Exhibit 10.1



 Exhibit 10.1 
 EXECUTION COPY 
  

 EMPLOYMENT AGREEMENT 
 Between 
 XM SATELLITE RADIO HOLDINGS INC. and 
 XM SATELLITE RADIO INC. 
 and 
 NATHANIEL A. DAVIS 
 Dated as of July 20, 2006 
  








 THIS AGREEMENT is entered into as of July 20, 2006, (the “Effective Date”), by and between
XM Satellite Radio Holdings Inc., a Delaware corporation, and its subsidiary XM Satellite Radio Inc., a Delaware corporation, both having a place of business at 1500 Eckington Place, N.E., Washington, D.C. 20002 (hereinafter collectively referred to
as “XM”) and Nathaniel A. Davis (“EMPLOYEE”) a resident of the State of Virginia. 
 WHEREAS, XM is engaged in the
development, implementation and operation of a digital audio satellite service to portable receivers; and 
 WHEREAS, XM is interested in
employing EMPLOYEE as its President and Chief Operating Officer (“COO”), EMPLOYEE is interested in being employed in that position subject to the terms and conditions set forth herein; 
 NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements of the parties contained herein, the parties hereby
agree as follows: 
 ARTICLE 1 
 DEFINITIONS 
 For purposes of this Agreement, the terms defined in this Article 1 shall have the respective meanings
set forth below: 
 1.1. “Affiliate” shall mean any corporation, partnership or other entity controlling, controlled by, or under
common control with XM; provided, however, that no entity that holds capital stock of XM Satellite Radio Holdings Inc. and/or with board representation rights incidental to such holdings shall be deemed to be an Affiliate of XM for purposes of this
Agreement. For purposes of this definition, “control” (including the terms “controlling” and “controlled”) means the power to direct or cause the direction of the management and policies of an entity, whether through
the ownership of securities, by contract, or otherwise. 
 1.2. “Confidential information” shall mean all information relating to
the business of XM known to XM or learned by EMPLOYEE during the term of employment and not generally known, including any and all general and specific knowledge, experience, information and data, technical or non-technical, and whether or not
patentable, including, without limitation processes, skills, information, know-how, trade secrets, data, designs, formulae, algorithms, specifications, samples, methods, techniques, compilations, computer programs, devices, concepts, inventions,
developments, discoveries, improvements, and commercial or financial information, in any form, including without limitation, oral, written, graphic, demonstrative, machine recognizable, specimen or sample form. 
 1.3. “Conflicting Product or Service” shall mean any product or service of any person or organization other than XM, in existence or under
development, which resembles or competes with a product or service of XM. 







 1.4. “Conflicting Organization” shall mean any person or organization engaged in research on or
development, production, marketing, or selling of a “Conflicting Product or Service.” 
 1.5. “Inventions” shall mean
inventions, designs, discoveries, developments, creations, and improvements created, discovered, developed, conceived or reduced to practice. 
 1.6. “Works of Authorship” shall mean all computer software programs or other writings, including, without limitation, verbal works, designs, models, drawings, or audio, visual or audiovisual recordings. 
 ARTICLE 2 
 TERM OF AGREEMENT;
EMPLOYMENT 
 2.1. Term. Subject to the provisions of Article 4 hereof, this Agreement shall be in effect for a term of three
(3) years commencing as of the Effective Date. For the term of this Agreement, each twelve (12) month period beginning on the Effective Date or any anniversary thereof shall be considered a “Contract Year.” 
 2.2. Employment. XM agrees to employ EMPLOYEE as President and Chief Operating Officer and EMPLOYEE agrees to accept such employment by XM, on the
terms and conditions set forth herein. EMPLOYEE represents and warrants that neither the execution and delivery nor performance by him of this Agreement will violate any agreement, order, judgment or decree to which he is a party or by which he is
bound. 
 2.3. Duties. 
 (a) As President and Chief Operating Officer of XM, EMPLOYEE shall have duties and responsibilities related to building the organization and business, including but not limited to, achieving agreed revenue, cost, profit and cash-flow
targets, and shall report to the Chief Executive Officer. While acting as President and COO, EMPLOYEE shall also serve as a director of XM. 
 (b) EMPLOYEE’s employment with XM shall be full-time and exclusive. During the term of employment, EMPLOYEE shall devote the whole of EMPLOYEE’s business time, attention, skill, and ability to the faithful and diligent fulfillment
of EMPLOYEE’s duties hereunder. EMPLOYEE acknowledges and agrees that EMPLOYEE may be required, without additional compensation, to perform services for any Affiliates, and to accept such office or position with any Affiliate as the Board may
require, including, but not limited to, service as an officer or director of XM or any Affiliate, provided however, that such services, and such office or position, shall be consistent with EMPLOYEE’s position as President and COO of XM.
EMPLOYEE shall comply with all applicable policies of XM and Affiliates; provided that such Affiliates’ policies shall be consistent with those of XM. 
  

