<PAGE>

                                                                    Exhibit 10.6

                         DIRECTOR DESIGNATION AGREEMENT

     This Director Designation Agreement, dated as of January 28, 2003 (this
"Agreement"), is hereby entered into by and among XM Satellite Radio Holdings
Inc., a corporation duly organized under the laws of the State of Delaware (the
"Company"); AEA XM Investors I LLC, AEA XM Investors II LLC, AEA XM Investors IA
LLC and AEA XM Investors IIA LLC, each a limited liability company organized
under the laws of the State of Delaware (individually or collectively "AEA XM");
Clear Channel Investments, Inc., a corporation duly organized under the laws of
the State of Nevada ("Clear Channel"); Columbia XM Radio Partners, LLC, a
limited liability company duly organized under the laws of the Commonwealth of
Virginia ("Columbia Radio Partners"), Columbia XM Satellite Partners III, LLC, a
limited liability company duly organized under the laws of the Commonwealth of
Virginia ("Columbia Satellite Partners"), Columbia Capital Equity Partners III
(QP), L.P. and Columbia Capital Equity Partners II (QP), L.P., each a limited
partnership duly organized under the laws of the State of Delaware (together,
"Columbia Equity Partners", and collectively with Columbia Radio Partners and
Columbia Satellite Partners, "Columbia"); Hughes Electronics Corporation,
corporation duly organized under the laws of Delaware ("Hughes"); American Honda
Motor Co., Inc., a corporation duly organized under the laws of the State of
California ("Honda"); and Madison Dearborn Capital Partners III, L.P. ("Madison
Capital"), Madison Dearborn Special Equity III, L.P. ("Madison Equity"), and
Special Advisors Fund I, LLC ("Madison Advisors" and, collectively with Madison
Capital and Madison Equity, each an entity duly organized under the laws of the
State of Delaware, "Madison"). AEA XM, Clear Channel, Columbia, Honda, Hughes
and Madison are collectively referred to herein as the "Investors." The Company
and the Investors are collectively referred to herein as the "Parties."

                                   WITNESSETH

     WHEREAS, the Company, the Investors, and certain other current and former
investors in the Company are parties to an Amended and Restated Shareholders
Agreement, dated August 8, 2000 (the "2000 Agreement"), that relates to, among
other things, the designation of the Company's directors, but is being amended
on or about the date hereof to delete the director designation provisions, which
will no longer be part of the arrangements between the Company and such
investors; and

     WHEREAS, the Company and each of the Investors believe it to be in the best
interests of the Company and the mutual best interests of each of the Investors
to continue to have certain agreements with respect to the designation of
directors of the Company.

     NOW, THEREFORE, in consideration for the mutual covenants contained herein,
the adequacy, receipt, and sufficiency of which are hereby acknowledged, the
undersigned hereby agree as follows:

<PAGE>

                                   ARTICLE I.

                                   DEFINITIONS

     Section 1.1    Definitions.

     Affiliate: means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. For purposes of
Section 2.1, a member of a limited liability company or a partner of a
partnership shall be deemed an Affiliate of said company or partnership.

     Board or Board of Directors: means the Board of Directors of the Company or
a committee consisting of one or more directors lawfully exercising the powers
of the Board.

     Business Day: means any day other than a Saturday, Sunday or any other day
on which commercial banks are authorized or required by law to be closed in New
York City or the District of Columbia.

     Capital Stock: means any and all securities, shares, interests, warrants,
options, rights to acquire equity or equity-linked securities of the Company,
participations or other equivalents (however designated, whether voting or
non-voting) in equity of the Company, whether issued by the Company or its
Subsidiaries, and whether now outstanding or issued subsequently hereto,
including, without limitation, all series and classes of Common Stock and
preferred stock of the Company, and all Convertible Securities, including the
Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock,
the Series C Convertible Preferred Stock and the 10% Senior Secured Discount
Convertible Notes due 2009 of the Company and its wholly owned subsidiary XM
Satellite Radio Inc. (the "New Notes").

     Class A Common Stock: means the Class A Common Stock, par value $0.01 per
share, of the Company having one (1) vote per share.

     Common Stock: means all classes and series of the common stock of the
Company, any stock into which such common stock shall have been changed or
converted or any stock resulting from any capital reorganization or
reclassification of such common stock, and all other stock of any class or
classes (however designated) of the Company, the holders of which have the
right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment of
dividends and distributions of any shares entitled to preference.

