**Exhibit10.50**

**EMPLOYMENT AGREEMENTBetweenXM SATELLITE RADIO HOLDINGS INC. and XM SATELLITE RADIO INC.andHUGH PANERODated as of June 1, 2001**

**Amended March 20, 2003**

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THIS AGREEMENT is entered into as of June 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 HughPanero (“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 itsChief Executive Officer and EMPLOYEE is interested in being employed in thatposition 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 this Agreement, the terms defined inthis Article 1 shall have the respective meanings 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 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 productor service of XM.

 

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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.** Subject to the provisions of Article 4 hereof, this Agreement shall bein effect for a term of three (3) years commencing as of the EffectiveDate.  For the term of this Agreement, eachtwelve (12) month period beginning on the Effective Date or any anniversarythereof shall be considered a “Contract Year.”

**2.2          Employment.** XM agrees to employ EMPLOYEE as Chief Executive Officer and EMPLOYEEagrees to accept such employment by XM, on the terms and conditions set forthherein.  EMPLOYEE represents andwarrants that neither the execution and delivery nor performance by him of thisAgreement will violate any agreement, order, judgment or decree to which he isa party or by which he is bound.

**2.3          Duties.**

(a)           As Chief Executive Officer of XM,EMPLOYEE shall have duties and responsibilities related to building theorganization and business, including but not limited to, achieving agreedrevenue, cost, profit and cash-flow targets, and shall report to the Board ofDirectors and the Board Chairman.  Whileacting as CEO, EMPLOYEE shall also serve as a director of XM.

(b)           EMPLOYEE’s employment with XM shallbe full-time and exclusive.  During theterm of employment, EMPLOYEE shall devote the whole of EMPLOYEE’s businesstime, attention, skill, and ability to the faithful and diligent fulfillment ofEMPLOYEE’s duties hereunder.  EMPLOYEEacknowledges and agrees that EMPLOYEE may be required, without additionalcompensation, to perform services for any Affiliates, and to accept such officeor position with any Affiliate as the Board may require, including, but notlimited to, service as an officer or director of XM or any Affiliate, providedhowever, that such services, and such office or position, shall be consistentwith EMPLOYEE’s position as Chief Executive Officer of XM.  EMPLOYEE shall comply with all applicablepolicies of XM and Affiliates.

(c)           During the term of employme nt, itshall not be a violation of this Agreement for EMPLOYEE to (i) serve on no morethan one outside corporate board (except the board of a ConflictingOrganization); (ii) serve as an officer or director of a

 

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cooperative housing, or civic or charitableorganization or committee; (iii) deliver lectures, fulfill speakingengagements, or teach at educational institutions; or (iv) manage personalpassive investments, so long as such activities (individually or collectively)do not conflict or materially interfere with the performance of EMPLOYEE’sduties hereunder.

**2.4          Indemnification. **During and after the term of this Agreement, XM shallprovide EMPLOYEE with directors and officers insurance, and shall indemnifyEMPLOYEE and his legal representatives to the fullest extent permitted by thelaws of the State of Delaware and the By-Laws of XM as in effect on the datehereof, against all damages, costs, expenses and other liabilities incurred orsustained by EMPLOYEE or his legal representatives in connection with any suit,action or proceeding to which EMPLOYEE or his legal representatives may be madea party by reason of EMPLOYEE being or having been a director or officer of XMor any Affiliate or having served in any other capacity or taken any otheraction purportedly on behalf of or at the request of XM or any Affiliate.  During and after the term of this Agreementand without the need for further approval by the Board of Directors of XM orany Affiliate, XM will promptly advance or pay any and all amounts for costs orexpenses (including but not limited to legal fees and expenses incurred bycounsel of EMPLOYEE’s choice retained by EMPLOYEE) for which EMPLOYEE may claimXM is obligated to indemnify him. EMPLOYEE undertakes to repay such amounts ifit is ultimately determined that he is not entitled to be indemnified by XM asprovided in this Article 2.4.

**ARTICLE 3**COMPENSATION

**3.1          BaseSalary.**  For services rendered by EMPLOYEE pursuantto this Agreement, XM agrees to pay EMPLOYEE a base salary (“Base Salary”) ofat least Four Hundred Twelve Thousand Dollars ($412,000), beginning January 1,2003 and continuing for the third Contract Year.  In determining any increase above the minimums set forth in thepreceding sentence, the Board shall consider any increases in the cost of livingand may provide for performance or merit increases as it deems appropriate inits sole discretion.  Base Salary shallbe payable in accordance with XM’s then-prevailing executive payroll practices.  The term “Base Salary” as used herein shallinclude any adjustments thereto made from time to time as permitted by thisArticle 3.1.

