As filed with the Securities and Exchange Commission on August 10, 1999.

Registration No. 333-83619


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 1 TO

FORM S-1
REGISTRATION STATEMENT
Under the Securities Act of 1933
XM SATELLITE RADIO HOLDINGS INC.
(Exact name of registrant as specified in its charter)

    Delaware                     4899                   54-1878819
(State or other      (Primary Standard Industrial    (I.R.S. Employer
jurisdiction of      Classification Code Number)  Identification Number)
incorporation or
 organization)

1250 23rd Street, N.W., Suite 57
Washington, D.C. 20037-1100
(202) 969-7100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

Joseph M. Titlebaum
Senior Vice President, General
Counsel and Secretary
XM Satellite Radio Holdings Inc.
1250 23rd Street, N.W., Suite 57
Washington, D.C. 20037-1100
(202) 969-7100
(Name, address, including zip code, and telephone number, including area code,

                     of agent for service)
                        ---------------
                        With Copies To:

David B.H. Martin, Esq.                 Gregory A. Ezring, Esq.
Steven M. Kaufman, Esq.                     LATHAM & WATKINS
 HOGAN & HARTSON L.L.P.                     885 Third Avenue
 555 13th Street, N.W.                         Suite 1000
 Washington, D.C. 20004                 New York, New York 10022
     (202) 637-5600     ---------------      (212) 906-1200

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (as defined below), check the following box. [_] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_]


The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.



EXPLANATORY NOTE TO AMENDMENT NO. 1

This Amendment No. 1 to the XM Satellite Radio Holdings, Inc. Registration Statement on Form S-1 has been filed solely for the purpose of filing certain exhibits to the Registration Statement.


PART II INFORMATION NOT REQUIRED IN PROSPECTUS

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits.

Exhibit
  No.                                 Description
-------                               -----------
 1.1+   Underwriting Agreement.

 3.1+   Restated Certificate of Incorporation of XM Satellite Radio Holdings
         Inc.

 3.2+   Amended and Restated Bylaws of XM Satellite Radio Holdings Inc.

 4.1+   Form of Certificate for our Class A common stock.

 5.1+   Opinion of Hogan & Hartson L.L.P. with respect to the common stock
         being registered.

10.1    Shareholders' Agreement, dated as of July 7, 1999, by and among XM
         Satellite Radio Holdings Inc., American Mobile Satellite Corporation,
         Baron Asset Fund, Clear Channel Investments, Inc., Columbia XM Radio
         Partners, LLC, DIRECTV Enterprises, Inc., General Motors Corporation,
         Madison Dearborn Capital Partners III, L.P., Special Advisors Fund I,
         LLC, Madison Dearborn Special Equity III, L.P., and Telcom-XM
         Investors, L.L.C.

10.2    Registration Rights Agreement, dated July 7, 1999, by and among XM
         Satellite Radio Holdings Inc., American Mobile Satellite Corporation,
         the Baron Asset Fund series of Baron Asset Fund, and the holders of
         Series A subordinated convertible notes of XM Satellite Radio
         Holdings Inc.

10.3    Note Purchase Agreement, dated June 7, 1999, by and between XM
         Satellite Radio Holdings Inc., XM Satellite Radio Inc., Clear Channel
         Communications, Inc., DIRECTV Enterprises, Inc., General Motors
         Corporation, Telcom-XM Investors, L.L.C., Columbia XM Radio Partners,
         LLC, Madison Dearborn Capital Partners III, L.P., Madison Dearborn
         Special Equity III, L.P., and Special Advisors Fund I, LLC (including
         form of Series A subordinated convertible note of XM Satellite Radio
         Holdings Inc. attached as Exhibit A thereto).

10.4*   Technology Licensing Agreement by and among XM Satellite Radio Inc.,
         XM Satellite Radio Holdings Inc., WorldSpace Management Corporation
         and American Mobile Satellite Corporation, dated as of January 1,
         1998, amended by Amendment No. 1 to Technology Licensing Agreement,
         dated June 7, 1999.

10.5*   Technical Services Agreement between XM Satellite Radio Holdings Inc.
         and American Mobile Satellite Corporation, dated as of January 1,
         1998, as amended by Amendment No. 1 to Technical Services Agreement,
         dated June 7, 1998.

10.6*   Satellite Purchase Contract for In-Orbit Delivery, by and between XM
         Satellite Radio Inc. and Hughes Space and Communications
         International, Inc., dated       , 1999.

10.7+   Agreement by and between XM Satellite Radio, Inc. and
         STMicroelectronics Srl, dated November 2, 1998.

10.8*   Distribution Agreement, dated June 7, 1999, between OnStar, a division
         of General Motors Corporation, and XM Satellite Radio Inc.

10.9*   Operational Assistance Agreement, dated as of June 7, 1999, between XM
         Satellite Radio Inc. and DIRECTV, INC.

10.10*  Operational Assistance Agreement, dated as of June 7, 1999, between XM
         Satellite Radio Inc. and Clear Channel Communications, Inc.

10.11*  Operational Assistance Agreement, dated as of June 7, 1999, between XM
         Satellite Radio Inc. and TCM, LLC.

II-1


Exhibit
  No.                                 Description
-------                               -----------
10.12+  Agreement, dated as of     , 1999 between XM Satellite Radio Holdings
         Inc. and Gary Parsons.

10.13+  Employment Agreement, dated as of June 1, 1998, between XM Satellite
         Radio Holdings Inc. and Hugh Panero.

10.14+  Letter Agreement with Lee Abrams date May 22, 1998.

10.15+  Letter Agreement with Stelios Patsiokas dated September 14, 1998.

10.16+  Letter Agreement with Heinz Stubblefield dated May 22, 1998.

10.17   Form of Indemnification Agreement between XM Satellite Radio Holdings
         Inc. and each of its directors and executive officers.

10.18   1998 Shares Award Plan.

10.19   Form of Non-Qualified Stock Option Agreement.

21.1+   Subsidiaries of XM Satellite Radio Holdings Inc.

23.1+   Consent of Hogan & Hartson L.L.P. (contained in their opinion filed as
         Exhibit 5.1).

23.2++  Consent of KPMG LLP.

24.1    Powers of Attorney (included with signature page to registration
         statement).

27.1++  Financial Data Schedule.


++ Previously filed.
+ To be filed by amendment.
* Certain confidential portions of this Exhibit were omitted by means of redacting a portion of the text. This Exhibit has been filed separately with the Secretary of the Commission without such text pursuant to our Application Requesting Confidential Treatment under Rule 406 under the Securities Act.

(b) Financial Statement Schedules included separately in the Registration Statement.

II-2


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this Amended Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the District of Columbia, on the 9th day of August, 1999.

XM Satellite Radio Holdings Inc.