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 (c) During the term of employment, it shall not be a violation of this Agreement for EMPLOYEE to
(i) serve on the Boards of Directors of Charter Communications, Inc. and Mutual of America Capital Management Corporation; (ii) serve as an officer or director of a cooperative housing, or civic or charitable organization or committee;
(iii) deliver lectures, fulfill speaking engagements, or teach at educational institutions; or (iv) manage personal passive investments, so long as such activities (individually or collectively) do not conflict or materially interfere with
the performance of EMPLOYEE’s duties hereunder. 
 2.4. Indemnification. During and after the term of this Agreement, XM shall
provide EMPLOYEE with directors and officers insurance, and shall indemnify EMPLOYEE and his legal representatives to the fullest extent permitted by the laws of the State of Delaware and the By-Laws of XM as in effect on the date hereof, against
all damages, costs, expenses and other liabilities incurred or sustained by EMPLOYEE or his legal representatives in connection with any suit, action or proceeding to which EMPLOYEE or his legal representatives may be made a party by reason of
EMPLOYEE being or having been a director or officer of XM or any Affiliate or having served in any other capacity or taken any other action purportedly on behalf of or at the request of XM or any Affiliate. During and after the term of this
Agreement and without the need for further approval by the Board of Directors of XM or any Affiliate, XM will promptly advance or pay any and all amounts for costs or expenses (including but not limited to legal fees and expenses incurred by counsel
of EMPLOYEE’s choice retained by EMPLOYEE) for which EMPLOYEE may claim XM is obligated to indemnify him. EMPLOYEE undertakes to repay such amounts if it is ultimately determined that he is not entitled to be indemnified by XM as provided in
this Article 2.4. 
 ARTICLE 3 
 COMPENSATION 
 3.1. Base Salary. For services rendered by EMPLOYEE pursuant to this Agreement, XM agrees to
pay EMPLOYEE a base salary (“Base Salary”) of at least Five Hundred Thousand Dollars ($500,000) beginning with the effective date, with increases on each anniversary of the effective date to $550,000 and $600,000, respectively. Base Salary
shall be payable in accordance with XM’s then-prevailing executive payroll practices. The term “Base Salary” as used herein shall include any adjustments thereto made from time to time as permitted by this Article 3.1. 
 3.2. Bonuses. 
  

	 	a)	With respect to each calendar year during the term of this Agreement, EMPLOYEE will be eligible to receive such bonuses (the “Discretionary Bonus”) as may be authorized
and declared by the XM Board of Directors based upon EMPLOYEE’s yearly performance compared to criteria to set by the Board, after consultation with EMPLOYEE, at the start of each calendar year. For performance during the partial year of 2006,
EMPLOYEE shall be guaranteed at least one-half of the pro-rata target bonus regardless of Corporate performance. 

  

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	 	b)	Upon signing, XM will provide EMPLOYEE with a one-time signing bonus of (i) One Hundred Fifty Thousand Dollars ($150,000) and (ii) twenty thousand (20,000) shares of
stock, each subject to applicable withholding taxes. This payment will be made as soon as practicable following EMPLOYEES employment. Please note that if EMPLOYEE should choose to leave XM on a voluntary basis, other than resignation for Good
Reason, prior to completing one year of service, EMPLOYEE will be required to (x) pay back to XM the entire amount of this signing bonus paid in cash and (y) pay to XM an amount equal to the fair market value of the 20,000 shares as of the
Effective Date. For the avoidance of doubt, the aforementioned 20,000 shares of stock shall not be subject to any vesting restrictions or any of the additional restrictions set forth in Section 3.7(f) hereof. 

