Document:

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                      THIS WARRANT HAS NOT BEEN REGISTERED
                        UNDER THE SECURITIES ACT OF 1933
                             AND IS NOT TRANSFERABLE
                            EXCEPT AS PROVIDED HEREIN

                               GMX RESOURCES, INC.

                                PURCHASE WARRANT

                                   Issued to:

                        PAULSON INVESTMENT COMPANY, INC.

                             Exercisable to Purchase

                        125,000 Shares of Common Stock

                                       of

                               GMX RESOURCES INC.

                           Void after _________, 2006

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         This is to certify that, for value received and subject to the terms
and conditions set forth below, the Warrantholder (hereinafter defined) is
entitled to purchase, and the Company promises and agrees to sell and issue to
the Warrantholder, at any time on or after _____________, 2002 and on or before
____________, 2006, up to 125,000 Shares (hereinafter defined) at the Exercise
Price (hereinafter defined).

         This Warrant Certificate is issued subject to the following terms and
conditions:

         1. DEFINITIONS OF CERTAIN TERMS. Except as may be otherwise clearly
required by the context, the following terms have the following meanings:

         (a) "Act" means the Securities Act of 1933, as amended.

         (b) "Cashless Exercise" means an exercise of Warrants in which, in lieu
of payment of the Exercise Price, the Holder elects to receive a lesser number
of Securities such that the value of the Securities that such Holder would
otherwise have been entitled to receive but has agreed not to receive, as
determined by the closing price of such Securities on the date of exercise or,
if such date is not a trading day, on the next prior trading day, is equal to
the Exercise Price with respect to such exercise. A Holder may only elect a
Cashless Exercise if the Securities issuable by the Company on such exercise are
publicly traded securities.

         (c) "Closing Date" means the date on which the Offering is closed.

         (d) "Commission" means the Securities and Exchange Commission.

         (e) "Common Stock" means the common stock, $0.001 par value, of the
Company.

         (f) "Company" means GMX Resources Inc., an Oklahoma corporation.

         (g) "Company's Expenses" means any and all expenses payable by the
Company or the Warrantholder in connection with an offering described in Section
6 hereof, except Warrantholder's Expenses.

         (h) "Effective Date" means the date on which the Registration Statement
is declared effective by the Commission.

         (i) "Exercise Price" means the price at which the Warrantholder may
purchase one Share upon exercise of Warrants as determined from time to time
pursuant to the provisions hereof. The initial Exercise Price is $____ per
Share.

         (j) "Offering" means the public offering of Shares made pursuant to the
Registration Statement.

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         (k) "Participating Underwriter" means any underwriter participating in
the sale of the Securities pursuant to a registration under Section 6 of this
Warrant Certificate.

         (l) "Registration Statement" means the Company's registration statement
(File No. 333 -________) as amended on the Closing Date.

         (m) "Rules and Regulations" means the rules and regulations of the
Commission adopted under the Act.

         (n) "Securities" means the securities obtained or obtainable upon
exercise of the Warrant or securities obtained or obtainable upon exercise,
exchange, or conversion of such securities.

         (o) "Share" means one share of Common Stock.

         (p) "Warrant Certificate" means a certificate evidencing the Warrant.

         (q) "Warrantholder" means a record holder of the Warrant or Securities.
The initial Warrantholder is Paulson Investment Company, Inc.

         (r) "Warrantholder's Expenses" means the sum of (i) the aggregate
amount of cash payments made to an underwriter, underwriting syndicate, or agent
in connection with an offering described in Section 6 hereof multiplied by a
fraction the numerator of which is the aggregate sales price of the Securities
sold by such underwriter, underwriting syndicate, or agent in such offering and
the denominator of which is the aggregate sales price of all of the securities
sold by such underwriter, underwriting syndicate, or agent in such offering and
(ii) all out-of-pocket expenses of the Warrantholder, except for the fees and
disbursements of one firm retained as legal counsel for the Warrantholder that
will be paid by the Company.

         (s) "Warrant" means the warrant evidenced by this certificate, any
similar certificate issued in connection with the Offering, or any certificate
obtained upon transfer or partial exercise of the Warrant evidenced by any such
certificate.

               2. EXERCISE OF WARRANTS. All or any part of the Warrant may be
exercised commencing on the first anniversary of the Effective Date and
ending at 5 p.m. Pacific Time on the fifth anniversary of the Effective Date by
surrendering this Warrant Certificate, together with appropriate instructions,
duly executed by the Warrantholder or by its duly authorized attorney, at the
office of the Company, One Benham Place, Suite 600, 9400 North Broadway,
Oklahoma City, Oklahoma 73114, or at such other office or agency as the Company
may designate. The date on which such instructions are received by the Company
shall be the date of exercise. If the Holder has elected a Cashless Exercise,
such instructions shall so state. Upon receipt of notice of exercise, the
Company shall immediately instruct its transfer agent to prepare certificates
for the Securities to be

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received by the Warrantholder upon completion of the Warrant exercise. When
such certificates are prepared, the Company shall notify the Warrantholder
and deliver such certificates to the Warrantholder or as per the
Warrantholder's instructions immediately upon payment in full by the
Warrantholder, in lawful money of the United States, of the Exercise Price
payable with respect to the Securities being purchased, if any. If the
Warrantholder shall represent and warrant that all applicable registration
and prospectus delivery requirements for their sale have been complied with
upon sale of the Securities received upon exercise of the Warrant, such
certificates shall not bear a legend with respect to the Securities Act of
1933.

         If fewer than all the Securities purchasable under the Warrant are
purchased, the Company will, upon such partial exercise, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof), in form and
tenor similar to this Warrant Certificate, evidencing that portion of the
Warrant not exercised. The Securities to be obtained on exercise of the Warrant
will be deemed to have been issued, and any person exercising the Warrants will
be deemed to have become a holder of record of those Securities, as of the date
of the payment of the Exercise Price.

         3. ADJUSTMENTS IN CERTAIN EVENTS. The number, class, and price of the
Shares are subject to adjustment from time to time upon the happening of certain
events as follows:

         (a) If the outstanding Shares are divided into a greater number of
Shares or a dividend in Shares is paid on the Shares , the number of Shares
for which the Warrant is then exercisable will be proportionately increased
and the Exercise Price will be proportionately reduced; and, conversely, if
the outstanding Shares are combined into a smaller number of Shares, the
number of Shares for which the Warrant is then exercisable will be
proportionately reduced and the Exercise Price will be proportionately
increased. The increases and reductions provided for in this subsection 3(a)
will be made with the intent and, as nearly as practicable, the effect that
neither the percentage of the total equity of the Company obtainable on
exercise of the Warrants nor the price payable for such percentage upon such
exercise will be affected by any event described in this subsection 3(a).