By: *

Name: Hugh Panero
Title: President and Chief
Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amended Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:

              Signature                          Title                   Date
              ---------                          -----                   ----

                  *                    President, Chief Executive   August 9, 1999
______________________________________  Officer, and Director
             Hugh Panero                (Principal Executive
                                        Officer)

                  *                    Senior Vice President and    August 9, 1999
______________________________________  Chief Financial Officer
          Heinz Stubblefield            (Principal Financial and
                                        Accounting Officer)

                  *                    Chairman of the Board of     August 9, 1999
______________________________________  Directors
           Gary M. Parsons

                  *                    Director                     August 9, 1999
______________________________________
           Randall T. Mays

                  *                    Director                     August 9, 1999
______________________________________
            Randy S. Segal

II-3


              Signature                          Title                   Date
              ---------                          -----                   ----

                  *                    Director                     August 9, 1999
______________________________________
              Jack Shaw

                  *                    Director                     August 9, 1999
______________________________________
          Dr. Rajendra Singh

                  *                    Director                     August 9, 1999
______________________________________
          Ronald L. Zarrella

       *By: Joseph M. Titlebaum
______________________________________
         Joseph M. Titlebaum
           Attorney-in-Fact

II-4



Exhibit 10.1

SHAREHOLDERS AGREEMENT

by and among

XM SATELLITE RADIO HOLDINGS INC.

AMERICAN MOBILE SATELLITE CORPORATION

BARON ASSET FUND

COLUMBIA XM RADIO PARTNERS, LLC

CLEAR CHANNEL INVESTMENTS, INC.

DIRECTV ENTERPRISES, INC.

GENERAL MOTORS CORPORATION

MADISON DEARBORN CAPITAL PARTNERS III, L.P.
MADISON DEARBORN SPECIAL EQUITY III

, L.P.

SPECIAL ADVISORS FUND I, LLC

and

TELCOM-XM INVESTORS, L.L.C.

Dated July 7, 1999


                               Table of Contents
                               -----------------

                                                             Page
                                                             ----

ARTICLE I. DEFINITIONS                                          3

 Section 1.1  Definitions                                       3

ARTICLE II. CONDUCT OF BUSINESS; NON-COMPETITION;
COOPERATION OF SHAREHOLDERS                                     8

 Section 2.1  Conduct of Business                               8
 Section 2.2  Non-Competition                                   8
 Section 2.3  Cooperation of Shareholders                       8

ARTICLE III. RESTRICTIONS ON TRANSFER
                     9

 Section 3.1  Initial Transfer Restrictions for Investors       9
 Section 3.2  Notice of Proposed Transfer                       9
 Section 3.3  Transfers and Assignment by American Mobile      10
 Section 3.4  Transfers and Assignment by Telcom, Columbia
              and Madison                                      11
 Section 3.5  Permitted Transfers                              11
 Section 3.6  Endorsement of Stock Certificates                11
 Section 3.7  Regulatory Approvals; Opinions                   12

ARTICLE IV. SHAREHOLDER DEBT AND RECAPITALIZATION AT PUBLIC
OFFERING                                                       13

 Section 4.1  Share and Debt Conversion                        13
 Section 4.2  Conversion of Class B Common Stock into Class A
              Common Stock                                     13
 Section 4.3  Submission of Proposal for Conversion to Public
              Stockholders                                     14

ARTICLE V. CORPORATE
GOVERNANCE; VOTING AGREEMENT              14

 Section 5.1  Board of Directors                               14
 Section 5.2  Observation Rights                               16
 Section 5.3  Removal of Directors                             17
 Section 5.4  Operational Involvement of Clear Channel,
              DIRECTV and the TCM Group                        17
 Section 5.5  Shareholder Actions                              17

ARTICLE VI. CERTAIN REPRESENTATIONS                            18

 Section 6.1  Existence and Power                              18
 Section 6.2  Due Authorization; No Contravention              18
 Section 6.3  Binding Effect                                   18


                                       2

ARTICLE VII. TAG-ALONG RIGHTS; RIGHT OF FIRST REFUSAL   18

 Section 7.1  Tag Along Rights                          18
 Section 7.2  Right of First Refusal                    19

ARTICLE VIII. MISCELLANEOUS                             20

 Section 8.1  Notices                                   20
 Section 8.2  Waiver and Amendment                      21
 Section 8.3  Specific Performance                      21
 Section 8.4  Governing Law                             21
 Section 8.5  Parties In Interest                       21
 Section 8.6  Severability of Provisions                22
 Sect
ion 8.7  Plural, Singular                          22
 Section 8.8  Counterparts                              22
 Section 8.9  Descriptive Headings                      22
 Section 8.10 Future Assurances                         22
 Section 8.11 Termination                               22

3

SHAREHOLDERS AGREEMENT

This Shareholders Agreement, dated as of July 7, 1999 ("Agreement"), is hereby entered into by and among XM Satellite Radio Holdings Inc., a corporation duly organized under the laws of the State of Delaware (the

"Company"), American Mobile Satellite Corporation, a corporation duly organized under the laws of the State of Delaware ("American Mobile"), the Baron Asset

Fund series ("Baron") of Baron Asset Fund, a business trust organized under the laws of the Commonwealth of Massachusetts, Clear Channel Investments, Inc., a corporation duly organized under the laws of the State of Nevada ("Clear Channel"), Columbia XM Radio Partners, LLC, a limited liability company duly organized under the laws of the State of Virginia ("Columbia"), DIRECTV Enterprises, Inc. a corporation duly organized under the laws of the State of Delaware ("DIRECTV"), General Motors Corporation, a corporation duly organized under the laws of the State of Delaware ("GM"), Madison Dearborn Capital


Partners III, L.P. ("Madison Capital"), Madison Dearborn Special Equity III, L.P. ("Madison Equity"), Special Advisors Fund I, LLC ("Madison Advisors" and, collectively with Madison Capital and Madison Equity, each an entity duly organized under the laws of the State of Delaware, "Madison") and TelcomXM Investors, L.L.C., a limited liability company duly organized under the laws of the State of Delaware ("Telcom"). Baron, Clear Channel, Columbia, DIRECTV, GM, Madison and Telcom are collectively referred to herein as the "Investors". The Company, American Mobi
le, and the Investors are collectively referred to herein as the "Parties".

