**Exhibit10.51**

**EMPLOYMENT AGREEMENTBetweenXM SATELLITE RADIO HOLDINGS INC. and XM SATELLITE RADIO INC.andGARY PARSONSDated as of July 1, 2001**

**Amended March 20, 2003**

** **

----

 

THIS AGREEMENT is entered into as of July 1, 2001 (the“Effective Date”), by and between XM Satellite Radio Holdings Inc., a Delawarecorporation, and its subsidiary XM Satellite Radio Inc., a Delawarecorporation, both having a place of business at 1500 Eckington Place, N.E.,Washington, D.C. 20002 (hereinafter collectively referred to as “XM”) and GaryParsons (“EMPLOYEE”) a resident of the State of Maryland.

WHEREAS, XM is engaged in the development,implementation and operation of a digital audio satellite service to portablereceivers; and

WHEREAS, XM is interested in employing EMPLOYEE as theChairman of its Board of Directors, and EMPLOYEE is interested in beingemployed in that position subject to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoingpremises and the mutual covenants and agreements of the parties containedherein, the parties hereby agree as follows:

**ARTICLE 1**DEFINITIONS

For purposes of thisAgreement, the terms defined in this Article 1 shall have the respectivemeanings set forth below:

1.1           “Affiliate” shall mean anycorporation, partnership or other entity (i) owning more than ten percent(10%) of the then outstanding voting shares of XM; or (ii) controlling,controlled by, or under common control with XM.  For purposes of this definition, “control” (including the terms“controlling” and “controlled”) means the power to direct or cause thedirection of the management and policies of an entity, whether through theownership of securities, by contract, or otherwise.

1.2           “Confidential information” shall meanall information relating to the business of XM known to XM or learned byEMPLOYEE during the term of employment and not generally known, including anyand all general and specific knowledge, experience, information and data,technical or non-technical, and whether or not patentable, including, withoutlimitation 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 anyform, including without limitation, oral, written, graphic, demonstrative,machine recognizable, specimen or sample form.

1.3           “Conflicting Productor Service” shall mean any product or service of any person or organizationother than XM, in existence or under development, which resembles or competeswith a product or service of XM.

 

----

 

 

1.4           “Conflicting Organization” shall meanany person or organization engaged in, or about to become engaged in, researchon or development, production, marketing, or selling of a “Conflicting Productor 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 allcomputer software programs or other writings, including, without limitation,verbal works, designs, models, drawings, or audio, visual or audiovisualrecordings.

**ARTICLE 2**TERM OF AGREEMENT; EMPLOYMENT

**2.1          Term.**  This Agreement supercedes previously existing agreements, and subject tothe provisions of Article 4 hereof, 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 beginningon the Effective Date or any anniversary thereof shall be considered a“Contract Year.”

**2.2          Employment.** XM agrees to employ EMPLOYEE as Chairman of the Board of Directors andEMPLOYEE agrees to accept such employment by XM, on the terms and conditionsset forth herein.  EMPLOYEE representsand warrants that neither the execution and delivery nor performance by him ofthis Agreement will violate any agreement, order, judgment or decree to whichhe is a party or by which he is bound.

**2.3          Duties.**

(a)           As Chairman of XM, EMPLOYEE shallhave duties and responsibilities related to building the organization andbusiness, including but not limited to, securing financing for the Company,merger/acquisition activity, ensuring positive shareholders and partnerrelations, and in consort with the CEO, establishing strategic direction andsenior management structure for the Company. EMPLOYEE shall report to the Board of Directors and shall also serve asa director of XM.

(b)           During the term of employment,EMPLOYEE shall devote   EMPLOYEE’sbusiness time, attention, skill, and ability to the faithful and diligentfulfillment of EMPLOYEE’s duties hereunder on a near-fulltime basis.  EMPLOYEE acknowledges and agrees that EMPLOYEEmay be required, without additional compensation, to perform services for anyAffiliates, and to accept such office or position with any Affiliate as theBoard may require, including, but not limited to, service as an officer ordirector of XM or any Affiliate, provided however, that such services, and suchoffice or position, shall be consistent with EMPLOYEE’s position as Chairman ofXM.  EMPLOYEE shall comply with allapplicable policies of XM and Affiliates.

