to);
WHEREAS, Owner Trustee, as Lessor,
currently intends to enter into a Lease Agreement (as amended,
modified or supplemented from time to time, the “Lease”
and, together with the Participation Agreement, Consent and
Agreement, Tax Indemnification Agreement, Purchase Agreement, Bill
of Sale, Service Agreement, any Deferred Payment Note and other
consents and agreements and bills of sale as specifically provided
in any of the XM Agreements or Operative Documents, in each case as
amended, modified or supplemented from time to time, hereinafter
referred to as the “Documents” and singly as a
“Document”) to be dated as of the Closing Date, with XM
Satellite Radio Inc., a Delaware corporation and a wholly-owned
subsidiary of Holdings and the parent company of XM Leasing and XM
License, as lessee (“Lessee”), providing for the lease
by Lessee from Owner Trustee of Buyer’s
Transponders;
WHEREAS, concurrently herewith,
Owner Trustee has entered into a Transponder Service Agreement (as
amended, modified or supplemented from time to time, the
“Service Agreement”) with XM Satellite Radio Inc., a
Delaware corporation and wholly-owned subsidiary of Holdings and
the parent company of XM Leasing and XM License, as service
provider (“Service Provider”), providing for the
performance by Service Provider of certain operational services for
Owner Trustee;
WHEREAS, subject to the terms and
conditions of that certain Participation Agreement, dated as of
February 13, 2007 (as amended or modified from time to time,
the “Participation Agreement”), among Owner
Participant, Holdings, XM and the other parties named therein,
Owner Participant has agreed to make an equity investment in
Buyer’s Transponders;
NOW, THEREFORE, in consideration of
the foregoing premises and other good and valuable consideration,
receipt of which is hereby acknowledged, Guarantors hereby agree
for the benefit of each of the Indemnitees (collectively, the
“Guaranteed Parties,” and individually, a
“Guaranteed Party”) as follows:
1. Guaranty .
(a) Guarantors hereby jointly and
severally unconditionally guarantee to each Guaranteed Party
(i) the punctual payment when due of each and every obligation
for the payment of money (including, without limitation, pursuant
to any indemnity provision) of Lessee or Service Provider to such
Guaranteed Party to the extent of such Guaranteed Party’s
rights to such payments under any Document now or hereafter arising
under any such Document (as such payment obligations are set forth
therein and which obligations are subject to any and all terms,
conditions and limitations now or hereafter set forth therein),
(ii) the due and punctual payment of any and all money damages
for breach or default by Lessee or Service Provider in respect of
their respective representations, warranties, covenants and other
obligations now or hereafter arising under any Document
(“Damages”) and (iii) any and all reasonable fees
and expenses (including, without limitation, reasonable
attorneys’ fees subject to the same limitations, if any,
imposed on such fees and expenses in the Documents) incurred by
each Guaranteed Party in enforcing any rights of each Guaranteed
Party under this Guaranty. In the event that any of the foregoing
obligations for the payment of money or liabilities for Damages of
Lessee or Service Provider, as the case may be, under any of the
Documents, shall not be paid when due, Guarantors will immediately
pay such obligations (to the extent that such obligations have not
been paid when due by the Lessee or Service Provider) for the
payment of money or liabilities for Damages; provided that
in the event that the payment of an obligation for the payment of
money or liability for Damages is required of Guarantors hereunder,
Guarantors may cause such obligation or liability to be paid on
their behalf by any entity affiliated with them. Such obligations
for the payment of money and liabilities for Damages are
collectively referred to herein as the “Guaranteed
Obligations.” For purposes of this Guaranty, the terms
“Lessee” and “Service Provider” shall mean
each of Lessee and Service Provider, as such terms are respectively
defined in Appendix A to the Participation Agreement, and each
successor to or assignee or delegate of any of their respective
obligations under any Document. As used herein, Lessee shall also
include any Assignee or User of Lessee pursuant to
Section 6(c) of the Lease.
(b) This Guaranty is a guarantee of
payment and not of collectibility, is in no way conditioned or
contingent upon any attempt to collect from Lessee or the Service
Provider, as the case may be, or upon any other event, contingency
or circumstance whatsoever.
(c) Notwithstanding anything
contained herein to the contrary, this Guaranty is a guarantee of
payment and not of performance.