WITNESSETH

WHEREAS, American Mobile is the holder of one hundred percent (100%) of the issued and outstanding shares of the Company's common stock;

WHEREAS, the Company owns one hundred percent (100%) of the issued and outstanding shares of common stock of XM Satellite Radio Inc. ("XM");

WHEREAS, XM holds a license awarded by the U.S. Federal Communications Commission (the "FCC") for the establishment of a Satellite Digital Audio Radio

Service ("SDARS") system in the United States;

WHEREAS, the Company desires to receive financing for capital expenditures and for working capital;

WHERE
AS, the Investors (other than Baron) have entered into a note purchase agreement with the Company (the "Note Purchase Agreement"), dated as of June 7, 1999, under which the Investors (other than Baron) shall purchase Series
A

Subordinated Convertible Notes due December 31, 2004 (each a "Series A Subordinated Convertible Note" and, collectively, the "Series A Subordinated
Convertible Notes"), on the terms and conditions described in the Note Purchase Agreement;

WHEREAS, pursuant to an exchange agreement dated as of June 7, 1999 (the "WSI Exchange Agreement"), WorldSpace has agreed to release any related security interest and to transfer to a trust created by WorldSpac e ("XM
Ventures") all of WorldSpace's right, title and interest in and to, except as noted below, all assets held by WorldSpace relating to the Company and XM (collectively, the "XM Interest"), including without limitation, the following:

(i) The Company's common stock held by WorldSpace;

(ii) That certain Convertible Note dated April 1, 1998 in the principal amount of $54,536,112 convertible into 62.3270 shares of the Company's Common Stock, and any interest accrued or capitalized with respect thereto;

(iii) The Bridge, Additional Amounts and Working Capital Loans issued by WorldSpace to the Company pursuant to the Bridge, Additional Amounts and Working Capital Facility dated as of May 16, 1997 among the Company, XM, American Mobile and WorldSpace, as amended by Amendment No. 1 to Bridge, Additional Amounts and Working Capital Credit Facility, and any inte rest accrued or capitalized with respect thereto, other than $75,000,000 aggregate principal and accrued interest thereunder which will be retained by WorldSpace and repaid and retired by the Company under the WSI Exchange Agreement;

(iv) Options to purchase (A) 97.2222 shares of the Company's Common Stock pursuant to the Bridge Option, (B) 128.8876 shares of the Company's Common Stock pursuant to the Additional Amounts Option, and (C) 3.5111 shares of the Company's Common Stock pursuant to the Working Capital Option, each of which is dated as of May 16, 1997 between the Company and WorldSpace; and

(v) The 80.9389 shares of XM common stock pledged under the Security Agreement, dated as of May 16, 1997 between the Company and WorldSpace; and

WHEREAS, pursuant to the WSI Exchange Agreement, XM Ventures has agreed to transfer the XM Interest to American Mobile;

WHEREAS, the Company, American Mobile, and each of the Investors believe it to be in the best interests of the Company, American Mobile, and the mutual

2

best interests of each of the Investors to set forth herein their agreements with respect to certain matters related to the ownership and corporate governance of the Company.

NOW, THEREFORE, in consideration for the mutual covenants contained herein, the adequacy, receipt, and sufficiency of which are hereby acknowledged, the undersigned hereby agree as follows:

ARTICLE I.

DEFINITIONS

Definitions. Capitalized terms not defined herein have the respective meanings ascribed to them in the Note Purchase Agreement.

(a) Accredited Investor: ha s the meaning specified in the Note Purchase Agreement.

(b) Affiliate: means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. For purposes of Sections 3.2, 3.5 and 7.1, a member of a limited liability company or a partner of a partnership shall be deemed an Affiliate of said company or partnership.

(c) Agreement: has the meaning specif ied in the Preamble.

(d) American Mobile: has the meaning specified in the Preamble.

(e) American Mobile Exchange Agreement: means the Exchange, Amendment and Recapitalization Agreement dated on or about the date hereof among American Mobile and the Company, providing for the restructuring of the investment of American Mobile in the Company.

(f) Baron: has the meaning specified in the Preamble.

(g) Board or Board of Directors: means the Board of Directors of the Company or a committee consisting of one or more directors lawfully exercising the powers of the Board.

(h) Business Day: means any day other than a Saturday, Sunday or any other
day on which commercial banks are authorized or required by law to be closed in New York City or the District of Columbia.

3

(i) Capital Stock: means any and all of the Company's shares, interests, warrants, options, rights to acquire equity or equity-linked securities of the Company, participations or other equivalents (however designated, whether voting or non-voting) in equity of the Company, whether now outstanding or issued subsequently hereto, including, without limitation, all series and classes of Common Stock and preferred stock of the Company, and all Convertible Securities, including any Series A Subordinated Convertible Note, Series A Convertible Preferred Stock, the New American Mobile Note and the $21 Million Notes.

(j) Change of Control: means a transfer of control of XM whi ch would
require approval by the FCC under any terms of XM's SDARS license.

(k) Charter Documents: has the meaning specified in Section 5.5(b).

(l) Class A Common Stock: means the Class A Common Stock, par value $0.01 per share, of the Company having one (1) vote per share.

(m) Class B Common Stock: means the Class B Common Stock, par value $0.01 per share, of the Company having three (3) votes per share.

(n) Class C Common Stock: means the Class C Common Stock, par value $0.01 per share, of the Company having zero (0) votes per share.

(o) Clear Channel: has the meaning specified in the Pr eamble.

(p) Clear Channel Operational Assistance Agreement: means the operational assistance agreement dated on or about June 7, 1999, between Clear Channel and the Company.

(q) Closing: means the consummation of the transactions contemplated by the Note Purchase Agreement, including the sale and purchase of the Series A Subordinated Convertible Notes.

(r) Columbia: has the meaning specified in the Preamble.

(s) Commencement of Commercial Operations: means the commencement of commercial operations of XM as publicly announced by it.

(t) Commission: means the Securities and Exchange Commission or any other


Federal agency at the time administering the Securities Act.

(u) Common Stock: means all classes and series of the common stock, $0.01 par value per share, of the Company, any stock into which such common stock shall have been changed or converted or any stock resulting from any capital reorganization or reclassification of such common stock, and all other stock of any class or classes (however designated) of the Company, the holders of which have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and

4

liquidating dividends after the payment of dividends and distributions of any shares entitled to preference.

(v) Common Stock Deemed Outstanding: means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock issuable upon the conversion, or exercise in full, of all Convertible Securities whether or not the Convertible Securities are convertible into or exercisable or exchangeable for Common Stock at such time.

(w) Company: has the meaning specified in the Preamble.

(x) Conversion Price: means $509,711, as such pric e may be adjusted
pursuant to the Note Purchase Agreement.

(y) Convertible Securities: means securities or obligations that are exercisable for, convertible into or exchangeable for shares of Common Stock. The term includes options, warrants or other rights to subscribe for or purchase Common Stock or to subscribe for or purchase other securities or obligations that are convertible into or exercisable or exchangeable for Common Stock, including, without limitation, the Series A Subordinated Convertible Notes, the Series A Convertible Preferred Stock, the $21 Million Notes and the New American Mobile Note.

(z) DBS: means direct broadcast satellite service.

(aa) DIRECTV: has the meaning specified in the Preamble.

(bb) DIRECTV Operational Assistance Agreement: means the operational assistance agreement dated on or about June 7, 1999 between DIRECTV and the Company.