 3.3. Participation in Benefit Plans. Subject to applicable eligibility requirements, and to the terms of this Agreement, EMPLOYEE shall be
eligible during the term of this Agreement to participate in any stock option, employee stock ownership, pension, thrift, profit sharing, group life or disability insurance, medical or dental coverage, education, or other retirement or employee
benefit plan or program that XM has adopted or may adopt for the benefit of its employees, on the same basis as other executive employees. EMPLOYEE shall be entitled to paid vacation, paid sick leave, and holidays on the same basis as may from time
to time apply to other XM executive employees generally. 
 3.4. Expenses. XM shall reimburse EMPLOYEE for all reasonable, ordinary
and necessary business expenses actually incurred by EMPLOYEE in connection with the performance of his duties hereunder, including ordinary and necessary expenses incurred by EMPLOYEE in connection with travel on XM business. As President and COO
of XM, EMPLOYEE shall be entitled to fly first class. All expenses shall be approved in advance by XM in accordance with and subject to the terms and conditions of XM’s then-prevailing expense policy. As a condition precedent to obtaining
reimbursement of expenses, EMPLOYEE shall provide to XM any and all statements, bills, or receipts evidencing the expenses for which EMPLOYEE seeks reimbursement, and such related information or materials as XM may from time to time reasonably
require. EMPLOYEE shall account to XM for any expenses that are eligible for reimbursement under this Section 3.4 in accordance with XM policy. XM shall reimburse EMPLOYEE for all reasonable legal expenses incurred by EMPLOYEE related to his
counsel’s review of this Agreement. 
 3.5. Employment and Supplies. XM shall provide EMPLOYEE with administrative support
relating to the performance of EMPLOYEE’s duties of the same type and at least the same extent as is provided to other executive employees. XM shall acquire and/or provide to EMPLOYEE for his business use: a multimedia portable computer and
subscriptions to various trade publications and various trade books. Such items shall remain the exclusive property of XM, are to be used solely for XM’s benefit, and shall be returned promptly to XM upon request at the termination of
EMPLOYEE’s employment for whatever reason. 
  

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 3.6. Withholding. Anything in this Agreement to the contrary notwithstanding, all payments
required to be made by XM hereunder to EMPLOYEE or EMPLOYEE’s estate or beneficiaries in connection with EMPLOYEE’s employment hereunder shall be subject to the withholding of such amounts relating to taxes as XM may reasonably determine
it should withhold pursuant to any applicable law or regulation. 
 3.7. Stock Option and Restricted Stock Grants. EMPLOYEE shall
receive restricted stock and options to purchase Class A common stock of XM Satellite Radio Holdings Inc. (“XM Stock”) on the following terms. 
 (a) On the Effective Date of this Agreement, XM will grant EMPLOYEE Two Hundred Thousand (200,000) shares of Restricted XM Stock, and an option to purchase Four Hundred Thousand (400,000) shares of XM Stock.
Subsequent grants of stock options and restricted shares shall be awarded at the discretion of the Compensation Committee and the Board of Directors. Should the Compensation Committee and the Board of Directors award stock options and/or restricted
stock to the executive team, then the award to EMPLOYEE shall be commensurate with his position compared to the other executives. 
 (b) The
options granted pursuant to Article 3.7(a) hereof will be non-qualified. The exercise price for such options shall be, with respect to each grant, the closing price of XM Stock on the date of grant. 
 (c) Subject to the provisions of Article 4 hereof, the options and restricted shares granted pursuant to Article 3.7(a) hereof will vest and become
exercisable on the following schedule: with respect to each grant, one third of the shares covered by the option or restricted grant shall become exercisable on the first anniversary of the grant, one third of the shares covered by the option or
restricted grant shall become exercisable on the second anniversary of the grant, and one third of the shares covered by the option or restricted grant shall become exercisable on the third anniversary of the grant. In the event that EMPLOYEE holds
non-vested options or restricted shares at the time his employment by XM terminates, such non-vested options and restricted grants shall vest or shall be forfeited, as the case may be, in accordance with the provisions of Article 4 hereof.

 (d) Vested options may be exercised within ten (10) years of the date on which they were granted. In the event that EMPLOYEE holds
unexercised vested options at the time his employment by XM terminates, however, such vested options may be exercised within the time periods set forth in Article 4 hereof. 
 (e) XM agrees that the XM Stock to be issued to EMPLOYEE upon his exercise of the options granted pursuant to Article 3.7(a) hereof will be registered
for sale to the public on XM’s Form S-8 Registration Statement. 
  

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 (f) Neither EMPLOYEE nor his successors will sell, pledge or otherwise dispose of (“Transfer”)
vested Restricted XM Stock until the first to occur of the following: (i) at any time after the grant date the average closing price for the Class A Common Stock on the Nasdaq National Market system, or other principal stock exchange or
automated quotation system on which the Class A Common Stock is then listed or traded, over any seven (7) consecutive trading days equals or exceeds 150% of the stock price on the grant date, or (ii) seven (7) years have elapsed
since the grant date; provided, however, that if EMPLOYEE voluntarily leaves the employment of the Company prior to the time clause (i) is satisfied, EMPLOYEE may not Transfer vested Restricted XM Stock until clause (i) or (ii) is
satisfied. The foregoing shall not prohibit the Transfer of vested Restricted XM Stock to fund the payment of any withholding or other taxes that may be due as a result of the vesting of Restricted XM Stock. The foregoing restrictions shall lapse
upon EMPLOYEE’s termination if his service terminates as a result of EMPLOYEE’s death, Disability or as the result of an involuntary termination within one year of a Change of Control of XM as defined in Article 4.5(c) hereof. 