2. Security Interest . In
addition to the provisions of Section 1, Holdings hereby
grants to the Owner Trustee, its successors and assigns, a first
priority security interest and lien on the Satellite, all in
accordance with the terms of Annex B (the “Security
Annex”), the provisions of which are hereby incorporated by
reference herein.
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3. Security for Owner
Trustee’s Obligations to Indenture Trustee . In order to
secure the indebtedness evidenced by the Notes and all obligations
secured by the Indenture, the Owner Trustee provides in the
Indenture, among other things, for the assignment (to the extent
provided therein) by the Owner to the Indenture Trustee of all of
the Owner’s right, title and interest in and to this
Guaranty, the Security Annex incorporated herein and the Satellite
Security and for the creation of a Lien and security interest to
the extent permitted by Applicable Laws in favor of the Indenture
Trustee for the benefit of the Noteholders in and to the Indenture
Estate as described in the granting clauses of the Indenture.
Guarantors hereby consent to such assignment and to the creation of
such Lien and security interest and acknowledge receipt of copies
of the Indenture. Guarantors and the Owner Trustee hereby
acknowledge that, for so long as the Lien of the Indenture shall be
in effect, (i) this Guaranty constitutes a “Granting
Clause Document” under the Indenture and (ii) the
Indenture Trustee is, and is intended to be, a third party
beneficiary of this Guaranty (including as to the representations
and warranties, the covenants and the indemnification obligations
of the Guarantors hereunder). In no event shall the Owner Trustee
grant or consent to any waiver, amendment, modification or
supplement to this Guaranty (except with respect to Excepted
Payments) without the prior written consent of the Indenture
Trustee, until the Lien of the Indenture shall have been terminated
or discharged. The Owner Trustee agrees that it shall not otherwise
assign or convey its right, title and interest in and to this
Guaranty, except as permitted by and subject to the provisions of
this Guaranty, Participation Agreement and the
Indenture.
4. Guaranty Absolute . The
liability of Guarantors under this Guaranty with respect to each
and all of the Guaranteed Obligations shall be irrevocable and
shall be absolute and unconditional irrespective of, and shall not
be released, discharged or in any way affected by, any
circumstance, condition or matter (whether or not any Guarantor,
Lessee or Service Provider shall have any knowledge or notice
thereof), including, without limitation:
(a) any waiver, extension, renewal
or modification of, or any consent to departure from, any Document,
including, without limitation, any waiver or consent involving a
change in the amount, time, manner or place of payment of all or
any of the Guaranteed Obligations contained in any
Document;
(b) any exchange, release or
nonperfection of any collateral, or any release or amendment or
waiver of or consent or departure from any other guaranty or
security agreement, for all or any of the Guaranteed Obligations
contained in any Document;
(c) as to any Guaranteed Party, any
failure on the part of any other Person to perform its obligations
under any XM Agreement, Operative Document or other Document, as
the case may be;
(d) any extension of the time for
payment by Lessee or Service Provider, as the case may be, or any
other Person of any Guaranteed Obligation under any
Document;
(e) any failure, omission or delay
by any Guaranteed Party to enforce, assert or exercise any right,
power or remedy conferred on or available to it;
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(f) any inability of Lessee or
Service Provider to perform any agreement, covenant, term or
condition contained in any Document for any reason (whether or not
any Guarantor shall have any knowledge or notice
thereof);
(g) the voluntary or involuntary
liquidation, dissolution, sale of assets, marshalling of assets and
liabilities, receivership, conservatorship, custodianship,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of or
similar proceeding affecting, Lessee, Service Provider, any
Guarantor, any Guaranteed Party or any other Person or any of their
respective properties or creditors, or any action taken by any
trustee or receiver or by any court in any such
proceeding;
(h) any discharge, termination,
cancellation, frustration, irregularity, invalidity or
unenforceability, in whole or in part, of any liabilities or
obligations of any Person under any Document, the Guaranteed
Obligations, any collateral security for the Guaranteed Obligations
or any other guarantee of the Guaranteed Obligations or any other
agreement, instrument, guarantee or security with respect to the
Guaranteed Obligations or any term of any thereof;