     Common Stock Deemed Outstanding: means, at any given time, the number of
shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock issuable upon the conversion, exchange, or exercise in
full, of all Convertible Securities, whether

                                      - 2 -

<PAGE>

or not the Convertible Securities are convertible into or exercisable or
exchangeable for Common Stock at such time.

     Convertible Securities: means securities or obligations that are
exercisable for, convertible into or exchangeable for shares of Common Stock.
The term includes options, warrants or other rights to subscribe for or purchase
Common Stock or to subscribe for or purchase other securities or obligations
that are convertible into or exercisable or exchangeable for Common Stock,
including, without limitation, the Series A Convertible Preferred Stock, the
Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock
and the New Notes.

     Person: means any individual, partnership, corporation, joint venture,
limited liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

     Series A Convertible Preferred Stock: means the Series A Convertible
Preferred Stock, par value $1.00 per share, of the Company having zero (0) votes
per share.

     Series B Convertible Preferred Stock: means the Series B Convertible
Redeemable Preferred Stock, par value $.01 per share, of the Company having zero
(0) votes per share.

     Series C Convertible Preferred Stock: means the Series C Convertible
Redeemable Preferred Stock, par value $.01 per share, of the Company, having the
same voting rights as the Class A Common Stock determined on an as converted
basis.

     Series C Purchase Agreement: means the Series C Convertible Preferred Stock
Purchase Agreement, dated as of July 7, 2000, by and among the Company and the
investors named therein.

     Subsidiary: means, with respect to any Person, any corporation, association
or other business entity of which more than fifty percent (50%) of the voting
power of the outstanding Capital Stock is owned, directly or indirectly, by such
Person or one or other Subsidiaries of such Person.

                                   ARTICLE II.

                     CORPORATE GOVERNANCE; VOTING AGREEMENT

     Section 2.1    Board of Directors.

     (a)  The Board of Directors and the board of directors of XM Satellite
Radio Inc. and any other material Subsidiary of the Company (other than the
board of any joint venture with Sirius Satellite Radio Inc. so long as the
Company's management provides regular reports to the Board of Directors as to
the status of any such joint venture) (collectively, the "Boards of Directors")
shall consist of at least seven (7) members, of whom:

                                      - 3 -

<PAGE>

          (i)   one (1) member shall be designated by Clear Channel;

          (ii)  one (1) member shall be the President and CEO of the Company;

          (iii) one (1) member shall be the Chairman of the Company;

          (iv)  two (2) members shall be independent directors of recognized
industry expertise and stature both of whom shall be approved by the Investors
who hold a majority of the Common Stock Deemed Outstanding that is held by the
Investors;

          (v)   one (1) member shall be designated by AEA XM who shall be
appointed to any Audit Committee and Executive Committee (subject to meeting the
Nasdaq Stock Market's Audit Committee and Charter requirements); and

          (vi)  at Honda's option, one (1) member shall be designated by Honda
who shall be appointed to any Executive or comparable committee of the Boards of
Directors.

     (b)  Each Investor agrees to vote its voting securities of the Company in
favor of the persons nominated in accordance with the provisions herein. The
rights of Clear Channel to designate a director and approve the appointment of
independent directors pursuant to this Section 2.1 shall continue for so long as
Clear Channel holds (A) in excess of 5% of the Common Stock Deemed Outstanding
or (B) the full amount of its original investment in the Company. The right of
AEA XM to designate a director and approve the appointment of independent
directors shall continue for so long as AEA XM (or its Affiliates) holds at
least 50% of the stock that it originally purchased under the Series C Purchase
Agreement, either in Series C Convertible Preferred Stock or as converted into
Class A Common Stock. The right of Honda to designate a director and approve the
appointment of independent directors shall continue for so long as Honda (or any
of its Affiliates) retains at least 50% of its investment, including debt and
equity securities, in the Company (measured by the purchase price paid by Honda
for such securities and without regard to (i) whether or not such securities
have been converted into any other security of the Company or (ii) the current
market value of any such securities) as of the date hereof.

     (c)  The right of Clear Channel to designate a director pursuant to Section
2.1(a)(i) also shall terminate, and any director designated by Clear Channel
shall promptly resign from the Boards of Directors, if a majority of the
ownership interests of Clear Channel cease to be owned, directly or indirectly,
by Clear Channel Communications, Inc.