(cc) Excluded Securities: means any (a) Common Stock or Convertible Securities outstanding as of the date hereof (as disclosed in the Note Purchase Agreement or the Private Placement Memorandum Supplement No. 1 dated as of July 1, 1999 delivered by the Company to each Investor), or issuable pursuant to the American Mobile Exchange Agreement or the WSI Exchange Agreement and any Common Stock issuable upon exercise of such Convertible Securities, (b) Common Stock or Convertible Securities issued under a Qualifying Stock Plan and (c) Common Stock or Convertible Securities issued to Persons who are not Affiliates of the Company as partial consideration for senior debt financing, equipment lease

financing or underwritten High Yield Debt financing pursuant to a registered public offering under the Securities Act or pursuant to Rule 144A thereunder.

(dd) FCC: has the meaning specified in the Recitals.

(ee) FCC Approval: means approval by the FCC of the transfer of control of the Company from American Mobile to a diffuse group of shareholders.

(ff) GM: has the meaning specified in the Preamble.

5

(gg) High Yield Debt: has the meaning specified in the Note Purchase Agreement.

(hh) Holders: means the Investors and American Mobile and their respective Permitted Transferees.

(ii) Initial Public Offering: means the closing of a firm commitment underwritten public offering of shares of Common Stock.

(jj) Investors: has the meaning specified in the Preamble and their Permitted Transferees.

(kk) January 15, 1999 Letter Agree ments: means, collectively, (i) that
certain letter agreement between American Mobile, Baron and WorldSpace and (ii) that certain letter agreement between American Mobile and WorldSpace, each such letter agreement dated as of January 15, 1999.

(ll) Madison: has the meaning specified in the Preamble.

(mm) Notice of Proposed Issuance: has the meaning specified in Section 7.

(nn) New American Mobile Note: means the convertible note issued by the Company to American Mobile on or about the date hereof pursuant to the American Mobile Exchange Agreement.

(oo) Note Purchase Agreement: has the meaning specified in the Preamble.

(pp) Offered Capital Stock: has the meaning specified in Section 7.

(qq) Participation Notice: has the meaning specified in Section 3.3(c).

(rr) Parties: has the meaning specified in the Preamble.

(ss) Permitted Transferees: means each transferee of any Capital Stock, with the transfer being made in compliance with the provisions of Article III hereof.

(tt) Person: means any individual, partnership, corporation, joint venture, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof.

(uu) Qualified Initial Public Offering: means an Initial Public Offering

which (a) raises not less than $100 million in gross proceeds and (b) for which the offering price of the securities offered thereby is at least (i) 125% of the Conversion Price if the offering occurs within six months of the Closing or (ii) 150% of the Conversion Price if the offering occurs more than six months after the Closing, unless the Company obtains Requisite Approval (as such term is defined in the Note Purchase Agreement) for a lower offering price or lower amount of funds raised at which the Series A Subordinated Convertible Notes may be automatically converted.

6

(vv) Qualified Institutional Buyer: has the meaning specified in the Note Purchase Agreement.

(ww) Qualifying Stock Plan: means, collectively, all approved stock incentive plans for employees, consultants and non-employee directors, provided that (i) issuances under a Qualifying Stock Plan do not exceed 10% in the aggregate of the shares of Common Stock Deemed Outstanding and (ii) such Qualifying Stock Plan has been approved by a compensation committee of the Board of Directors or the full Board of Directors, which, in either case, shall include at least one director designated by the Holders of the Series A
Subordinated Convertible Notes and which approval shall include the approval of such director so designated.

(xx) Registration Statement: means a registration statement filed with the Commission pursuant to the Securities Act.

(yy) Resale-Restriction Termination Date: has the meaning specified in Section 3.1

(zz) Right of First Refusal: means the rights granted to each Holder pursuant to Section 7.2 hereof.

(aaa) SDARS: has the meaning specified in the Recitals.

(bbb) Series A Convertible Preferred Stock: means the Series A Convertible Preferred Stock, par value $1.00 per share, of the Compan y having
zero (0) votes per share.

(ccc) Series A Subordinated Convertible Note: has the meaning specified in the Recitals.

(ddd) Securities Act: means the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

(eee) Subsidiary: means, with respect to any Person, any corporation, association or other business entity of which more than fifty percent (50%) of the voting power of the outstanding Capital Stock is owned, directly or indirectly, by such Person or one or other Subsidiaries of such Person.

(fff) TCM Group: means Columbia, Madison and Telcom collectively.

(ggg) Telcom: has the meaning specified in the Preamble.

(hhh) TCM: means TCM, LLC, a Delaware limited liability company.

(iii) TCM Operational Assistance Agreement: means the operational assistance agreement dated on or about the date hereof between TCM and the Company.

7

(jjj) Transfer Notice: has the meaning specified in Section 3.3(c)

(kkk) $21 Million Notes: means the convertible notes issued by the Company to American Mobile as of January 15, 1999.

(lll) Unallocated Portion: has the meaning specified in Section 3.3(c).

(mmm) WorldSpace: means WorldSpace, Inc., a Maryland corporation.

(nnn) WSI Exchange Agreement: has the meaning specified in the Recitals.

(ooo) XM Interest: has the meaning specified in the Recitals.

(ppp) XM Ventures: has the meaning specified in the Recitals.

ARTICLE II.

CONDUCT OF BUSINESS; NON-COMPETITION; COOPERATION OF
SHAREHOLDERS

Section 2.1 Conduct of Business. The Company shall act as the holding company for XM. XM and the Company shall, and American Mobile shall cause XM and the Company to, conduct their business in such manner as to comply with all applicable laws and regulations (including but not limited to the rules and regulations of the FCC).

Section 2.2 Non-Competition. American Mobile agrees not to compete with XM or the Company in the SDARS business in the United States for so long as American Mobile holds at least 5% of the Common Stock (assuming full conversion of all of American Mobile's holdings of Capital Stock which are convertible into Common Stock) and for a period of three years following the date on which American Mobile ceases to hold 5% of the Common Stock (assuming full conversion of all of American Mobile's holdings of Capital Stock which are convertible into Common Stock). Notwithstanding the foregoing, nothing contained herein shall limit American Mobile's rights to fulfill its obligations under law as a common carrier licensed by the FCC with respect to the selling of its capacity to third party resellers for any business purpose, including those which may compete with the business of XM and the Company.

Section 2.3 Cooperation of Shareholders. American M obile, the Company and the
Investors agree to work cooperatively in connection with the preservation, maintenance and any extension or renewal by XM of its SDARS license and to provide (and to cause the Company to provide), with reasonable promptness, such information as may be required or appropriate in accordance with FCC rules, regulations, and processes to preserve, maintain and extend or renew XM's SDARS license.

8

ARTICLE III.