(g) XM represents and warrants that the restricted stock and options to purchase XM stock are not deferred compensation under Internal Revenue Code
Section 409A. 
 ARTICLE 4 
 TERMINATION 
 4.1. General. EMPLOYEE’s employment hereunder shall terminate in accordance with the
provisions of this Article 4 upon EMPLOYEE’s death or Disability, upon EMPLOYEE’s termination by XM with or without Cause, upon EMPLOYEE’s resignation with or without Good Reason, or upon the expiration of the term of this Agreement
without renewal. 
 4.2. Death. If the EMPLOYEE’s employment terminates because of his death, the date of termination shall be
the date of death. 
 (a) If the EMPLOYEE’s employment terminates because of his death, XM shall continue to pay EMPLOYEE’s then
current Base Salary, and pro-rated Discretionary Bonus (based on the percentage of Base Salary awarded to EMPLOYEE as a Discretionary Bonus in the prior year), and shall continue to make all applicable benefits available, to EMPLOYEE’s legal
representatives, estate, beneficiaries or heirs, in accordance with XM’s then-prevailing executive payroll practices, through the end of the third calendar month following EMPLOYEE’s death. In addition, XM shall continue any health,
medical, dental, or similar benefits which members of EMPLOYEE’s family were receiving for a period of one year, or pay such family members an amount equal to their cost for obtaining equivalent coverage. 
 (b) If the EMPLOYEE’s employment terminates because of his death, a pro-rated portion of EMPLOYEE’s non-vested options and non-vested
restricted stock, which otherwise would be scheduled to vest in the following twelve (12) month period, shall 
  

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 immediately vest and the balance of EMPLOYEE’s non-vested options and non-vested restricted shares shall be
forfeited. EMPLOYEE’s legal representatives, estate, beneficiaries or heirs shall be entitled to exercise any of EMPLOYEE’s vested options within one (1) year after EMPLOYEE’s death. 
 4.3. Disability. For purposes of this Agreement, EMPLOYEE shall be deemed to be under a Disability if EMPLOYEE shall be unable, by virtue of
illness or physical or mental incapacity or disability (from any cause or causes whatsoever), to perform EMPLOYEE’s essential job functions hereunder, whether with or without reasonable accommodation, in substantially the manner and to the
extent required hereunder prior to the commencement of such disability, for a period exceeding ninety (90) consecutive days. 
 (a) Upon
EMPLOYEE’s Disability, the payment of benefits under XM’s short-term and long-term disability insurance programs, if any, shall offset XM’s obligations under Article 3.1 hereof to the extent such benefits are received by EMPLOYEE.

 (b) Subject to any applicable legal requirements, in the event EMPLOYEE shall remain under a Disability for a period exceeding one hundred
twenty (120) days in any twelve (12) month period, XM shall have the right to terminate EMPLOYEE’s employment hereunder. XM shall effect such termination by giving EMPLOYEE a notice specifying the effective date of such termination,
which date shall not be earlier than the last day of the calendar month following the giving of notice. 
 (c) If XM terminates the
EMPLOYEE’s employment because of Disability, XM shall continue to pay EMPLOYEE’s then current Base Salary, and pro-rated Discretionary Bonus (based on the percentage of Base Salary awarded to EMPLOYEE as a Discretionary Bonus in the prior
year), and shall continue to make all applicable benefits available, to EMPLOYEE, in accordance with XM’s then-prevailing executive payroll practices, through the end of the third calendar month following termination. In addition, XM shall
continue any health, medical, dental, or similar benefits which EMPLOYEE (and/or members of EMPLOYEE’s family) were receiving for a period of one year, or pay EMPLOYEE an amount equal to the cost of obtaining equivalent coverage. 
 (d) If XM terminates EMPLOYEE’s employment because of Disability, a pro-rated portion of EMPLOYEE’s non-vested options and non-vested
restricted stock, which otherwise would be scheduled to vest in the following twelve (12) month period, shall immediately vest and the balance of EMPLOYEE’s non-vested options and non-vested restricted shares shall be forfeited. EMPLOYEE
shall be entitled to exercise any of his vested options within one (1) year after termination. 
 4.4. Termination for Cause or
Voluntary Resignation. 
 (a) For purposes of this Agreement, Cause shall mean a good faith finding by the Board of Directors of:
(i) EMPLOYEE’s willful or gross misconduct, willful or gross negligence in the performance of his duties for XM, or intentional or habitual neglect of 
  