**2.4          Indemnification. **During and after the term of this Agreement, XM shallprovide EMPLOYEE with directors and officers insurance, and shall indemnify 

 

 

2

----

 

 

EMPLOYEE and his legal representatives to the fullestextent permitted by the laws of the State of Delaware and the By-Laws of XM asin effect on the date hereof, against all damages, costs, expenses and otherliabilities incurred or sustained by EMPLOYEE or his legal representatives inconnection with any suit, action or proceeding to which EMPLOYEE or his legalrepresentatives may be made a party by reason of EMPLOYEE being or having beena director or officer of XM or any Affiliate or having served in any othercapacity or taken any other action purportedly on behalf of or at the requestof XM or any Affiliate.  During andafter the term of this Agreement and without the need for further approval bythe Board of Directors of XM or any Affiliate, XM will promptly advance or payany and all amounts for costs or expenses (including but not limited to legalfees and expenses incurred by counsel of EMPLOYEE’s choice retained byEMPLOYEE) for which EMPLOYEE may claim XM is obligated to indemnify him.EMPLOYEE undertakes to repay such amounts if it is ultimately determined thathe is not entitled to be indemnified by XM as provided in this Article 2.4.

**ARTICLE 3**COMPENSATION

**3.1          BaseSalary.**  For services rendered by EMPLOYEE pursuantto this Agreement, XM shall pay EMPLOYEE a base salary (“Base Salary”) of atleast $250,000 annually beginning January 1, 2003.

**3.2          Bonuses.** 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 uponEMPLOYEE’s performance in the sole discretion of the Board of Directors.  Discretionary Bonus will be paid in cash orstock, at the discretion of the Board, within 60 days of the end of eachcalendar year.  The target amount forthe Discretionary Bonus shall be based upon having met (100%) or havingsignificantly exceeded (200%) the personal and corporate objectives establishedby the Board of Directors each year.

**3.3          Participationin Benefit Plans. **Subject to applicable eligibilityrequirements, and to the terms of this Agreement, EMPLOYEE shall be eligibleduring the term of this Agreement to participate in any stock option, employeestock ownership, pension, thrift, profit sharing, group life or disabilityinsurance, medical or dental coverage, education, or other retirement oremployee benefit plan or program that XM has adopted or may adopt for thebenefit of its employees, on the same basis as other executive employees.

**3.4          Expenses. **XMshall reimburse EMPLOYEE for all reasonable, ordinary and necessary businessexpenses actually incurred by EMPLOYEE in connection with the performance ofhis duties hereunder, including ordinary and necessary expenses incurred byEMPLOYEE in connection with travel on XM business.  As Chairman of XM, EMPLOYEE shall be entitled to fly firstclass.  All expenses shall be approvedin advance by XM in accordance with and subject to the terms and conditions ofXM’s then-prevailing expense policy.  Asa condition precedent to obtaining reimbursement of expenses, EMPLOYEE shallprovide to XM any and all statements, bills, or receipts 

 

 

3

----

 

evidencing the expenses for which EMPLOYEE seeksreimbursement, and such related information or materials as XM may from time totime reasonably require. EMPLOYEE shall account to XM for any expenses that areeligible for reimbursement under this Section 3.4 in accordance with XM policy.

**3.5          Employmentand Supplies. **XM shall provide EMPLOYEE withadministrative support relating to the performance of EMPLOYEE’s duties of thesame type and at least the same extent as is provided to other executiveemployees.  XM shall acquire and/orprovide to EMPLOYEE for his business use: a multimedia portable computer and subscriptions to various tradepublications and various trade books. Such items shall remain the exclusive property of XM, are to be usedsolely for XM’s benefit, and shall be returned promptly to XM upon request atthe termination of EMPLOYEE’s employment for whatever reason.

**3.6          Withholding.** Anything in this Agreement to the contrary notwithstanding, all paymentsrequired to be made by XM hereunder to EMPLOYEE or EMPLOYEE’s estate orbeneficiaries in connection with EMPLOYEE’s employment hereunder shall besubject to the withholding of such amounts relating to taxes as XM mayreasonably determine it should withhold pursuant to any applicable law orregulation.