RESTRICTIONS ON TRANSFER

Section 3.1 Initial Transfer Restrictions for Investors

Prior to the date which is one year after the later of the date of original issue of the Series A Subordinated Convertible Notes and the last date that the Company or any Affiliate of the Company was the owner of such Securities (or any predecessor thereto) (the "Resale-Restriction Termination Date"), each Investor, except for Baron, may transfer any shares of Capital Stock held by it only (i) to the Company, (ii) pursuant to a Registration Statement that has been declared effective under the Securities Act, (iii) for
so long as such Capital Stock is eligible for resale pursuant to Rule 144A under the Securities Act, to a person it reasonably believes is a Qualified Institutional Buyer that purchases for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the transfer is being made in reliance on Rule 144A under the Securities Act, (iv) pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act, (v) commencing only with the period which is six months after the date of the issuance of such Capital Stock, to an Accredited Investor purchasing for its own account or for the account of such an Accredited Investor, or (vi) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of its property or the property of any investor account or accounts be a t all times within its
or their control. The foregoing restrictions on resale will not apply subsequent to the Resale-Restriction Termination Date. If any resale or other transfer of any Capital Stock is proposed to be made pursuant to clause (v) above prior to the Resale-Restriction Termination Date, the transferor shall deliver a letter from the transferee to the Company in form and substance reasonably satisfactory to the Company, which shall provide, among other things, that the transferee is an Accredited Investor that is acquiring such Capital Stock for investment and not for resale or distribution in violation of the Securities Act. Each Investor acknowledges that the Company reserves the right prior to any offer, sale or other transfer of the Capital Stock pursuant to clauses, (iii), (iv), (v) or (vi) above to require the delivery to the Company of an opinion of counsel to the Investor, certifications and/or other information reasonably satisfactory to the Company.

Section 3.2 Notice of Propo
sed Transfer

(a) Until an Initial Public Offering, except for transfers to Affiliates permitted under this Agreement, each Holder of Capital Stock shall be required to furnish at least 30 days prior written notice to the Company of any proposed transfer of Capital Stock.

(b) During the 30-day period referred to in Section 3.2 (a), any proposed sale, assignment or transfer may be disallowed if the Board of Directors reasonably determines, and provides notice to such requesting Holder, that any such proposed sale, assignment or transfer to the proposed transferee would:

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(i) result in a sale, assignment or transfer to a competitor of the Company for SDARS service in the United States;

(ii) be reasonably likely to materially adversely affect the Company's prospects for obtaining from the FCC or other regulatory bodies any necessary licenses or consents for the Company's SDARS system; or

(iii) be reasonably likely to materially adversely affect the Company's ability or prospects for successfully implementing or operating its SDARS system.

(c) Upon any such disallowance by the Board of Directors of a proposed sale, assignment or transfer by a Holder pursuant to Section 3.2(b), counsel to the Company shall be available to discuss with such Holder the reasons for s uch disallowance.

Section 3.3 Transfers and Assignment by American Mobile

(a) Subject to the requirements of Article IV hereof, American Mobile shall not be permitted to transfer any of its shares of Capital Stock or other securities of the Company to any Person (except as contemplated in the January 15, 1999 Letter Agreements) until the earlier of (i) the Commencement of Commercial Operations, or (ii) one year after the closing of the Company's Initial Public Offering; provided that no shares of Class B Common Stock may be transferred at any time until such shares are converted to shares of Class A Common Stock.

(b) Notwithstanding Section 3.3(a) and subject to Section 3.5, American Mobile shall have the right to (i) assign or transfer its interest in the Company to any Person (1) if such Person is an Affiliate of American Mobile or
(2) if such Person owns 10% or more of the outstanding Common Stock of American Mobile (not including WorldSpace or any Affiliate of WorldSpace); provided that such assignment or transfer complies with applicable law and, in the case of an assignment or transfer to a 10% or more holder, American Mobile's right to effect such assignment or transfer shall be subject to the notice requirement of
Section 3.2(a), compliance with the provisions of Section 3.3(c) and Section 7.1 and any such assignment or transfer may be subject to disallowance pursuant to
Section 3.2(b), and (ii) pledge or hypothecate, in connection with its customary bona fide financing arrangements (including under its current guaranteed bank facilities),Capital Stock and any other interest in the Company.

(c) In the event that American Mobile proposes to transfer all or a portion of its interest in the Company in accordance with Section 3.3(b)(i)(2) hereof to a Person who is not an Affiliate, American Mobile will provide notice thereof (including the propos ed terms thereof) (the "Transfer Notice"), at least ten
(10) Business Days prior to the proposed transfer, to each Investor (other than Baron), whereupon each Investor (other than Baron) shall have the right to purchase, at the same price and upon the same material terms and conditions set forth in the Transfer Notice, a pro rata portion of such interest based upon such Investor's portion of the Common Stock Deemed Outstanding held by all Investors other than Baron. Each Investor desiring to participate in such purchase

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shall provide American Mobile and each other Investor notice of its agreement to participate (the "Participation Notice") within ten (10) Business Days of receipt of the Transfer Notice with respect to its pro rata portion of the proposed transfer. In the event that one or more of the other Investors does not provide a timely Participation Notice, whether and to the extent to which such Investor would acquire any remaining, unallocated portion of the proposed transfer (the "Unallocated Portion"), the Unallocated Portion shall be allocated in pro rata proportion to the Convertible Securities (or secu rities
into which such Convertible Securities had been converted) held by each of the Investors who submits a Participation Notice to the extent of such Investor's indicated willingness to acquire any Unallocated Portion as provided in such Investors' Participation Notice.

Section 3.4 Transfers and Assignment by Telcom, Columbia and Madison. Prior to the Company's Initial Public Offering, none of Telcom, Columbia or Madison shall transfer (including transfer to an Affiliate) any of their shares of Common Stock, or other securities of the Company, to (i) any Person who, directly or indirectly, derives 20% or more of its gross revenues from radio, television or outdoor media or (ii) any Person who, directly or indirectly, then provides, distributes or markets DBS services or who is then known to the proposed transferor to be actively planning such activities.

Section 3.5 Permitted Transfers

(a) No
twithstanding the restrictions on transfer set forth elsewhere in this Article III (other than Section 3.4, Section 3.6 and Section 3.7), each Investor shall have the right to transfer or assign its holdings of Capital Stock to an Affiliate of such Investor, and each Investor shall be able to pledge or hypothecate, in connection with bona fide financing arrangements, its Capital Stock and any other interest in the Company; provided, however that no transfer to an Affiliate shall be effective if the purpose or intent of such transfer is to circumvent the restrictions on transfers to non-Affiliates set forth herein.

