Document:

<PAGE>

                                                                     Exhibit 4.4

THE WARRANT REPRESENTED BY THIS CERTIFICATE AND ANY SECURITIES ACQUIRED UPON THE
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND
NEITHER THIS WARRANT NOR SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR (B) UPON
RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL, WHICH OPINION SHALL BE
REASONABLY SATISFACTORY TO ISSUER THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION
UNDER SUCH ACT AND SUCH LAWS.

                         _____________________________

                       XM SATELLITE RADIO HOLDINGS INC.

                         COMMON STOCK PURCHASE WARRANT

                         _____________________________

     This certifies that, for good and valuable consideration, XM Satellite
Radio Holdings Inc., a Delaware corporation (the "Company"), grants to Sony
Electronics, Inc., a Delaware corporation ("Sony"), and other Warrantholders the
right to subscribe for and purchase from the Company the number of shares
determined as set forth below (the "Warrant Shares") of the Company's Class A
common stock, par value $0.01 per share (the "Common Stock"), subject to the
terms, conditions and adjustments herein set forth.

     Certain capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in Section 11.

Certificate No.  1

Name of Warrantholder:  Sony Electronics, Inc.

Number of Shares:
<PAGE>

1.   Number of Warrant Shares; Exercise Price.
     ----------------------------------------

     1.1.  Number of Warrant Shares.
           ------------------------
           (a) Subject to adjustment as provided in Section 7.1, the number of
               Warrant Shares which the Warrantholder shall have the right to
               purchase shall be equal to the nearest whole number that is less
               than or equal to the product of the number of Fully-Diluted
               Shares multiplied by the percentage that is opposite the range
               set forth below that includes the percentage of the XM Satellite
               Installed Base that are Sony Devices at the time of the Vesting
               Date.  The percentage of shares which Sony will be entitled to
               acquire shall be based on the Fully-Diluted Shares of the
               Company.

<TABLE>
<CAPTION>

Percentage of XM Satellite Installed Base           Percentage of Number of
that are Sony Devices as of Vesting Date              Fully-Diluted Shares
----------------------------------------            ------------------------

          <S>                                                <C>
           0 - 19.99%                                           0%
           20 - 29.99%                                        0.5%
           30 - 39.99%                                        1.0%
           40 - 49.99%                                        1.5%
           50 - 100%                                          2.0%
</TABLE>

           (b) As soon as is reasonably practicable after the occurrence of the
               Vesting Date, the Company shall provide the Warrantholder with
               written notice thereof.

     1.2   Exercise Price. This Warrant shall, at the time of the Vesting Date,
           --------------
           entitle the Warrantholder, subject to the terms, conditions and
           adjustments set forth herein, to purchase the Warrant Shares at a
           purchase price per share (the "Exercise Price") equal to 105% of the
                                          --------------
           Fair Market Value as of the Vesting Date, subject to adjustment as
           provided in Section 7.1(g).  The Exercise Price may be payable by the
           Warrantholder in cash, in shares of common stock of the Company or by
           the surrender of warrants or other securities of the Company having a
           net value, at the time of the surrender, equal to the Exercise Price.

2.   Duration and Exercise Of Warrant; Limitations on Exercise; Payment of Taxes
     ---------------------------------------------------------------------------

     2.1   Exercisability of Warrant.  Subject to the terms and conditions set
           -------------------------
           forth herein, the right to exercise this Warrant shall vest, and this
           Warrant shall become exercisable for the number of Warrant Shares set
           forth in Section 1.1, as of the Vesting Date.  The Warrantholder
           shall have no right to exercise this Warrant prior to the Vesting
           Date.

                                       2
<PAGE>

     2.2   Duration and Exercise of Warrant.  Subject to the terms and
           --------------------------------
           conditions set forth herein, including Section 1.1, the Warrant may
           be exercised, in whole or in part, at any time prior to the
           Expiration Date, by the Warrantholder by:

           (a) the surrender of this Warrant to the Company, with a duly
               executed Exercise Form specifying the number of Warrant Shares to
               be purchased, during normal business hours on any Business Day
               prior to the Expiration Date; and

           (b) the delivery of payment to the Company, for the account of the
               Company, by cash, by certified or bank cashier's check or by wire
               transfer of immediately available funds in accordance with wire
               instructions that shall be provided by the Company upon request,
               of the Exercise Price for the number of Warrant Shares specified
               in the Exercise Form in lawful money of the United States of
               America.

           The Company agrees that such Warrant Shares shall be deemed to be
           issued to the Warrantholder as the record holder of such Warrant
           Shares as of the close of business on the date on which this Warrant
           shall have been surrendered and payment made for the Warrant Shares
           as aforesaid.

     2.3   Limitations on Exercise.  Notwithstanding anything to the contrary
           -----------------------
           herein, this Warrant may be exercised only upon (i) the delivery to
           the Company of any certificates, legal opinions, and other documents
           reasonably requested by the Company to satisfy the Company that the
           proposed exercise of this Warrant may be effected without
           registration under the Securities Act, and (ii) receipt by the
           Company of approval of any applicable Governmental Authority (other
           than the FCC) of the proposed exercise.  The Warrantholder shall not
           be entitled to exercise this Warrant, or any part thereof, unless and
           until such approvals, certificates, legal opinions or other documents
           are reasonably acceptable to the Company.  The cost of such
           approvals, certificates, legal opinions and other documents, if
           required, shall be borne by the Warrantholder.  In the event that the
           FCC shall object to the proposed exercise of the Warrant, then the
           Company, at its expense, shall be solely responsible for taking any
           and all action required to obtain FCC approval to permit such
           exercise as promptly as practicable.  In the event that on the date
           that Sony is permitted to exercise the Warrant in full without

                                       3
<PAGE>

           restriction (the "Approval Date") the Fair Market Value of the common
           stock underlying the Warrant is less than the value of the underlying
           common stock on the date on which Sony initially proposed to exercise
           the Warrant (the "Proposed Exercise Date"), then the Company shall,
           within ten days of Sony's request, pay to Sony an amount equal to the
           difference between Fair Market Value of the common stock on the
           Approval Date and the Proposed Exercise Date.  The Company may make
           such payment in the form of cash or common stock of the Company, at
           the option of the Company.  In addition, any and all transfer
           restrictions set forth in Section 3 shall terminate immediately after
           the Proposed Exercise Date.

     2.4   Warrant Shares Certificate.  A stock certificate or certificates for
           --------------------------
           the Warrant Shares specified in the Exercise Form shall be delivered
           to the Warrantholder within five Business Days after receipt of the
           Exercise Form and receipt of payment of the purchase price.  If this
           Warrant shall have been exercised only in part, the Company shall, at
           the time of delivery of the stock certificate or certificates,
           deliver to the Warrantholder a new Warrant evidencing the rights to
           purchase the remaining Warrant Shares, which new Warrant shall in all
           other respects be identical with this Warrant.

     2.5   Payment of Taxes.  The issuance of certificates for Warrant Shares
           ----------------
           shall be made without charge to the Warrantholder for any
           documentary, stamp or similar stock transfer or other issuance tax in
           respect thereto; provided, however, that the Warrantholder shall be
           required to pay any and all taxes which may be payable in respect of
           any transfer involved in the issuance and delivery of any certificate
           in a name other than that of the then Warrantholder as reflected upon
           the books of the Company.

3.   Restrictions on Transfer; Restrictive Legends
     ---------------------------------------------

     3.1   Divisibility of Warrant; Transfer of Warrant.
           --------------------------------------------

           (a) Subject to applicable federal and state securities laws, this
               Warrant and any Warrant Shares (x) prior to the Vesting Date may
               be transferred by the Warrantholder only to the Warrantholder's
               affiliates, except with the consent of the Company, and (y) after
               the Vesting Date may be transferred at any time by the
               Warrantholder.  No transfer of the registration rights set forth
               in Section 11 hereof shall be made except as permitted pursuant
               to Section 11.11 hereof.

                                       4
<PAGE>

           (b) Subject to the provisions of this Section, this Warrant may be
               divided into warrants for the purchase of one thousand shares or
               multiples thereof, upon surrender at the office of the Company
               located at 1250 23rd Street, N.W., Suite 57, Washington, D.C.,
               20037, without charge to any Warrantholder.  Subject to the
               provisions of this Section, upon such division, the Warrants may
               be transferred of record as the then Warrantholder may specify
               without charge to such Warrantholder (other than any applicable
               transfer taxes).

           (c) Subject to the provisions of this Section, upon surrender of this
               Warrant to the Company with a duly executed Assignment Form and
               funds sufficient to pay any transfer tax, the Company shall,
               without charge, execute and deliver a new Warrant or Warrants of
               like tenor in the name of the assignee named in such Assignment
               Form, and this Warrant shall promptly be canceled.  Prior to any
               proposed transfer (whether as the result of a division or
               otherwise) of this Warrant, such Warrantholder shall give written
               notice to the Company of such Warrantholder's intention to effect
               such transfer.  Each such notice shall describe the manner and
               circumstances of the proposed transfer in sufficient detail, and,
               if requested by the Company, shall be accompanied by a written
               opinion of legal counsel, which opinion shall be addressed to the
               Company and be reasonably satisfactory in form and substance to
               the Company, to the effect that the proposed transfer of this
               Warrant may be effected without registration under the Securities
               Act.  In addition to the restrictions contained in this Section,
               the Warrantholder shall not be entitled to transfer this Warrant,
               or any part thereof, if such legal opinion is not reasonably
               acceptable to the Company.  The term "Warrant" as used herein
               shall be deemed to include any Warrants issued in substitution or
               exchange for this Warrant in accordance with the terms and
               conditions herein set forth.

     3.2   Restrictive Legends.  Except as otherwise permitted by this Section,
           -------------------
           each Warrant shall (and each Warrant issued upon direct or indirect
           transfer or in substitution for any Warrant pursuant to Section 3.1
           or Section 5 shall) be stamped or otherwise imprinted with a legend
           in substantially the following form:

           THE WARRANT REPRESENTED BY THIS CERTIFICATE AND ANY SECURITIES
           ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
           UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE

                                       5
<PAGE>

           SECURITIES LAWS AND NEITHER THIS WARRANT NOR SUCH SECURITIES NOR ANY
           INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
           OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE
           REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR (B) UPON
           RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL, WHICH OPINION SHALL
           BE REASONABLY SATISFACTORY TO ISSUER THAT SUCH TRANSFER IS EXEMPT
           FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.

           Except as otherwise permitted by this Section, each stock certificate
           for Warrant Shares issued upon the exercise of any Warrant and each
           stock certificate issued upon the direct or indirect transfer of any
           such Warrant Shares shall be stamped or otherwise imprinted with a
           legend in substantially the following form:

           THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
           REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
           SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN
           MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
           EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
           OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND
           SUCH LAWS.

           Notwithstanding the foregoing, the Warrantholder may require the
           Company to issue a Warrant or a stock certificate for Warrant Shares,
           in each case without a legend, if either (i) such Warrant or such
           Warrant Shares, as the case may be, have been registered for resale
           under the Securities Act or (ii) the Warrantholder has delivered to
           the Company an opinion of legal counsel, which opinion shall be
           addressed to the Company and be reasonably satisfactory in form and
           substance to the Company, to the effect that such registration is not
           required with respect to such Warrant or such Warrant Shares, as the
           case may be.

           By acceptance of this Warrant, the Warrantholder expressly agrees
           that it will at all times comply with the restrictions contained in
           Rule 144(e) under the Securities Act (as in effect on the date
           hereof) when selling, transferring or otherwise disposing Warrant
           Shares, even if such restrictions would not then be applicable to the
           Warrantholder.

                                       6
<PAGE>

4.   Reservation and Registration of Shares, Etc.
     --------------------------------------------

     The Company covenants and agrees as follows:

           (a) all Warrant Shares which are issued upon the exercise of this
               Warrant will, upon issuance, be validly issued, fully paid, and
               nonassessable, not subject to any preemptive rights, and free
               from all taxes, liens, security interests, charges, and other
               encumbrances with respect to the issue thereof;

           (b) during the period within which this Warrant may be exercised, the
               Company will at all times have authorized and reserved, and keep
               available free from preemptive rights and any liens and
               encumbrances, a sufficient number of shares of Common Stock to
               provide for the exercise of the rights represented by this
               Warrant; and

           (c) the Company will, from time to time, take all such action as may
               be required to assure that the par value per share of the Warrant
               Shares is at all times equal to or less than the then effective
               Exercise Price.

5.   Loss or Destruction of Warrant.
     ------------------------------

     Subject to the terms and conditions hereof, upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction, of
such bond or indemnification as the Company may reasonably require, and, in the
case of such mutilation, upon surrender and cancellation of this Warrant, the
Company will execute and deliver a new Warrant of like tenor.

6.   Ownership of Warrant.
     --------------------

     The Company may deem and treat the Person in whose name this Warrant is
registered as the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer.

7.   Certain Adjustments
     -------------------

     7.1   The number of Warrant Shares purchasable upon the exercise of this
           Warrant and the Exercise Price shall be subject to adjustment as
           follows:

                                       7
<PAGE>

           (a) Stock Dividends.  If at any time after the date of the issuance
               ---------------
               of this Warrant (i) the Company shall fix a record date for the
               issuance of any stock dividend payable in shares of Common Stock;
               or (ii) the number of shares of Common Stock shall have been
               increased by a subdivision or split-up of shares of Common Stock,
               then, on the record date fixed for the determination of holders
               of Common Stock entitled to receive such dividend or immediately
               after the effective date of such subdivision or split-up, as the
               case may be, the number of shares to be delivered upon exercise
               of this Warrant will be increased so that the Warrantholder will
               be entitled to receive the number of shares of Common Stock that
               such Warrantholder would have owned immediately following such
               action had this Warrant been exercised immediately prior thereto,
               and the Exercise Price will be adjusted as provided below in
               paragraph (g).

           (b) Combination of Stock.  If the number of shares of Common Stock
               --------------------
               outstanding at any time after the date of the issuance of this
               Warrant shall have been decreased by a combination of the
               outstanding shares of Common Stock, then, immediately after the
               effective date of such combination, the number of shares of
               Common Stock to be delivered upon exercise of this Warrant will
               be decreased so that the Warrantholder thereafter will be
               entitled to receive the number of shares of Common Stock that
               such Warrantholder would have owned immediately following such
               action had this Warrant been exercised immediately prior thereto,
               and the Exercise Price will be adjusted as provided below in
               paragraph (g).