         (b) In case of any change in the Shares through merger, consolidation,
reclassification, reorganization, partial or complete liquidation, purchase of
substantially all the assets of the Company, or other change in the capital
structure of the Company, then, as a condition of such change, lawful and
adequate provision will be made so that the holder of this Warrant Certificate
will have the right thereafter to receive upon the exercise of the Warrant the
kind and amount of shares of stock or other securities or property to which he
would have been entitled if, immediately prior to such event, he had held the
number of Shares obtainable upon the exercise of the Warrant. In any such case,
appropriate adjustment will be made in the application of the provisions set
forth herein with respect to the rights and interest thereafter of the
Warrantholder, to the end that the provisions set forth herein will thereafter
be applicable, as nearly as reasonably may be, in relation to any shares of
stock or other property thereafter deliverable upon the exercise

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of the Warrant. The Company will not permit any change in its capital
structure to occur unless the issuer of the shares of stock or other
securities to be received by the holder of this Warrant Certificate, if not
the Company, agrees to be bound by and comply with the provisions of this
Warrant Certificate.

         (c) When any adjustment is required to be made in the number of Shares,
other securities, or property purchasable upon exercise of the Warrant, the
Company will promptly determine the new number of such Shares or other
securities or property purchasable upon exercise of the Warrant and (i) prepare
and retain on file a statement describing in reasonable detail the method used
in arriving at the new number of such Shares or other securities or property
purchasable upon exercise of the Warrant and (ii) cause a copy of such statement
to be mailed to the Warrantholder within thirty (30) days after the date of the
event giving rise to the adjustment.

         (d) No fractional Shares or other securities will be issued in
connection with the exercise of the Warrant, but the Company will pay, in lieu
of fractional shares, a cash payment therefor on the basis of the mean between
the bid and asked prices of the Shares in the over-the-counter market or the
closing price on a national securities exchange on the day immediately prior to
exercise.

         (e) If securities of the Company or securities of any subsidiary of the
Company are distributed pro rata to holders of Shares, such number of securities
will be distributed to the Warrantholder or his assignee upon exercise of his
rights hereunder as such Warrantholder or assignee would have been entitled to
if this Warrant Certificate had been exercised prior to the record date for such
distribution. The provisions with respect to adjustment of the Shares provided
in this Section 3 will also apply to the securities to which the Warrantholder
or his assignee is entitled under this subsection 3(e).

         (f) Notwithstanding anything herein to the contrary, there will be no
adjustment made hereunder on account of the sale of the Shares or other
Securities purchasable upon exercise of the Warrant.

         4. RESERVATION OF SECURITIES. The Company agrees that the number of
Shares or other Securities sufficient to provide for the exercise of the Warrant
upon the basis set forth above will at all times during the term of the Warrant
be reserved for exercise.

         5. VALIDITY OF SECURITIES. All Securities delivered upon the exercise
of the Warrant will be duly and validly issued in accordance with their terms,
and the Company will pay all documentary and transfer taxes, if any, in respect
of the original issuance thereof upon exercise of the Warrant.

         6. REGISTRATION OF SECURITIES ISSUABLE ON EXERCISE OF WARRANT
CERTIFICATE.

         (a) The Company will register the Securities with the Commission
pursuant to the Act so as to allow the unrestricted sale of the Securities to
the public from time to

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time commencing on the first anniversary of the Effective Date and ending at
5:00 p.m. Pacific Time on the fifth anniversary of the Effective Date (the
"Registration Period"). The Company will also file such applications and
other documents necessary to permit the sale of the Securities to the public
during the Registration Period in those states in which the Units were
qualified for sale in the Offering or such other states as the Company and
the Warrantholder agree to. In order to comply with the provisions of this
Section 6(a), the Company is not required to file more than one registration
statement. No registration right of any kind, "piggyback" or otherwise, will
last longer than five years from the Effective Date.

         (b) The Company will pay all of the Company's Expenses and each
Warrantholder will pay its pro rata share of the Warrantholder's Expenses
relating to the registration, offer, and sale of the Securities.

         (c) Except as specifically provided herein, the manner and conduct of
the registration, including the contents of the registration, will be entirely
in the control and at the discretion of the Company. The Company will file such
post-effective amendments and supplements as may be necessary to maintain the
currency of the registration statement during the period of its use. In
addition, if the Warrantholder participating in the registration is advised by
counsel that the registration statement, in their opinion, is deficient in any
material respect, the Company will use its best efforts to cause the
registration statement to be amended to eliminate the concerns raised.

         (d) The Company will furnish to the Warrantholder the number of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as it may reasonably request
in order to facilitate the disposition of Securities owned by it.

         (e) The Company will, at the request of Warrantholders holding at least
50 percent of the then outstanding Warrants, (i) furnish an opinion of the
counsel representing the Company for the purposes of the registration pursuant
to this Section 6, addressed to the Warrantholders and any Participating
Underwriter, (ii) furnish an appropriate letter from the independent public
accountants of the Company, addressed to the Warrantholders and any
Participating Underwriter, and (iii) make representations and warranties to the
Warrantholders and any Participating Underwriter. A request pursuant to this
subsection (e) may be made on three occasions. The documents required to be
delivered pursuant to this subsection (e) will be dated within ten days of the
request and will be, in form and substance, equivalent to similar documents
furnished to the underwriters in connection with the Offering, with such changes
as may be appropriate in light of changed circumstances.

         7. INDEMNIFICATION IN CONNECTION WITH REGISTRATION.

         (a) If any of the Securities are registered, the Company will indemnify
and hold harmless each selling Warrantholder, any person who controls any
selling Warrantholder

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within the meaning of the Act, and any Participating Underwriter against any
losses, claims, damages, or liabilities, joint or several, to which any
Warrantholder, controlling person, or Participating Underwriter may be
subject under the Act or otherwise; and it will reimburse each Warrantholder,
each controlling person, and each Participating Underwriter for any legal or
other expenses reasonably incurred by the Warrantholder, controlling person,
or Participating Underwriter in connection with investigating or defending
any such loss, claim, damage, liability, or action, insofar as such losses,
claims, damages, or liabilities, joint or several (or actions in respect
thereof), arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained, on the effective date
thereof, in any such registration statement or any preliminary prospectus or
final prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading; PROVIDED, HOWEVER, that the Company will not be
liable in any case to the extent that any loss, claim, damage, or liability
arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any registration statement,
preliminary prospectus, final prospectus, or any amendment or supplement
thereto, in reliance upon and in conformity with written information
furnished by a Warrantholder for use in the preparation thereof. The
indemnity agreement contained in this subparagraph (a) will not apply to
amounts paid to any claimant in settlement of any suit or claim unless such
payment is first approved by the Company, such approval not to be
unreasonably withheld.