**3.7          StockOption Grants.**  EMPLOYEE shall receive options to purchaseClass A common stock of XM Satellite Radio Holdings Inc. (“XM Stock”) on thefollowing terms.

(a)           On the Effective Date of theAmendment, XM will grant EMPLOYEE an option to purchase Four Hundred Thousand(400,000) shares of XM Stock. Subsequent grants of options shall be at the solediscretion of the Board of Directors.

(b)           The options granted pursuant toArticle 3.7(a) hereof will be non-qualified. The exercise price for such options shall be, with respect to eachgrant, the closing price of  XM Stock onthe date of grant.

(c)           Subject to theprovisions of Article 4 hereof, the options 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 theshares covered by the option shall become exercisable on the first anniversaryof the grant, one third of the shares covered by the option shall becomeexercisable on the second anniversary of the grant, and one third of the sharescovered by the option shall become exercisable on the third anniversary of thegrant.  In addition to the annualvesting requirement, the initial options granted upon the amendment of thecontract shall also require that EMPLOYEE will not sell, pledge or otherwisedispose of shares issued upon the exercise of such initial options until thefirst to occur of the following: (i) the average closing price of XM Stock onthe Nasdaq National Market system, or principal stock exchange on which sharesof XM Stock are then listed, over any 20 consecutive trading days following thedate of grant equals or exceeds $10, or (ii) seven years have elapsed since thedate of grant.  In the 

 

4

----

 

 

event that EMPLOYEE holds non-vested options at thetime his employment by XM terminates, such non-vested options shall vest orshall be forfeited, as the case may be, in accordance with the provisions ofArticle 4 hereof.

(d)           Vested options may be exercisedwithin ten (10) years of the date on which they were granted.  In the event that EMPLOYEE holds unexercisedvested options at the time his employment by XM terminates, such vested optionsmay be exercised within the time periods set forth in Article 4 hereof.

(e)           XM agrees that the XM Stock to beissued to EMPLOYEE upon his exercise of the options granted pursuant to Article3.7(a) hereof will be registered for sale to the public on XM’s Form S-8Registration Statement.

**ARTICLE 4**TERMINATION

**4.1          General.** EMPLOYEE’s employment hereunder shall terminate in accordance with theprovisions of this Article 4 upon EMPLOYEE’s death or Disability, upon EMPLOYEE’stermination by XM with or without Cause, upon EMPLOYEE’s resignation with orwithout Good Reason, or upon the expiration of the term of this Agreementwithout renewal.

**4.2          Death.** If the EMPLOYEE’s employment terminates because of his death, the dateof termination shall be the date of death.

(a)           If the EMPLOYEE’s employmentterminates because of his death, XM shall continue to pay EMPLOYEE’s thencurrent Base Salary, if any, and Discretionary Bonus (based on theDiscretionary Bonus awarded to EMPLOYEE in the prior year), and shall continueto make all applicable benefits available, to EMPLOYEE’s legal representatives,estate, beneficiaries or heirs, in accordance with XM’s then-prevailingexecutive payroll practices, through the end of the third calendar monthfollowing EMPLOYEE’s death.  Inaddition, XM shall continue any health, medical, dental, or similar benefitswhich members of EMPLOYEE’s family were receiving for  a period of one year, or pay such family members an amount equalto their cost for obtaining equivalent coverage.

(b)           If the EMPLOYEE’s employmentterminates because of his death, EMPLOYEE’s non-vested options shall beforfeited.  EMPLOYEE’s legalrepresentatives, estate, beneficiaries or heirs shall be entitled to exerciseany of EMPLOYEE’s vested options within one (1) year after EMPLOYEE’s death.

**4.3          Disability.** For purposes of this Agreement, EMPLOYEEshall be deemed to be under a Disability if EMPLOYEE shall be unable, by virtueof illness or physical or mental incapacity or disability (from any cause orcauses whatsoever), to perform EMPLOYEE’s essential job functions hereunder,whether with or without reasonable accommodation, in substantially the mannerand to the extent required hereunder prior to the commencement of such disability,for a period exceeding ninety (90) consecutive days.