     Section 2.2    Removal of Directors. The Investors agree to vote so that
each member of the Board of Directors nominated or designated in accordance with
Section 2.1 shall serve as a director of the Company until removed, upon the
instructions of the Party designating such director, and each Party agrees to
vote its shares of Common Stock in accordance with such directions. To the
extent permitted by law, each Investor agrees not to take any action to remove
or replace (and to use all reasonable efforts to cause the Board of Directors
not to replace), with or without cause, any director of the Company that has not
been designated for removal or replacement by the Party having originally
nominated or designated such director.

                                      - 4 -

<PAGE>

     Section 2.3    No Group. It is the intent of the Investors that no "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as
amended) shall be formed as a result of this Agreement.

     Section 2.4    Partial Termination. If the Investors at any time
beneficially own in excess of 50% of the voting securities of the Company, then
this Agreement shall terminate automatically as to the following, in all
respects, first, Columbia, second (if necessary), Clear Channel, third (if
necessary), Madison, and, fourth (if necessary), AEA XM until the remaining
Investors beneficially own 50% or less of the voting securities of the Company.
The Parties shall take all actions to reflect any such partial termination as
may be reasonably requested by the Company or any other Party. Thirty (30) days
prior to a date for payment of interest (an "Interest Payment") under any of (i)
the New Notes, (ii) the Series GM 10% Senior Secured Convertible Notes due 2009
of the Company and XM Satellite Radio Inc., and (iii) the Credit Agreement among
the Company, XM Satellite Radio Inc. and General Motors Corporation, the Company
shall calculate the Investors' beneficial ownership of voting securities of the
Company (with a copy of such calculation to be furnished to each of the
Investors). Each Investor shall provide the Company with at least ten (10) days
prior written notice of its intent to purchase any voting securities of the
Company. If any proposed purchase of voting securities or Interest Payment would
cause the beneficial ownership of the Investors to be in excess of 50%, then the
Parties shall take such actions as necessary to remove Investors as Parties to
this Agreement in the order set forth above.

     Section 2.5    Transfers. Any assignment or transfer by an Investor to a
single transferee or a group of Affiliated transferees, whether in a single
transaction or a series of related transactions, of:

          (i)   Convertible Securities representing more than 1% of the Common
Stock Deemed Outstanding, other than Common Stock sold pursuant to an effective
registration statement or Rule 144 or Rule 145 under the Securities Act of 1934,
as amended, or

          (ii)  any New Notes

shall be subject to the assumption by such transferee of the obligation to vote
its Common Stock as provided herein and the obligation to require the same in
subsequent such assignments or transfers.

                                  ARTICLE III.

                             CERTAIN REPRESENTATIONS

     Each Party hereby represents and warrants on behalf of itself to each other
     Party that:

     Section 3.1    Existence and Power.

     (a)  it is an entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of formation;

                                      - 5 -

<PAGE>

     (b)  it has the power and authority to own its assets, carry on its
business and execute, deliver, and perform its obligations under this Agreement;
and

     (c)  it is duly qualified to do business and is licensed and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
or license except where such failure to qualify would not have a material
adverse effect on the business or financial condition of such Party.

     Section 3.2    Due Authorization; No Contravention. The execution, delivery
and performance by it of this Agreement have been duly authorized by all
necessary action, and do not and will not:

     (a)  Breach or violate the terms of its certificate of incorporation (or
similar constituent document) or bylaws (or similar constituent document);

     (b)  Breach or violate the terms of any material agreement to which it is
party; or

     (c)  Violate any law or regulation applicable to it, including but not
limited to the Communications Act and the rules and regulations promulgated from
time to time by the Federal Communications Commission (or any successor agency
thereto).

     Section 3.3    Binding Effect. This Agreement has been duly authorized (to
the extent such Party is an entity), executed and delivered by such Party and
constitutes the legal, valid and binding obligation of such Party enforceable
against such Party in accordance with the terms hereof, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws affecting creditors' rights generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).

                                   ARTICLE IV.

                                  MISCELLANEOUS

     Section 4.1    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 each Party at its address for notices specified on Schedule I
attached hereto, or at such other address, or to the attention of such officer,
as any Party shall have furnished to each other Party in writing pursuant to
this Section 4.1. Such notice shall be deemed to have been received: (i) three
(3) Business Days after the date of mailing if sent by certified or registered
mail, (ii) one (1) Business 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 with confirmation of
receipt.