         (b) Each selling Warrantholder, as a condition of the Company's
registration obligation, will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed any registration statement
or other filing or any amendment or supplement thereto, and any person who
controls the Company within the meaning of the Act, against any losses, claims,
damages, or liabilities to which the Company or any such director, officer, or
controlling person may become subject under the Act or otherwise, and will
reimburse any legal or other expenses reasonably incurred by the Company or any
such director, officer, or controlling person in connection with investigating
or defending any such loss, claim, damage, liability, or action, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue or alleged untrue statement of any material
fact contained in said registration statement, any preliminary or final
prospectus, or other filing, or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in said
registration statement, preliminary or final prospectus, or other filing, or
amendment or supplement, in reliance upon and in conformity with written
information furnished by such Warrantholder for use in the preparation thereof;
PROVIDED, HOWEVER, that the indemnity agreement contained in this subparagraph
(b) will not apply to amounts paid to any claimant in settlement of any suit or
claim unless such payment is first approved by the Warrantholder, such approval
not to be unreasonably withheld.

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         (c) Promptly after receipt by an indemnified party under subparagraphs
(a) or (b) above of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, notify the indemnifying party of the commencement thereof; but the
omission to notify the indemnifying party will not relieve it from any liability
that it may have to any indemnified party otherwise than under subparagraphs (a)
and (b).

         (d) If any such action is brought against any indemnified party and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party; and after
notice from the indemnifying party to such indemnified party of its election to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.

         8. RESTRICTIONS ON TRANSFER. This Warrant Certificate and the Warrant
may not be sold, transferred, assigned or hypothecated for a one-year period
after the Effective Date except to underwriters of the Offering or to
individuals who are either a partner or an officer of such an underwriter or by
will or by operation of law. The Warrant may be divided or combined, upon
request to the Company by the Warrantholder, into a certificate or certificates
evidencing the same aggregate number of Warrants.

         9. NO RIGHTS AS A SHAREHOLDER. Except as otherwise provided herein, the
Warrantholder will not, by virtue of ownership of the Warrant, be entitled to
any rights of a shareholder of the Company but will, upon written request to the
Company, be entitled to receive such quarterly or annual reports as the Company
distributes to its shareholders.

         10. NOTICE. Any notices required or permitted to be given hereunder
will be in writing and may be served personally or by mail; and if served will
be addressed as follows:

                  If to the Company:

                  GMX Resources Inc.
                  One Benham Place, Suite 600
                  9400 North Broadway
                  Oklahoma City, Oklahoma 73114
                  Attn: Treasurer

                  If to the Warrantholder:

                  at the address furnished

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                  by the Warrantholder to the
                  Company for the purpose of
                  notice.

         Any notice so given by mail will be deemed effectively given 48 hours
after mailing when deposited in the United States mail, registered or certified
mail, return receipt requested, postage prepaid and addressed as specified
above. Any party may by written notice to the other specify a different address
for notice purposes.

         11. APPLICABLE LAW. This Warrant Certificate will be governed by and
construed in accordance with the laws of the State of Oregon, without reference
to conflict of laws principles thereunder. All disputes relating to this Warrant
Certificate shall be tried before the courts of Oregon located in Multnomah
County, Oregon to the exclusion of all other courts that might have
jurisdiction.

         Dated as of _______, 2001

         GMX RESOURCES, INC.

         By:  __________________________________
              Title:

         Agreed and Accepted as of __________, 2001

         PAULSON INVESTMENT COMPANY, INC.

         By:___________________________________
              Title:

                                       9<PAGE>

                                                                     EXHIBIT 4.1

                        XM SATELLITE RADIO HOLDINGS INC.

                             1998 SHARES AWARD PLAN
                                  (AS AMENDED)

                                  -------------

                          Effective as of June 16, 1998

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                        XM SATELLITE RADIO HOLDINGS INC.
                             1998 SHARES AWARD PLAN
                                  (AS AMENDED)

                                  INTRODUCTION

         XM Satellite Radio Holdings Inc., a Delaware corporation (hereinafter
referred to as the "Corporation"), hereby establishes an incentive compensation
plan to be known as the "XM 1998 Shares Award Plan" (hereinafter referred to as
the "Plan"), as set forth in this document. The Plan permits the grant of
Incentive Stock Options, Non-Qualified Stock Options, Phantom Stock Awards,
Stock Appreciation Rights, Restricted Stock Awards and Other Stock-Based Awards.
Subject to the terms of the Plan, the Plan shall become effective on June 16,
1998.

         The purpose of the Plan is to promote the success and enhance the value
of the Corporation by linking the personal interests of Participants to those of
the Corporation's shareholders by providing Participants with an incentive for
outstanding performance. The Plan is further intended to assist the Corporation
in its ability to motivate, and retain the services of, Participants upon whose
judgment, interest and special effort the successful conduct of its operations
is largely dependent.

                                   DEFINITIONS

         For purposes of this Plan, the following terms shall be defined as
follows unless the context clearly indicates otherwise:

         (a) "AFFILIATE" shall mean (i) any parent, including American Mobile
Satellite Corporation and any other entity which owns directly or indirectly at
least 50% of the total combined voting power of all classes of stock of the
Corporation and (ii) any entity in which the Corporation directly or indirectly
owns at least 50% of the total combined voting power of all classes of stock.

         (b) "AWARD" shall mean any award to a participant of an Option, Stock
Appreciation Right, Phantom Share, Restricted Stock or any other stock-based
award under the Plan.

<PAGE>

         (c) "AWARD AGREEMENT" shall mean the written agreement, executed by an
appropriate officer of the Corporation, pursuant to which an Award is granted.

         (d) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation.

         (e) "CHANGE OF CONTROL" shall have the meaning set forth in Section
11(d) hereof.

         (f) "CODE" shall mean the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder.

         (g) "COMMITTEE" shall mean the Board of Directors of the Corporation or
any committee of two or more Non-Employee Directors (as defined under Rule 16b
promulgated under the Exchange Act) designated by the Board of Directors to
serve as the Committee.

         (h) "CONSULTANT" shall mean an individual or entity who is in a
consulting relationship with the Corporation or any parent or subsidiary of the
Corporation.

         (i) "CORPORATION" shall mean XM Satellite Radio Holdings Inc., a
Delaware corporation.

         (j) "EMPLOYEE" shall mean a common-law employee of the Corporation or
of any Affiliate.

         (k) "EQUIVALENT AWARD" shall mean, in connection with a Change of
Control, a continuation of the Award by the Corporation to a Participant, an
agreement by the person(s) acquiring the Corporation that to honor or assume the
Award following the Change of Control, or the substitution of a new Award with
an inherent value equivalent to that of the original Award and on terms at least
as beneficial to the Participant as those contained in the Participant's
original Award Agreement.

         (l) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.