 

5

----

 

(a)           Upon EMPLOYEE’s Disability, thepayment of benefits under XM’s short-term and long-term disability insuranceprograms, if any, shall offset XM’s obligations under Article 3.1 hereof to theextent such benefits are received by EMPLOYEE.

(b)           Subject to any applicable legalrequirements, in the event EMPLOYEE shall remain under a Disability for aperiod 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 givingEMPLOYEE a notice specifying the effective date of such termination, which dateshall not be earlier than the last day of the calendar month following thegiving of notice.

(c)           If XM terminates the EMPLOYEE’semployment because of Disability, XM shall continue to pay EMPLOYEE’s thencurrent Base Salary, if any,  andDiscretionary Bonus (based on the Discretionary Bonus awarded to EMPLOYEE inthe prior year), and shall continue to make all applicable benefits available,to EMPLOYEE, in accordance with XM’s then-prevailing executive payrollpractices, 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 ofEMPLOYEE’s family) were receiving for  aperiod of one year, or pay EMPLOYEE an amount equal to the cost of obtainingequivalent coverage.

(d)           If XM terminates EMPLOYEE’semployment because of Disability, EMPLOYEE’s non-vested options shall beforfeited.  EMPLOYEE shall be entitledto exercise any of his vested options within one (1) year after termination.

**4.4          Terminationfor Cause or Voluntary Resignation.**

(a)           For purposes of this Agreement, Causeshall mean:  (i) EMPLOYEE’s willful orgross misconduct, willful or gross negligence in the performance of his dutiesfor XM, or intentional or habitual neglect of his duties for XM, provided thatXM shall have given EMPLOYEE notice specifying the conduct it believes to fallwithin this sentence and EMPLOYEE shall have failed to remedy such conductwithin ten (10) days thereafter; or (ii) EMPLOYEE’s theft or misappropriationof funds of XM or conviction of a felony. XM shall effect a termination for Cause by giving EMPLOYEE a noticespecifying the effective date of such termination.

(b)           For purposes of this Agreement,voluntary resignation means the EMPLOYEE’s resignation of his employmenthereunder without Good Reason (as defined in Article 4.5(b) hereof.  EMPLOYEE shall effect a termination byvoluntary resignation by giving XM a notice specifying the effective date ofsuch termination, which date shall not be earlier than thirty (30) days afterthe giving of notice.

(c)           In the event EMPLOYEE’s employment isterminated by XM for Cause or by EMPLOYEE by voluntary resignation:

(i)            XM shall pay to EMPLOYEE, inaccordance with XM’s then-prevailing executive payroll practices, all BaseCompensation, benefits and other 

 

6

----

 

 

payments to which EMPLOYEE was entitled hereunderthrough the effective date of termination.

(ii)           In the case of voluntary resignationonly, EMPLOYEE shall be entitled to exercise any of his vested options withinthree (3) months after termination. Subject to the previous sentence of this Article 4.4(c)(ii), EMPLOYEE’snon-vested and vested but unexercised options shall be forfeited.

(iii)          Except as set forth in this Article4.4, XM shall have no further obligation to EMPLOYEE (or EMPLOYEE’s legalrepresentatives, estate, beneficiaries or heirs) for any compensation, benefitsor other payments hereunder, provided that nothing herein shall be deemed toaffect EMPLOYEE’s entitlement, if any, to any vested pension or similarbenefits to which he may be or may become entitled.

**4.5          TerminationWithout Cause or Resignation for Good Reason.**

(a)           For the purposes of this Agreement,termination without Cause is any termination by XM of EMPLOYEE’s employmenthereunder without Cause, as defined in Article 4.4(a) hereof.  XM shall effect atermination without Cause by giving EMPLOYEE a notice specifying the effectivedate of such termination, which date shall not be earlier than thirty (30) daysafter the giving of notice.