           (c) Reorganization, etc.  If any capital reorganization of the
               -------------------
               Company, any reclassification of the Common Stock, any
               consolidation of the Company with or merger of the Company with
               or into any other Person, or any sale or lease or other transfer
               of all or substantially all of the assets of the Company to any
               other Person, shall be effected in such a way that the holders of
               Common Stock shall be entitled to receive stock, other securities
               or assets (whether such stock, other securities or assets are
               issued or distributed by the Company or another Person) with
               respect to or in exchange for Common Stock, then, upon exercise
               of this Warrant, the Warrantholder shall have the right to
               receive the kind and amount of stock, other securities or assets
               receivable upon such reorganization, reclassification,
               consolidation, merger or sale, lease or other transfer by a
               holder of the number of shares of Common Stock that such
               Warrantholder would have been entitled to receive upon

                                       8
<PAGE>

               exercise of this Warrant had this Warrant been exercised
               immediately before such reorganization, reclassification,
               consolidation, merger or sale, lease or other transfer, subject
               to adjustments that shall be as nearly equivalent as may be
               practicable to the adjustments provided for in this Section 7. If
               the Company effects any such consolidation, merger or sale, lease
               or other transfer, the Company shall ensure that prior to, or
               simultaneously with, the consummation thereof, the successor
               Person (if other than the Company) resulting from such
               consolidation or merger, or such Person purchasing, leasing or
               otherwise acquiring such assets, shall assume, by written
               instrument, the obligation to deliver to the Warrantholder the
               shares of stock, securities or assets to which, in accordance
               with the foregoing provisions, the Warrantholder may be entitled
               and all other obligations of the Company under this Warrant. The
               provisions of this paragraph (c) shall apply to successive
               reorganizations, reclassifications, consolidations, mergers,
               sales, leasing transactions and other transfers.

           (d) Distributions to all Warrantholders of Common Stock.  If the
               ---------------------------------------------------
               Company shall, at any time after the date of issuance of this
               Warrant, fix a record date to distribute to all holders of its
               Common Stock any shares of capital stock of the Company (other
               than Common Stock) or evidences of its indebtedness or assets
               (not including regular quarterly cash dividends and distributions
               paid from retained earnings of the Company) or rights or warrants
               to subscribe for or purchase any of its securities, then the
               Warrantholder shall be entitled to receive, upon exercise of this
               Warrant, that portion of such distribution to which it would have
               been entitled had the Warrantholder exercised its Warrant
               immediately prior to the date of such distribution.  At the time
               it fixes the record date for such distribution, the Company shall
               allocate sufficient reserves to ensure the timely and full
               performance of the provisions of this Subsection.  The Company
               shall promptly (but in any case no later than five Business Days
               prior to the record date of such distribution) give notice to the
               Warrantholder that such distribution will take place.

           (e) Fractional Shares.  No fractional shares of Common Stock or scrip
               -----------------
               shall be issued to any Warrantholder in connection with the
               exercise of this Warrant.  Instead of any fractional shares of
               Common Stock that would otherwise be issuable to such
               Warrantholder, the Company will pay to such Warrantholder a cash
               adjustment in respect of such fractional interest in an

                                       9
<PAGE>

               amount equal to that fractional interest of the then current Fair
               Market Value per share of Common Stock.

           (f) Carryover.  Notwithstanding any other provision of this Section
               ---------
               7, no adjustment shall be made to the number of shares of Common
               Stock to be delivered to the Warrantholder (or to the Exercise
               Price) if such adjustment represents less than 0.10% of the
               number of shares to be so delivered, but any lesser adjustment
               shall be carried forward and shall be made at the time and
               together with the next subsequent adjustment which together with
               any adjustments so carried forward shall amount to 0.10% or more
               of the number of shares to be so delivered.

           (g) Exercise Price Adjustment.  Whenever the number of Warrant Shares
               -------------------------
               purchasable upon the exercise of this Warrant is adjusted, as
               herein provided, the Exercise Price payable upon the exercise of
               this Warrant shall be adjusted by multiplying such Exercise Price
               immediately prior to such adjustment by a fraction, of which the
               numerator shall be the number of Warrant Shares purchasable upon
               the exercise of the Warrant immediately prior to such adjustment,
               and of which the denominator shall be the number of Warrant
               Shares purchasable immediately thereafter.

     7.2   Rights Offering.  In the event the Company shall effect an offering
           ---------------
           of Common Stock pro rata among its stockholders, the Warrantholder
           shall be entitled to elect to participate in each and every such
           offering as if this Warrant had been exercised immediately prior to
           each such offering.  The Company shall promptly (but in any case no
           later than five Business Days prior to such rights offering) give
           notice to the Warrantholder that such rights offering will take
           place.  The Company shall not be required to make any adjustment with
           respect to the issuance of shares of Common Stock pursuant to a
           rights offering in which the holder hereof elects to participate
           under the provisions of this Section 7.2.

     7.3   Notice of Adjustments.  Whenever the number of Warrant Shares or the
           ---------------------
           Exercise Price of such Warrant Shares is adjusted, as herein
           provided, the Company at its expense shall promptly give to the
           Warrantholder notice of such adjustment or adjustments and a
           certificate of the independent public accountants regularly employed
           by the Company or a firm of independent public accountants of
           recognized national standing selected by the Board of Directors of
           the Company (which shall be appointed at the Company's expense)
           setting forth the number of Warrant Shares and the Exercise Price of

                                      10
<PAGE>

           such Warrant Shares after such adjustment, a brief statement of the
           facts requiring such adjustment, and the computation by which such
           adjustment was made.

     7.4   Notice of Extraordinary Corporate Events.  In case the Company after
           ----------------------------------------
           the date hereof shall propose to (i) distribute any dividend (whether
           stock or cash or otherwise) to the holders of shares of Common Stock
           or to make any other distribution to the holders of shares of Common
           Stock, (ii) offer to the holders of shares of Common Stock rights to
           subscribe for or purchase any additional shares of any class of stock
           or any other rights or options, or (iii) effect any reclassification
           of the Common Stock (other than a reclassification involving merely
           the subdivision or combination of outstanding shares of Common
           Stock), any capital reorganization, any consolidation or merger
           (other than a merger in which no distribution of securities or other
           property is to be made to holders of shares of Common Stock), any
           sale or lease or transfer or other disposition of all or
           substantially all of its property, assets and business, or the
           liquidation, dissolution or winding up of the Company, then, in each
           such case, the Company shall give to the Warrantholder notice of such
           proposed action, which notice shall specify the date on which (a) the
           books of the Company shall close, or (b) a record shall be taken for
           determining the holders of Common Stock entitled to receive such
           stock dividends or other distribution or such rights or options, or
           (c) such reclassification, reorganization, consolidation, merger,
           sale, transfer, other disposition, liquidation, dissolution or
           winding up shall take place or commence, as the case may be, and the
           date, if any, as of which it is expected that holders of record of
           Common Stock shall be entitled to receive securities or other
           property deliverable upon such action.  Such notice shall be given in
           the case of any action covered by clause (i) or (ii) above at least
           ten days prior to the record date for determining holders of Common
           Stock for purposes of receiving such payment or offer, or in the case
           of any action covered by clause (iii) above at least 30 days prior to
           the date upon which such action takes place and 20 days prior to any
           record date to determine holders of Common Stock entitled to receive
           such securities or other property.

     7.5   Effect of Failure to Notify.  Failure to file any certificate or
           ---------------------------
           notice or to give any notice, or any defect in any certificate or
           notice, pursuant to Sections 7.3 and 7.4 shall not affect the
           legality or validity of the adjustment to the Exercise Price, the
           number of shares purchasable upon exercise of this Warrant, or any
           transaction giving rise thereto.

                                      11
<PAGE>

8.   Reports Under Securities Exchange Act of 1934.  With a view to making
     ---------------------------------------------
     available to the Warrantholders the benefits of Rule 144 promulgated under
     the Securities Act or any other similar rule or regulation of the SEC that
     may at any time permit the Warrantholders to sell securities of the Company
     to the public without registration ("Rule 144"), the Company agrees, at all
     times when the Warrantholders may need to rely on Rule 144 to sell such
     securities to the public without registration, to:

           (a) make and keep public information available, as those terms are
               understood and defined in Rule 144, at all times;

           (b) file with the SEC in a timely manner all reports and other
               documents required of the Company under the Securities Act and
               the Exchange Act; and

           (c) furnish to each Warrantholder so long as such Warrantholder owns
               Warrants, promptly upon request, (i) a written statement by the
               Company that it has complied with the reporting requirements of
               Rule 144 (at any time after 90 days after the effective date of
               the first registration statement filed by the Company), the
               Securities Act and the Exchange Act (at any time after it has
               become subject to such reporting requirements), (ii) a copy of
               the most recent annual or quarterly report of the Company and
               such other reports and documents so filed by the Company, and
               (iii) such other information as may be reasonably requested to
               permit the Warrantholders to sell such securities without
               registration.

9.   Amendments.  Any provision of this Warrant may be amended and the
     ----------
     observance thereof may be waived (either generally or in a particular
     instance and either retroactively or prospectively), only with the written
     consent or approval of the Company and the Warrantholders who hold a
     majority in interest of the Warrants; provided that it is not necessary
     that the exact form of the amendment be approved by the holders of a
     majority in interest of the Warrants if such holders have approved the
     substance of such amendment. Any amendment or waiver effected in accordance
     with this Section shall be binding upon each Warrantholder and the Company.

10.  Expiration of the Warrant.  The obligations of the Company pursuant to this
     -------------------------

     Warrant shall terminate on the Expiration Date.

11.  Registration Rights.
     -------------------

     11.1  Shelf Registration.
           ------------------

                                      12
<PAGE>

           (a) Shelf Registration.  At any time during the Registration Rights
               ------------------
               Period, at the request of the Warrantholder, the Company shall
               prepare and file, as soon as reasonably practicable thereafter, a
               Registration Statement for an offering to be made on a delayed or
               a continuous basis pursuant to Rule 415 (or any appropriate
               similar rule that may be adopted by the Commission) under the
               Securities Act covering the Warrant Shares (the "Shelf
               Registration").  The Shelf Registration shall be on a Form S-3 or
               another appropriate form (unless the Warrantholder reasonably
               requests a specific form) permitting registration of such Warrant
               Shares for resale by the Warrantholder in a non-underwritten
               sale.

           (b) Effectiveness.  The Company shall use reasonable efforts to cause
               -------------
               the Shelf Registration to become effective under the Securities
               Act as soon as reasonably practicable following the date of
               filing.  Subject to the requirements of the Securities Act
               including, without limitation, requirements relating to updating
               prospectuses through post-effective amendments or otherwise, the
               Company shall use reasonable efforts to keep the Shelf
               Registration continuously effective until the earlier of (i) the
               date on which all of the Warrant Shares registered thereunder
               from time to time are sold or (ii) the date that the
               Warrantholder's Warrant Shares are eligible for immediate sale to
               the public under Rule 144(k) under the Securities Act without any
               limitation as to volume for such sale thereunder.

           (c) Inclusion of Additional Common Stock.  If the Warrantholder
               ------------------------------------
               elects to request a Shelf Registration, the parties to the July
               Rights Agreement, including the Company, may include in such
               registration, on their own behalf, shares of Common Stock
               requested and permitted to be included pursuant to the terms of
               the July Rights Agreement.

     11.2  Piggyback Registration Rights.
           -----------------------------

           (a) Requests for Piggyback Registration.  Except as set forth in this
               -----------------------------------
               Section 11.2(a), if at any time during the Registration Rights
               Period the Company proposes to effect a registered offering of
               its Common Stock on Forms S-1, S-2 or S-3, the Company will give
               prompt written notice to the Warrantholder of its intention to
               effect such a registration.  If the Company receives a written
               request from the Warrantholder for inclusion of some or all of
               the Warrant Shares within fifteen (15) days after the date the
               Company's notice is given, then the Company will include,

                                      13
<PAGE>

               subject to paragraph (b) of this Section 11.2, in such
               registration all of the Warrant Shares specified in such written
               request (a "Piggyback Registration"); provided, however, that the
                                                     -----------------
               Warrantholder shall not have any right to the notice described in
               the first sentence of this Section 11.2(a) or to cause a
               Piggyback Registration (i) at any time during the effectiveness
               of a Shelf Registration or other than during the Registration
               Rights Period or (ii) in connection with any offering by the
               Company of securities other than its Common Stock.

           (b) Priority on Piggyback Registrations.  If, in connection with any
               -----------------------------------
               proposed Piggyback Registration in connection with an
               underwritten offering by the Company or the other parties to the
               July Rights Agreement, the managing underwriters of such offering
               notify the Company or such other parties that in their opinion
               the number of shares of securities requested to be included in
               such offering exceeds the number which can be sold in such
               offering in an orderly manner within a price range acceptable to
               the Company, the Company will include in such offering (i) first,
               the greatest number of shares of Common Stock requested to be
               included by the Company or the other parties to the July Rights
               Agreement and permitted to be included pursuant to the terms
               thereof and (ii) second, other shares of the Company's Common
               Stock, including the Warrant Shares as requested by the
               Warrantholder, in each case up to the greatest number of shares
               of Common Stock which, in the opinion of such managing
               underwriters, can be sold in an orderly manner in the price range
               of such offering; provided, however, in no event shall any
                                 --------  -------
               Warrant Shares be excluded from such offering if any
               stockholder's securities are proposed to be included therein
               other than those party to the agreement referenced in clause (i)
               above.

     11.3  Participation in Underwritten Registrations.  Notwithstanding any
           -------------------------------------------
           other provision of this Section 11 to the contrary, the Warrantholder
           may not participate in any underwritten offering by the Company
           unless the Warrantholder: (i) agrees to sell its Warrant Shares on
           the basis provided in the applicable underwriting arrangements, which
           shall contain customary terms and conditions, and (ii) completes and
           executes all questionnaires, powers of attorney, indemnities,
           underwriting agreements and other documents required under the terms
           of such underwriting arrangements; provided, however, that if the
                                              --------  -------
           Warrantholder participates in an underwritten offering by the
           Company, it shall not be required to make any representations or
           warranties to the Company or the underwriters thereof other than
           representations and warranties regarding the Warrantholder and its
           intended method of distribution, nor shall it be required to
           undertake joint or joint and several obligations with any other
           Person.

                                      14
<PAGE>

           The Warrantholders further agree, in connection with an registration
           of the Company's securities in an underwriting, upon the request of
           the underwriters managing such underwriting, not to sell any Warrant
           Shares without the prior written consent of the Company or such
           underwriters for a period of time as determined by the Board of
           Directors upon advice from the managing underwriter (not to exceed
           180 days) after the effective date of such registration, provided
           that each officer, director and key employees of the Company and all
           other holders of at least five percent of the Company's Common Stock
           shall make the same agreement with respect to other securities of the
           Company then held by such other person and; provided, further, that
                                                       --------  -------
           to the extent any officer, director, key employee or five percent
           holder is permitted by the underwriters of such offering to transfer
           any securities in connection with the offering, then each
           Warrantholder shall be permitted to transfer a pro rata portion of
                                                          --- -----
           its securities.