**3.2          Bonuses.**

(a)           With respect to each calendar yearduring the term of this Agreement, regardless of XM’s performance, EMPLOYEEshall be entitled to a bonus (the “Leadership Bonus”) equal to thirty percent(30%) of his Base Salary for the calendar year if, in the reasonable judgmentof the XM Board of Directors, he shall have made the effort and provided theleadership expected of the CEO.  In anycalendar year in which EMPLOYEE is employed by XM for less than the full year,the Leadership Bonus will be paid on a pro-rata basis for the portion of thecalendar year for which EMPLOYEE was employed by XM and provided the expectedeffort and leadership.

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The Leadership Bonus shall be paid within sixty (60)days of the end of each calendar year.

(b)           With respect to each calendar yearduring the term of this Agreement, EMPLOYEE will be eligible to receive suchbonuses (the “Discretionary Bonus”) as may be authorized and declared by the XMBoard of Directors based upon EMPLOYEE meeting or substantially exceedingperformance criteria to be set by the Board, after consultation with EMPLOYEE,at the start of each calendar year.  For2001, such criteria shall be set by July 1, 2001.  Although the actual amount of any Discretionary Bonus will bedetermined by the Board, the “target” amount of the annual Discretionary Bonuswill be thirty to seventy percent (30-70%) of EMPLOYEE’s Base Salary for thecalendar year, reflecting the Board’s determination that EMPLOYEE has met (30%)or substantially exceeded (70%) the established performance criteria.

**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.  EMPLOYEE shall be entitled to paid vacation,paid sick leave, and holidays on the same basis as may from time to time applyto other XM executive employees generally. EMPLOYEE shall also be entitled to supplemental disability insurancebeginning no earlier than April 1, 2003, at the company’s expense.

**3.4          Expenses. **XM shall reimburse EMPLOYEE for all reasonable,ordinary and necessary business expenses actually incurred by EMPLOYEE inconnection with the performance of his duties hereunder, including ordinary andnecessary expenses incurred by EMPLOYEE in connection with travel on XM business.  As Chief Executive Officer of XM, EMPLOYEEshall be entitled to fly first class. All expenses shall be approved in advance by XM in accordance with andsubject to the terms and conditions of XM’s then-prevailing expensepolicy.  As a condition precedent toobtaining reimbursement of expenses, EMPLOYEE shall provide to XM any and allstatements, bills, or receipts 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          Employment and Supplies. **XM shall provide EMPLOYEE with administrative supportrelating to the performance of EMPLOYEE’s duties of the same type and at leastthe same extent as is provided to other executive employees.  XM shall acquire and/or provide to EMPLOYEEfor his business use:  a multimediaportable computer and subscriptions to various trade publications and varioustrade books.  Such items shall remainthe exclusive property of XM, are to be used solely for XM’s benefit, and shallbe returned promptly to XM upon request at the termination of EMPLOYEE’s employmentfor whatever reason.

 

 

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**3.6          Withholding.** Anything in this Agreement to the contrary notwithstanding, al 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 Three Hundred FiftyThousand (350,000) shares of XM Stock. Additional stock options shall be awarded at the discretion of theCompensation Committee and 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 the provisions of Article4 hereof, the options granted pursuant to Article 3.7(a) hereof will vest andbecome exercisable on the following schedule: with respect to each grant, one third of the shares covered by theoption shall become exercisable on the first anniversary of the grant, onethird of the shares covered by the option shall become exercisable on thesecond anniversary of the grant, and one third of the shares covered by theoption shall become exercisable on the third anniversary of the grant.  In addition to the annual vestingrequirement, the initial options granted upon the amendment of the contractshall also require that EMPLOYEE will not sell, pledge or otherwise dispose ofshares issued upon the exercise of such initial options until the first tooccur of the following: (i) the average closing price of XM Stock on the NasdaqNational Market system, or principal stock exchange on which shares of XM Stockare then listed, over any 20 consecutive trading days following the date ofgrant equals or exceeds $10, or (ii) seven years have elapsed since the date ofgrant. In the event that EMPLOYEE holds non-vested options at the time hisemployment by XM terminates, such non-vested options shall vest or shall beforfeited, as the case may be, in accordance with the provisions of Article 4hereof.