(b) Transfers and encumbrances of Capital Stock may only be made in strict compliance with all applicable terms of this Agreement. Any purported transfer or encumbrance of Capital Stock that does not so comply with all applicable provisions of this Agreement shall be void and ineffective and the Company shall not recognize nor be bound by any such purported transfer or encumbrance and any such purported transfer shall have no effect on the stock transfer books of the Company.

(c) Any assignment or transfer of an interest in the Company pursuant to the terms of this Agreement, other than in a public offering of the Company's Common Stock or an offering pursuant to Rule 144 or 145 under the Securities Act, shall be subject to the assumption by the transferee of the terms and conditions set forth in this Agreement applicable to the transferor.

Section 3.6 Endorsement of Stock Certificates. Conformed copies of this Agreement shall be filed with the secretary of the Company and kept with the records of the Company at its principal office. Until such time that the Company, based on an opinion of counsel, shall

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have determined otherwise, an officer of the Company shall endorse each certificate representing the Capital Stock heretofore or hereafter issued by the Company to any Holder by causing to be placed on the back thereof the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE THE SUBJECT OF A

CERTAIN SHAREHOLDERS AGREEMENT WHICH, AMONG OTHER THINGS, CONTAINS RESTRICTIONS ON THE TRANSFER OF SUCH SECURITIES. A COPY OF THE SHAREHOLDERS AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY.

Upon registration of any Capital Stock under the Securities Act, the Company shall remove such legend from the certificate(s) representing such Capital Stock promptly upon request of the Holder thereof and delivery of such certificate(s) to the Company.

The Company shall, upon presentation of a certificate representing shares of the Company's Capital Stock with respect to which one or both of the foregoing restrictions have expired or are not applicable, together with such evidence (including, when such an opinion would customarily be required by the Company of its stockholders, an opinion of counsel obtained at the Holder's expense and reasonably satisfactory
to the Company) of such lapse or
nonapplicability as the Company would reasonably request of stockholders who are similarly situated, promptly cause to be issued a replacement certificate for such shares of the Company's Capital Stock without the applicable restrictive legend.

Section 3.7 Regulatory Approvals; Opinions

(a) To the extent that any regulatory approval, notification or other submission or procedure is required or customarily provided in connection with the exercise of any right or obligations as set forth in this Agreement with respect to the transfer or assignment of Capital Stock (including, but not limited to, FCC approvals (if required) and applicable

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securities laws), such transfer or assignment of Capital Stock pursuant to this Agreement will be delayed and will only take place after such approval, notification or other submission or procedure has been obtained, submitted or completed.

(b) Prior to the transfer of any Capital Stock, the Company at its option may require an opinion of counsel reasonably satisfactory to the Company to the effect that such transfer is in compliance with, or exempt from, the registration requirements of the Securities Act.

ARTICLE IV.

SHAREHOLDER DEBT AND RECAPITALIZATION AT PUBLIC OFFERING

Section 4.1
Share and Debt Conversion. On the completion of an Initial Public Offering, American Mobile shall convert the New American Mobile Note and all other instruments of indebtedness issued to American Mobile pursuant to the American Mobile Exchange Agreement and the WSI Exchange Agreement and all interest accrued thereon into shares of Class B Common Stock, in accordance with the terms and conditions of such instruments, and the Holder of the $21 Million Notes shall convert the $21 Million Notes and all interest accrued thereon into shares of Class B Common Stock, in accordance with the terms and conditions of such notes.

Section 4.2 Conversion of Class B Common Stock into Class A Common Stock. Following the earlier to occur of (a) completion of the Company's Initial Public Offering, or (b) January 1, 2002, and either (i) at the discretion of American Mobile or (ii) at the direction of the holders of a majority of the shares of
Common Stock Deemed Outstanding (excluding any shares held by American Mobile and its Affiliates other than Baron, GM, Hughes or DIRECTV), which majority, if the Company has then completed an Initial Public Offering, shall include at least 20% of the public holders of Class A Common Stock, American Mobile shall convert all of its shares of Class B Common Stock into shares of Class A Common Stock, upon the receipt of FCC Approval; provided that American Mobile shall not be obligated to convert any shares of Class B Common Stock into shares of Class A Common Stock if such conversion, together with the conversion of all Convertible Securities the Company reasonably believes would be converted at such time, would not result in a Change of Control. The conversion rate shall be one share of Class B Common Stock for each share of Class A Common Stock, subject to adjustment in connection with any stock split, dividend or comb
ination or similar event involving the Common Stock; provided that no such adjustment shall be made for shares of Common Stock issued pursuant to a Qualifying Stock Plan. Each of American Mobile, the Company and the Investors hereby agrees to prepare and file any and all applications, and furnish any information, required by applicable FCC rules and policies in order to obtain the FCC Approval and shall agree to use all reasonable commercial efforts in order to obtain the FCC Approval.

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Section 4.3 Submission of Proposal for Conversion to Public Stockholders. At the direction of two (2) of the three (3) members of the Board of Directors designated by the Investors (other than Baron) pursuant to Section 5.1, the Company will insert into any proxy statement scheduled by the Company to be delivered to the holders of Class A Common Stock appropriate material to provide such holders of Class A Common Stock with the opportunity to vote to direct the Company to cause American Mobile to convert its shares of Class B Common Stock into shares of Class A Common Stock.

ARTICLE V.

CORPORATE GOVERNANCE; VOTING AGREEMENT

Section 5.1 Board of Directors.

(a) From the date hereof until the completion of the Company's Initial Public Offering, the Board of Directors and the boards of directors of XM and any other material subsidiary, (collectively, the "Boards of Directors") shall consist of seven (7) members (unless the constitution of the board of directors of any material subsidiary other than XM shall be otherwise approved by unanimous vote of the members of the Board of Directors designated, pursuant to this Section 5.1, by the Holders of Series A Subordinated Convertible Notes (or the holders of securities into which such Series A Convertible Notes may be converted), of whom:

(i) three (3) members shall be designated by the Holders of Series A Subordinated Convertible Notes (or the holders of securities into which such Series A Convertible Note s may be converted), (x) one (1) of whom shall be a designee of Clear Channel, (y) one (1) of whom shall be a designee of GM or DIRECTV, as those two Parties may agree, and (z) one (1) of whom shall be a designee of a majority in interest of the TCM Group; and

(ii) four (4) members shall be designated by American Mobile, who shall include (x) the Chairman and (y) the President and CEO of the Company (who shall be selected by American Mobile).