         (m) "FAIR MARKET VALUE" of the Corporation's Common Shares on a Trading
Day shall mean the last reported sale price for Common Shares or, in case no
such reported sale takes place on such Trading Day, the average of the closing
bid and asked prices for the Common Shares for such Trading Day, in either case
on the principal national securities exchange on which the Common Shares are
listed or admitted to trading, or if the Common Shares are not listed or
admitted to trading on

                                      -2-

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any national securities exchange but are traded in the over-the-counter market,
the closing sale price of the Common Shares or, if no sale is publicly reported,
the average of the closing bid and asked quotations for the Common Shares, as
reported by the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or any comparable system or, if the Common Shares are not
listed on NASDAQ or a comparable system, the average of the bid and asked prices
of the Common Shares or, if no sale is publicly reported, the average of the
closing bid and asked prices, as furnished by two members of the National
Association of Securities Dealers, Inc., who make a market in the Common Shares
selected from time to time by the Corporation for that purpose. In addition, for
purposes of this definition, a "Trading Day" shall mean, if the Common Shares
are listed on any national securities exchange, a business day during which such
exchange was open for trading and at least one trade of Common Shares was
effected on such exchange on such business day, or, if the Common Shares are not
listed on any national securities exchange but are traded in the
over-the-counter market, a business day during which the over-the-counter market
was open for trading and at least one "broker-dealer" quoted both a bid and
asked price for the Common Shares (if a broker-dealer quoted only a bid or only
an asked price for such day, such day will not be a Trading Day). In the event
the Corporation's Common Shares are not publicly traded, the Fair Market Value
of such Common Shares shall be determined by the Committee in good faith and in
its sole discretion.

         (n) "GOOD CAUSE" shall mean, with respect to any Participant, the
meaning of such term as set forth in the employment agreement between the
Corporation (or any Affiliate) and the Participant or, in the event there is no
such employment agreement (or if any such employment agreement does not contain
such a definition), such term shall mean (i) willful or gross misconduct or
willful or gross negligence in the performance of his or her duties for the
Corporation or any Affiliate, (ii) neglect of his or her duties for the
Corporation or any Affiliate after written notice and opportunity to cure, (iii)
dishonesty, fraud, theft, embezzlement or misappropriation of funds, properties
or assets of the Corporation or of any Affiliate, (iv) conviction of a felony,
(v) a direct or indirect material breach of the terms of any agreement with the
Corporation or any Affiliate or (vi) acting in a manner or making any statements
which the Committee reasonably determines to have a material adverse effect on
the reputation, operations, prospects or business relations of the Company or
its Affiliates.

         (o) "INCENTIVE STOCK OPTION" shall mean a right to purchase Shares from
the Corporation that is granted under Section 5 of the Plan and that is intended
to meet the requirements of Section 422 of the Code or any successor provision
thereto.

         (p) "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board of
Directors who is not a full-time employee of the Corporation.

                                      -3-

<PAGE>

         (q) "NON-QUALIFIED STOCK OPTION" shall mean a shares option which does
not satisfy the requirements for, or which is not intended to be eligible for,
tax-favored treatment under Section 422 of the Code.

         (r) "OPTION" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.

         (s) "OPTIONEE" shall mean a Participant who is granted an Option under
the terms of the Plan.

         (t) "OTHER STOCK-BASED AWARD" shall mean any right granted under
Section 9 of the Plan.

         (u) "PARTICIPANT" shall mean any Employee, Consultant or Non-Employee
Director participating under the Plan.

         (v) "PHANTOM SHARE" shall mean a hypothetical Share which is cancelled
by the delivery of an actual Share or, in the discretion of the Corporation, by
the payment of cash (or a combination of cash and Shares) in an amount equal to
the Fair Market Value of a Share on the date of surrender.

         (w) "PLAN" shall mean this XM 1998 Shares Award Plan as the same shall
be amended, revised or terminated from time to time.

         (x) "RESTORATION OPTION" shall mean an Option granted under Section
5(f).

         (y) "RESTRICTED STOCK" shall mean any Share granted under Section 7 of
the Plan.

         (z) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations thereunder.

         (aa) "SHARE" shall mean a share of the Class A common stock, par value
$.01 per share, of the Corporation, or such other securities of the Corporation
as may be designated by the Committee from time to time.

         (bb) "STOCK APPRECIATION RIGHT" shall mean any right granted under
Section 6 of the Plan.

                                      -4-

<PAGE>

                                    SECTION 1
                                 ADMINISTRATION

         The Plan shall be administered by the Committee. Subject to the
provisions of the Plan, the Committee may establish from time to time such
regulations, provisions, proceedings and conditions of awards which, in its sole
opinion, may be advisable in the administration of the Plan. A majority of the
Committee shall constitute a quorum, and, subject to the provisions of Section 4
of the Plan, the acts of a majority of the members present at any meeting at
which a quorum is present, or acts approved in writing by a majority of the
Committee, shall be the acts of the Committee as a whole.

                                    SECTION 2
                                SHARES AVAILABLE

         Subject to the adjustments provided in Section 7 of the Plan, the
aggregate number of Shares with respect to which Awards may be granted under the
Plan shall be 8,000,000 shares. The Shares underlying Awards shall be counted
against the limitation set forth in the immediately preceding sentence and may
be reused to the extent that the related Award to any individual is settled in
cash, expires, is terminated unexercised, or is forfeited without the delivery
of Shares. Shares granted to satisfy Awards under the Plan may be authorized and
unissued shares, issued Shares held in the Corporation's treasury or Shares
acquired on the open market. The maximum number of Shares with respect to which
Awards may be granted under the Plan to any individual in any calendar year
shall be equal to 267,570 Shares.

                                    SECTION 3
                                   ELIGIBILITY

         All (i) Employees who are regularly employed, (ii) Consultants and
(iii) Non-Employee Directors shall be eligible to participate in the Plan.

                                    SECTION 4
                             AUTHORITY OF COMMITTEE

         The Plan shall be administered by, or under the direction of, the
Committee, which shall administer the Plan so as to comply at all times with
applicable law, and shall otherwise have the sole and exclusive authority to
interpret the Plan and to make all determinations specified in or permitted by
the Plan or deemed necessary or desirable for its administration or for the
conduct of the Committee's business. Subject to the provisions of Section 12
hereof, all interpretations and determinations of the Committee may be made on
an individual or group basis and shall be final, conclusive and binding on all
persons. Subject to the express provisions of the Plan, the

                                      -5-

<PAGE>

Committee shall have authority, in its discretion, to determine, without
limitation, the persons to whom Awards shall be granted, the times when Awards
shall be granted, the number of Shares subject to any Awards, the terms of
Awards, any other restrictions, including any vesting requirements, and the
other provisions thereof (which need not be identical with respect to each
Award). In addition, the authority of the Committee shall include, without
limitation, the following with respect to an Award of an Option:

         (a) FINANCING. The arrangement of temporary financing for a Participant
by registered broker-dealers, under the rules and regulations of the Federal
Reserve Board, for the purpose of assisting a Participant in the exercise of an
Option, such authority to include the payment by the Corporation of the
commissions of the broker-dealer;

         (b) PROCEDURES FOR EXERCISE OF OPTION. The establishment of procedures
for a Participant (i) to exercise an Option by payment of cash or (ii) with the
consent of the Committee, (A) to have withheld from the total number of Shares
to be acquired upon the exercise of an Option that number of shares having a
Fair Market Value, which, together with such cash as will be paid in respect of
fractional shares, shall equal the Option exercise price of the total number of
Shares to be acquired, (B) to exercise all or a portion of an Option by
delivering that number of Shares already owned by him or her having a Fair
Market Value which shall equal the Option exercise price for the portion
exercised and, in cases where an Option is not exercised in its entirety, and
subject to the requirements of the Code, to permit the Participant to deliver
the Shares thus acquired by him or her in payment of Shares to be received
pursuant to the exercise of additional portions of such Option, the effect of
which shall be that a Participant can in sequence utilize such newly acquired
shares of Common Shares in payment of the exercise price of the entire Option,
together with such cash as shall be paid in respect of fractional shares or (C)
to engage in any form of "cashless" exercise.