(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.

 

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**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, uponEMPLOYEE’s termination by XM with or without Cause, upon EMPLOYEE’s resignationwith or without Good Reason, or upon the expiration of the term of thisAgreement without 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, pro-rated Leadership Bonus, and pro-rated DiscretionaryBonus (based on the percentage of Base Salary awarded to EMPLOYEE as aDiscretionary Bonus in the prior year), and shall continue to make allapplicable benefits available, to EMPLOYEE’s legal representatives, estate,beneficiaries or heirs, in accordance with XM’s then-prevailing executivepayroll practices, through the end of the third calendar month followingEMPLOYEE’s death.  In addition, XM shallcontinue any health, medical, dental, or similar benefits which members ofEMPLOYEE’s family were receiving for  aperiod of one year, or pay such family members an amount equal to their costfor 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, whetherwith or without reasonable accommodation, in substantially the manner and tothe extent required hereunder prior to the commencement of such disability, fora period exceeding ninety (90) consecutive days.

(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 anyapplicable legal requirements, in the event EMPLOYEE shall remain under aDisability for a period exceeding one hundred twenty (120) days in any twelve(12) month period, XM shall have the right to terminate EMPLOYEE’s employmenthereunder.  XM shall effect suchtermination by giving EMPLOYEE a notice specifying the effective date of suchtermination, which date shall not be earlier than the last day of the calendarmonth following the giving of notice.

 

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(c)           If XM terminates the EMPLOYEE’s employmentbecause of Disability, XM shall continue to pay EMPLOYEE’s then current BaseSalary, pro-rated Leadership Bonus, and pro-rated Discretionary Bonus (based onthe percentage of Base Salary awarded to EMPLOYEE as a Discretionary Bonus 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 followingtermination.  In addition, XM shallcontinue 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 anamount equal to the cost of obtaining equivalent 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 payments to which EMPLOYEE was entitledhereunder through 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 forthin this Article 4.4, XM shall have no further obligation to EMPLOYEE (orEMPLOYEE’s legal representatives, estate, beneficiaries or heirs) for anycompensation, benefits or other payments hereunder, 

 

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provided thatnothing herein shall be deemed to affect EMPLOYEE’s entitlement, if any, to anyvested pension or similar benefits 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)the departure of Gary M. Parsons as Chairman of the Board of Directors of XM,unless the newly named Chairman is reasonably acceptable to EMPLOYEE; or (v) aChange of Control of XM as defined in Article 4.5(c) hereof.  EMPLOYEE shall effect a termination byresignation for Good Reason by giving XM a notice specifying the effective dateof such termination.

(c)           For the purposes ofthis Agreement, a Change of Control will occur where (i) any person or groupbecomes beneficial owner of securities of XM representing more than 40% of thethen voting power of XM; (ii) Board members (together with new membersappointed by at least two thirds (2/3) of those members) at the beginning of atwo-year period no longer constitute two thirds (2/3) of the Board during suchtwo-year period; (iii) a merger/consolidation of XM occurs wherein the XMvoting securities immediately prior thereto do not constitute at least sixtypercent (60%) of the combined voting securities after the merger/consolidation;or (iv) the stockholders approve a plan of complete liquidation or winding-upor an agreement for the sale or disposition of all or substantially all of XM’sassets.

 

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

(i)            XM shall continue to pay EMPLOYEE’sthen current Base Salary and pro-rated Leadership Bonus, and shall continue tomake all applicable benefits 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.

(ii)           XM shall pay EMPLOYEE’s pro-ratedDiscretionary Bonus (based on the percentage of Base Salary awarded to EMPLOYEEas a 

 

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Discretionary Bonus in the prior year), for theportion of the calendar year EMPLOYEE was employed by XM prior to the termination.

(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 tax liability.  All determinations under this Article4.5(f), including whether EMPLOYEE is liable for the excise tax, and the amountto be paid to EMPLOYEE by XM, shall be made by a nationally-recognizedaccounting firm to be selected by EMPLOYEE and paid by XM.