     Section 4.2    Amendment. Any term of this Agreement may be amended only
with the written consent of (a) the Company, (b) Investors holding, (i) in the
case of amendments to provisions of this Agreement generally, 75% of the
aggregate of the Common Stock Deemed

                                      - 6 -

<PAGE>

Outstanding held by Investors, and (ii) in the case of any non-material change
or technical correction of this Agreement, a majority of the aggregate of the
Common Stock Deemed Outstanding held by Investors, and (c) in the case of
amendments to any provision of Section 2.1 which adversely affect the right of
any Investor to designate one or more directors, in addition to the consents
listed in clauses (a) and (b) of this Section, the Investor having the right
that would be adversely affected; provided, however, that in the event the
rights, preferences or obligations hereunder of one or more Investors are being
amended in a manner that is materially adverse to such Investors and in a manner
that is different from those of other Investors, such rights, preferences or
obligations may be so amended only with the consent of the Investors holding at
least 75% in the aggregate of the Common Stock Deemed Outstanding held by
Investors whose rights, preferences or obligations are being materially
adversely amended in such different manner. Any amendment effected in accordance
with this Section 4.2 shall be binding upon any future transferee of an Investor
and the Company.

     Section 4.3    Specific Performance. Each Party acknowledges (i) that it
will be impossible to measure in money the damage to each other Party if any of
them or any legal representative of any Party fails to comply with any of the
provisions of this Agreement, (ii) that every such provision is material, and
(iii) that in the event of any such failure, the Company and the Investors will
not have an adequate remedy at law or in damages. Accordingly, each Party hereto
consents to the issuance of an injunction or the enforcement of other equitable
remedies against it at the suit of an aggrieved Party without the posting of any
bond or other security, to compel specific performance of all of the terms
hereof, and waives any defense thereto, including, without limitation, the
defenses of (i) failure of consideration, (ii) breach of any other provision of
this Agreement and (iii) availability or relief in damages.

     Section 4.4    GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING
EFFECT TO ANY CONFLICT OF LAW PROVISIONS THEREOF.

     EACH OF THE PARTIES ACKNOWLEDGES THAT (i) IT IS A KNOWLEDGEABLE, INFORMED,
SOPHISTICATED BUSINESS ENTITY CAPABLE OF UNDERSTANDING AND EVALUATING THE
PROVISIONS SET FORTH IN THIS AGREEMENT, AND (ii) IT HAS BEEN REPRESENTED BY SUCH
COUNSEL AND OTHER ADVISORS OF ITS CHOOSING AS IT HAS DEEMED APPROPRIATE IN
CONNECTION WITH ITS DECISION TO ENTER INTO THIS AGREEMENT.

     Section 4.5    Parties In Interest. This Agreement shall be binding upon
and shall inure to the benefit of each Party and their respective successors and
permitted assigns as provided for herein, and by their signatures hereto, and
each Party intends to and does hereby become bound. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any Person
other than the Parties hereto and their respective successors and assigns any
legal or equitable right, remedy or claim under or in or in respect of this
Agreement or any provision herein contained.

                                      - 7 -

<PAGE>

     Section 4.6    Severability of Provisions. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.

     Section 4.7    Plural; Singular. When used herein, the singular of each
term includes the plural and the plural of each term includes the singular.

     Section 4.8    Counterparts. This Agreement may be executed in any number
of counterparts all of which taken together shall constitute one agreement and
any Party hereto may execute this Agreement by signing any such counterpart.

     Section 4.9    Descriptive Headings. The descriptive headings of the
several sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.

     Section 4.10   Future Assurances. Each Party shall execute and deliver all
such future instruments and take such other and further action as may be
reasonably necessary or appropriate to carry out the provisions of this
Agreement and the intention of the Parties as expressed herein.

     Section 4.11   Termination. This Agreement shall be immediately terminated
upon any of the following: (i) the unanimous written consent to the termination
hereof by the Parties hereto, (ii) the dissolution, bankruptcy or receivership
of the Company, or (iii) at such time as only one (1) Investor remains a Party
hereto. This Agreement shall be immediately terminated in all respects as to any
Investor that transfers 95% or more of its Capital Stock to any Person that is
not an Affiliate of such Investor.

                                      - 8 -

<PAGE>

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

XM SATELLITE RADIO HOLDINGS INC.

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

CLEAR CHANNEL INVESTMENTS, INC.

By: /s/ Randall T. Mays
   -------------------------------
Name:  Randall T. Mays
Title: Executive Vice President

HUGHES ELECTRONICS CORPORATION


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

AMERICAN HONDA MOTOR CO., INC.