         (c) WITHHOLDING. The establishment of a procedure whereby a number of
Shares may be withheld from the total number of Shares to be issued upon
exercise of an Award or for the tender of Shares owned by any Participant to
meet any obligation of withholding for taxes incurred by the Participant upon
such exercise.

                                    SECTION 5
                                  SHARE OPTIONS

         (a) GRANT. Subject to the provisions of the Plan, the Committee shall
have sole and complete discretion and authority to determine the Employees,
Consultants and Non-Employee Directors to whom Options shall be granted, the
number of Shares

                                      -6-

<PAGE>

to be covered by each Option, the option price therefor and the conditions and
limitations applicable to the exercise of the Option. The Committee shall have
the discretion and authority to grant Incentive Stock Options (but only to
Employees who meet the requirements of Section 422(a)(2) of the Code),
Non-Qualified Stock Options, and any combination thereof (provided that
Incentive Stock Options shall be granted only to Employees who meet the
requirements of Section 422(a)(2) of the Code). In the case of Incentive Stock
Options, the terms and conditions of such grants shall be subject to and comply
with such rules as may be prescribed by Section 422 of the Code, as from time to
time amended, and any regulations implementing such statute.

         (b) EXERCISE PRICE. Subject to the requirement set forth in Section
5(a) with respect to Incentive Stock Options, the Committee in its sole
discretion shall establish the exercise price at the time each option is
granted. The exercise price shall be subject to adjustment in accordance with
the provisions of Section 11 of the Plan.

         (c) TERM. Subject to the provisions of the Plan, the term of any Option
granted hereunder shall be not more than 10 years from the date of grant.

         (d) EXERCISABILITY. Except as provided in Section 5(e) hereof, each
Option shall be exercisable in whole or in installments, and at such time(s),
and subject to the fulfillment of any conditions on, and to any limitations on,
exercisability as may be determined by the Committee at the time of the grant of
such Options. The right to purchase Shares shall be cumulative so that when the
right to purchase any Shares has accrued such Shares or any part thereof may be
purchased at any time thereafter until the expiration or termination of the
Option. Notwithstanding the above, no Option shall be exercisable by a
Participant until he or she has fully repaid any and all loans made to him or
her by the Corporation (or by any parent or subsidiary of the Corporation);
PROVIDED, HOWEVER, that a repayment (whether in the form of cash or Shares) made
contemporaneously with an exercise of an Option granted hereunder (including a
repayment in the form of withholding on Shares to be received upon the exercise
of such Option) shall be considered to have occurred prior to such Option
exercise.

         (e) PAYMENT OF EXERCISE PRICE. The price per share of Shares with
respect to each Option shall be payable at the time the Option is exercised.
Such price shall be payable in cash or pursuant to any of the methods set forth
in Sections 4(a) or (b) hereof, as determined by the Participant and approved by
the Committee. Common Shares delivered to the Corporation in payment of the
exercise price shall be valued at the Fair Market Value of the Common Shares on
the date preceding the date of the exercise of the Option.

                                      -7-

<PAGE>

         (f) RESTORATION OPTIONS. In the event that any Participant delivers
Shares in payment of the exercise price of any Option granted hereunder, or in
the event that the withholding tax liability arising upon exercise of any such
Option by a Participant is satisfied through the withholding by the Corporation
of Shares otherwise deliverable upon exercise of the Option, the Committee shall
have the authority to grant or provide for the automatic grant of a Restoration
Option to such Participant. The grant of a Restoration Option shall be subject
to the satisfaction of such conditions or criteria as the Committee in its sole
discretion shall establish from time to time. A Restoration Option shall entitle
the holder thereof to purchase a number of Shares equal to the number of such
Shares so delivered or withheld upon exercise of the original Option. A
Restoration Option shall have a per share exercise price of not less than 100%
of the per Share Fair Market Value as of the date of grant of such Restoration
Option and such other terms and conditions as the Committee in its sole
discretion shall determine.

                                    SECTION 6
                            STOCK APPRECIATION RIGHTS

         (a) GRANT. Subject to the provisions of the Plan, the Committee shall
have sole and complete discretion and authority to determine the eligible
persons to whom Stock Appreciation Rights shall be granted, the number of Shares
to be covered by each Stock Appreciation Right Award, the grant price thereof
and the conditions and limitations applicable to the exercise thereof. Stock
Appreciation Rights may be granted in tandem with another Award, in addition to
another Award or freestanding and unrelated to another Award. Stock Appreciation
Rights granted in tandem with or in addition to an Award may be granted either
at the same time as the Award or at a later time. Stock Appreciation Rights
shall not be exercisable earlier than six months after grant and shall have a
grant price as determined by the Committee on the date of grant.

         (b) EXERCISE AND PAYMENT. A Stock Appreciation Right shall entitle the
Participant to receive an amount equal to the excess of the Fair Market Value of
a Share on the date of exercise of the Stock Appreciation Right over the grant
price thereof, provided that the Committee may for administrative convenience
determine that, with respect to any Stock Appreciation Right that is not related
to an Incentive Stock Option and that can only be exercised for cash during
limited periods of time in order to satisfy the conditions of Rule 16b-3, the
exercise of such Stock Appreciation Right for cash during such limited period
shall be deemed to occur for all purposes hereunder on the day during such
limited period on which the Fair Market Value of the Shares is the highest. Any
such determination by the Committee may be changed by the Committee from time to
time and may govern the exercise of Stock Appreciation Rights granted prior to
such determination as well as Stock Appreciation Rights

                                      -8-

<PAGE>

thereafter granted. The Committee shall determine whether a Stock Appreciation
Right shall be settled in cash, Shares or a combination of cash and Shares.

         (c) OTHER TERMS AND CONDITIONS. Subject to the terms of the Plan and
any applicable Award Agreement, the Committee shall determine, at or after the
grant of a Stock Appreciation Right, the term, methods of exercise, methods and
form of settlement, and any other terms and conditions of any Stock Appreciation
Right. Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights
granted or exercised prior to such determination as well as Stock Appreciation
Rights granted or exercised thereafter. The Committee may impose such conditions
or restrictions on the exercise of any Stock Appreciation Right as it shall deem
appropriate.