(b)           For the purposes of this Agreement,Good Reason shall mean:  (i) asubstantial diminution of EMPLOYEE’s responsibilities or status; (ii) XM’srelocation of EMPLOYEE outside the Washington, D.C. area; (iii) a materialbreach of this Agreement by XM, provided that EMPLOYEE shall have given XMnotice of the conduct he believes to constitute the material breach and XMshall have failed to remedy such breach within ten (10) days thereafter;(iv)  a Change of Control of XM asdefined in Article 4.5(c) hereof. EMPLOYEE shall effect a termination by resignation for Good Reason bygiving XM a notice specifying the effective date of such termination.

(c)           For the purposes of this Agreement, aChange of Control will occur where (i) any person or group becomes beneficialowner of securities of XM representing more than 40% of the then voting powerof XM; (ii) Board members (together with new members appointed by at least twothirds (2/3) of those members) at the beginning of a two-year period no longerconstitute two thirds (2/3) of the Board during such two-year period; (iii) amerger/consolidation of XM occurs wherein the XM voting securities immediatelyprior thereto do not constitute at least sixty percent (60%) of the combinedvoting securities after the merger/consolidation; or (iv) the stockholdersapprove a plan of complete liquidation or winding-up or an agreement for thesale or disposition of all or substantially all of XM’s assets.

(d)           In the event EMPLOYEE’s employment isterminated by XM without Cause or by EMPLOYEE by resignation for Good Reason:

XM shall continue to payEMPLOYEE’s then current Base Salary, if any, and Discretionary Bonus (based onthe Discretionary Bonus awarded to EMPLOYEE in the prior year), and shallcontinue to make all applicable benefits 

 

7

----

 

 

available to EMPLOYEE, in accordance with XM’sthen-prevailing executive payroll practices, for two (2) years from suchtermination.  With respect to thehealth, medical, dental, or similar benefits which EMPLOYEE (and/or members ofEMPLOYEE’s family) were receiving, XM may pay EMPLOYEE an amount equal to hiscost for obtaining equivalent coverage, as an alternative to continuing suchbenefits.

(e)           In the event EMPLOYEE’s employment isterminated by XM without Cause or by EMPLOYEE by resignation for Good Reason,all options that have been granted to EMPLOYEE shall immediately vest andbecome exercisable, and EMPLOYEE shall be entitled to exercise any of hisvested options within eighteen (18) months after termination.

(f)            If, as a result of a Change ofControl, it is determined that EMPLOYEE would be subject to the excise taximposed by Section 4999 of the Internal Revenue Code, XM shall reimburseEMPLOYEE for the amount of such tax, and shall pay EMPLOYEE such additionalamount as may be necessary to place EMPLOYEE in the same financial positionthat he would have been in if he had not incurred such excise taxliability.  All determinations underthis 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 anationally-recognized accounting firm to be selected by EMPLOYEE and paid byXM.

**4.6          Expirationof Contract Term.**

(a)           For the purposes of this Agreement,Renewal Offer means a bona fide offer by XM to enter into a new employmentagreement with EMPLOYEE, on terms at least as favorable to EMPLOYEE as thisAgreement, made to EMPLOYEE at least four (4) months before the expiration ofthis Agreement.

(b)           In the event that XM makes a RenewalOffer to Employee, but the parties nevertheless do not enter into a newemployment agreement and EMPLOYEE’s employment by XM therefore terminates uponthe expiration of this Agreement, any options scheduled to vest on the thirdanniversary of the Effective Date of this Agreement pursuant to Article 3.7(c)shall immediately vest and become exercisable, all other non-vested optionsshall be forfeited, and EMPLOYEE shall be entitled to exercise any of hisvested options within three (3) months after termination.

(c)           In the event that XM does not make aRenewal Offer to Employee and EMPLOYEE’s employment by XM therefore terminatesat the expiration of the term of this Agreement, all options that have beengranted to EMPLOYEE shall immediately vest and become exercisable, and EMPLOYEEshall be entitled to exercise any of his vested options within eighteen (18)months after termination.