     11.4  Expenses of Registration.  The Company or Persons other than the
           ------------------------
           Warrantholder shall pay any and all registration expenses incident to
           the filing of each Registration Statement or otherwise incident to
           the performance by the Company of or its compliance with, its
           obligations under this Section 11. The Warrantholder shall pay all
           underwriting discounts and commissions and transfer taxes, if any,
           relating to the sale or disposition of the Warrant Shares included in
           such Registration Statement and the fees of any counsel retained by
           the Warrantholder in connection therewith.

     11.5  Registration Procedures.  In connection with any Shelf Registration
           -----------------------
           or Piggyback Registration, and the Registration Statement effecting
           such registration, the Company hereby covenants and agrees that it
           shall:

           (a) take such action as may be necessary so that: (i) such
               Registration Statement and any amendment thereto and any
               prospectus forming part thereof and any amendment or supplement
               thereto (and each report or other document incorporated therein
               by reference in each case) complies in all material respects with
               the Securities Act and the Exchange Act and the respective rules
               and regulations thereunder; (ii) such Registration Statement and
               any amendment thereto does not, when it becomes effective,
               contain an untrue statement of a material fact or omit to state a
               material fact required to be stated therein or necessary to make
               the statements therein not

                                      15
<PAGE>

               misleading; and (iii) any prospectus forming part of such
               Registration Statement, and any amendment or supplement to such
               prospectus, does not include an untrue statement of a material
               fact or omit to state a material fact necessary in order to make
               the statements therein, in light of the circumstances under which
               they were made, not misleading;

           (b) notify the Warrantholder as promptly as practicable in any of the
               following circumstances: (i) at any time when a prospectus
               relating to the Warrant Shares is required to be delivered under
               the Securities Act, of the happening of any event as a result of
               which the prospectus included in such Registration Statement
               contains an untrue statement of a material fact or omits any fact
               necessary to make the statements therein not misleading, and, at
               the request of the Warrantholder, the Company will prepare a
               supplement or amendment to such prospectus so that, as thereafter
               delivered to the purchasers of the Warrant Shares, such
               prospectus will not contain an untrue statement of a material
               fact or omit to state any fact necessary to make the statements
               therein not misleading; (ii) when such Registration Statement and
               any amendment thereto has been filed with the Commission and when
               such Registration Statement or any post-effective amendment
               thereto has become effective; (iii) of any request by the
               Commission for amendment or supplements to such Registration
               Statement or the prospectus included therein or for additional
               information; (iv) of the issuance by the Commission of any stop
               order suspending the effectiveness of such Registration Statement
               or the initiation of any proceedings for that purpose; and (v)
               the receipt by the Company of any notification with respect to
               the suspension of the qualification of the securities included
               therein for sale (including the Warrant Shares) in any
               jurisdiction or the initiation of any proceeding for such
               purpose;

           (c) use its best efforts to prevent the issuance, and if issued to
               obtain the withdrawal, of any order suspending the effectiveness
               of such Registration Statement at the earliest possible time;

           (d) use its best efforts to comply with the requirements of any
               applicable blue sky laws of such jurisdictions as the
               Warrantholder reasonably requests and do any and all other acts
               and things which may be reasonably necessary or advisable to
               enable the Warrantholder to consummate the disposition in such
               jurisdictions of the Warrant Shares (provided, however, that the
                                                    --------  -------
               Company will not be required to: (i) qualify generally to

                                      16
<PAGE>

               do business in any jurisdiction where it would not otherwise be
               required to qualify but for this subparagraph, (ii) subject
               itself to taxation in any such jurisdictions, or (iii) consent to
               general service of process in any such jurisdiction);

           (e) cause the Warrant Shares included in such Registration Statement
               to be listed on each securities exchange or quoted in each
               quotation system on which similar securities issued by the
               Company are then listed or quoted; and

           (f) cooperate with the Warrantholder to facilitate the timely
               preparation and delivery of certificates representing the Warrant
               Shares to be sold pursuant to such Registration Statement free of
               any restrictive legend and registered in such names as the
               Warrantholder may request in connection with the sale of the
               Warrant Shares pursuant to such Registration Statement.

               The Warrantholder agrees that, upon receipt of any notice from
               the Company of the happening of any event of the kind described
               in Section 11.5(b) hereof, the Warrantholder will immediately
               discontinue disposition of the Warrant Shares pursuant to a
               Registration Statement until the Warrantholder's receipt of the
               copies of the supplemented or amended prospectus contemplated by
               Section 11.5(b) hereof, and, if so directed by the Company, the
               Warrantholder will deliver to the Company (at the expense of the
               Company) all copies in its possession, other than permanent file
               copies then in the Warrantholder's possession, of the prospectus
               covering the Warrant Shares current at the time of receipt of
               such notice.  If the Company shall give any such notice to
               suspend the disposition of the Warrant Shares pursuant to a
               Registration Statement, the Company shall extend the period
               during which the Registration Statement shall be maintained
               effective pursuant to this Section 11 by the number of days
               during the period from and including the date of the giving of
               such notice to and including the date when the Warrantholder
               shall have received copies of the supplemented or amended
               prospectus necessary to resume such dispositions.

     11.6  Hold-Back Agreements.
           --------------------

           In connection with a Registration Statement effecting an underwritten
offering that includes Warrant Shares, the Warrantholder shall be deemed to have
agreed not to effect any public sale or public distribution of securities of the

                                      17
<PAGE>

Company of the same or similar class or classes of the securities included in
such Registration Statement or any securities convertible into or exchangeable
or exercisable for such securities, including a sale pursuant to Rule 144 or
Rule 144A under the Securities Act, during the 15-day period prior to, and
during such period of time as may be required by the managing underwriter of
such offering, but not to exceed a 90-day period beginning on, the effective
date of the Registration Statement (except pursuant to such offering), except to
the extent otherwise agreed in writing by the managing underwriter of such
offering.

     11.7  Black-Out Periods for Registration Statements.
           ---------------------------------------------

           (a) Notwithstanding anything to the contrary in this Section 11, the
               Company may, from time to time and at any time, subject to
               Section 11.7(b) herein, delay filing or effectiveness of the
               Registration Statement or direct the Warrantholder to suspend
               sales of the Warrant Shares registered thereunder, as provided
               herein, in the event of the consummation of, or negotiations
               relating to, a material corporate transaction (i) that would
               require additional disclosure of material information by the
               Company in such Registration Statement (or such filings), (ii) as
               to which the Company has a bona fide business purpose for
               preserving confidentiality and (iii) which renders the Company
               unable to comply with Commission requirements, in each case under
               circumstances that would make it impractical or inadvisable to
               cause such Registration Statement (or such filings) to become
               effective or to promptly amend or supplement such Registration
               Statement on a post-effective basis, as applicable (a "Suspension
               Event").

           (b) In the case of a Suspension Event, the Company may give notice (a
               "Suspension Notice") to the Warrantholder to suspend sales of the
               Warrant Shares so that the Company may correct or update such
               Registration Statement (or such filings).  Each such suspension
               shall continue only for so long as the Suspension Event or its
               effect is continuing, and in no event will any such suspension
               exceed ninety (90) days (or 120 days in any calendar year) or all
               such suspensions pursuant to this Warrant exceed an aggregate of
               one hundred-eighty (180) days.  The Warrantholder agrees that it
               will not effect any sales of the Warrant Shares pursuant to such
               Registration Statement (or such filings) at any time after it has
               received a Suspension Notice from the Company and prior to the
               termination of such Suspension Event.  If so directed by the
               Company, the Warrantholder will deliver to the Company all copies
               of the prospectus covering the Warrant Shares held by it at the
               time of

                                      18
<PAGE>

               receipt of the Suspension Notice.  The Warrantholder may
               recommence effecting sales of the Warrant Shares pursuant to such
               Registration Statement (or such filings) following further notice
               to such effect (an "End of Suspension Notice") from the Company,
               which End of Suspension Notice shall, in the case of a Suspension
               Event, be given by the Company not later than five (5) days after
               the conclusion of any Suspension Event and shall be accompanied
               by copies of the supplemented or amended prospectus necessary to
               resume such sales.

     11.8  Indemnification and Contribution.
           --------------------------------

           (a) Indemnification by the Company.  The Company shall indemnify, to
               ------------------------------
               the extent permitted by law, the Warrantholder, each Person who
               controls the Warrantholder (within the meaning of Section 15 of
               the Securities Act or Section 20 of the Exchange Act) and its
               respective officers, directors, partners, members, employees,
               agents and representatives, against all actions, suits, claims,
               damages, losses, costs, expenses or proceedings (collectively,
               "Losses") caused by any untrue or alleged untrue statement of
               material fact contained in any Registration Statement, prospectus
               or preliminary prospectus or any amendment thereof or supplement
               thereto or any omission or alleged omission of a material fact
               required to be stated therein or necessary to make the statements
               therein, in light of the circumstances under which made, not
               misleading, except insofar as the same are caused by or contained
               in any information furnished in writing to the Company by the
               Warrantholder expressly for use therein or by the Warrantholder's
               failure to deliver a copy of the Registration Statement or
               prospectus or any amendments or supplements thereto after the
               Company has furnished the Warrantholder with a sufficient number
               of copies of the same and except insofar as the same are caused
               by or contained in any prospectus if the Warrantholder failed to
               send or deliver a copy of any subsequent prospectus or prospectus
               supplement which would have corrected such untrue or alleged
               untrue statement of material fact or such omission or alleged
               omission of a material fact with or prior to the delivery of
               written confirmation of the sale by the Warrantholder after the
               Company has furnished the Warrantholder with a sufficient number
               of copies of the same.  In connection with an Underwritten
               Offering, the Company will indemnify such Underwriters, each
               Person who controls such Underwriters (within the meaning of
               Section 15 of the Securities Act or Section 20 of the Exchange
               Act) and their respective

                                      19
<PAGE>

               officers, directors, partners, employees, agents and
               representatives to the same extent as provided above with respect
               to the indemnification of the Warrantholder.

           (b) Indemnification by Warrantholder.  In connection with any
               --------------------------------
               Registration Statement in which the Warrantholder is
               participating, the Warrantholder will furnish to the Company in
               writing such information as the Company reasonably requests for
               use in connection with any such Registration Statement or
               prospectus and, to the extent permitted by law, will indemnify
               the Company, each Person who controls the Company (within the
               meaning of Section 15 of the Securities Act or Section 20 of the
               Exchange Act) and their respective officers, directors, partners,
               employees, agents and representatives against any Losses arising
               out of or based upon any untrue or alleged untrue statement of a
               material fact contained in any Registration Statement,
               prospectus, or form of prospectus, or arising out of or based
               upon any omission or alleged omission of a material fact required
               to be stated therein or necessary to make the statements therein,
               in light of the circumstances under which made, not misleading,
               to the extent, but only to the extent, that such untrue or
               alleged untrue statement is contained in, or such omission or
               alleged omission is required to be contained in, any information
               so furnished in writing by the Warrantholder to the Company
               expressly for use in such Registration Statement or prospectus
               and that such statement or omission was relied upon by the
               Company in preparation of such Registration Statement, prospectus
               or form of prospectus; provided, however, that the Warrantholder
               shall not be liable in any such case to the extent that the
               Warrantholder has furnished in writing to the Company prior to
               the filing of any such Registration Statement or prospectus or
               amendment or supplement thereto information expressly for use in
               such Registration Statement or prospectus or any amendment or
               supplement thereto which corrected or made not misleading,
               information previously furnished to the Company, and the Company
               failed to include such information therein.  In no event shall
               the liability of the Warrantholder hereunder be greater in amount
               than the dollar amount of the proceeds (net of payment of all
               expenses) received by the Warrantholder upon the sale of the
               Warrant Shares giving rise to such indemnification obligation.
               Such indemnity shall remain in full force and effect regardless
               of any investigation made by or on behalf of such indemnified
               party.

                                      20
<PAGE>

           (c) Conduct of Indemnification Proceedings.  If any Person shall be
               --------------------------------------
               entitled to indemnity pursuant to this Section 11.8, such
               indemnified party shall give prompt written notice to the party
               or parties from which such indemnity is sought of the
               commencement of any proceeding with respect to which such
               indemnified party seeks indemnification or contribution pursuant
               hereto; provided, however, that the failure to so notify the
               indemnifying parties shall not relieve the indemnifying parties
               from any obligation or liability except to the extent that the
               indemnifying parties have been prejudiced by such failure.  The
               indemnifying parties shall have the right, exercisable by giving
               written notice to an indemnified party promptly after the receipt
               of written notice from such indemnified party of such proceeding,
               to assume, at the indemnifying parties' expense, the defense of
               any such proceeding, with counsel reasonably satisfactory to such
               indemnified party; provided, however, that an indemnified party
               or parties (if more than one such indemnified party is named in
               any proceeding) shall have the right to employ separate counsel
               in any such proceeding and to participate in the defense thereof,
               but the fees and expenses of such counsel shall be at the expense
               of such indemnified party or parties unless the parties to such
               proceeding include both the indemnified party or parties and the
               indemnifying party or parties, and there exists, in the opinion
               of the indemnified party(ies)' counsel, a conflict between one or
               more indemnifying parties and one or more indemnified parties, in
               which case the indemnifying parties shall, in connection with any
               one such proceeding or separate but substantially similar or
               related proceedings in the same jurisdiction, arising out of the
               same general allegations or circumstances, be liable for the fees
               and expenses of not more than one separate firm of attorneys
               (together with appropriate local counsel) at any time for such
               indemnified party or parties.  If an indemnifying party assumes
               the defense of such proceeding, the indemnifying parties will not
               be subject to any liability for any settlement made by the
               indemnified party without its or their consent (such consent not
               to be unreasonably withheld).

           (d) Contribution.  If the indemnification provided for in this
               ------------
               Section 11.8 is unavailable to an indemnified party or is
               insufficient to hold such indemnified party harmless for any
               Losses in respect of which this Section 11.8 would otherwise
               apply by its terms, then each applicable indemnifying party, in
               lieu of indemnifying such indemnified party, shall have an
               obligation to contribute to the amount paid or payable by such
               indemnified party as a

                                      21
<PAGE>

               result of such Losses, in such proportion as is appropriate to
               reflect the relative fault of the indemnifying party, on the one
               hand, and such indemnified party, on the other hand, in
               connection with the actions, statements or omissions that
               resulted in such Losses as well as any other relevant equitable
               considerations. The relative fault of such indemnifying party, on
               the one hand, and indemnified party, on the other hand, shall be
               determined by reference to, among other things, whether any
               action in question, including any untrue or alleged untrue
               statement of a material fact or omission or alleged omission to
               state a material fact, has been taken by, or relates to
               information supplied by, such indemnifying party or indemnified
               party, and the parties' relative intent, knowledge, access to
               information and opportunity to correct or prevent any such
               action, statement or omission. The amount paid or payable by a
               party as a result of any Losses shall be deemed to include any
               legal or other fees or expenses incurred by such party in
               connection with any proceeding, to the extent such party would
               have been indemnified for such expenses under Section 11.8(c), if
               the indemnification provided for in Section 11.8(a) or Section
               11.8(b) was available to such party. The Company and the
               Warrantholder agree that it would not be just and equitable if
               contribution pursuant to this Section 11.8(d) were determined by
               pro rata allocation or by any other method of allocation that
               does not take account of the equitable considerations referred to
               in the second sentence of this paragraph. Notwithstanding the
               provisions of this Section 11.8(d), the Warrantholder, as an
               indemnifying party, shall not be required to contribute any
               amount in excess of the amount by which the net proceeds received
               by the Warrantholder exceeds the amount of any damages that the
               Warrantholder has otherwise been required to pay by reason of
               such untrue or alleged untrue statement or omission or alleged
               omission. No person adjudged guilty of fraudulent
               misrepresentation (within the meaning of Section 11(f) of the
               Securities Act) shall be entitled to contribution from any Person
               who was not guilty of such fraudulent misrepresentation.