By:   Thomas G. Elliot
   -------------------------------
Name: Thomas G. Elliot
Title: Executive Vice President

                   Agreement to Elect Directors Signature Page

<PAGE>

<TABLE>
<S>                                                       <C>
AEA XM INVESTORS I LLC                                    AEA XM INVESTORS II LLC
By XM Investors I LP, its Sole Member                     By XM Investors II LP, its Sole Member
By AEA XM Investors Inc., its General Partner             By AEA XM Investors Inc., its General Partner
                                                          By: /s/ Christine J. Smith
                                                             ---------------------------------------
                                                          Name: Christine J. Smith
By: /s/ Christine J. Smith                                Title: Vice President
   -------------------------------
Name: Christine J. Smith
Title: Vice President


AEA XM INVESTORS IA LLC                                   AEA XM INVESTORS IIA LLC
By XM Investors IA LP, its Sole Member                    By XM Investors IIA LP, its Sole Member
By AEA XM Investors Inc., its General Partner             By AEA XM Investors Inc., its General Partner
                                                          By: /s/ Christine J. Smith
                                                             ---------------------------------------
                                                          Name: Christine J. Smith
By: /s/ Christine J. Smith                                Title: Vice President
   -------------------------------
Name: Christine J. Smith
Title: Vice President


COLUMBIA XM RADIO PARTNERS, LLC                           COLUMBIA XM SATELLITE PARTNERS III, LLC
By Columbia Capital LLC, its Managing Member              By: Columbia Capital L.L.C., its Managing Member

By:   James B. Fleming, Jr.                               By:   James B. Fleming, Jr.
   -------------------------------                           ---------------------------------------
Name: James B. Fleming, Jr.                               Name: James B. Fleming, Jr.
Title: Vice President                                     Title: Vice President


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

By:   James B. Fleming, Jr.                               By:   James B. Fleming, Jr.
   -------------------------------                           ---------------------------------------
Name: James B. Fleming, Jr.                               Name: James B. Fleming, Jr.
Title: Vice President                                     Title: Vice President
</TABLE>

                   Agreement to Elect Directors Signature Page

<PAGE>

<TABLE>
<S>                                                       <C>
MADISON DEARBORN CAPITAL PARTNERS III, L.P.               MADISON DEARBORN SPECIAL EQUITY III, L.P.
                                                          By Madison Dearborn Partners III, L.P., its general
By Madison Dearborn Partners III, L.P., its               partner
general partner                                           By Madison Dearborn Partners LLC, its general
By Madison Dearborn Partners LLC, its general             partner
partner


By:   James N. Perry, Jr.                                 By:   James N. Perry, Jr.
   -------------------------------                           ---------------------------------------
Name: James N. Perry, Jr.                                 Name: James N. Perry, Jr.
Title: Managing Director                                  Title: Managing Director


SPECIAL ADVISORS FUND I, LLC
By Madison Dearborn Partners III, L.P., its
manager
By Madison Dearborn Partners LLC, its general
partner


By:   James N. Perry, Jr.
   -------------------------------
Name: James N. Perry, Jr.
Title: Managing Director
</TABLE>

                   Agreement to Elect Directors Signature Page

<PAGE>

                                   SCHEDULE I

                NAMES, ADDRESSES AND FACSIMILE NUMBERS OF PARTIES

The Company:         XM Satellite Radio Holdings Inc.               202-380-4500
                     1500 Eckington Place, N.E.
                     Washington, DC 20002
                     Attention: Joseph M. Titlebaum, Esq.

Clear Channel:       Clear Channel Investments, Inc.                210-822-2299
                     200 E. Basse Road
                     San Antonio, TX 78209
                     Attention: Ken Wyker, Esq.

AEA XM:              AEA Investors Inc.                             212-888-1459
                     65 E. 55th Street
                     New York, New York 10022
                     Attention: General Counsel

Columbia:            Columbia XM Radio Partners, L.L.C.             703-519-3904
                     201 North Union Street, Suite 300
                     Alexandria, Virginia 22314
                     Attention: Mr. James B. Fleming

Honda:               America Honda Motor Co., Inc.                  310-783-2210
                     1919 Torrance Boulevard
                     Torrance, California 90501-2746
                     Attention: Shinichi Sakamoto

                     Honda North America, Inc.                      310-781-4970
                     700 Van Ness Avenue
                     Torrance, California 90501
                     Attention: Law Department

Hughes:              200 N. Sepulveda Boulevard                     310-640-1734
                     El Segundo, California 90245

Madison:             Madison Dearborn Partners, Inc.                312-895-1221
                     Three First National Plaza
                     Chicago, Illinois 60602
                     Attention: Mr. James N. Perry