**ARTICLE 5**RESTRICTIVE COVENANTS

**5.1          Confidentiality.** Except as authorized or directed by XM, EMPLOYEE shall not, at any timeduring or subsequent to the term of this Agreement, directly or 

 

8

----

 

 

indirectly publish or disclose any ConfidentialInformation of XM or of any of its Affiliates, or Confidential Information ofothers that has come into the possession of XM or of any of its Affiliates, orinto the EMPLOYEE’s possession in the course of his employment with XM or ofhis services and duties hereunder, to any other person or entity, and EMPLOYEEshall not use any such Confidential Information for EMPLOYEE’s own personal useor advantage or make it available to others for use.  All Confidential Information, whether oral or written, regardingthe business or affairs of XM or any of its Affiliates, including, withoutlimitation, information as to their products, services, systems, designs,inventions, software, finances (including prices, costs and revenues),marketing plans, programs, methods of operation, prospective and existingcontracts, 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 ofthe EMPLOYEE’S confidentiality obligation made available to the general publicwithout restriction, or that EMPLOYEE can prove, by documentary evidence, waspreviously known to EMPLOYEE prior to the term of EMPLOYEE’s employment.  The Company shall be under no obligation toidentify specifically any information as to which the protection of thisSection 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, includingall copies thereof in EMPLOYEE’s possession, whether prepared by him or others.

**5.2          UnfairCompetition. **During his employment pursuant to thisAgreement and for a period of one (1) year after the termination of hisemployment, EMPLOYEE shall not, within the United States, directly orindirectly, and whether or not for compensation, as a stockholder owningbeneficially or of record more than five percent (5%) of the outstanding sharesof any class of stock of an issuer, or as an officer, director, employee,consultant, partner, joint venturer, proprietor, or otherwise, engage in orbecome 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 anyof their successors) as conducted from time to time during such period.  During the period in which EMPLOYEE isreceiving any payments under this Agreement and for a period of one (1) yearthereafter, EMPLOYEE shall not, without the prior written consent of XM,solicit or hire or induce the termination of employment of any employees orother personnel providing services to XM, or any of its Affiliates, for anybusiness activity, other than a business activity owned or controlled, directlyor indirectly, by XM or any of its Affiliates.

**5.3          InjunctiveRelief.**

(a)           EMPLOYEEacknowledges and warrants that he will be fully able to earn an adequatelivelihood for himself and his dependents if Section 5.2 should be specificallyenforced against him, and that Section 5.2 merely prevents unfair competitionagainst XM for a limited period of time. EMPLOYEE agrees and acknowledges that, by virtue of EMPLOYEE’s employmentwith XM, EMPLOYEE shall have access to and maintain an intimate knowledge ofXM’s activities and affairs, 

 

 

9

----

 

 

including trade secrets, Confidential Information, andother confidential matters.  As a resultof such access and knowledge, and because of the special, unique, andextraordinary services that EMPLOYEE is capable of performing for XM or one ofits competitors, EMPLOYEE acknowledges that the services to be rendered byEMPLOYEE pursuant to this Agreement are of a character giving them a peculiarvalue, the loss of which cannot adequately or reasonably be compensated bymoney damages.  Consequently, EMPLOYEEagrees that any breach or threatened breach by EMPLOYEE of EMPLOYEE’sobligations under this Article 5 would cause irreparable injury to XM, and thatXM shall be entitled to (i) preliminary and permanent injunctions enjoiningEMPLOYEE from violating such provisions, and (ii) actual money damages sufferedby XM as a result of such breach, in the amount of any fees, compensation,benefits, profits, or other remuneration earned by EMPLOYEE as a result of suchbreach, together with interest, and cost and attorney’s fees expended tocollect such damages or secure such injunctions.  Nothing in this Agreement, however, shall be construed toprohibit XM from pursuing any other remedy, XM and EMPLOYEE having agreed thatall such remedies shall be cumulative.

(b)           The restrictions set forth in thisArticle 5 and the following Article 6 shall be construed as independentcovenants, and shall survive the termination or expiration of this Agreement,and the existence of any claim or cause of action against XM, whetherpredicated upon this Agreement or otherwise, shall not constitute a defense tothe enforcement by XM of the restrictions contained in this Article 5 or thefollowing Article 6.  EMPLOYEE herebyconsents and waives any objection to the jurisdiction over his person or thevenue of any courts within the State of Virginia with respect to any proceedingsin law or in equity arising out of this Article 5 or the following Article6.  If any court of competentjurisdiction shall hold that any of the restrictions contained in Section 5.2are unreasonable as to time, geographical area, or otherwise, said restrictionsshall be deemed to be reduced to the extent necessary in the opinion of suchcourt to make their application reasonable.