     11.9  Rule 144.
           --------

           The Company covenants that it will file any reports required to be
filed by it under the Securities Act and the Exchange Act and that it will take
such further action as the Warrantholder may reasonably request, all to the
extent required from time to time to enable the Warrantholder to sell the
Warrant Shares without registration under the Securities Act within the
limitations of the

                                      22
<PAGE>

exemptions provided by (a) Rule 144 or 145 under the Securities Act, as such
rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of the Warrantholder, the
Company will deliver to the Warrantholder a written statement as to whether it
has complied with such requirements.

     11.10 Specific Performance.
           --------------------

           The Warrantholder, in addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of liquidated or
other damages, will be entitled to specific performance of its rights under this
Section 11.  The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Section 11 and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.

     11.11 Transfers.
           ---------

           (a) If the Warrantholder transfers all of its remaining Warrant
               Shares, the Warrantholder may also transfer to its transferee all
               (but not less than all) of the registration rights granted
               pursuant to Section 11 hereof as an entirety and then held by
               such Warrantholder; provided, however, that Sony (or any future
                                   -----------------
               direct or indirect transferee of such registration rights as
               permitted pursuant this Section 11.11) shall not transfer such
               registration rights to more than one transferee; and provided
                                                                    --------
               further, that no such transfer shall be deemed to obligate the
               -------
               Company to issue notices hereunder to any additional Person,
               except to the extent the Company shall have received actual
               notice of such transfer to such Person.  At no time shall there
               be more than one "Warrantholder" for purposes of Section 11
               hereof.

           (b) Any assignment or transfer of the registration rights set forth
               herein shall be subject to the assumption by the transferee of
               the terms and conditions set forth in Section 11 hereof
               applicable to the transferor, and any proposed transferee shall
               execute such documents and instruments that the Company may
               reasonably require to evidence that such transferee is bound by
               the terms and conditions set forth in Section 11 hereof.

12.  Definitions.
     -----------
     As used herein, unless the context otherwise requires, the following terms
have the following respective meanings:

                                      23
<PAGE>

     Assignment Form:  an instrument of transfer of a warrant in the form
annexed hereto as Exhibit B.

     Business Day:  any day other than a Saturday, Sunday or a day on which
banks are required or authorized by law to close in The City of New York, State
of New York.

     Bylaws:  the bylaws of the Company, as the same may be amended and in
effect from time to time.

     Certificate of Incorporation:  the Certificate of Incorporation of the
Company, as the same may be amended and in effect from time to time.

     Class B Common Stock: the meaning specified in Section 14.10 of this
Warrant.

     Commission: the Securities and Exchange Commission or any other Federal
agency at the time administering the Securities Act.

     Common Stock:  the meaning specified on the cover of this Warrant.

     Company:  the meaning specified on the cover of this Warrant.

     Contractual Obligation:  as to any Person, any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument to which such
Person is a party or by which it or any of its property is bound.

     End of Suspension Notice: the meaning specified in Section 11.7(b) of this
Warrant.

     Exchange Act:  the Securities Exchange Act of 1934, as amended, or any
similar Federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time.  Reference to a particular
section of the Exchange Act shall include a reference to a comparable section,
if any, of any such similar Federal statute.

     Exercise Form:  a request to exercise a warrant in the form annexed hereto
as Exhibit A.

     Exercise Price:  the meaning specified in Section 1.2 of this Warrant.

     Expiration Date:  5:00 PM, New York City time, on the third anniversary of
the Vesting Date; provided, however, that if the number of Warrant Shares as
                  ------------------
determined in Section 1.1 of this Warrant is zero, then the Expiration Date
shall occur immediately following the Vesting Date.

                                      24
<PAGE>

     Fair Market Value:  With respect to a share of Common Stock as of a
particular date:

     (i)  if the Common Stock is registered under the Exchange Act, (a) the
          average of the daily closing sales prices of the Common Stock for the
          20 consecutive trading days immediately preceding such date, or (b) if
          the securities have been registered under the Exchange Act for less
          than 20 consecutive trading days before such date, then the average of
          the daily closing sales prices for all of trading days before such
          date for which closing sales prices are available, in the case of each
          of (a) and (b), as certified by any Vice President or the Chief
          Financial Officer of the Company; or

     (ii) If the Common Stock is not registered under the Exchange Act, then the
          Fair Market Value shall be as reasonably determined in good faith by
          the Board of Directors of the Company or a duly appointed committee
          thereof (which determination shall be reasonably described in the
          written notice given to the Warrantholder); provided, however, that if
          the Warrantholder reasonably objects to such determination of Fair
          Market Value by the Board of Directors or a duly appointed committee
          thereof, then such determination shall be referred to an unaffiliated
          investment banking firm of national reputation whose determination
          shall be final and binding upon the parties.

     For the purposes of clause (i) of this definition, the closing sales price
for each such trading day shall be:  (1) in the case of a security listed or
admitted to trading on any United States national securities exchange or
quotation system, the closing sales price, regular way, on such day, or if no
sale takes place on such day, the average of the closing bid and asked prices on
such day; (2) in the case of a security not then listed or admitted to trading
on any national securities exchange or quotation system, the last reported sale
price on such day, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reputable quotation
source designated by the Company; (3) in the case of a security not then listed
or admitted to trading on any national securities exchange or quotation system
and as to which no such reported sale price or bid and asked prices are
available, the average of the reported high bid and low asked prices on such
day, as reported by a reputable quotation service, or a newspaper of general
circulation in the Borough of Manhattan, City and State of New York, customarily
published on each Business Day, designated by the Company, or if there shall be
no bid and asked prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than 30 days prior to
the date in question) for which prices have been so reported; and (4) if there
are no bid and asked prices reported during the 30 days prior to the date in
question, the Fair Market Value shall be determined as if the securities were
not registered under the Exchange Act.

                                      25
<PAGE>

     FCC:  the Federal Communications Commission.

     Fully-Diluted Shares: all shares of Common Stock issued and outstanding on
the Vesting Date, plus all shares of Common Stock issuable upon conversion of
all other securities of the Company issued and outstanding, and eligible within
60 days of the date of determination to be converted into Common Stock.

     Governmental Authority:  the government of any nation, state, city,
locality or other political subdivision of any thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government or any international regulatory body
having or asserting jurisdiction over a Person, its business or its properties.

     July Rights Agreement: the Registration Rights Agreement, dated July 7,
1999, by and among the Company, American Mobile Satellite Corporation and the
Investors set forth therein.

     Lien: any mortgage, deed of trust, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other), restriction or other security interest
of any kind or nature whatsoever.

     Losses: the meaning specified in Section 11.8(a) of this Warrant.

     OEM:  the original equipment manufacturer of an XM Receiver (as defined in
the Sony Agreement) for distribution by automotive manufacturers, their
dealerships and distributors to dealerships.

     Person:  any individual, firm, corporation, partnership, limited liability
company, trust, incorporated or unincorporated association, joint venture, joint
stock company, Governmental Authority or other entity of any kind.

     Piggyback Registration: the meaning specified in Section 11.2(a) of this
Warrant.

     Registration Rights Period: the period of time commencing on the Vesting
Date and ending on the date that all of the Warrantholder's Warrant Shares are
eligible for immediate sale to the public under Rule 144(k) under the Securities
Act without any limitation as to volume or manner of sale for such sale
thereunder.

     Registration Statement: a registration statement filed with the Commission
pursuant to the Securities Act.

     Requirement of Law:  as to any Person, the Certificate of Incorporation and
bylaws, or other organizational or governing documents, of such Person, and any
law, treaty, rule, regulation, qualification, license or franchise or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable or

                                      26
<PAGE>

binding upon such Person or any of its property or to which such Person or any
of its property is subject or pertaining to any or all of the transactions
contemplated hereby.

     Rule 144:  the meaning specified in Section 8 of this Warrant.

     SEC:  the Securities and Exchange Commission or any other Federal agency at
the time administering the Securities Act or the Exchange Act, whichever is the
relevant statute for the particular purpose.

     Securities Act:  the meaning specified on the cover of this Warrant, or any
similar Federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time.  Reference to a particular
section of the Securities Act, shall include a reference to the comparable
section, if any, of any such similar Federal statute.

     Series A Preferred Stock: the meaning specified in Section 14.10 of this
Warrant.

     Series B Preferred Stock: the meaning specified in Section 14.10 of this
Warrant.

     Shelf Registration: the meaning specified in Section 11.1(a) of this
Warrant.

     Sony Agreement:  the Sony Design, Development, Production, Marketing And
License Agreement, dated as of February 9, 2000, between the Company and Sony.

     Sony Devices: all Sony-branded devices, other than Sony OEM Device(s), that
meet the requirements of an XM Receiver (as defined in the Sony Agreement).

     Sony OEM Devices: all devices manufactured by or on behalf of Sony pursuant
to the Sony Agreement, for the OEM automotive market in the United States that
meet the requirements of an XM Receiver (as defined in the Sony Agreement).

     Suspension Event: the meaning specified in Section 11.7(b) of this Warrant.

     Suspension Notice: the meaning specified in Section 11.7(a) of this
Warrant.

     Vesting Date:  the date of the first meeting of the Board of Directors of
the Company that occurs after the activation of the Company's one-millionth
subscriber or, if such meeting does not occur on a Business Day or is adjourned
after 5:00 PM, New York City time, on a Business Day, the first Business Day
after such meeting.

     Warrant Shares: the meaning specified on the cover of this Warrant.

                                      27
<PAGE>

     Warrantholder(s):  Sony (for so long as Sony holds any interest in the
Warrant) and any transferee or transferees of Sony's rights in the Warrant in
accordance with Section 3 hereof (for so long as such transferee holds such
rights) and subject to Section 11.11 hereof.

     XM Satellite Installed Base:  the number of XM Receivers sold to retail
customers.

13.  No Impairment.  The Company shall not by any action, including,
     -------------
     without limitation, amending its Certificate of Incorporation or through
     any reorganization, transfer of assets, consolidation, merger, dissolution,
     issue or sale of securities or any other voluntary action, avoid or seek to
     avoid the observance or performance of any of the terms of this Warrant,
     but will at all time in good faith assist in the carrying out of all such
     terms and in the taking of all such reasonable actions as may be necessary
     or appropriate to protect the rights of the Warrantholder against
     impairment. Without limiting the generality of the foregoing, the Company
     shall (a) take all such actions as may be necessary or appropriate in order
     that the Company may validly and legally issue fully paid and nonassesable
     shares of Common Stock upon the exercise of this Warrant, and (b) provide
     reasonable assistance to the Warrantholder in obtaining all authorizations,
     exemptions or consents from any Governmental Authority which may be
     necessary in connection with the exercise of this Warrant.

14.  Miscellaneous.
     -------------
     14.1  Entire Agreement.  This Warrant constitutes the entire agreement
           ----------------
           between the Company and the Warrantholder with respect to the
           Warrants.

     14.2  Binding Effects; Benefits.  This Warrant shall inure to the benefit
           -------------------------
           of and shall be binding upon the Company and the Warrantholders and
           their respective heirs, legal representatives, successors and
           assigns.  Nothing in this Warrant, expressed or implied, is intended
           to or shall confer on any Person other than the Company and the
           Warrantholders, or their respective heirs, legal representatives,
           successors or assigns, any rights, remedies, obligations or
           liabilities under or by reason of this Warrant.

     14.3  Section and Other Headings.  The section and other headings
           --------------------------
           contained in this Warrant are for reference purposes only and shall
           not be deemed to be a part of this Warrant or to affect the meaning
           or interpretation of this Warrant.

                                      28
<PAGE>

     14.4  Pronouns.  All pronouns and any variations thereof refer to the
           --------
           masculine, feminine or neuter, singular or plural, as the context may
           require.

     14.5  Further Assurances.  Each of the Company and the Warrantholder
           ------------------
           shall do and perform all such further acts and things and execute and
           deliver all such other certificates, instruments and documents as the
           Company or the Warrantholder may, at any time and from time to time,
           reasonably request in connection with the performance of any of the
           provisions of this Warrant.

     14.6  Notices.  All notices and other communications required or
           -------
           permitted to be given under this Warrant shall be in writing and
           shall be deemed to have been duly given if (i) delivered personally
           or (ii) sent by facsimile or recognized overnight courier or by
           United States first class certified mail, postage prepaid, to the
           parties hereto at the following addresses or to such other address as
           any party hereto shall hereafter specify by notice to the other party
           hereto:

           if to the Company, addressed to:

           XM Satellite Radio Inc.
           1250 23rd Street, N.W.
           Suite 57
           Washington, D.C.   20037
           Attention:  Chief Financial Officer

           if to the Warrantholder, addressed to:

           Sony Electronics, Inc.
           Law Department, MD 2F4
           1 Sony Drive
           Park Ridge, New Jersey  07856
           Attention:  General Counsel

           Except as otherwise provided herein, all such notices and
           communications shall be deemed to have been received (a) on the date
           of delivery thereof, if delivered personally or sent by facsimile,
           (b) on the second Business Day following delivery into the custody of
           an overnight courier service, if sent by overnight courier, provided
           that such delivery is made before such courier's deadline for next-
           day delivery, or (c) on the third Business Day after the mailing
           thereof.

     14.7  Separability.  Any term or provision of this Warrant which is
           ------------
           invalid or unenforceable in any jurisdiction shall, as to such
           jurisdiction, be ineffective to the extent of such invalidity or
           unenforceability without

                                      29
<PAGE>

           rendering invalid or unenforceable the terms and provisions of this
           Warrant or affecting the validity or enforceability of any of the
           terms or provisions of this Warrant in any other jurisdiction.

     14.8  Governing Law.  This Warrant shall be deemed to be a contract made
           -------------
           under the laws of New York and for all purposes shall be governed by
           and construed in accordance with the laws of such State applicable to
           such agreements made and to be performed entirely within such State,
           except that all matters relating to issuances of stock shall be
           governed by Delaware General Corporation Law.