(i) any defect in the title,
compliance with specifications, condition, design, operation or
fitness for use of, or any damage to or loss or destruction of, or
any interruption or cessation in the use of Buyer’s
Transponders or of the Satellite for any reason whatsoever
(including, without limitation, any governmental prohibition or
restriction, condemnation, requisition, seizure or any other act on
the part of any governmental or military authority, or any act of
God or of the public enemy) regardless of the duration
thereof;
(j) any merger or consolidation of
Lessee, Service Provider or any Guarantor into or with any Person
or any sale, lease or transfer of any of the assets of Lessee,
Service Provider or any Guarantor to any other Person;
(k) any counterclaim, set off,
deduction or defense Guarantors may have against any Guaranteed
Party or any other Person; provided , however , that
to the extent that Lessee or Service Provider has a counterclaim,
set off, deduction or defense against any Guaranteed Party, this
clause shall not be applicable with respect to such counterclaim,
set off, deduction or defense; provided , however
that the foregoing shall not apply with respect to any
counterclaim, set off, deduction or defense relating to
(x) any bankruptcy or insolvency proceeding involving the
Lessee or Service Provider or (y) to the validity and
enforceability of the Documents; and
(l) any other circumstance
whatsoever, whether similar or dissimilar to the foregoing, which
might otherwise constitute a legal or equitable defense available
to, or a discharge of, any Guarantor in respect of this Guaranty;
provided , however , that nothing contained in this
Section 4 shall prevent any Guarantor from bringing an action
for damages suffered by Guarantor as a result of the breach by any
Person of any obligation owed by it to Lessee, Service Provider or
any Guarantor or for equitable relief to obtain compliance with
such. This Guaranty shall continue to be effective or be
reinstated, as the case may be, with respect to any Guaranteed
Party, if at any time any payment of any of the Guaranteed
Obligations owed such Guaranteed Party is rescinded or must
otherwise be returned by such Guaranteed Party, as
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the case may be, upon the insolvency, bankruptcy
or reorganization of Lessee, Service Provider or any Guarantor or
otherwise, all as though such payment had not been made. If the
payment of any sum required to be made by Lessee or Service
Provider under any Document shall at any time be prevented by
reason of a case or proceeding under bankruptcy, insolvency or
other similar law, Guarantors agree that, for purposes of this
Guaranty and their obligations hereunder, such sum shall be deemed
to be payable in accordance with the terms of such Document, and
Guarantors shall immediately pay such sum and any other amounts
guaranteed hereunder without further notice or demand (and, for
purposes hereof, if Lessor’s exercise of remedies under
Section 16 of the Lease is stayed or otherwise limited in
connection with any such case or proceeding with respect to Lessee,
Lessee shall be deemed to owe an amount equal to the maximum amount
Lessor would be entitled to demand from Lessee in the absence of
such stay or other limitations).
Notwithstanding anything in this
Guaranty to the contrary, to the extent that Lessee or Service
Provider has a counterclaim, set off, deduction or defense against
any Guaranteed Party, the Guarantors shall be entitled to raise
such counterclaim, set off, deduction or defense prior to the
making of any payment with respect to that portion of the
Guaranteed Obligations comprising or relating to any such
counterclaim, set off, deduction or defense; provided ,
however that the foregoing shall not apply with respect to
any counterclaim, set off, deduction or defense relating to
(x) any bankruptcy or insolvency proceeding involving the
Lessee or Service Provider or (y) to the validity and
enforceability of the Documents.
5. Disaffirmance of Documents in
Bankruptcy . Notwithstanding the rejection or disaffirmance of
any Document by Lessee or Service Provider or their respective
trustees in bankruptcy or similar representatives pursuant to the
Federal bankruptcy law or any other law affecting creditors’
rights, including, without limitation, in the event of
disaffirmance or rejection of any Document pursuant to
Section 365(a) of the Bankruptcy Code or any similar provision
of applicable law now or hereafter in effect, Guarantors shall
remain liable, to the extent set forth herein, with respect to the
payment obligations and liabilities for Damages of Lessee or
Service Provider, as the case may be, under all of the Documents to
the same extent as if there had been no such rejection or
disaffirmance, and Guarantors will confirm their obligations
hereunder upon or after such rejection or disaffirmance.