                                    SECTION 7
                                RESTRICTED STOCK

         (a) GRANT. Subject to the provisions of the Plan, the Committee shall
have sole and complete discretion and authority to determine the eligible
persons to whom Shares of Restricted Stock shall be granted, the number of
Shares of Restricted Stock to be granted to each Participant, the duration of
the period during which, if any, and the conditions under which, the Restricted
Stock may be forfeited to the Corporation, and the other terms and conditions of
such Awards.

         (b) TRANSFER RESTRICTIONS. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except, in the case of
Restricted Stock, as provided in the Plan or the applicable Award Agreements.
Certificates issued in respect of Shares of Restricted Stock shall be registered
in the name of the Participant and deposited by such Participant, together with
a stock power endorsed in blank, with the Corporation. Upon the lapse of the
restrictions applicable to such Shares of Restricted Stock, the Corporation
shall deliver such certificates to the Participant or the Participant's legal
representative.

         (c) DIVIDENDS AND DISTRIBUTIONS. Dividends and other distributions paid
on or in respect of any Shares of Restricted Stock may be paid directly to the
Participant, or may be reinvested in additional Shares of Restricted Stock, as
determined by the Committee in its sole discretion.

                                    SECTION 8
                                 PHANTOM SHARES

                                      -9-

<PAGE>

         (a) GRANT. Subject to the provisions of the Plan, the Committee shall
have sole and complete discretion and authority to determine the eligible
persons to whom Phantom Shares shall be granted, the number of Phantom Shares to
be granted to each Participant, the duration of the period during which, and the
conditions under which, the Phantom Shares may be forfeited to the Corporation
and the other terms and conditions of such Awards.

         (b) SURRENDER. Each Award Agreement with respect to a Phantom Stock
Unit shall specify the date on which the Phantom Stock Unit shall be
surrendered, and thereby cancelled by delivery of a Share with respect thereto,
subject to such terms and conditions as the Committee may specify, in its sole
discretion, in the applicable Award Agreement or thereafter. The date on which
the Phantom Shares shall be surrendered may be accelerated upon the occurrence
of certain events, as determined by the Committee in its sole discretion and as
set forth in the applicable Award Agreement.

         (c) DIVIDENDS AND DISTRIBUTIONS. Payments may be made to Participants
who have been awarded Phantom Shares in an amount equal to dividends and other
distributions paid on or in respect of an equivalent number of Shares. Such
payments may be paid directly to the Participant or may be reinvested in
additional Phantom Shares, as determined by the Committee in its sole
discretion.

                                    SECTION 9
                            OTHER STOCK-BASED AWARDS

         The Committee shall have the discretion and authority to grant to
eligible persons an "Other Stock-Based Award," which shall consist of any right
that is (i) not an Award described in Sections 5 through 8 above and (ii) an
Award of Shares or an Award denominated or payable in, valued in whole or in
part by reference to, or otherwise based on or related to, Shares (including,
without limitation, securities or rights convertible into Shares), as deemed by
the Committee to be consistent with the purposes of the Plan. Subject to the
terms of the Plan and any applicable Award Agreement, the Committee shall
determine the terms and conditions of any such Other Stock-Based Award.

                                   SECTION 10
                             TERMINATION OF SERVICES

         The following provisions shall apply in the event that the Participant
ceases to provide services to the Corporation or any Affiliate, either as an
Employee, a Consultant or a Non-Employee Director, unless the Committee shall
have provided otherwise, either at the time of the grant of the Award or
thereafter.

                                      -10-

<PAGE>

         (a)      NON-QUALIFIED STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.

                  (i) UPON TERMINATION OF SERVICES AS EMPLOYEE OR CONSULTANT.
The Participant's right to exercise any Non-Qualified Stock Option or Stock
Appreciation Right shall terminate, and such Option or Stock Appreciation Right
shall expire, as set forth in the Award Agreement. The exercise periods and
rights to acceleration, if any, in the event of termination of employment,
including for Good Cause, or upon death, total and permanent disability or
retirement, or as a result of a change of control or otherwise shall be as set
forth in the Award Agreement as determined by the Committee in its sole
discretion.

                  (ii) For purposes of determining whether a Participant's
employment or consulting relationship has terminated, a Participant who is both
an Employee (or Consultant) and a director of the Corporation or any Affiliate
shall be considered to have terminated his or her employment or consulting
relationship only upon his or her termination of service both as an Employee (or
Consultant) and as a director.

         (b)      INCENTIVE STOCK OPTIONS.

                  (i) Except as otherwise determined by the Committee at the
time of grant, if the Participant's employment with the Corporation terminates
for any reason, the Participant shall have the right to exercise any Incentive
Stock Option and any related Stock Appreciation Right during the 90 days after
such termination of employment to the extent it was exercisable at the date of
such termination, but in no event later than the date the Option would have
expired had it not been for the termination of such employment. If the
Participant does not exercise such Option or related Stock Appreciation Right to
the full extent permitted by the preceding sentence, the remaining exercisable
portion of such Option automatically will be deemed a Non-Qualified Stock Option
(except to the extent otherwise provided by Section 421 or Section 422 of the
Code), and such Option and any related Stock Appreciation Right will be
exercisable during the period set forth in Section 10(a) of the Plan, provided
that in the event that employment terminates because of death or the Participant
dies in such 90-day period, the option will continue to be an Incentive Stock
Option to the extent provided by Section 421 or Section 422 of the Code, or any
successor provisions, and any regulations promulgated thereunder.
Notwithstanding the forgoing, if a Participant's employment is terminated by the
Corporation or by any Affiliate for Good Cause or as otherwise set forth in the
Award Agreement, then the Participant shall immediately forfeit his or her
rights to exercise any and all of outstanding Options or Stock Appreciation
Rights theretofore granted to him or her.

                                      -11-

<PAGE>

                  (ii) For purposes of determining whether a Participant's
employment or consulting relationship has terminated, a Participant who is both
an Employee (or Consultant) and a director of the Corporation or any Affiliate
shall be considered to have terminated his or her employment or consulting
relationship only upon his or her termination of service both as an Employee (or
Consultant) and as a director.

         (c) RESTRICTED STOCK. Except as otherwise determined by the Committee
at the time of grant, upon termination of employment for any reason during the
restriction period, all shares of Restricted Stock still subject to restriction
shall be forfeited by the Participant and reacquired by the Corporation at the
price (if any) paid by the Participant for such Restricted Stock, provided that
in the event of a Participant's retirement, permanent and total disability or
death, or in cases of special circumstances, the Committee may, in its sole
discretion, when it finds that a waiver would be in the best interests of the
Corporation, waive in whole or in part any or all remaining restrictions with
respect to such Participant's shares of Restricted Stock.