     14.9  No Rights or Liabilities as Stockholder.  Nothing contained in this
           ---------------------------------------
           Warrant shall be deemed to confer upon the Warrantholder any rights
           as a stockholder of the Company or as imposing any liabilities on the
           Warrantholder to purchase any securities whether such liabilities are
           asserted by the Company or by creditors or stockholders of the
           Company or otherwise.

     14.10 Representations of the Company.  The Company hereby
           ------------------------------
           represents and warrants, as of the date hereof, to the Warrantholder
           as follows:

           (a) Corporate Existence and Power.  The Company (i) is a corporation
               -----------------------------
               duly incorporated, validly existing and in good standing under
               the laws of the State of Delaware; (ii) has all requisite
               corporate power and authority to own and operate its property, to
               lease the property it operates as lessee and to conduct the
               business in which it is engaged; and (iii) has the corporate
               power and authority to execute, deliver and perform its
               obligations under this Warrant.  The Company is duly qualified to
               do business as a foreign corporation in, and is in good standing
               under the laws of, each jurisdiction in which the conduct of its
               business or the nature of the property owned requires such
               qualification.

           (b) Corporate Authorization; No Contravention.  The execution,
               -----------------------------------------
               delivery and performance by the Company of this Warrant and the
               transactions contemplated hereby, including, without limitation,
               the sale, issuance and delivery of the Warrant Shares, (i) have
               been duly authorized by all necessary corporate action of the
               Company; (ii) do not contravene the terms of the Certificate of
               Incorporation or Bylaws; and (iii) do not violate, conflict with
               or result in any breach or contravention of, or the creation of
               any Lien under, any Contractual Obligation of the Company or any
               Requirement of Law applicable to the Company.  No event has
               occurred and no condition exists which,

                                      30
<PAGE>

               upon notice or the passage of time (or both), would constitute a
               default under any indenture, mortgage, deed of trust, credit
               agreement, note or other evidence of indebtedness or other
               material agreement of the Company or the Certificate of
               Incorporation or Bylaws.

           (c) Capitalization of the Company.  The authorized capital stock of
               -----------------------------
               the Company consists of (i) 180,000,000 shares of Common Stock,
               of which, as of January 31, 2000 (a) 26,465,076 shares were
               issued and outstanding and (b) 30,658,680 shares were reserved
               for issuance upon the exercise of outstanding stock options and
               conversion of outstanding shares of the Company's Class B Common
               Stock, par value $0.01 per share ("Class B Common Stock"), Series
               A Convertible Preferred Stock, par value $0.01 per share ("Series
               A Preferred Stock") and 8.25% Series B Convertible Redeemable
               Preferred Stock, par value $0.01 per share ("Series B Preferred
               Stock"), (ii) 30,000,000 shares of Class B Common Stock, of
               which, as of January 31, 2000, 17,872,176 shares were issued and
               outstanding, (iii) 15,000,000 shares of Series A Preferred Stock,
               of which, as of January 31, 2000, 10,786,504 shares were issued
               and outstanding and (iv) 3,000,000 shares of Series B Preferred
               Stock, of which, as of January 31, 2000, 2,000,000 shares were
               issued and outstanding.  In each case, the numbers set forth
               above exclude recent exercises of employee stock options.  Each
               share of Class B Common Stock, Series A Preferred Stock and
               Series B Preferred Stock may be converted at any time, at the
               option of the holder, into one share of Common Stock.

           (d) Issuance of Warrant Shares.  The Warrant Shares have been duly
               --------------------------
               authorized and reserved for issuance.  When issued, such shares
               will be validly issued, fully paid and non-assessable, and free
               and clear of all Liens and preemptive rights, and the holders
               thereof shall be entitled to all rights and preferences accorded
               to a holder of Common Stock.

           (e) Binding Effect.  This Warrant has been duly executed and
               --------------
               delivered by the Company and constitutes the legal, valid and
               binding obligation of the Company enforceable against the Company
               in accordance with its terms, except as enforceability may be
               limited by applicable bankruptcy, insolvency, fraudulent
               conveyance or transfer, moratorium or other similar laws
               affecting the enforcement of creditors' rights generally and by
               general principles of equity.

                                      31
<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.

                              XM SATELLITE RADIO HOLDINGS INC.

                              By:  Hugh Panero

                                   -------------------------------------
                                   Hugh Panero
                                   President and Chief Executive Officer

Dated:  February ___, 2000

Attest:

By:  Joseph M. Titlebaum

     ------------------------------
     Joseph M. Titlebaum
     Senior Vice President, General Counsel
       and Secretary

                                      32
<PAGE>

                                   Exhibit A

                                 EXERCISE FORM

                (To be executed upon exercise of this Warrant)

     The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase __________ shares of Common Stock and
herewith tenders payment for such Common Stock to the order of XM Satellite
Radio Holdings Inc. in the amount of $__________, which amount includes payment
of the par value for _________ of the Common Stock, in accordance with the terms
of this Warrant.  The undersigned requests that a certificate for such shares of
Common Stock be registered in the name of __________________ and that such
certificates be delivered to __________________ whose address is
___________________________________.

Dated:______________

                              Signature  ______________________________

                                         ______________________________
                                         (Print Name)

                                         ______________________________
                                         (Street Address)

                                         ______________________________
                                         (City)  (State)  (Zip Code)

Signed in the Presence of:

__________________________

                                      33
<PAGE>

                                   Exhibit B

                              FORM OF ASSIGNMENT

              (To be executed only upon transfer of this Warrant)

     For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto ______________________ the right
represented by such Warrant to purchase ________________ shares of Common Stock
of XM Satellite Radio Holdings Inc. to which such Warrant relates and all other
rights of the Warrantholder under the within Warrant, and authorizes XM
Satellite Radio Holdings Inc., or any of its officers, to make such transfer on
the books of XM Satellite Radio Holdings Inc. maintained for such purpose, with
full power of substitution in the premises.  This sale, assignment and transfer
has been previously approved in writing by XM Satellite Radio Holdings Inc.

Dated:______________

                              Signature  ______________________________

                                         ______________________________
                                         (Print Name)

                                         ______________________________
                                         (Street Address)

                                         ______________________________
                                         (City)  (State)  (Zip Code)

Signed in the Presence of:

__________________________

                                      34<PAGE>

                                                                   Exhibit 10.29

***** Confidential treatment has been requested for portions of this agreement.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this agreement
has been filed separately with the Securities and Exchange Commission.

                          JOINT DEVELOPMENT AGREEMENT

          This JOINT DEVELOPMENT AGREEMENT is entered into between XM Satellite
Radio Inc., a Delaware corporation with its principal location at 1250 23rd
Street, N.W., Washington, DC ("XM"), and Sirius Satellite Radio Inc., a Delaware
                               --
corporation with its principal location at 1221 Avenue of the Americas, New
York, New York ("Sirius") as of February 16th, 2000 ("Effective Date").
                 ------                               --------------

                                   RECITALS

     WHEREAS, XM is engaged in designing, developing, marketing and licensing
the technology relating to its satellite digital audio radio system ("XM Radio
                                                                      --------
System") in accordance with the rights under the license issued to XM by the
------
Federal Communications Commission (the "FCC");
                                        ---

     WHEREAS, Sirius is engaged in designing, developing, marketing and
licensing the technology relating to its satellite digital audio radio system

("Sirius Radio System") in accordance with the rights under the license issued
---------------------
to Sirius by the FCC;

     WHEREAS, the FCC has mandated that XM and Sirius deploy a final receiver
design that is interoperable;

     WHEREAS, due to the different technical heritage, satellite design and
performance requirements of the XM Radio System and the Sirius Radio System,
such systems currently employ different technologies that impede the design and
development of an interoperable receiver;

     WHEREAS, XM and Sirius and their respective radio equipment suppliers
already have expended significant funds in developing Single Mode Radios (as
defined below);

     WHEREAS, it will take an extensive and expensive joint program to merge the
technologies employed by the XM Radio System and the Sirius Radio System in
order to design and develop a cost efficient interoperable receiver;

     WHEREAS, XM and Sirius are, and will continue to be, competitors in, among
other things, the marketing and sale of the satellite broadcasting of radio
programming to listeners, the acquisition of rights to broadcast such
programming and sale of radio advertising availabilities and other forms of
advertising or promotional opportunities in connection with that programming
(collectively, "Business Opportunities");
                ----------------------

     WHEREAS, nothing in this Agreement is intended to, or will in any way,
restrain or reduce the competitive rivalry between the parties in the pursuit of
Business Opportunities;

     WHEREAS, the parties desire to comply with FCC licensing requirements and
to enhance efficiency and consumer welfare by jointly developing and deploying
certain interoperable technology for the purpose of producing radios capable of
receiving broadcasts from both the XM Radio System and the Sirius Radio System;
<PAGE>

     ***** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

     WHEREAS, in jointly developing such interoperable technology in the most
cost effective manner, the parties believe it necessary and desirable to
integrate some of their economic activities to develop and bring to market
Interoperable Radios (as defined below); and

     WHEREAS, the parties wish to set forth the terms and conditions under which
they will jointly develop and deploy such interoperable technology;

     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants contained herein, the parties hereto agree as follows:

                                   ARTICLE I

                                  Definitions
                                  -----------

     1.01. Defined Terms. Capitalized terms used herein and not otherwise
           -------------
defined herein shall have the meaning assigned to such terms below:

            "Aftermarket" shall mean the market for radios that are (a) sold to
             -----------
     a customer for use in a vehicle, aircraft or vessel, after such vehicle,
     aircraft or vessel has been manufactured and sold to a customer; or (b)
     sold separately as stand alone devices.

            "Agreement" shall mean this Joint Development Agreement, including
             ---------
     all Exhibits attached hereto, as amended, supplemented or otherwise
     modified from time to time.

            "Auditor" shall have the meaning specified in Section 14.10.
             -------

            "Business Opportunities" shall have the meaning specified in the
             ----------------------
     recitals to this Agreement.

            "Confidential Information" shall have the meaning specified in
             ------------------------
     Section 9.01.

            "Consultant" shall have the meaning specified in Section 3.02(b).
             ----------

            "Consulting Agreement" shall have the meaning specified in Section
             --------------------
     3.02(b).

            "Content Provider" shall have the meaning specified in Section
             ----------------
     6.06.

            "Distribution Partners" shall have the meaning specified in Section
             ---------------------
     6.01.

            "Effective Date" shall have the meaning specified in the
             --------------
     introductory paragraph of this Agreement.

            "[*****] Deals" shall mean the agreements,
             -----------------------------
     arrangements and understandings in effect as of the Effective Date among
     [*****]
<PAGE>

     ***** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

                                                                               3

     [*****], as such agreements, arrangements and understandings may be
     amended, supplemented or otherwise modified from time to time.

            "[*****] Partner" shall mean [*****].
             ---------------

            "[****] Deals" shall mean the agreements, arrangements and
             ------------
     understandings in effect as of the Effective Date among [*****],
     or any of their respective subsidiaries or affiliates, as such agreements,
     arrangements and understandings may be amended, supplemented or otherwise
     modified from time to time.

            "[*****] Partner" shall mean [*****] and [*****].

            "Expedited Rules" shall have the meaning specified in Section 13.02.
             ---------------

            "FCC" shall have the meaning specified in the recitals to this
             ---
     Agreement, together with any successor agency or agencies.

            "FCC License" shall mean the license granted by the FCC to Sirius or
             -----------
     XM, as the context may require, to launch and operate satellites to provide
     a radio communications service in which audio programming is digitally
     transmitted by one or more space stations directly to fixed, mobile and/or
     portable stations which may involve complementary repeating terrestrial
     transmitters and telemetry, tracking and control facilities.

            "Interoperable Chipset" shall mean integrated circuits which are
             ---------------------
     capable of receiving, decoding, decompressing and outputting to a user
     interface the digital audio radio broadcast, transmitted from both
     satellites and terrestrial repeaters, of both the XM Radio System and the
     Sirius Radio System.
<PAGE>
                                                                               4
        *****Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

            "Interoperable Radio" shall mean a radio that, at a minimum, (a)
             -------------------
     receives and processes the audio portion of both the Sirius Radio System
     signal and the XM Radio System signal, either as a result of an
     Interoperable Chipset contained in the unit itself or as a result of an
     Interoperable Chipset contained in an outboard location which interfaces
     directly with the unit, and (b) which is capable of providing the user
     interface for both Sirius Radio System broadcasts and XM Radio System
     broadcasts, including displaying the artist and title information
     transmitted as part of such broadcasts, in each case, without the consumer
     purchasing additional hardware or software.

            "Interoperability Technology" shall mean the technology, including
             ---------------------------
     the technology which is jointly funded and developed by Sirius and XM
     pursuant to this Agreement or owned and/or licensed by either party, which
     is required to design, develop and/or manufacture an Interoperable Radio,
     as well as any enhancements and modifications jointly funded and developed
     for such technology pursuant to this Agreement (including the industry
     standards jointly developed by the parties pursuant to Section 3.03), but
     shall not include Non-core Technology.

            "JV" shall have the meaning specified in Article XI.
             --

            [*****] shall have the meaning specified in Section 6.02(a).
             -----

            [*****] shall have the meaning specified in Section 6.04(a).
             -----

            "Non-core Technology" shall have the meaning specified in Section
             -------------------
     5.02.

            "Non-owning Party" shall have the meaning specified in Section 8.05.
             ----------------

            "OEM Automobile Partners" shall mean an original equipment
             -----------------------
     manufacturer of vehicles (including trucks and/or other specialty
     vehicles), such as General Motors Corporation, Ford Motor Company,
     DaimlerChrysler AG, Honda Motor Company, Toyota, BMW AG and their
     respective divisions, affiliates and subsidiaries.

            "Owning Party" shall have the meaning specified in Section 8.05.
             ------------

            "Project Leader" shall have the meaning specified in Section
             --------------
     3.02(d).

            "Project Plan" shall have the meaning specified in Section 3.02(b).
             ------------

            "Radio Manufacturing Partners" shall have the meaning specified in
             ----------------------------
     Section 5.04.

            "Recipient" shall have the meaning specified in Section 9.01.
             ---------

            "RFP" shall have the meaning specified in Section 3.02(e).
             ---

            "SDARS Mark" shall have the meaning specified in Section 4.04(a).
             ----------
<PAGE>

     ***** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

                                                                               5

            "Single Mode Radio" shall mean a radio that (a) receives and
             -----------------
     processes the Sirius Radio System signal or the XM Radio System signal, but
     not both, and (b) which is capable of providing the user interface for
     either Sirius Radio System broadcasts or XM Radio System broadcasts, but
     not both.

            "Sirius" shall have the meaning specified in the first paragraph of
             ------
     this Agreement.

            "Sirius Radio System" shall have the meaning specified in the
             -------------------
     recitals to this Agreement.

            "Specifications" shall have the meaning specified in Section
             --------------
     3.02(c).

            [*****]

            "Third Party Technology" shall mean any patents, know-how or other
             ----------------------
     intellectual property rights owned or controlled by any person or entity
     other than Sirius, XM and their respective affiliates that may be included
     within the XM Radio System or the Sirius Radio System or in
     Interoperability Technology from time to time.