6. Waiver . Guarantors hereby
unconditionally waive, as to any Guaranteed Party, to the greatest
extent permitted by applicable law, (a) any and all notice of
the creation, renewal, extension or accrual of any of the
Guaranteed Obligations and notice of or proof of reliance by any
Guaranteed Party upon this Guaranty, or acceptance of this
Guaranty, and the Guaranteed Obligations, (b) any requirement
that any Guaranteed Party exhaust any right or take any action
against Lessee, Service Provider, any other Guarantor or any other
Person or any collateral, (c) any and all rights which
Guarantor may have or which at any time hereafter may be conferred
upon it, by statute (including but not limited to any statute of
limitations), regulation or otherwise, to terminate or cancel this
Guaranty, (d) all notices which may be required by statute,
rule of law or otherwise to preserve any rights against Guarantors
hereunder, including, without limitation, any demand, presentment,
protest, proof or notice of nonpayment of any amounts payable under
or in respect of the Documents, and notice of any failure on the
part of Lessee or Service Provider to perform and comply with any
term or condition of any Document, (e) any
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rights to the enforcement, assertion or exercise
of any right, remedy, power or privilege under or in respect of any
of the Documents, (f) any requirement of diligence and
(g) notice of acceptance of this Guaranty. Each Guaranteed
Party shall have the right to bring suit directly against any or
all of the Guarantors with respect to the Guaranteed Obligations
owed such Guaranteed Party, either prior to or concurrently with
any lawsuit against, or without bringing suit against, Lessee or
Service Provider, as the case may be. Each Guarantor assumes all
responsibility for being and keeping itself informed of the
Lessee’s and each other Guarantor’s financial
condition, affairs and assets, and of all other circumstances
bearing upon the Guarantor’s risk hereunder. Each Guarantor
acknowledges and agrees that the Guaranteed Parties shall have no
obligation to investigate the financial condition or affairs of the
Lessee or any other Guarantor for the benefit of such Guarantor or
to advise such Guarantor of any fact respecting, or any change in,
the financial condition, assets or affairs of the Lessee or any
other Guarantor that might become known to any Guaranteed
Party.
7. Amendments, Etc . No
amendment or waiver of any provision of this Guaranty shall in any
event be effective with respect to any Guaranteed Party unless the
same shall be in writing and signed by such Guaranteed
Party.
8. No Waiver, Remedies . No
failure on the part of any Guaranteed Party to exercise, and no
delay in any Guaranteed Party’s exercise of, any right
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right hereunder by any Guaranteed Party
preclude any other or further exercise thereof or the exercise of
any other right by such Guaranteed Party. Any Guaranteed Party may
specifically waive any breach of this Guaranty by a Guarantor;
provided that no such waiver shall be effective or binding
unless in writing, and that no such waiver shall constitute a
continuing waiver of similar or other breach, or any breach by any
other Guarantor; and provided , further , that no
such waiver by any Guaranteed Party shall in any manner or to any
extent constitute or be deemed to constitute a waiver by any other
Guaranteed Party.
GUARANTORS’ SOLE OBLIGATION TO
ANY GUARANTEED PARTY HEREUNDER SHALL BE AS GUARANTORS OF THE
GUARANTEED OBLIGATIONS OF LESSEE AND SERVICE PROVIDER UNDER THE
DOCUMENTS, SUBJECT TO ALL OF THE SPECIFIC LIMITATIONS ON SUCH
GUARANTEED OBLIGATIONS EXPRESSLY PROVIDED IN SUCH DOCUMENTS (EXCEPT
FOR SUCH LIMITATIONS AS ARISE AS THE RESULT OF AUTHORITY OR POWER,
OR A BANKRUPTCY, INSOLVENCY OR REORGANIZATION
PROCEEDING).
9. Continuing Guaranty . This
Guaranty is a continuing guaranty and shall (a) remain in full
force and effect in accordance with the terms hereof until all of
the Guaranteed Obligations owed each Guaranteed Party have been
paid in full and are not subject to rescission or return,
(b) be binding upon Guarantors, their respective successors
and assigns, and (c) inure to the benefit of and be
enforceable by the successors, transferees and assigns of each
Guaranteed Party permitted by the applicable Document. Each
Guarantor agrees that in the discharge of its obligations hereunder
no judgment, order, or exhaustion need be obtained and no action,
suit or proceeding need be brought, and no other remedies need be
exhausted against Lessee, Service Provider or any other Person for
performance by Guarantor of its obligations hereunder.
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10. Merger or Consolidation .