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 his duties for XM, provided that XM shall have given EMPLOYEE notice specifying the conduct it believes to fall within
this sentence and EMPLOYEE shall have failed to remedy such conduct within ten (10) days thereafter; or (ii) EMPLOYEE’s theft or misappropriation of funds of XM or conviction of a felony. XM shall effect a termination for Cause by
giving EMPLOYEE a notice specifying the effective date of such termination. 
 (b) For purposes of this Agreement, voluntary resignation
means the EMPLOYEE’s resignation of his employment hereunder without Good Reason (as defined in Article 4.5(b) hereof. EMPLOYEE shall effect a termination by voluntary resignation by giving XM a notice specifying the effective date of such
termination, which date shall not be earlier than thirty (30) days after the giving of notice. 
 (c) In the event EMPLOYEE’s
employment is terminated by XM for Cause or by EMPLOYEE by voluntary resignation: 
 (i) XM shall pay to EMPLOYEE, in accordance with
XM’s then-prevailing executive payroll practices, all Base Compensation, benefits and other payments to which EMPLOYEE was entitled hereunder through the effective date of termination. 
 (ii) EMPLOYEE’s non-vested restricted shares as well as non-vested options shall be forfeited. EMPLOYEE shall be entitled to exercise any of his
vested options within three (3) months after termination. 
 (iii) Except as set forth in this Article 4.4, XM shall have no further
obligation to EMPLOYEE (or EMPLOYEE’s legal representatives, estate, beneficiaries or heirs) for any compensation, benefits or other payments hereunder, provided that nothing herein shall be deemed to affect EMPLOYEE’s entitlement, if any,
to any vested pension or similar benefits to which he may be or may become entitled. 
 4.5. Termination Without Cause or Resignation for
Good Reason. 
 (a) For the purposes of this Agreement, termination without Cause is any termination by XM of EMPLOYEE’s employment
hereunder without Cause, as defined in Article 4.4(a) hereof. XM shall effect a termination without Cause by giving EMPLOYEE a notice specifying the effective date of such termination, which date shall not be earlier than thirty (30) days after
the giving of notice. 
 (b) For the purposes of this Agreement, Good Reason shall mean: (i) a substantial diminution of EMPLOYEE’s
responsibilities or status; (ii) XM’s relocation of EMPLOYEE outside the Washington, D.C. area; (iii) a material breach of this Agreement by XM, provided that EMPLOYEE shall have given XM notice of the conduct he believes to
constitute the material breach and XM shall have failed to remedy such breach within ten (10) days thereafter; (iv) a Change of Control of XM as defined in Article 4.5(c) hereof; or (v) the naming of a new Chief Executive Officer of
the Company (other than EMPLOYEE or the current Chairman). EMPLOYEE shall effect a termination by resignation for Good Reason by giving XM a notice specifying the effective date of such termination. 
  

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 (c) For the purposes of this Agreement, a Change of Control will occur where (i) any person or group
becomes beneficial owner of securities of XM representing more than 40% of the then voting power of XM; (ii) Board members (together with new members appointed with the concurrence of at least two thirds (2/3) of those members) at the
beginning of a two-year period no longer constitute two thirds (2/3) of the Board during such two-year period; (iii) a merger/consolidation of XM occurs wherein the XM voting securities immediately prior thereto do not constitute at least
sixty percent (60%) of the combined voting securities after the merger/consolidation; or (iv) the stockholders approve a plan of complete liquidation or winding-up or an agreement for the sale or disposition of all or substantially all of
XM’s assets. 
 (d) In the event EMPLOYEE’s employment is terminated by XM without Cause or by EMPLOYEE by resignation for Good
Reason: 
 (i) XM shall continue to pay EMPLOYEE’s then current Base Salary, and shall continue to make all applicable benefits available
to EMPLOYEE, in accordance with XM’s then-prevailing executive payroll practices, for two (2) years from such termination. With respect to the health, medical, dental, or similar benefits which EMPLOYEE (and/or members of EMPLOYEE’s
family) were receiving, XM may pay EMPLOYEE an amount equal to his cost for obtaining equivalent coverage, as an alternative to continuing such benefits. 
 (ii) XM shall pay EMPLOYEE’s pro-rated Discretionary Bonus (based on the percentage of Base Salary awarded to EMPLOYEE as a Discretionary Bonus in the prior year), for the portion of the calendar year EMPLOYEE
was employed by XM prior to the termination. 
 (iii) Any payment under this Section 4.5(d) shall be made in a present value lump sum
payment. 
 (e) In the event EMPLOYEE’s employment is terminated by XM without Cause or by EMPLOYEE by resignation for Good Reason, all
options and restricted shares that have been granted to EMPLOYEE shall immediately vest and become exercisable, and EMPLOYEE shall be entitled to exercise any of his vested options within eighteen (18) months after termination. 
 (f) If, as a result of a Change of Control, it is determined that EMPLOYEE would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, XM shall reimburse EMPLOYEE for the amount of such tax, and shall pay EMPLOYEE such additional amount as may be necessary to place EMPLOYEE in the same financial position that he would have been in if he had not incurred such
excise tax liability. All determinations under this Article 4.5(f), including whether EMPLOYEE is liable for the excise tax, and the amount to be paid to EMPLOYEE by XM, shall be made by a nationally-recognized accounting firm to be selected by
EMPLOYEE and paid by XM. 
  