**ARTICLE 6**INVENTIONS, WORKS OF AUTHORSHIP,PATENTS AND COPYRIGHTS

**6.1          Ownership of Inventions and Works ofAuthorship. **EMPLOYEE agrees that all Inventions made,conceived, discovered, developed or reduced to practice by EMPLOYEE and allsoftware and other works of authorship created by EMPLOYEE, either alone orwith others, at any time, within or without normal working hours, during theterm of this Agreement, arising out of such employment or based uponConfidential Information, or pertinent to any field of business or research inwhich, during such employment, XM is engaged or (if such is known orascertainable by EMPLOYEE) is considering engaging, whether or not patented orpatentable, shall be and remain the sole property of XM with respect to allrights 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 allrights thereto.

 

 

10

----

 

 

**6.2          Disclosureof Inventions and Works of Authorship. **EMPLOYEE shall promptly make fulldisclosure to XM or to an authorized representative thereof of all informationrelating to the making, conception, discovery, development, creation orreduction to practice of Inventions, or of software and other works ofauthorship owned by XM pursuant to Section 6.1 above.

**6.3          Patent andCopyright Applications. **At the request of XM and at XM’s expense,EMPLOYEE shall execute such documents and perform such acts as XM deemsnecessary to obtain patents or the like on such Inventions or copyrightregistrations for such software and other works of authorship in anyjurisdiction or jurisdictions.  Suchobligation shall continue beyond the term of this Agreement.  In the event that XM is unable because of  EMPLOYEE’s mental or physical capacity orfor any other reason to secure EMPLOYEE’s signature to apply for or to pursueany applications for patent or copyright covering Inventions, software andother works of authorship owned by XM pursuant to Section 6.1, then EMPLOYEEhereby irrevocably designates and appoints XM as EMPLOYEE’s agent and attorneyin fact, upon prior notice, to act for and in his behalf and stead to executeand file any such applications and to do all other lawfully permitted acts tofurther the prosecution and issuance of patents and copyright registrationsthereon with the same legal force and effect as if executed by EMPLOYEE.  EMPLOYEE further agrees not to file anypatent applications relating to or describing or otherwise disclosing anyConfidential Information or any such Inventions, or to claim any copyright orfile any applications to register any copyright in such software or other worksof authorship, except with the prior written consent of XM.

**6.4          Assignmentof Inventions and Works of Authorship. **EMPLOYEE agrees to assign to XM or itAffiliates all of EMPLOYEE’s right, title and interest in and to any and allsuch Inventions and the patent applications and patents relating thereto and tothe copyright in any and all such software and other works of authorship andany copyright applications and registrations relating thereto conceived,reduced to practice, discovered, created or otherwise developed by EMPLOYEE andowned by XM pursuant to Section 6.1 above.

**ARTICLE 7**MISCELLANEOUS

**7.1          Assignment. **The rights and obligations of XM under this Agreementshall be binding upon its successors and assigns and, subject to EMPLOYEE’srights under Article 4.5 hereof, may be assigned by XM to the successors ininterest of XM.  The rights andobligations of EMPLOYEE under this Agreement shall be binding upon EMPLOYEE’sheirs, legatees, personal representatives, executors or administrators.  This Agreement may not be assigned byEMPLOYEE, but any amount owed EMPLOYEE upon EMPLOYEE’s death shall inure to thebenefit of EMPLOYEE’s heirs legatees, personal representatives, executors, oradministrators.