**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 indirectlypublish or disclose any Confidential Information of XM or of any of itsAffiliates, or Confidential Information of others that has come into thepossession of XM or of any of its Affiliates, or into the EMPLOYEE’s possessionin the course of his 

 

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employment with XM or of his services and dutieshereunder, to any other person or entity, and EMPLOYEE shall not use any suchConfidential Information for EMPLOYEE’s own personal use or advantage or makeit available to others for use.  AllConfidential Information, whether oral or written, regarding the business oraffairs 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, customersand other business arrangements or business plans, procedures, and strategies,shall all be deemed Confidential Information, except to the extent the sameshall have been lawfully and without breach of the EMPLOYEE’S confidentialityobligation made available to the general public without restriction, or thatEMPLOYEE can prove, by documentary evidence, was previously known to EMPLOYEEprior to the term of EMPLOYEE’s employment. The Company shall be under no obligation to identify specifically anyinformation as to which the protection of this Section 5.1 extends by anynotice or other action.  Upon expirationor termination of this Agreement for any reason, EMPLOYEE shall promptly returnto XM all Confidential Information, including all copies thereof in EMPLOYEE’spossession, 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 orindirectly, in competition with XM or any of its Affiliates (or any of theirsuccessors) 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)           EMPLOYEE acknowledges and warrantsthat he will be fully able to earn an adequate livelihood for himself and hisdependents if Section 5.2 should be specifically enforced against him, and thatSection 5.2 merely prevents unfair competition against XM for a limited periodof time.  EMPLOYEE agrees and acknowledgesthat, by virtue of EMPLOYEE’s employment with XM, EMPLOYEE shall have access toand maintain an intimate knowledge of XM’s activities and affairs, includingtrade 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 iscapable of performing for XM or one of its

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competitors, EMPLOYEE acknowledges that the servicesto be rendered by EMPLOYEE pursuant to this Agreement are of a character givingthem a peculiar value, the loss of which cannot adequately or reasonably becompensated by money damages. Consequently, EMPLOYEE agrees that any breach or threatened breach byEMPLOYEE of EMPLOYEE’s obligations under this Article 5 would cause irreparableinjury to XM, and that XM shall be entitled to (i) preliminary and permanentinjunctions enjoining EMPLOYEE from violating such provisions, and (ii) actualmoney damages suffered by XM as a result of such breach, in the amount of anyfees, compensation, benefits, profits, or other remuneration earned by EMPLOYEEas a result of such breach, together with interest, and cost and attorney’sfees expended to collect such damages or secure such injunctions.  Nothing in this Agreement, however, shall beconstrued to prohibit XM from pursuing any other remedy, XM and EMPLOYEE havingagreed that all 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 anyproceedings in law or in equity arising out of this Article 5 or the followingArticle 6.  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 ofInventions and Works of Authorship. **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.

**6.2          Disclosure of Inventions and Works ofAuthorship. **EMPLOYEE shall promptly make fulldisclosure to XM or to an authorized representative thereof of all informationrelating to the making, conception, discovery, development, creation or 

 

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reduction to practice of Inventions, or of softwareand other works of authorship 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 copyright registrationsfor such software and other works of authorship in any jurisdiction orjurisdictions.  Such obligation shallcontinue 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 tosecure EMPLOYEE’s signature to apply for or to pursue any applications forpatent or copyright covering Inventions, software and other works of authorshipowned by XM pursuant to Section 6.1, then EMPLOYEE hereby irrevocablydesignates and appoints XM as EMPLOYEE’s agent and attorney in fact, upon priornotice, to act for and in his behalf and stead to execute and file any suchapplications and to do all other lawfully permitted acts to further theprosecution and issuance of patents and copyright registrations thereon withthe 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 first-class, registered, or certified mail, return receiptrequested, postage prepaid, or transmitted by telegram, telecopy, or telexaddressed as follows:

 

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If to EMPLOYEE: (Copy to XM Executive Office)

Hugh Panero4609 Derussey Parkway Chevy Chase, Maryland 20815

 

 

 

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 be interpretedso as to be enforceable.  In the eventany provision of this Agreement, or any portion thereof is determined by anyarbitrator 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 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 

 

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have the authorityto apportion the costs of arbitration, and to render an award includingreasonable attorney’s fees,  as and tothe extent he 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                                |   |
|   | Gary M. Parsons                   |
|   | Chairman of the Board             |
|   | Date:                             |   |   |
|   |                              |
|   |                              |
|   |                              |
|   | Hugh Panero                       |
|   | Date:                             |   |   |

 

 

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