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 4.6. Expiration of Contract Term. 
 (a) For the purposes of this Agreement, Renewal Offer means a bona fide offer by XM to enter into a new employment agreement with EMPLOYEE, on terms at
least as favorable to EMPLOYEE as this Agreement, made to EMPLOYEE at least four (4) months before the expiration of this Agreement. 
 (b) In the event that XM makes a Renewal Offer to Employee, but the parties nevertheless do not enter into a new employment agreement and EMPLOYEE’s employment by XM therefore terminates upon the expiration of this Agreement, any
restricted shares and options scheduled to vest on the third anniversary of the Effective Date of this Agreement pursuant to Article 3.7(c) shall immediately vest and become exercisable, all other non-vested restricted shares and options shall be
forfeited, and EMPLOYEE shall be entitled to exercise any of his vested options within three (3) months after termination. 
 (c) In the
event that XM does not make a Renewal Offer to Employee and EMPLOYEE’s employment by XM therefore terminates at the expiration of the term of this Agreement, all options and restricted shares that have been granted to EMPLOYEE shall immediately
vest and become exercisable, and EMPLOYEE shall be entitled to exercise any of his vested options within eighteen (18) months after termination. 
 4.7. Section 409A of the Internal Revenue Code. 
 (a) Anything in this Agreement to the contrary
notwithstanding, if (A) on the date of termination of EMPLOYEE’s employment with the Company or a Subsidiary, any of the Company’s stock is publicly traded on an established securities market or otherwise (within the meaning of
Section 409A(a)(2)(B)(i) of the Internal Revenue Code, as amended (the “Code”)) and (B) as a result of such termination, EMPLOYEE would receive any payment that, absent the application of this Section 4.7, would be subject
to interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earliest of (1) 6
months after EMPLOYEE’s termination date, (2) EMPLOYEE’s death or (3) such other date as will cause such payment not to be subject to such interest and additional tax. 
 (b) It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to
Section 409A of the Code. To the extent such potential payments or benefits could become subject to such Section, the parties shall cooperate to amend this Agreement with the goal of giving EMPLOYEE the economic benefits described herein in a
manner that does not result in such tax being imposed. 
  

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 ARTICLE 5 
 RESTRICTIVE COVENANTS 
 5.1. Confidentiality. Except as authorized or directed by XM,
EMPLOYEE shall not, at any time during or subsequent to the term of this Agreement, directly or indirectly publish or disclose any Confidential Information of XM or of any of its Affiliates, or Confidential Information of others that has come into
the possession of XM or of any of its Affiliates, or into the EMPLOYEE’s possession in the course of his employment with XM or of his services and duties hereunder, to any other person or entity, and EMPLOYEE shall not use any such Confidential
Information for EMPLOYEE’s own personal use or advantage or make it available to others for use. All confidential information, whether oral or written, regarding the business or affairs of XM or any of its Affiliates, including, without
limitation, information as to their products, services, systems, designs, inventions, software, finances (including prices, costs and revenues), marketing plans, programs, methods of operation, prospective and existing contracts, customers and other
business arrangements or business plans, procedures, and strategies, shall all be deemed Confidential Information, except to the extent the same shall have been lawfully and without breach of the EMPLOYEE’S confidentiality obligation made
available to the general public without restriction, or that EMPLOYEE can prove, by documentary evidence, was previously known to EMPLOYEE prior to the term of EMPLOYEE’s employment. The Company shall be under no obligation to identify
specifically any information as to which the protection of this Section 5.1 extends by any notice or other action. Upon expiration or termination of this Agreement for any reason, EMPLOYEE shall promptly return to XM all Confidential
Information, including all copies thereof in EMPLOYEE’s possession, whether prepared by him or others. 
 5.2. Unfair Competition.
During his employment pursuant to this Agreement and for a period of one (1) year after the termination of his employment, EMPLOYEE shall not, within the United States, directly or indirectly, and whether or not for compensation, as a
stockholder owning beneficially or of record more than five percent (5%) of the outstanding shares of any class of stock of an issuer, or as an officer, director, employee, consultant, partner, joint venturer, proprietor, or otherwise, engage
in or become interested in any Conflicting Organization in connection with research, development, consulting, manufacturing, purchasing, accounting, engineering, marketing, merchandising or selling of any Conflicting Product or Service, directly or
indirectly, in competition with XM or any of its Affiliates (or any of their successors) as conducted from time to time during such period. During the period in which EMPLOYEE is receiving any payments under this Agreement and for a period of one
(1) year thereafter, EMPLOYEE shall not, without the prior written consent of XM, solicit or hire or induce the termination of employment of any employees or other personnel providing services to XM, or any of its Affiliates, for any business
activity, other than a business activity owned or controlled, directly or indirectly, by XM or any of its Affiliates. 
  