(b) Following the completion of the Company's Initial Public Offering but prior to the receipt of FCC Approval, the Boards of Directors shall consist of nine (9) members, of whom:

(i) three (3) members shall be designated by the Holders of Series A Subordinated Convertible Notes (or the holders of securities into which such Series A Subordinated Convertible Notes may be converted), (x) one (1) of whom shall be a designee of Clear Channel, (y) one (1) of whom shall be a designee of GM or DIRECT V, as those two Parties may agree, and (z) one
(1) of whom shall be a designee of a majority in interest of the TCM Group;

(ii) four (4) members shall be designated by American Mobile, who shall include (x) the Chairman and (y) the President and the CEO of the Company (who shall be selected by American Mobile); and

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(iii) two (2) of whom shall be independent directors of recognized industry expertise and stature, of whom (x) one (1) member shall be approved by American Mobile and (y) the other of whom shall be approved by the Investors who hold a majority of the Common Stock Deemed Outstanding (excluding Baron) held by Investors (excluding Baron).

(c) Following the completion of the Company's Initial Public Offering and upon receipt of the FCC Approval, the Boards of Directors shall consist of nine
(9) members, of whom:

(i) three (3) members shall be designated by the Holders of Series A Subordinated Convertible Notes (or the holders of the securities into which such Series A Subordinated Convertible Notes may be converted), (x) one (1) of whom shall be a designee of Clear Channel, (y) one (1) of whom shall be a designee of GM or DIRECTV, as those two Parties may agree, and (z) one
(1) of whom shall be a designee of a majority in interest of the TCM Group;

(ii) three (3) members shall be designated by American Mobile;

(iii) one (1) member shall be the President and CEO of the Company; and

(iv) two (2) members shall be independent directors of recognized industry expertise and stature both of whom shall be approved by American Mobile and the Investors who hold a majority of the Common Stock Deemed Outstanding (excluding Baron) held by Investors (excluding Baron).

(d) Each Holder agrees to vote its Common Stock in favor of the persons nominated in accordance with the provisions herein. The rights of each of (i) Clear Channel, (ii) GM or DIRECTV, and (iii) the TCM Group to designate a director and, if applicable, approve the appointment of independent directors pursuant to this Section 5.1 shall continue for so long as such Party (or GM and DIRECTV together) holds (A) in excess of 5% of the Common Stock Deemed Outstanding or (B) the full amount of such Party's original investment in the Company (whether or not converted into shares of Series A Convertible Preferred Stock, if applicable, or Class A Common Stock). Similarly, following the Company's receipt of FCC Approval, the right of American Mobile to designate directors and approve the appointment of independent directors pursuant to this
Section 5.1 shall continue for so long as American Mobile holds (A) in excess of 15% of the Common Stock Deemed Outstanding or (B) the full amount of American Mobile's investment in the Company on the date of this Agreement excluding the portion of its investment contemplated in the January 15 Letter Agreements (whether or not converted into shares of Class A Common Stock) (the "Initial AMSC Investment"); provided that, if American Mobile holds less than 15% of the Common Stock Deemed Outstanding and less than the Initial AMSC Investment, (x) American Mobile shall be entitled to designate two (2) directors (pursuant to
Section 5.1(a)(ii) and (c)(ii)) and approve the appointment of two (2) independent directors (pursuant to Section 5.1(c)(iv)) for so long as American Mobile owns Capital Stock in excess of 10% of the

15

Common Stock Deemed Outstanding, and (y) American Mobile shall be entitled to designate one (1) director (pursuant to Section 5.1(a)(ii) and (c)(ii)) and approve the appointment of two (2) independent directors (pursuant to Section 5.1(c)(iv)) for so long as American Mobile owns excess of 5% of the Common Stock Deemed Outstanding.

(e) The right of each Investor to designate a director pursuant to Sections 5.1(a)(i), 5.1(b)(i) and 5.1(c)(i) also shall terminate, and any director designated by such Investor shall promptly resign from the Boards of Directors:

(i) in the case of Clear Channel, if a majority of the ownership interests of Clear Channel cease to be owned, directly or indirectly, by Clear Channel Communications, Inc.;

(ii) in the case of DIRECTV, if a majority of the ownership interests of DIRECTV cease to be owned, directly or indirectly, by DIRECTV, Inc. (provided that the loss of DIRECTV's right to designate directors shall not affect GM's rights under this Section 5.1); and

(iii) in the case of the TCM Group, if a majority of the ownership interests of both Telcom and Columbia cease to be owned, directly or indirectly, by Telcom Ventures, L.L.C. and the existing members of Columbia (one of which is Columbia Capital, LLC).

Section 5.2 Observation Rights.

(a) Following the Closing and for such time as GM and DIRECTV (i) continue to hold, in the aggregate, in excess of 5% of the Common Stock Deemed Outstanding, or (ii) each retains the full amount of its original investment in the Company (whether or not converted into shares of Series A Convertible Preferred Stock or Class A Common Stock), GM or DIRECTV shall be al lowed one observer at Board of Directors meetings to represent whichever company does not designate a member of the Board of Directors at that time.

(b) Following the Closing and for such time as any of Telcom, Columbia and Madison (i) continues to hold, in the aggregate, in excess of 5% of the Common Stock Deemed Outstanding , or (ii) such Investor retains the full amount of its original investment in the Company, such Investor shall be allowed to have an observer at Board of Directors meetings so long as such company(ies) does not have an Affiliate serving as a member of the Board of Directors at that time.

(c) Following the Closing and for such time as Clear Channel (i) continues to hold in excess of 5% of the Common Stock Deemed Outstanding, or (ii) retains the full

16

amount of its original investment in the Company, Clear Channel shall be allowed an observer at Board of Directors meetings.

Section 5.3 Removal of Directors. American Mobile and the Investors agree to vote so that each member of the Board of Directors nominated or designated in accordance with Section 5.1 shall serve as a director of the Company until removed, upon the instructions of the Party designating such director, and each Party agrees to vote its shares of Common Stock in accordance with such directions. To the extent permitted by law, American Mobile and each Investor agree not to take any action to remove or replace, with or without cause, any director of the Company that has not been designated for removal or replacement
by the Party having originally nominated or designated such director.

Section 5.4 Operational Involvement of Clear Channel, DIRECTV and the TCM Group.

(a) Following the Closing and for such time as Clear Channel (i) continues to hold in excess of 5% of the Common Stock Deemed Outstanding, or (ii) retains the full amount of its original investment in the Company, the Company agrees that Clear Channel shall have operational rights and involvement as set forth in the Clear Channel Operational Assistance Agreement, provided that such rights and involvement shall terminate if Clear Channel ceases to be a wholly-owned subsidiary of Clear Channel Communications, Inc.

(b) Following the Closing and for such time as DIRECTV (i) continues to hold in excess of 5% of the Common Stock Deemed Outstanding, or (ii) retains the full amount of its original investment in the Company (whether or not converted into shares of Series A Convertible Preferred Stock or Class A Common Stock), the Company agrees that DIRECTV shall have operational rights and involvement as set forth in the DIRECTV Operational Assistance Agreement.