**7.2          Notice. **For purposes of this Agreement, notices and all othercommunications provided for in this Agreement shall be in writing and shall bedeemed to have been duly given when hand delivered, sent by overnight courier,or mailed by 

 

11

----

 

 

first-class, registered, or certified mail, returnreceipt requested, postage prepaid, or transmitted by telegram, telecopy, ortelex addressed as follows:

If to EMPLOYEE: (Copy to XM Executive Office)

Gary Parsons11009 Stanmore Drive Potomac, Maryland 20854

 

 

 

If to XM:

 

 

XM Satellite RadioHoldings Inc.1500 Eckington Place, N.E.,Washington, D.C. 20002Telephone:            703-758-6116Telecopy:              703-758-6106

 

 

Attn:       GeneralCounsel

or to such other address as either party may havefurnished to the other in writing in accordance herewith, except that noticesof change of address shall be effective only upon receipt.

**7.3          EntireAgreement. **From and after the Effective Date, thisAgreement constitutes the entire agreement between the parties hereto, andexpressly supersedes all prior oral or written agreements, commitments orunderstandings with respect to the matters provided for herein.

**7.4          Headings. **Article and Section headings contained in thisAgreement are inserted for convenience of reference only, shall not be deemedto be a part of this Agreement for any purpose, and shall not in any way defineor 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, isdetermined by any arbitrator or court of competent jurisdiction to beunenforceable as written, such provision or portion thereof shall beinterpreted so as to be enforceable.  Inthe event any provision of this Agreement, or any portion thereof is determinedby any arbitrator or court of competent jurisdiction to be void, the remainingportions of this Agreement shall nevertheless be binding upon XM and EMPLOYEEwith the same effect as though the void provision or portion thereof had beensevered and deleted.

**7.6          Arbitration.** Without prejudice to XM’s right to seek an injunction pursuant toArticle 5.3(a) hereof from a court of competent jurisdiction, any disputebetween the parties hereto arising out of this Agreement, or otherwise arisingout of or relating to EMPLOYEE’s employment by XM, or the termination thereof,shall be submitted to non-binding mediation before a mediator to be agreed uponby the parties 

 

 

12

----

 

 

or, failing agreement, to be appointed by the AmericanArbitration Association (“AAA”).  In theevent that mediation is unsuccessful, such dispute shall be resolved by bindingarbitration, before a single arbitrator, under the rules of the AAA.  The arbitrator shall have the authority toapportion the costs of arbitration, and to render an award including reasonableattorney’s fees,  as and to the extenthe deems appropriate under the circumstances.

**7.7          GoverningLaw. **This Agreement, the rights and obligations of theparties hereto, and any claims or disputes relating thereto, shall be governedby and construed in accordance with the substantive laws of the State ofVirginia (excluding the choice of law rules thereof).

**7.8          Amendment;Modification; Waiver. **No amendment, modification or waiver ofthe terms of this Agreement shall be valid unless made in writing and dulyexecuted by EMPLOYEE and XM.  No delayor 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 thisAgreement, shall impair any such right, power, or privilege, or be construed asa waiver of any default or as any acquiescence therein, or shall affect theright of EMPLOYEE or XM thereafter to enforce each and every provision of thisAgreement in accordance with its terms.

**7.9          AdditionalObligations. **Both during and after the term ofemployment, EMPLOYEE shall, upon reasonable notice, furnish XM with suchinformation as may be in EMPLOYEE’s possession or control, and cooperate withXM, as may reasonably be requested by XM (and, after the term of employment,with due consideration for EMPLOYEE’s obligations with respect to any newemployment or business activity) in connection with any litigation or otheradversarial proceedings in which XM or any Affiliate is or may become aparty.  XM shall reimburse EMPLOYEE forall reasonable expenses incurred by EMPLOYEE in fulfilling EMPLOYEE’sobligations under this Article 7.9.

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

 
|   | XM Satellite Radio  Holdings Inc. |
|--------|-----------------------------------|
|   | XM Satellite Radio Inc.           |
|   |                              |
|   | By                           |   | Date: |   |
|   |                              | Gary M. Parsons |
|   |                              | Chairman of the Board |
|   |                              |   |
|   |                              |   |
|   | By:                               |   | Date: |   |
|   |                              | Tom Donohue |
|   |                              | Chairman/Comp Comm |
|        |                                   |  |  |  |  |  |

 

13

----