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 5.3. Injunctive Relief.  
 (a) EMPLOYEE acknowledges and warrants that he will be fully able to earn an adequate livelihood for himself and his dependents if Section 5.2 should
be specifically enforced against him, and that Section 5.2 merely prevents unfair competition against XM for a limited period of time. EMPLOYEE agrees and acknowledges that, by virtue of EMPLOYEE’s employment with XM, EMPLOYEE shall have
access to and maintain an intimate knowledge of XM’s activities and affairs, including trade secrets, Confidential Information, and other confidential matters. As a result of such access and knowledge, and because of the special, unique, and
extraordinary services that EMPLOYEE is capable of performing for XM or one of its competitors, EMPLOYEE acknowledges that the services to be rendered by EMPLOYEE pursuant to this Agreement are of a character giving them a peculiar value, the loss
of which may not adequately or reasonably be compensated by money damages. Consequently, EMPLOYEE agrees that any breach or threatened breach by EMPLOYEE of EMPLOYEE’s obligations under this Article 5 may cause irreparable injury to XM, and
that XM may be entitled to preliminary and permanent injunctions enjoining EMPLOYEE from violating such provisions. Nothing in this Agreement, however, shall be construed to prohibit XM from pursuing any other remedy, XM and EMPLOYEE having agreed
that all such remedies shall be cumulative. 
 (b) The restrictions set forth in this Article 5 and the following Article 6 shall be
construed as independent covenants, and shall survive the termination or expiration of this Agreement, and the existence of any claim or cause of action against XM, whether predicated upon this Agreement or otherwise, shall not constitute a defense
to the enforcement by XM of the restrictions contained in this Article 5 or the following Article 6. EMPLOYEE hereby consents and waives any objection to the jurisdiction over his person or the venue of any courts within the State of New York with
respect to any proceedings in law or in equity arising out of this Article 5 or the following Article 6. If any court of competent jurisdiction shall hold that any of the restrictions contained in Section 5.2 are unreasonable as to time,
geographical area, or otherwise, said restrictions shall be deemed to be reduced to the extent necessary in the opinion of such court to make their application reasonable. 
 ARTICLE 6 
 INVENTIONS, WORKS OF AUTHORSHIP, 
 PATENTS AND COPYRIGHTS 
 6.1.
Ownership of Inventions and Works of Authorship. EMPLOYEE agrees that all Inventions made, conceived, discovered, developed or reduced to practice by EMPLOYEE and all software and other works of authorship created by EMPLOYEE, either alone or
with others, at any time, within or without normal working hours, during the term of this Agreement, arising out of such employment or based upon Confidential Information, or pertinent to any field of business or research in which, during such
employment, XM is engaged or (if such is known or ascertainable by EMPLOYEE) is considering engaging, whether or not patented or patentable, shall be and remain the sole property of XM with respect to all rights of EMPLOYEE arising from any
discovery, conception, development, reduction to practice, or creation by EMPLOYEE. XM shall have the full right to assign, license, or transfer all rights thereto. 
  

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 6.2. Disclosure of Inventions and Works of Authorship. EMPLOYEE shall promptly make full
disclosure to XM or to an authorized representative thereof of all information relating to the making, conception, discovery, development, creation or reduction to practice of Inventions, or of software and other works of authorship owned by XM
pursuant to Section 6.1 above. 
 6.3. Patent and Copyright Applications. At the request of XM and at XM’s expense, EMPLOYEE
shall execute such documents and perform such acts as XM deems necessary to obtain patents or the like on such Inventions or copyright registrations for such software and other works of authorship in any jurisdiction or jurisdictions. Such
obligation shall continue beyond the term of this Agreement. In the event that XM is unable because of EMPLOYEE’s mental or physical capacity or for any other reason to secure EMPLOYEE’s signature to apply for or to pursue any applications
for patent or copyright covering Inventions, software and other works of authorship owned by XM pursuant to Section 6.1, then EMPLOYEE hereby irrevocably designates and appoints XM as EMPLOYEE’s agent and attorney in fact, upon prior
notice, to act for and in his behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents and copyright registrations thereon with the same legal force and
effect as if executed by EMPLOYEE. EMPLOYEE further agrees not to file any patent applications relating to or describing or otherwise disclosing any Confidential Information or any such Inventions, or to claim any copyright or file any applications
to register any copyright in such software or other works of authorship, except with the prior written consent of XM. 
 6.4. Assignment
of Inventions and Works of Authorship. EMPLOYEE agrees to assign to XM or it Affiliates all of EMPLOYEE’s right, title and interest in and to any and all such Inventions and the patent applications and patents relating thereto and to the
copyright in any and all such software and other works of authorship and any copyright applications and registrations relating thereto conceived, reduced to practice, discovered, created or otherwise developed by EMPLOYEE and owned by XM pursuant to
Section 6.1 above. 
 ARTICLE 7 
 MISCELLANEOUS 
 7.1. Assignment. The rights and obligations of XM under this Agreement
shall be binding upon its successors and assigns and, subject to EMPLOYEE’s rights under Article 4.5 hereof, may be assigned by XM to the successors in interest of XM. The rights and obligations of EMPLOYEE under this Agreement shall be binding
upon EMPLOYEE’s heirs, legatees, personal representatives, executors or administrators. This Agreement may not be assigned by EMPLOYEE, but any amount owed EMPLOYEE upon EMPLOYEE’s death shall inure to the benefit of EMPLOYEE’s heirs
legatees, personal representatives, executors, or administrators. 
  