            "XM" shall have the meaning specified in the first paragraph of this
             --
     Agreement.

            "XM Radio System" shall have the meaning specified in the recitals
             ---------------
     to this Agreement.

     1.02.  Other Definitional Matters.  Definitions in this Agreement apply
            --------------------------
equally to the singular and plural forms of the defined terms.  The words
"include" and "including" shall be deemed to be followed by the phrase "without
limitation" or "but not limited to" when such phrase does not otherwise appear.
The terms "herein," "hereof" and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular section, paragraph
or subdivision.  All article, section, paragraph, clause, exhibit or schedule
references not attributed to a particular document shall be references to such
parts of this Agreement.
<PAGE>

                                                                               6

                                  ARTICLE II

                            Term of this Agreement
                            ----------------------

     Unless terminated in accordance with Section 12.01, this Agreement shall
commence on the Effective Date and continue until the termination of each of the
parties' respective FCC Licenses, and shall be automatically renewed upon the
renewal or extension of the FCC Licenses.

                                  ARTICLE III

                         Joint Technology Development.
                         -----------------------------

     3.01.  Interoperability Technology Development.  XM and Sirius hereby agree
            ----------------------------------------
to develop Interoperability Technology for the purpose of producing (or having
produced by others) Interoperable Radios.

     3.02.  Project Plan.  Unless otherwise agreed by the parties in writing:
            ------------

             (a) As soon as practicable, the parties shall exchange, on a
     mutually agreed date, appropriate technical documentation relating to the
     XM Radio System and the Sirius Radio System, as the case may be.

             (b) The parties shall use commercially reasonable efforts to
     execute, within 90 days following the Effective Date, a consulting
     agreement (the "Consulting Agreement") with a third party consultant
                     --------------------
     reasonably acceptable to both parties (the "Consultant") to manage the
                                                 ----------
     project development activities relating to the Interoperability Technology.
     The Consultant shall have responsibility for creating a budget and project
     plan for developing the Interoperability Technology (the "Project Plan").
                                                               ------------

             (c) The Consultant shall work with representatives of the parties
     to develop the Project Plan, including the development and preparation of a
     written document containing agreed upon engineering and other
     specifications for the Interoperable Chipset (the "Specifications"). The
                                                        --------------
     Specifications shall be in form and substance acceptable to both Sirius and
     XM.

             (d) The parties shall negotiate in good faith to determine the
     Project Plan and Specifications.  Each party agrees to use commercially
     reasonable efforts to meet any deliverables and/or timetables set forth in
     the Project Plan.  Each party shall provide commercially reasonable support
     to facilitate the exchange of information during the development of the
     Project Plan and Specifications, as well as during the development of the
     Interoperability Technology.  In addition, each party shall designate a
     project leader (each, a "Project Leader"), who shall be designated in the
                              --------------
     Project Plan, and who shall coordinate such party's development activities.

             (e) As part of the Project Plan, upon completion of the
     Specifications, the Consultant shall issue to chipset design and
     fabrication firms reasonably acceptable
<PAGE>

     ***** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

                                                                               7

     to XM and Sirius, a request for (the "RFP") to design, develop and
                                           ---
     manufacture Interoperable Chipsets. However, the Consultant shall [*****]
     Similarly, the Consultant shall [*****]. As soon as practicable after
     responses to the RFP have been received by the Consultant and reviewed by
     XM and Sirius, the Consultant, with the consent of Sirius and XM (which
     shall not be unreasonably withheld, delayed or conditioned), shall use
     commercially reasonable efforts to negotiate one or more agreements to
     design and develop Interoperable Chipsets.

             (f) The parties shall use commercially reasonable efforts to
     develop an antenna or series of antennas which function with both the
     Sirius Radio System and the XM Radio System for deployment with
     Interoperable Radios.

             (g) Nothing contained in this Agreement shall be interpreted or
     construed to limit in any way Sirius' or XM's ability to continue its
     existing integrated circuit development efforts for Single Mode Radios.

             (h) XM and Sirius shall each use commercially reasonable efforts to
     design and develop Interoperable Radios that are backward compatible with
     then existing Single Mode Radios.

             (i) XM and Sirius agree that [*****], as the case may be.

     3.03. SDARS Industry Standards Publication.  In order to direct that the
           ------------------------------------
development work performed pursuant to this Agreement results in the quality of
reception on Interoperable Radios of either party's programming being comparable
to the quality of reception of such party's programming on a Single Mode Radio,
XM and Sirius shall jointly develop and publish industry standards for
Interoperable Radios.  Such standards shall contain parameters relating to
Interoperable Radios, including, but not limited to user-interface and
communication protocols.

     3.04. Enhancement and Support of the Interoperability Technologies.  Each
           ------------------------------------------------------------
party agrees to use commercially reasonable efforts to maintain and enhance the
Interoperability Technology to ensure its proper functioning and commercial
usefulness.

     3.05. Implementation of Non-core Technologies.  Nothing in this Agreement
           ---------------------------------------
shall prevent the development, manufacturing, marketing, sale and distribution
of Interoperable Radios with respect to which the Non-core Technologies, if any,
used by or relating to customers of one of the parties differ from the Non-core
Technologies, if any, used by or relating to customers of the other party.
<PAGE>

                                                                               8

                                  ARTICLE IV

                  Intellectual Property Rights and Ownership
                  ------------------------------------------

     4.01. XM Radio System.  The parties agree that XM owns, or has license
           ---------------
rights to, the XM Radio System and shall at all times continue to retain full
and exclusive right, title and ownership and/or license, as the case may be, in
and to the XM Radio System, and in any and all intellectual property rights
therein, including, but not limited to, all rights in related patents,
trademarks, copyrights, derivative works and proprietary and trade secret rights
and know-how.

     4.02. Sirius Radio System.  The parties agree that Sirius owns, or has
           -------------------
license rights to, the Sirius Radio System and shall at times continue to retain
full and exclusive right, title and ownership and/or license, as the case may
be, in and to the Sirius Radio System, and in any and all intellectual property
rights therein, including, but not limited to, all rights in related patents,
trademarks, copyrights, derivative works and proprietary and trade secret rights
and know-how.

     4.03. Interoperability Technology.  (a)  Subject to each party's rights
           ---------------------------
set forth in Sections 4.01 and 4.02, the parties agree that XM and Sirius shall
jointly own the Interoperability Technology jointly developed by the parties and
jointly funded hereunder, and any and all intellectual property rights therein,
including, but not limited to, all rights in related patents, trademarks,
copyrights, derivative works and proprietary and trade secret rights and know-
how. Each party shall give the other party all reasonable assistance and shall,
at the other party's request and expense, execute and deliver all documents and
assignments which may be necessary to establish the joint ownership rights in
the Interoperability Technology.

     (b) If any patentable inventions are created as a result of the parties'
joint development activities hereunder, the parties agree to cooperate in the
filing and prosecution of patent applications for such inventions with the costs
to be shared equally by the parties.  Any resulting patent shall be jointly
owned by Sirius and XM.

     (c) Each party agrees to require each of its employees to assign to such
party all of such employee's right, title and interest in and to
Interoperability Technology and all related intellectual property rights,
including patents, patent applications, copyright, derivative works, trademarks,
trade secrets, know-how and other proprietary rights.

     4.04. Logo or Service Mark for Interoperability Technology.  (a)  Sirius
           ----------------------------------------------------
and XM shall jointly select and file for federal trademark protection a new
name, logo and/or service mark (collectively, the "SDARS Mark") relating to
                                                   ----------
digital satellite radios for the purposes of promoting and identifying
Interoperable Radios and Single Mode Radios, and the parties shall share equally
in any profits relating to the SDARS Mark.  The parties will work cooperatively
to design the SDARS Mark(s) so as to minimize consumer confusion regarding
whether a given radio is a Single Mode Radio or Interoperable Radio.

     (b) From and after the joint selection thereof, Sirius and XM shall
prominently use and/or display the SDARS Mark in all communications that mention
XM or Sirius.
<PAGE>

     ***** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
                                                                               9

     (c) Each of the parties agrees not to change its name to, or adopt the use
of a trade name or trademark that is likely to cause confusion with (i) the
corporate name, trade names and trademarks employed by the other party hereto,
or (ii) following the joint selection thereof, the SDARS Mark.

     (d) Each party shall license the SDARS Mark to its Radio Manufacturing
Partners, Distribution Partners and OEM Automobile Partners for use on Single
Mode Radios and Interoperable Radios. Each party shall require, as part of any
agreement, arrangement or understanding entered into with any Radio
Manufacturing Partner, Distribution Partner or OEM Automobile Partner after the
Effective Date, the use of the SDARS Mark on the face or another static
component of the user interface of all Single Mode Radios and Interoperable
Radios; provided that such requirement shall not apply to any radio if no logo,
        --------
trade name or trademark relating to XM, Sirius or satellite digital audio radio
service is displayed on the face or any other static component of the user
interface thereof. In addition, each party shall use commercially reasonable
efforts to require its [*****] Partners and [*****] Partners to use the SDARS
Mark on the face or another static component of the user interface of all Single
Mode Radios and Interoperable Radios; provided that such requirement shall not
                                      --------
apply to any radio if no logo, trade name or trademark relating to XM, Sirius or
satellite digital audio radio service is displayed on the face or any other
static component of the user interface thereof.

     (e) Each party acknowledges that the quality of use of the SDARS Mark will
have an important effect on goodwill associated with the SDARS Mark and on the
resulting value of the SDARS Mark and each party agrees that the nature and
quality of all uses of the SDARS Mark shall be of high quality, and be
adequately suited to exploitation of the SDARS Mark to the best advantage and
enhancement of the SDARS Mark and consistent with quality control standards
mutually established by the parties.

                                   ARTICLE V

                               Licensing Matters
                               -----------------

     5.01. Independent Developments.  (a)  In the event that either party
           ------------------------
independently develops technology, including any technology existing on the
Effective Date, that is included in Interoperability Technology, such party
shall retain full right, title and interest in and to such technology, including
any and all intellectual property rights therein; however, each party hereby
grants to the other party, to the fullest extent possible, subject to any Third
Party Technology restrictions as described in Section 5.03, a perpetual, non-
exclusive, royalty-free, worldwide license to use, copy, distribute, sublicense
and allow its Distribution Partners and Radio Manufacturing Partners to
sublicense such technology for the purpose of manufacturing Interoperable Radios
and marketing and distributing Interoperable Radios in North America.

     (b) In addition, each party shall retain full right, title and interest in
and to its technology included in the digital satellite radio system of such
party as of the Effective Date, including any and all intellectual property
rights therein; however, each party hereby grants to the other party, to the
fullest extent possible, subject to any Third Party
<PAGE>

                                                                              10

Technology restrictions as described in Section 5.03, a perpetual, non-
exclusive, royalty-free, worldwide license to use, copy, distribute, sublicense
and allow such other party's Distribution Partners and Radio Manufacturing
Partners to sublicense such technology (including any other technology relevant
to a satellite digital audio radio system that such party, or any officer,
employee or affiliate of such party, may own or have a license to use) for the
purpose of manufacturing, marketing and distributing such other party's
satellite digital audio radio system in North America, including any Single Mode
Radios used in connection therewith; provided that the technology covered by
                                     --------
such license shall exclude all Non-core Technology.

     5.02. Independent Development of Non-core Technology.  In the event that
           ----------------------------------------------
either party independently develops or licenses technology that is not included
in the definition of Interoperability Technology ("Non-core Technology"), such
                                                   -------------------
Non-core Technology shall remain the property of the developing or licensing
party; and all right, title and interest in and to such Non-core Technology,
including any intellectual property rights therein, shall reside with the
developing or licensing party.  In such event, the developing or licensing party
shall make available (or, in the case of licensed technology, use commercially
reasonable efforts (which shall not include the payment of additional license
fees) to make available) to the other party, upon written request, a license for
such Non-core Technology on commercially reasonable terms.  In the event that
the non-developing party does not accept such commercially reasonable terms, no
license shall be granted.  In no event shall either party be entitled to any
equitable relief with regard to Non-core Technology.

     5.03. Third Party Technology.  Each party shall be responsible, at its
           ----------------------
cost, for licensing any Third Party Technology to the extent that such Third
Party Technology is used in the digital satellite radio system of such party.
All licenses granted hereunder shall be subject to existing agreements entered
into by the parties for such Third Party Technology.  A listing of the Third
Party Technology included within each party's satellite digital audio radio
system as of the Effective Date shall be provided to the other party within 30
days of the Effective Date.  Each party shall, within 30 days of the Effective
Date, provide to the other party copies of any agreements executed by such party
relating to Third Party Technology, to the extent such party is legally entitled
to disclose such agreement.  Each party shall use commercially reasonable
efforts to obtain all consents necessary to disclose such agreements to the
other party in accordance with the terms of this Agreement.

     5.04. Licensing of the Interoperability Technology to Third Parties.
           -------------------------------------------------------------
Subject to any restrictions in the Third Party Technology agreements, as joint
owners of the Interoperability Technology, the parties shall each have authority
to license (and permit the sublicense of) the Interoperability Technology to
third parties, including, but not limited to, manufacturers of integrated
circuits and receivers ("Radio Manufacturing Partners"), for the purpose of
                         ----------------------------
manufacturing, marketing, distributing and/or selling Interoperable Radios.  The
parties shall share equally in any licensing, technical assistance or other
revenue recognized from such third party licensing of, or technical or other
assistance relating to, Interoperability Technology.
<PAGE>

     ***** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

                                                                              11

                                  ARTICLE VI

                               Marketing Matters
                               -----------------

     6.01. Distribution Partners.  Commencing on the Effective Date, neither
           ---------------------
party shall enter into any agreement, arrangement or understanding with any
[*****] distribution partner (collectively, "Distribution Partners") for the
                                             ---------------------
distribution of either the XM Radio System or Sirius Radio System that [*****].
In addition, commencing on the Effective Date neither party shall enter into any
agreement, arrangement or understanding which [*****].

     6.02. [*****] Deals.  (a)  Notwithstanding anything to the contrary in
           -----------------
this Agreement, XM and Sirius each agree that, other than their respective
[*****] Deals, all agreements, arrangements and understandings made by either
party after the Effective Date that [*****] shall specify the [*****]; provided
                                                                       --------
that, in the period before [*****]; and provided further, that neither party
                                        -------- -------
shall enter into any agreement, arrangement or understanding to [*****].

      (b) Neither party shall after the Effective Date enter into any agreement,
arrangement or understanding with [*****] in circumvention of the terms of this
Agreement and neither party shall [*****], other than in accordance with the
terms of this Agreement.