         (d) PHANTOM SHARES AND OTHER STOCK-BASED AWARDS. Upon termination of a
Participant's employment or consulting relationship with the Corporation for any
reason, the Participant who has been granted Phantom Shares or Other Stock-Based
Awards under the Plan shall surrender such Awards, and such Awards shall either
be cancelled or shall be paid as determined by the Committee at the time of
grant and as set forth in the relevant Award Agreement.

                                   SECTION 11
                         ADJUSTMENT OF SHARES; MERGER OR
                     CONSOLIDATION, ETC. OF THE CORPORATION

         (a) RECAPITALIZATION, ETC. In the event there is any change in the
common shares of the Corporation by reason of any stock dividend, stock split,
adoption of stock rights plans, split-ups, split-offs, spin-offs, liquidations,
combination or exchanges of shares, recapitalizations, mergers, consolidations
or reorganizations of or by the corporation or any distribution to common
stockholders other than ordinary cash dividends, there shall be substituted for
or added to each Share theretofore appropriated or thereafter subject, or which
may become subject, to any Award, the number and kind of shares or other
securities into which each outstanding Share shall be so changed or for which
each such Share shall be exchanged, or to which each such Share be entitled, as
the case may be, and the per share price thereof also shall be appropriately
adjusted.

         (b) MERGER OR CONSOLIDATION OF CORPORATION. Upon (i) the merger or
consolidation of the Corporation with or into another corporation (pursuant to
which the

                                      -12-

<PAGE>

shareholders of the Corporation immediately prior to such merger or
consolidation will not, as of the date of such merger or consolidation, own a
beneficial interest in shares of voting securities of the corporation surviving
such merger or consolidation having at least a majority of the combined voting
power of such corporation's then outstanding securities), if the agreement of
merger or consolidation does not provide for (1) the continuance of the Awards
granted hereunder or (2) the substitution of new awards for Awards granted
hereunder, or for the assumption of such Awards by the surviving corporation or
(ii) the dissolution, liquidation, or sale of all or substantially all the
assets of the Corporation, the holder of any such Award theretofore granted and
still outstanding (and not otherwise expired) who satisfies such other
requirements, if any, that may be required by the Committee and set forth in the
related Award Agreement, shall have the right immediately prior to the effective
date of such merger, consolidation, dissolution, liquidation or sale of assets
of the Corporation to exercise such Awards in whole or in part without regard to
any installment provision regarding exercisability that may have been made part
of the terms and conditions of such Awards. The Corporation, to the extent
practicable, shall give advance notice to affected Participants of such merger,
consolidation, dissolution, liquidation or sale of assets of the Corporation.
All such Awards which are not so exercised shall be forfeited as of the
effective time of such merger, consolidation, dissolution, liquidation or sale
of assets of the Corporation.

         (c) CHANGE OF CONTROL OF THE CORPORATION. Notwithstanding the
foregoing, if a Change of Control occurs during the period commencing on the
date of grant of an Award and terminating on the date of expiration of the
Award, the Participant shall be entitled to receive an Equivalent Award. If,
despite the best efforts of the Corporation, the Participant cannot receive an
Equivalent Award in connection with such Change in Control, (i) the Participant
shall be entitled to receive immediately prior to such Change in Control, in
exchange for his or her Award, cash in an amount equal to the excess of the
highest price paid for a Share in connection with the Change of Control over the
exercise price per Share under the Award, multiplied by the total number of
Shares subject to the Award, including all Shares with respect to which the
Award has not yet become exercisable under the provisions of the Plan but
excluding any Shares with respect to which the Award has previously been
exercised or (ii) if the Participant is an insider who would be subject to suit
under Section 16(b) of the Exchange Act if the Participant were to receive the
cash payment described above, the Award may be exercised by the Participant in
full beginning on the date two weeks before such Change of Control. If the
Participant receives an Equivalent Award in connection with a Change of Control,
and the Optionee's employment with the Corporation or an Affiliate is terminated
within one year following the Change of Control by reason of involuntary
termination, the Equivalent Award may be exercised in full beginning on the date
of

                                      -13-

<PAGE>

such termination if and for such period as the Committee, in its sole
discretion, shall determine.

         (d) DEFINITION OF CHANGE OF CONTROL OF THE CORPORATION. A "Change of
Control" shall be deemed to have occurred if (i) any person or group of persons
(as defined in Section 13(d) and 14(d) of the Exchange Act) together with its
affiliates, excluding employee benefit plans of the Corporation, is or becomes,
directly or indirectly, the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act) of securities of the Corporation representing 40% or more of
the combined voting power of the Corporation's then outstanding securities; or
(ii) individuals who at the beginning of any two-year period constitute the
Board, plus new directors of the Corporation whose election or nomination for
election by the Corporation's shareholders is approved by a vote of at least
two-thirds of the directors of the Corporation still in office who were
directors of the Corporation at the beginning of such two-year period, cease for
any reason during such two-year period to constitute at least two-thirds of the
members of the Board; or (iii) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation or entity
regardless of which entity is the survivor, other than a merger or consolidation
which would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or being converted into voting securities of the surviving entity)
at least 60% of the combined voting power of the voting securities of the
Corporation or such surviving entity outstanding immediately after such merger
or consolidation; or (iv) the shareholders of the Corporation approve a plan of
complete liquidation or winding-up of the Corporation or an agreement for the
sale or disposition by the Corporation of all or substantially all of the
Corporation's assets. Notwithstanding anything herein to the contrary, in no
event shall (A) an initial public offering of the Corporation, (B) any change in
the percentage ownership of the Corporation by American Mobile Satellite
Corporation or its affiliates, or (C) a private placement of less than
$150,000,000 be deemed to constitute a Change of Control hereunder.

                                   SECTION 12
                            MISCELLANEOUS PROVISIONS

         (a) ADMINISTRATIVE PROCEDURES. The Committee may establish any
procedures determined by it to be appropriate in discharging its
responsibilities under the Plan. All actions and decisions of the Committee
shall be final.

         (b) INVESTMENT REPRESENTATION. With respect to Shares received pursuant
to the exercise of an Option, the Committee may require, as a condition of
receiving such securities, that the Participant furnish to the Corporation such
written representations

                                      -14-

<PAGE>

and information as the Committee deems appropriate to permit the Corporation, in
light of the existence or nonexistence of an effective registration statement
under the Securities Act, to deliver such securities in compliance with the
provisions of the Securities Act.

         (c) WITHHOLDING TAXES. The Corporation shall have the right to deduct
from all cash payments hereunder any federal, state, local or foreign taxes
required by law to be withheld with respect to such payments. In the case of the
issuance or distribution of Common Shares upon the exercise of an Award, the
Corporation, as a condition of such issuance or distribution, may require the
payment (through withholding from the Participant's salary, reduction of the
number of Shares or other securities to be issued, or otherwise) of any such
taxes. Each Participant may satisfy the withholding obligations by paying to the
Corporation a cash amount equal to the amount required to be withheld or by
tendering to the Corporation a number of Shares having a value equivalent to
such cash amount, or by use of any available procedure as described under
Section 4(c) hereof.