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 7.2. Notice. For purposes of this Agreement, notices and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly given when hand delivered, sent by overnight courier, or mailed by first-class, registered, or certified mail, return receipt requested, postage prepaid, or transmitted by
telegram, telecopy, or telex addressed as follows: 
 If to EMPLOYEE: (Copy to XM Executive Office) 
 Nathaniel A. Davis 
 _____________________

 _____________________ 
 If to
XM: 
 XM Satellite Radio Holdings Inc. 
 1500 Eckington Place, N.E., 
 Washington, D.C. 20002 
 Telephone:   202-380-4066 
 Telecopy:     202-380-4534 
 Attn: General Counsel 
 or to such other address as either
party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 
 7.3. Entire Agreement. From and after the Effective Date, this Agreement constitutes the entire agreement between the parties hereto, and expressly supersedes all prior oral or written agreements, commitments
or understandings with respect to the matters provided for herein. 
 7.4. Headings. Article and Section headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof. 

7.5. Severability. In the event any provision of this Agreement, or any portion thereof, is determined by any arbitrator or court of competent
jurisdiction to be unenforceable as written, such provision or portion thereof shall be interpreted so as to be enforceable. In the event any provision of this Agreement, or any portion thereof is determined by any arbitrator or court of competent
jurisdiction to be void, the remaining portions of this Agreement shall nevertheless be binding upon XM and EMPLOYEE with the same effect as though the void provision or portion thereof had been severed and deleted. 
  

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 7.6. Arbitration. Without prejudice to XM’s right to seek an injunction pursuant to Article
5.3(a) hereof from a court of competent jurisdiction, any dispute between the parties hereto arising out of this Agreement, or otherwise arising out of or relating to EMPLOYEE’s employment by XM, or the termination thereof, shall be submitted
to binding arbitration, before a single arbitrator, to be appointed by the American Arbitration Association (“AAA”), under the rules of the AAA. The arbitrator shall have the authority to apportion the costs of arbitration, and to render
an award including reasonable attorney’s fees, as and to the extent he deems appropriate under the circumstances. 
 7.7. Governing
Law. This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the substantive laws of the State of New York (excluding the choice of law
rules thereof). 
 7.8. Amendment; Modification; Waiver. No amendment, modification or waiver of the terms of this Agreement shall be
valid unless made in writing and duly executed by EMPLOYEE and XM. No delay or failure at any time on the part of EMPLOYEE or XM in exercising any right, power or privilege under this Agreement, or in enforcing any provision of this Agreement, shall
impair any such right, power, or privilege, or be construed as a waiver of any default or as any acquiescence therein, or shall affect the right of EMPLOYEE or XM thereafter to enforce each and every provision of this Agreement in accordance with
its terms. 
 7.9. Additional Obligations. Both during and after the term of employment, EMPLOYEE shall, upon reasonable notice,
furnish XM with such information as may be in EMPLOYEE’s possession or control, and cooperate with XM, as may reasonably be requested by XM (and, after the term of employment, with due consideration for EMPLOYEE’s obligations with respect
to any new employment or business activity) in connection with any litigation or other adversarial proceedings in which XM or any Affiliate is or may become a party. XM shall reimburse EMPLOYEE for all reasonable expenses incurred by EMPLOYEE in
fulfilling EMPLOYEE’s obligations under this Article 7.9. 
  

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 IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the Effective Date.

  

			
	XM Satellite Radio Holdings Inc.
	XM Satellite Radio Inc.
		
	By	 	 /s/ Hugh Panero

		 	Hugh Panero
		 	Chief Executive Officer
		 	Date: July 20, 2006
		
		 	 /s/ Nathaniel A. Davis

		 	Nathaniel A. Davis
		 	Date: July 20, 2006


  

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