     6.03. [*****] Deals.  (a)  Notwithstanding anything to the contrary in
           -------------
Section 6.02, both XM and Sirius shall be free to [*****]. The parties
acknowledge that any [*****] Deals. After the Effective Date, each of the
parties shall work cooperatively with one another and with its [*****], enter
into any agreement relating to Interoperable Radios with any [*****] Deal unless
such agreement (i) is either (A) [*****]
<PAGE>

     ***** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

                                                                              12

[*****] and (ii) shall become effective as soon as practicable after [*****];
provided, that until such an agreement is established with a given [*****] of a
--------
party, the other party shall not [*****].

      (b) Notwithstanding Sections 6.02(a) and 6.03(a), in the period [*****].

     6.04. [*****] Partners.  (a)  Notwithstanding anything to the contrary in
           ----------------
this Agreement, XM and Sirius each agree that all agreements, arrangements and
understandings made by either party after the Effective Date that contemplate
[*****]; provided that, for the avoidance of doubt, it is understood that each
         --------
of the parties may [*****].

      (b) Notwithstanding Section 6.04(a), in the period [*****].

      (c) Neither party shall [*****] Deal in circumvention of the terms of this
Agreement nor shall it [*****] in violation of the terms of Section 6.04(a).

     6.05. [*****] Partners.  (a)  Notwithstanding anything to the contrary in
           ----------------
Section 6.04, the parties agree that each may [*****]. The parties acknowledge
that [*****]. Nothing in this Agreement shall, or shall be construed to, require
either party to [*****].

      (b) XM and Sirius shall each [*****].

     6.06. New Content Arrangements.  (a)  Commencing on the Effective Date,
           ------------------------
neither party shall enter into any agreement, arrangement or understanding with
any provider of content or programming, including celebrity talent (a "Content
Provider") that (i) [*****]
<PAGE>

     ***** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

                                                                              13

[*****] or (ii) rewards any such Content Provider for [*****]. This Section
6.06(a) shall not apply to contracts between either party and its employees,
other than celebrity talent. To implement this provision, each party agrees,
[*****].

      (b) Commencing on the Effective Date, neither party shall enter into any
agreement, arrangement or understanding [*****].

                                  ARTICLE VII

                                 Consideration
                                 -------------

     7.01. Resources.  Each party agrees to devote its resources to the joint
           ---------
development of the Interoperability Technology in accordance with the Project
Plan, or as mutually agreed by the parties in writing.

     7.02. Existing Technology.  Each party shall negotiate in good faith the
           -------------------
financial value of the intellectual property licenses granted hereunder for the
technology of such party that is included in (a) the Interoperability
Technology; and/or (b) the satellite digital audio radio system of the other
party.  The applicability, validity, value, use, importance and available
alternatives of each party's intellectual property rights with respect to (i)
the Interoperability Technology; and (ii) the other party's satellite digital
audio radio system shall be considered in determining the financial value of
such intellectual property licenses.  In the event that the parties fail to
reach agreement regarding the financial value of such intellectual property
licenses within ninety days of the Effective Date, the parties shall resolve the
dispute through binding arbitration in accordance with Section 13.02.  The
financial value agreed by the parties or determined by arbitration to be
attributed to each party's existing technology licenses granted hereunder shall
be set forth on a schedule which shall be approved in writing by both parties.
Each party shall receive a credit against its contribution to fees, costs and
expenses that this Agreement may require equal to the value attributed to its
technology pursuant to this Section.

     7.03. Fees, Costs and Expenses.  Subject to Section 7.02, each party shall
           ------------------------
share equally in the fee, costs and expenses associated with the following
activities:

            (a) contracting with the Consultant pursuant to the Consulting
     Agreement, as further described in Section 3.02(b);

            (b) publication of the industry standards set forth in Section 3.03;

            (c) joint trademark activities set forth in Section 4.04;
<PAGE>

                                                                              14

            (d) development, enhancement and support of the Interoperability
     Technology as described in Section 3.04.

            (e) royalties, if applicable, due after the Effective Date for Third
     Party Technology that the parties mutually agree shall be included in
     Interoperability Technology;

            (f) the parties' activities pursuant to this Agreement to jointly
     market the Interoperability Technology;

            (g) the parties' activities relating to the filing and prosecution
     of patent applications for the jointly owned Interoperability Technology;
     and

            (h) any other joint activities undertaken in furtherance of this
     Agreement as mutually agreed by the parties in writing.

     7.04. Stipulation of Dismissal of Patent Litigation.  Subject to the terms
           ----------------------------------------------
of this Agreement, XM and Sirius shall cause to be to filed, within five
business days of the Effective Date, a stipulation substantially in the form set
forth in Exhibit A for dismissal, without prejudice, of the patent litigation
         ---------
currently pending between XM and Sirius.

                                 ARTICLE VIII

               Infringement Action Defense and General Indemnity
               -------------------------------------------------

     8.01. XM Defense.  (a)  Subject to Section 8.03 and 8.04, XM shall defend
           ----------
at its expense any action brought against Sirius, or any of its officers or
directors, to the extent such action is based upon the claim that the XM Radio
System, including the technology contributed pursuant to Section 5.01,
constitutes direct infringement of any duly issued United States patent,
copyright, trademark or trade secret and will pay any reasonable expenses and
settlements or judgments to the extent based thereon, provided that (i) XM has
sole control of any such action or settlement negotiations, (ii) Sirius notifies
XM promptly in writing of such claim, suit or proceeding, and (iii) Sirius uses
commercially reasonable efforts, at XM's expense, to assist in the settlement
and/or defense of any such claim, suit or proceeding.  Sirius may, at its option
and expense, elect to participate in such settlement and/or defense with its own
counsel.  Neither party shall be liable for any costs or expenses incurred by
the other party without its prior written authorization.

     (b) In the event that the XM Radio System is likely to result in, or is
subject to, a claim hereunder, XM shall, at its option, modify the XM Radio
System so that it becomes non-infringing, or procure the right to continue using
the XM Radio System without modification.  Notwithstanding the foregoing, XM
shall not be liable for any claim arising from or based upon the combination of
the XM Radio System with another system, including the Sirius Radio System,
unless Sirius establishes that the modifications or combination of the systems
did not contribute to the infringement, except to the extent XM knew, or
reasonably should have known, that such modifications or combination could give
rise to such claim and failed to so inform Sirius.
<PAGE>

                                                                              15

     8.02. Sirius Defense.  (a)  Subject to Section 8.03 and 8.04, Sirius shall
           --------------
defend at its expense any action brought against XM, or any of its officers or
directors, to the extent such action is based upon the claim that the Sirius
Radio System, including the technology contributed pursuant to Section 5.01,
constitutes direct infringement of any duly issued United States patent,
copyright, trademark or trade secret and will pay any reasonable expenses and
settlements or judgments to the extent based thereon, provided that (i) Sirius
has sole control of any such action or settlement negotiations, (ii) XM notifies
Sirius promptly in writing of such claims, suit or proceeding, and (iii) XM uses
commercially reasonable efforts, at Sirius' expense, to assist in the settlement
and/or defense of any such claim, suit or proceeding.  XM may, at its option and
expense, elect to participate in such settlement, and/or defense with its own
counsel.  Neither party shall be liable for any costs or expenses incurred by
the other party without its prior written authorization.

     (b) In the event that the Sirius Radio System is likely to result in, or
is subject to, a claim hereunder, Sirius shall, at its option, modify the Sirius
Radio System so that it becomes non-infringing, or procure the right to continue
using the Sirius Radio System without modification. Notwithstanding the
foregoing, Sirius shall not be liable for any claim arising from or based upon
the combination of the Sirius Radio System with another system, including the XM
Radio System, unless XM establishes that the modifications or combination of the
systems did not contribute to the infringement, except to the extent Sirius
knew, or reasonably should have known, that such modification or combination
could give rise to such claim and failed to so inform XM.

     8.03. No Indemnification for Interoperability Technology.  Except to the
           --------------------------------------------------
extent indemnification is available pursuant to Section 8.01 or 8.02, neither
party shall be liable to the other for any intellectual property infringement
claim, action, proceeding or suit brought against such party relating to the
Interoperability Technology.

     8.04. Non-Core Technology.  In the event that either party licenses Non-
           -------------------
core Technology to the other party, any indemnification rights and obligations
shall be as set forth in the licensing agreement between the parties relating to
such Non-core Technology.

     8.05. General Indemnity for Third Party Actions Based on Use of the Other
           -------------------------------------------------------------------
Party's System.  Subject to Section 8.01 through 8.04, each party (in such
--------------
context, the "Owning Party") owns a satellite digital radio system and such
              ------------
Owning Party shall defend, indemnify and hold harmless the other party (in such
context, the "Non-owning Party") from all damages, liabilities and expenses,
              ----------------
including reasonable attorney's fees, arising out of, connected with, or
resulting in any way from a claim or action by a third party against the Non-
owning Party due to the performance or use of the satellite digital radio system
of the Owning Party.

                                  ARTICLE IX

                           Confidential Information.
                           -------------------------

     9.01. General. Each party acknowledges that in the course of performance
           -------
of this Agreement, either of them may disclose to the other (such other party,
together with its directors, officers, employees, agents and other
representatives, a "Recipient") information
                    ---------
<PAGE>

                                                                              16

about the disclosing party's technology, products, business or activities which
such party considers proprietary and confidential, including, without
limitation, information regarding the XM Radio System, the Sirius Radio System,
Interoperability Technology, other trade secrets and information concerning the
existence and terms of this Agreement and the joint development arrangements
contemplated hereunder, as well as the characterization and use of any of the
intellectual property rights of the parties described in this Agreement, and any
financial valuations, determinations, or settlements relating to either party's
intellectual property rights in any patent or other disputes between the
parties, in any form, including, without limitation, oral, written, graphic,
demonstrative, machine recognizable or sample form (all of such proprietary and
confidential information, and all summaries, analyses and other material and
data generated by Recipient from any such information, is hereinafter referred
to as "Confidential Information"). Confidential Information shall be retained
       ------------------------
in confidence and shall not be disclosed or caused or permitted to be disclosed
directly or indirectly to any third party without the prior written approval of
the disclosing party, and shall not be used by Recipient for any reason other
than in accordance with the terms of this Agreement.  Notwithstanding the
foregoing, in no event shall either party exchange information on the subjects
as to which the parties compete, and nothing in this Section 9.01 shall be
construed to require the sharing of any information other than information
necessary to effectuate the purposes of this Agreement.  The obligation of
Recipient to retain Confidential Information in confidence shall not apply to
Confidential Information which is (a) now in or hereafter enters the public
domain beyond the control of Recipient and without its violation of this
Agreement; (b) rightfully known to Recipient prior to the time of disclosure by
the disclosing party hereunder, or independently developed by Recipient
personnel without access to Confidential Information; (c) disclosed in good
faith to Recipient by a third party legally entitled to disclose the same; or
(d) which Recipient discloses under operation of law, rule or legal process;
provided, that (i) the burden shall be on Recipient to prove the applicability
--------
of one or more of the foregoing exceptions by documentary evidence should the
disclosing party question the applicability of such exceptions; (ii) as to
exception (b), Recipient makes known to the disclosing party within five (5)
days of receipt of information from the disclosing party that such information
was already known to Recipient and (iii) as to exception (d), Recipient provides
the disclosing party with prompt written notice of any request or legal
proceeding through which Recipient may be required to disclose such Confidential
Information.

     9.02. Transmission of Confidential Information.  Recipient agrees to
           ----------------------------------------
transmit Confidential Information only to those of its directors, officers,
employees, agents or other representatives who need access to the Confidential
Information for the purposes of this Agreement, and who are informed by
Recipient of the confidential nature of such Confidential Information, and who
agree to be bound by the terms of this Agreement or an agreement containing
substantially similar terms in regards to Confidential Information.  Recipient
further agrees to be responsible for any breach of this Agreement by any
director, officer, employee or other representative of Recipient.

     9.03. Return or Destruction of Confidential Information.  Recipient agrees
           -------------------------------------------------
that all Confidential Information disclosed to Recipient hereunder shall be and
remain the property of the disclosing party, unless otherwise agreed hereunder.
Any tangible form of such Confidential Information including, but not limited
to, documents, papers, computer diskettes and electronically transmitted
information shall be destroyed by Recipient or returned, together with all
copies thereof, to the disclosing party upon request.  If such tangible
<PAGE>

                                                                              17

form of Confidential Information is destroyed, a certification of such
destruction executed by a duly authorized officer of Recipient shall be
delivered to the disclosing party.

     9.04. Survival of Confidentiality Obligations.  Recipient's obligations
           ---------------------------------------
under this Article IX shall survive the termination of this Agreement,
regardless of the manner of such termination, and shall be binding upon its
successors and assigns.

     9.05. Publicity.  (a)  Each party agrees that it shall not make any public
           ---------
statement concerning the existence of this Agreement, the contemplated joint
development efforts, the intellectual property rights of either party relating
to the development of Interoperable Radios or statements regarding the
settlement of any patent or other disputes between the parties, without the
prior written consent of the other party.

     (b) The parties shall promptly issue a press release announcing this
Agreement, in the form attached hereto as Exhibit B.
                                          ---------

     (c) The parties hereby agree to cooperate with one another with regard to
any disclosures required by the Securities and Exchange Commission ("SEC") and
                                                                     ---
the FCC relating to this Agreement, and each shall afford the other party as
much advance notice as practicable for such party's review and comment prior to
the filing of such SEC or FCC disclosure document.

                                   ARTICLE X

                Warranty; Disclaimers; Limitation of Liability
                ----------------------------------------------

     10.01. Warranties.  Each party hereby represents and warrants to the other
            ----------
that (subject to agreements for Third Party Technology as set forth in Section
5.03):

            (a) it has the right and power to enter into this Agreement;

            (b) to the best of its knowledge, the information which it may
     disclose to the other party, and the process of disclosure and the use of
     such information in accordance with the provisions of this Agreement, will
     not violate any trade secret right, trademark, issued United States patent,
     copyright or other proprietary right of any third party; and

            (c)  it holds good title or right, free and clear of all liens and
     encumbrances, to technology or other information which it is providing
     under this Agreement.

In addition to the foregoing, each party warrants that its development efforts
relating to the Interoperability Technology shall be performed in accordance
with those standards of care, skill and diligence, and those practices and
procedures, which are commonly accepted in connection with the performance of
the same or similar services, and that any development work performed by such
party pursuant to this Agreement shall substantially conform to the
Specifications.
<PAGE>

                                                                              18

     10.02. DISCLAIMER.  EXCEPT AS SPECIFICALLY SET FORTH HEREIN, NEITHER PARTY
            ----------
MAKES ANY OTHER WARRANTY TO THE OTHER PARTY UNDER THIS AGREEMENT, EITHER
EXPRESS, IMPLIED, OR ARISING BY COURSE OF CONDUCT OR PERFORMANCE, CUSTOM OR
USAGE IN THE TRADE, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

     10.03 LIMITATION OF LIABILITY. EACH PARTY SHALL BE LIABLE TO THE OTHER IN
     ----- -----------------------
THE EVENT OF A MATERIAL BREACH OF THIS AGREEMENT IN AN AMOUNT EQUAL TO DIRECT
DAMAGES ACTUALLY SUFFERED BY THE OTHER PARTY.  EXCEPT FOR WILLFUL MISCONDUCT
AND/OR LACK OF GOOD FAITH, NEITHER  PARTY HEREUNDER SHALL BE LIABLE FOR ANY LOST
PROFITS, LOST SAVINGS, OR INCIDENTAL DAMAGES, OR OTHER ECONOMIC CONSEQUENTIAL
DAMAGES RESULTING FROM THIS AGREEMENT.  WHERE A PARTY IS LIABLE FOR
CONSEQUENTIAL DAMAGES UNDER THIS PROVISION, SUCH PARTY'S LIABILITY THEREFOR
SHALL NOT EXCEED $100 MILLION.