Except as set forth in Section 11 hereof, no Guarantor shall
consolidate with or merge into any other Person or convey, transfer
or lease all or substantially all of its assets as an entirety to
any Person unless:
(a) the successor entity formed by
such consolidation or into which it is merged or the successor
entity which acquires by conveyance, transfer or lease all or
substantially all of its assets as an entirety shall be an entity
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia which has a
substantial part of its properties and assets located within, and
operates substantially within, the United States of
America;
(b) such successor entity shall
expressly assume in writing by instrument or instruments
enforceable against it reasonably satisfactory in form and
substance to Owner Trustee, the due and punctual payment of all
obligations of such Guarantor under this Guaranty with the same
effect as if such entity had originally been named Guarantor herein
or had been a party hereto;
(c) immediately after giving effect
to such transaction, no Bankruptcy Default or Event of Default, to
the extent it relates to such Guarantor, shall exist;
and
(d) Guarantor shall have delivered
to Owner Trustee and Indenture Trustee, an opinion of counsel in
scope and substance reasonably satisfactory to the Owner Trustee
and Indenture Trustee stating that such consolidation, merger,
conveyance, transfer or lease meet the requirements of clauses
(a) and (c) above and the assumption agreement is
enforceable as required by clause (b) above.
11. Merger, Consolidation of
Subsidiary Guarantors .
(a) Nothing contained in this
Guaranty or in any of the XM Agreements or Operative Documents
shall prevent any consolidation or merger of XM Leasing, XM License
or an Additional Guarantor (each, a “Subsidiary
Guarantor”) with or into Lessee or another Subsidiary
Guarantor, or shall prevent the transfer of all or substantially
all of the assets of a Subsidiary Guarantor to Lessee or another
Subsidiary Guarantor. Upon any such consolidation, merger, transfer
or sale, the Guaranty of the Subsidiary Guarantor being
consolidated or merged (or the assets of which are being so
transferred) shall no longer have any force or effect.
(b) Nothing contained in this
Guaranty or in any of the XM Agreements or Operative Documents
shall prevent any consolidation or merger of a Subsidiary Guarantor
with or into another entity or entities including the Lessee or
another 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 another entity including the Lessee or another
Subsidiary Guarantor authorized to acquire and operate the same in
the event that such consolidation,
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merger or transfer complies with the terms and
conditions of this Guaranty, the XM Agreements and the Operative
Documents and in the event that the entity or entities acquiring
the assets in any such sale or disposition or the entity or
entities formed by or surviving any such consolidation(s) or
merger(s) unconditionally assumes all the obligations of such
Subsidiary Guarantor under this Guaranty on the terms set forth
herein.
(c) Concurrently with any sale or
other disposition of all or substantially all of the assets of a
Subsidiary Guarantor or all of the equity interests of a Subsidiary
Guarantor (in each case other than XM License or any Subsidiary
Guarantor into which XM License has consolidated or merged or to
which XM License has transferred its assets) to a party that is not
an Affiliate of XM or Holdings, 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 equity interests of such
Subsidiary Guarantor) or the non-Affiliate entity 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 this Guaranty.
Neither XM License nor any Subsidiary Guarantor that is a
transferee of any material assets of XM License or a successor by
merger, consolidation or otherwise to XM License may transfer
assets to or consolidate or merge into any entity that is not a
Subsidiary Guarantor or does not, in connection with such
transaction, enter into a guarantee identical in all material
respects to this Guaranty.
12. Notices, Etc . All
notices, demands, requests, consents, approvals and other
instruments hereunder shall be in writing and shall be deemed to
have been properly given if given as provided for in
Section 13.03 of the Participation Agreement to the address of
Holdings as set forth therein.
13. Severability of This
Guaranty . In case any term or provision of this Guaranty or
any application thereof to any circumstance shall, in any
circumstances or jurisdiction and to any extent, be invalid,
illegal or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such
invalidity, illegality or unenforceability without invalidating or
rendering unenforceable any remaining terms and provisions hereof
or the application of such term or provision to circumstances or
jurisdictions other than those as to which it is held invalid,
illegal or unenforceable. To the extent permitted by Applicable
Law, each Guarantor hereby waives any provision of law that renders
any term or provision hereof invalid, illegal or unenforceable in
any respect.
14. Further Assurances . Each
Guarantor hereby agrees to execute and deliver all s