         (d) COMPLIANCE WITH APPLICABLE LAW AND REGULATIONS. The adoption of the
Plan and the grant and exercise of the Awards thereunder shall be subject to
receipt of all required regulatory approvals, including without limitation any
required approvals of the Federal Communications Commission. Should any
provision of the Plan that is intended to comply with the provisions of Rule
16b-3 under the Exchange Act at the date of the adoption of the Plan by the
Board not be necessary for such compliance, or become no longer necessary for
such compliance, such provision of the Plan shall have no force or effect under
the Plan as of the date that such provision is not required for the purpose of
satisfying the provisions of Rule 16b-3 under the Exchange Act.

         (e) COSTS AND EXPENSES. The costs and expenses of administering the
Plan shall be borne by the Corporation and shall not be charged against any
Award or to any employee receiving an Award.

         (f) FUNDING OF PLAN. The Plan shall be unfunded. Neither the
Participants nor any other persons shall have any interest in any fund or in any
specific asset or assets of the Corporation or any other entity by reason of any
Award. The interests of each Participant and former Participant hereunder are
unsecured and shall be subject to the general creditors of the Corporation.

         (g) OTHER INCENTIVE PLANS. The adoption of the Plan does not preclude
the adoption by appropriate means of any other incentive plan for employees.

                                      -15-

<PAGE>

         (h) PLURALS. Where appearing in the Plan, singular terms shall include
the plural, and vice versa, unless the context clearly indicates a different
meaning.

         (i) HEADINGS. The headings and sub-headings in the Plan are inserted
for the convenience of reference only and are to be ignored in any construction
of the provisions hereof.

         (j) SEVERABILITY. In case any provision of the Plan shall be held
illegal or void, such illegality or invalidity shall not affect the remaining
provisions of the Plan, but shall be fully severable, and the Plan shall be
construed and enforced as if said illegal or invalid provisions had never been
inserted herein.

         (k) LIABILITY AND INDEMNIFICATION. Neither the Corporation nor any
Affiliate shall be responsible in any way for any action or omission of the
Committee, or any other fiduciaries in the performance of their duties and
obligations as set forth in the Plan. Furthermore, neither the Corporation nor
any Affiliate shall be responsible for any act or omission of any of their
agents, or with respect to reliance upon advice of their counsel provided that
the Corporation and/or the appropriate Affiliate relied in good faith upon the
action of such agent or the advice of such counsel.

                  (ii) Except for their own gross negligence or willful
misconduct regarding the performance of the duties specifically assigned to them
under, or their willful breach of the terms of, the Plan, the Corporation, each
Affiliate and the Committee shall be held harmless by the Participants, former
Participants, beneficiaries and their representatives against liability or
losses occurring by reason of any act or omission. Neither the Corporation, any
Affiliate, the Committee, nor any agents, employees, officers, directors or
shareholders of any of them, nor any other person shall have any liability or
responsibility with respect to the Plan, except as expressly provided herein.

         (l) COOPERATION OF PARTIES. All parties to the Plan and any person
claiming any interest hereunder agree to perform any and all acts and execute
any and all documents and papers which the Committee deems necessary or
desirable for carrying out the Plan or any of its provisions.

         (m) GOVERNING LAW. All questions pertaining to the validity,
construction and administration of the Plan shall be determined in accordance
with the laws of the State of Delaware.

         (n) NONGUARANTEE OF EMPLOYMENT OR CONSULTING RELATIONSHIP. Nothing
contained in the Plan shall be construed as a contract of employment (or as a

                                      -16-

<PAGE>

consulting contract) between the Corporation (or any Affiliate) and any Employee
or Participant, as a right of any Employee or Participant to be continued in the
employment of (or in a consulting relationship with) the Corporation (or any
Affiliate), or as a limitation on the right of the Corporation or any Affiliate
to discharge any of its Employees or Consultants, at any time, with or without
cause.

         (o) NOTICES. Each notice relating to the Plan shall be in writing and
delivered in person or by certified mail to the proper address. All notices to
the Corporation or the Committee shall be addressed to it at c/o General
Counsel, 1250 23rd Street, N.W., Suite 57, Washington, D.C. 20037. All notices
to Participants, former Participants, beneficiaries or other persons acting for
or on behalf of such persons shall be addressed to such person at the last
address for such person maintained in the Committee's records.

         (p) WRITTEN AGREEMENTS. Each Award shall be evidenced by a signed Award
Agreement between the Corporation and the Participant containing the terms and
conditions of the Award.

                                   SECTION 13
                        AMENDMENT OR TERMINATION OF PLAN

         The Board of Directors of the Corporation shall have the right to
amend, suspend or terminate the Plan at any time except that no amendment,
suspension or termination of the Plan shall alter or impair any Award previously
granted under the Plan without the consent of the holder thereof. Any provision
of the Plan or any Award Agreement notwithstanding, the Committee may cause any
Award granted hereunder to be cancelled in consideration of a cash payment or
alternative Award made to the holder of such cancelled Award equal to the Fair
Market Value of such cancelled Award.

                                   SECTION 14
                                  TERM OF PLAN

         The Plan shall automatically terminate on the day immediately preceding
the tenth anniversary of the date the Plan was adopted by the Board of
Directors, unless sooner terminated by the Board of Directors. No Award may be
granted under the Plan subsequent to the termination of the Plan.

                                   SECTION 15
                                 EFFECTIVE DATE

                                      -17-

<PAGE>

         The Plan shall become effective as of June 16, 1998, the date as of
which it was approved by the Board of Directors.

                                      -18-

<PAGE>

                                    * * * * *

         The Plan was duly adopted and approved by the Board on June 16, 1998,
and was duly adopted and approved by the stockholders of the Corporation on June
16, 1998. The Board duly adopted certain amendments to the Plan on February 3,
1999 and June 6, 1999. The Board duly adopted certain amendments to the Plan on
July 8, 1999, including an amendment to increase the number of authorized Shares
under the Plan; the stockholders of the Company approved the amendment for such
increase in the number of authorized Shares on July 8, 1999. The Board duly
adopted certain amendments to the Plan on March 9, 2000, including an amendment
to increase the number of authorized Shares under the plan; the stockholders of
the Company approved the amendment for such increase in the number of authorized
Shares on May 31, 2000. The Board duly adopted certain amendments to the Plan on
January 11, 2001, including an amendment to increase the number of authorized
Shares under plan; the stockholders of the Company approved the amendment for
such increase in the number of authorized Shares on May 24, 2001.

                                               /S/ JOSEPH M. TITLEBAUM
                                               --------------------------------
                                               Joseph M. Titlebaum
                                               XM Satellite Radio Holdings Inc.
                                               Senior Vice President,
                                               General Counsel and Secretary

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