                                  ARTICLE XI

                        Establishment of Joint Venture
                        ------------------------------

     The parties contemplate that they may form a joint venture or limited
liability corporation ("JV") to pursue the development of the Interoperability
                        --
Technology.  If a JV is established, the parties agree that any agreements
between the parties relating to establishing the JV and/or addressing any of the
terms or conditions included in this Agreement shall supersede the terms of this
Agreement.  The parties anticipate that the JV may contract with the Consultant
to undertake the parties' activities pursuant to this Agreement to jointly
develop the Interoperability Technology, including preparing the RFP for third
parties and licensing the Interoperability Technology to third parties,
including, but not limited to, chipset manufacturers, OEM Automobile Partners,
Distribution Partners and Radio Manufacturing Partners.  The parties further
anticipate that all development and other costs of such JV will be split equally
between XM and Sirius.  In the event that the parties elect not to form such JV,
this Agreement shall continue in full force and effect.

                                  ARTICLE XII

                                  Termination
                                  -----------

     12.01. Termination Events.  Either party may terminate this Agreement upon
            ------------------
the occurrence of any of the following events:

           (a) the other party becomes the subject of a bankruptcy petition
     filed in a court in any jurisdiction, whether voluntary or involuntary,
     and, in the case of an involuntary proceeding, is not dismissed within 90
     days; or

           (b) a receiver or a trustee is appointed for all or a substantial
     portion of the other party's assets; or
<PAGE>

                                                                              19

           (c) the other party makes an assignment for the benefit of its
     creditors; or

           (d) Sirius Radio and XM agree in writing that the design and
     development of an Interoperable Receiver is technically impracticable; or

           (e) the other party fails to begin digital audio broadcasting for
     sale to consumers using the XM Radio System or the Sirius Radio System, as
     applicable, on or before June 30, 2002 and is not reasonably likely to
     commence such broadcasts on or before December 31, 2002; or

           (f) the other party or any of its subsidiaries defaults in the
     payment of principal of or premium, if any, on any indebtedness aggregating
     $25 million or more, when the same becomes due and payable, and such
     default or defaults shall have continued after any applicable grace period
     and shall not have been cured or waived; or

           (g) the other party fails to perform any material covenant or
     obligation contained in this Agreement, and such failure continues
     unremedied for a period of ninety days following receipt of written notice
     describing in reasonable detail such failure.

     12.02. Effects of Termination. Upon termination of this Agreement pursuant
            ----------------------
to Section 12.01, the licenses granted to each party pursuant to Section 5.01
shall survive such termination and each party shall continue to maintain joint
ownership rights in the Interoperability Technology; provided that if this
Agreement is terminated by a party pursuant to Section 12.01(g) prior to the
time that the value of the intellectual property licensed under Section 5.01
shall have been determined, either through negotiated agreement or decision of
an arbitrator, then the licenses granted to the other party under Section 5.01
shall terminate.

     12.03. Mutual Covenant Prior to Termination. Other than a party which has
            ------------------------------------
terminated this Agreement pursuant to Section 12.01(g), neither party shall take
any legal action, including, but not limited to, arbitration, that seeks to
enjoin the other party's use of any intellectual property rights which relate to
or are useful in a digital satellite radio system or any enhancements,
modifications, and derivative works thereof.

                                 ARTICLE XIII

                      Dispute Resolution and Arbitration
                      ----------------------------------

     13.01. Dispute Resolution.  The parties shall attempt to settle any
            ------------------
dispute between them amicably and agree to exercise their commercially
reasonable efforts to resolve such controversy or dispute prior to seeking an
arbitrated resolution.  To invoke the dispute resolution process, the invoking
party shall give to the other party written notice of its decision to do so,
including a description of the issues subject to the controversy or dispute and
a proposed resolution thereof. Designated representatives of both parties with
the closest responsibility for this Agreement shall attempt to resolve the
controversy or dispute within five business days after receipt of such notice.
If those designated representatives
<PAGE>

                                                                              20

cannot resolve the controversy or dispute, the parties shall describe their
controversy or dispute and their respective proposals for resolution to their
respective Chief Executive Officers or other designated persons with comparable
authority who shall meet in good faith to resolve the controversy or dispute.
Except as provided in Section 7.02, if any controversy or dispute is not
resolved within ten business days after such meeting, the parties shall seek a
resolution through arbitration as set forth in Section 13.02.

     13.02. Arbitration.  Any controversy or claim arising out of or relating
            -----------
to this Agreement shall be settled by arbitration in Washington, DC, by one or
more arbitrators, as mutually agreed by the parties, and such arbitrator(s) will
be persons with sufficient expertise to evaluate the subject of the dispute.  In
the event that the dispute relates to intellectual property, such arbitrators
shall have sufficient technical, engineering and legal knowledge to evaluate the
applicability, validity and value of the intellectual property that is the
subject of the dispute.  The arbitration shall be conducted in accordance with
the Expedited Arbitration Rules of JAMS/Endispute ("Expedited Rules").  In the
                                                    ---------------
event that the parties do not agree on the arbitrators, or other procedures or
standards concerning the arbitration, such choice of arbitrator(s) or other
procedures shall be determined under the Expedited Rules.  The award of the
arbitrator shall be binding upon the parties.  The arbitrator(s) shall be
entitled to award reasonable attorneys' fees and expenses to the prevailing
party.

                                  ARTICLE XIV

                                 Miscellaneous
                                 -------------

     14.01. Non-Solicitation.  During the term of this Agreement, and for a
            ----------------
period of twelve months following termination of this Agreement, neither party
shall, without the prior written consent of the other party, directly or
indirectly solicit for employment, employ or otherwise engage the services of
employees or individual consultants of the other party.

     14.02. Catastrophic Loss Backup.  XM and Sirius shall negotiate in good
            ------------------------
faith with respect to an agreement to provide service to the other's subscribers
in the event of a catastrophic failure of the XM Radio System or the Sirius
Radio System.

     14.03. Governing Law.  This Agreement shall be governed by, and
            -------------
interpreted in accordance with, the laws of the State of New York, without
giving effect to any provisions which would require the application of the laws
of another jurisdiction.

     14.04. Assignment.  Any assignment of this Agreement by either party
            ----------
(except to an entity controlling, controlled by or in common control with such
party) without the written consent of the other party shall be void.  Subject to
the foregoing, this Agreement will be binding upon and will inure to the benefit
of the respective successors and assigns of the parties.

     14.05. Entire Agreement.  This Agreement and all exhibits hereto shall
            ----------------
constitute the entire agreement between the parties with regard to the subject
matter of this Agreement and supersede all previous communications, whether oral
or written, between the parties with respect to such subject matter.  No
modification of any provision of this Agreement
<PAGE>

                                                                              21

shall be binding unless in writing and signed by duly authorized representatives
of XM and Sirius.

     14.06. Severability.  Each party agrees that, in the event any court shall
            ------------
determine that any provision of this Agreement is invalid, such determination
shall not affect the validity of any other provisions of this Agreement, which
shall remain in full force and effect and shall be construed so as to be valid
under applicable law only to the extent that such construction maintains the
economic balance of the parties under this Agreement.

     14.07. Waiver.  Each party agrees that no failure or delay by any party in
            ------
exercising any right, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof.

     14.08. Notices.  Any notice required or permitted to be sent under this
            -------
Agreement shall be sent by certified mail, overnight mail with receipt requested
or telefax with written confirmation to the following addresses:

               For XM:

               XM Satellite Radio Inc.
               1250 23rd Street, N.W.
               Washington, DC  20037
               Attention:  General Counsel
               Telecopier:  202-969-7050

               For Sirius:

               Sirius Satellite Radio Inc.
               1221 Avenue of the Americas
               36th Floor
               New York, New York  10020
               Attention:  General Counsel
               Telecopier:  212-584-5353

     14.09. Independent Parties. The parties hereto are independent parties, and
            -------------------
neither shall be liable for the performance or failure to perform of the other
party.

     14.10. Records and Audits.  Either party may, up to twice within any
            ------------------
twelve month period at such party's expense and upon five (5) days written
notice to the other party, hire an independent audit firm or other independent
representative reasonably acceptable to the other party ("Auditor"), to inspect
                                                          -------
or audit any or all of the other party's records solely relating to this
Agreement, for the purposes of verifying the other party's compliance with its
obligations hereunder.  Such Auditor shall not disclose any information relating
to the business of the other party other than that information required to
determine the other party's compliance, and in such event, only to those
employees, agents or representatives of the other party having a need-to-know
for the purpose of the verification.
<PAGE>

                                                                              22

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

Accepted by XM Satellite Radio Inc.     Accepted by Sirius Satellite Radio Inc.

By:                                             By:
    ---------------------------                     ---------------------------
    Name:                                           Name:
    Title:                                          Title:
<PAGE>

                                                                              23

                                   EXHIBIT A

                           STIPULATION OF DISMISSAL

James David Jacobs (JJ 7731)
Robert B. Davidson (RD 7158)
Jonathan S. Caplan (JC 1039)
BAKER & MCKENZIE
805 Third Avenue
New York, New York  10022
Tel.:  (212) 751-5700

Attorneys for Plaintiff
     Sirius Radio Inc.

Robert C. Morgan (RM 0245)
Mark H. Bloomberg (MB 5614)
FISH & NEAVE
1251 Avenue of the Americas, 50th Fl.
New York, New York  10020
Tel.:  (212) 596-9000

Attorneys for Defendant
     XM Satellite Radio, Inc.

                         UNITED STATES DISTRICT COURT
                     FOR THE SOUTHERN DISTRICT OF NEW YORK

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
SIRIUS RADIO INC.,          )
                              )
                  Plaintiff,  )      Civ. No. 99-0230 (LMM)
                              )
v.                            )
                              )
XM SATELLITE RADIO, INC.,     )
                              )
                  Defendant.  )
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

                           STIPULATION OF DISMISSAL
                           ------------------------
<PAGE>

                                                                              24

     Pursuant to Rule 41, Fed. R. Civ. P., Plaintiff Sirius Radio Inc. and
Defendant XM Satellite Radio, Inc., by their undersigned attorneys, stipulate
that this action be dismissed, without prejudice, each party bearing its own
costs and attorney fees.

Respectfully submitted,                  Respectfully submitted,

By_________________________              By_________________________
  James David Jacobs (JJ 7731)             Robert C. Morgan (RM 0245)
  Robert B. Davidson (RD 7158)             Mark H. Bloomberg (MB 5614)
  Jonathan S. Caplan (JC 1039)             FISH & NEAVE
  BAKER & MCKENZIE                         1251 Avenue of the Americas
  805 Third Avenue                         New York, New York  10020
  New York, New York  10022                Tel.:  (212) 596-9000
  Tel.:  (212) 751-5700

  Attorneys for Plaintiff,               Attorneys for Defendant,
  Sirius Radio Inc.                        XM Satellite Radio Inc.

Dated:_________________________          Dated:_________________________
<PAGE>

                                                                              25

                                   EXHIBIT B

                                 PRESS RELEASE

   PRESS RELEASE

   For Immediate Release

                Sirius Radio and XM Radio Form Alliance to Develop
                       Unified Standard for Satellite Radios

   New York, NY and Washington, DC -- February 16, 2000 -- Sirius
   Satellite Radio (Nasdaq: SIRI) and XM Satellite Radio (Nasdaq: XMSR) today
   announced an agreement to develop a unified standard for satellite radios.

   The standard is expected to accelerate growth of the satellite radio
   category by enabling consumers to purchase one radio capable of receiving
   both companies' broadcasts. XM Radio and Sirius will jointly fund development
   of the technology and work together to proliferate the new standard by
   creating a service mark for satellite radio. As part of the agreement, each
   company will contribute its intellectual property to the initiative and have
   agreed to resolve any pending patent litigation.

   "This standard is good news both for consumers and for the category," said
   David Margolese, Sirius Chairman and CEO, and High Panero, XM President and
   CEO, in a joint statement. "This will allow for reduced subscriber
   acquisition costs, more satellite radios in the marketplace, and a
   simplified choice for consumers."

   The unified standard will represent a second generation of satellite radios.
   At the time of the commercial launches of XM Radio and Sirius, consumers
   will be able to purchase radios capable of receiving one of the two
   companies' broadcasts. These radios are already being developed by leading
   electronics and automotive manufacturers. XM and Sirius will work with their
   existing automobile and radio manufacturing partners to integrate the new
   standard under the terms of their existing agreements. All future agreements
   with automakers and radio partners will specify the new satellite radio
   standard.

   XM Radio and Sirius are each building a digital satellite radio service for
   consumers, offering up to 100 channels of audio entertainment for a monthly
   subscription fee of $9.95. For more information about the companies, visit
   XM Satellite Radio at www.xmradio.com and Sirius Satellite Radio at
                         ---------------
   www.siriusradio.com.
   -------------------

                                          continues...

   Sirius Radio and XM Radio Form Alliance
   Page Two

   Any statements that express, or involve discussions as to, expectations,
beliefs, plans, objectives, assumptions, future events or performance with
respect to Sirius Satellite Radio Inc. or XM Satellite Radio Inc. are not
historical facts and may be forward-looking and, accordingly, such statements
involve estimates, assumptions and uncertainties which could cause actual
results to differ materially from those expressed in the forward-looking
statements. Accordingly, any such statements are qualified in their entirety by
reference to the factors discussed, as the case may be, in XM Satellite Radio
Inc.'s registration statement on Form S-1 (File No. 333-93529) filed with the
Securities and Exchange Commission or Sirius Satellite Radio Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1998, filed under the
company's former name, CD Radio Inc. Among the key factors that have a direct
bearing on the companies' results of operations are the potential risk of delay
in implementing the companies' business plans; increased costs of construction
and launch of necessary satellites; dependence on satellite construction and
launch contractors; dependence on third-party technology partners; risk of
launch failure; unproven market and unproven applications of existing
technology; unavailability of satellite radio receivers; and the companies' need
for additional financing.

                                ###############

For more information, please call:

Sirius Satellite Radio:                 XM Satellite Radio:
Mindy Kramer                            Vicki Stearn
212-584-5138                            202-969-7070

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