(c) Following the Closing and for such time as Telcom, Columbia and Madison
(i) continue to hold, in the aggregate, in excess of 5% of the Common Stock Deemed Outstanding, or (ii) each retains the full amount of its original investment in the Company, the Company agrees that the TCM Group shall have operational rights and involvement as set forth in the TCM Operational Assistance Agreement.

Section 5.5 Shareholder Actions.

(a) Each Party acknowledges that the Company's bylaws provide for certain notice, quorum and voting requirements for actions taken thereby to be valid and agrees not to take any action inconsistent with such provisions.

(b) Each Party shall at all times take all actions necessary (i) to give effect to the terms and conditions of this Agreement and (ii) to ensure that the certificate of incorporation and bylaws of the Company (the "Charter Documents") do not, at any time, conflict with the provisions of this Agreement, and hereby agrees to make or authorize any amendments to the Charter Documents that may hereafter be required to give effect to this Agreement.

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(c) In the event of any conflict between the terms of this Agreement and the bylaws of the Company, the terms of this Agreement shall prevail.

ARTICLE VI.

CERTAIN REPRESENTATIONS

Each Party hereby represents and warrants on behalf of itself to each other Party that:

Section 6.1 Existence and Power.

(a) It is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of formation;

(b) It has the power and authority to own its assets, carry on its business and execute, deliver, and perfo rm its obligations under this Agreement; and

(c) It is duly qualified to do business and is licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification or license.

Section 6.2 Due Authorization; No Contravention. The execution, delivery and performance by it of this Agreement have been duly authorized by all necessary action, and do not and will not:

(a) Breach or violate the terms of its certificate of incorporation (or similar constituent document) or bylaws (or similar constituent document);

(b) Breach or violate the terms of any material agreement to which it is party; or

(c) Violate any law or regulation applicable to it, including but not limited to the rules and regulations promulgated from time to time by the FCC.

Section 6.3 Binding Effect. This Agreement has been duly authorized,


executed and delivered by it and constitutes the legal, valid and binding obligation of it enforceable against it in accordance with the terms hereof, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

ARTICLE VII.

TAG-ALONG RIGHTS; RIGHT OF FIRST REFUSAL

Section 7.1 Tag Along Rights. Prior to a Qualified Initial Public Offering, each Holder of Convertible Securities (and/or the Holders of securities into which such Convertible Securities may be converted), other than Baron, shall have the right to participate in any

18

sale or transfer (without paying any portion of the transaction costs associated with such sale except for their own legal expense and selling commission), in one transaction or in a series of transactions, to any Person not an Affiliate of such transferor, of Capital Stock (including the Series A Subordinated Convertible Notes) representing, at the time of such sale, more than 5% of the Common Stock Deemed Outstanding, such participation to be shared pro rata with each other Holder of Convertible Securities desiring to participate and/or the Holders of securities into which such Convertible Securities may be converted.

Section 7.2 Right of First Refusal. Prior to a Qualified Initial Public Offering, the Company shall
only issue Capital Stock in accordance with the following terms:

(a) The Company shall not issue any Capital Stock unless it first delivers to each Holder of Convertible Securities (or the Holders of securities into which such Convertible Securities may be converted) (each such Person being referred to in this Section 7 as a "Buyer") a written notice (the "Notice of Proposed Issuance") specifying the type and total number of such shares of Capital Stock that the Company then intends to issue (the "Offered Capital Stock"), all of the material terms, including the price upon which the Company proposes to issue the Offered Capital Stock and stating that the Buyers shall have the right to purchase the Offered Capital Stock in the manner specified in this Section 7.2(a) for the s
ame price per share and in accordance with the same terms and conditions specified in such Notice of Proposed Issuance.

(b) During the thirty (30) consecutive day period commencing on the date the Company delivers to all of the Buyers the Notice of Proposed Issuance (the

"Thirty Day Period"), the Buyers shall have the option to purchase all of the Offered Capital Stock at the same price per share and upon the same terms and conditions specified in the Notice of Proposed Issuance. Each Buyer electing to purchase Offered Capital Stock must give written notice of its election to the Company prior to the expiration of the Thirty Day Period. If the Offered Capital Stock is being offered as part of an investment unit together with debt or other instruments, any election by a Buyer to purchase Offered Capital Stock shall also constitute an electi
on to purchase a like portion of such debt or other instruments.

(c) Each Buyer shall have the right to purchase that number of shares of the Offered Capital Stock as shall be equal to the number of shares of the Offered Capital Stock multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock then held by such Buyer plus all shares of Common Stock issuable upon conversion of all Convertible Securities then held by such Buyer and the denominator of which shall be the aggregate number of shares of Common Stock Deemed Outstanding. The amount of such Offered Capital Stock that each Buyer is entitled to purchase under this Section 7 shall be referred to as its "Proportionate Share."

(d) Each Buyer shall have a right of oversubscription such that if any other Buyer fails to elect to purchase his or its full Proportionate Share of the Offered Capital Stock, the other Buyer(s) shall, among them, have the right to purchase up to the balance of such Offered Capital Stock not so purchased. The Buyers may exercise such right of oversubscription by electing to purchase more than their Proportionate Share of the

19

Offered Capital Stock by so indicating in their written notice given during the Thirty Day Period. If, as a result thereof, such oversubscription elections exceed the total number of the Offered Capital Stock available in respect to such oversubscription privilege, the oversubscribing Buyers shall be cut back with respect to oversubscriptions on a pro rata basis in accordance with their respective Proportionate Share or as they may otherwise agree among themselves.

(e) If all of the Offered Capital Stock has not been purchased by the Buyers pursuant to the foregoing provisions, then the Company shall have the right, until the expiration of one-hundred eighty (180) consecutive days commencing on the first day immediately following the expiration of t he Thirty Day Period, to issue the Offered Capital Stock not purchased by the Buyers at not less than, and on terms no more favorable in any material respect to the purchaser(s) thereof than, the price and terms specified in the Notice of Proposed Issuance. If such remaining Offered Capital Stock is not issued within such period and at such price and on such terms, the right to issue in accordance with the Notice of Proposed Issuance shall expire and the provisions of this Agreement shall continue to be applicable to the Offered Capital Stock.

(f) The Company may proceed with the issuance of Capital Stock without first following the foregoing procedures provided that (i) the purchaser of such Capital Stock agrees in writing to be bound by this Section 7, and (ii) within ten (10) days following the issuance of such Capital Stock, the Company or the purchaser of the Capital Stock undertakes steps substantially similar to those described above to offer to all Buyers the right to purchase f rom such purchaser or from the Company such amount of such Capital Stock at the same price and terms applicable to the purchaser's purchase thereof as is necessary to provide the Buyers with substantially the same antidilution protection offered by this Section 7 as if the procedures set forth above had been followed prior to the issuance of such Capital Stock.

(g) Notwithstanding the foregoing, the Right of First Refusal described in this Section 7 shall not apply with respect to the issuance of Excluded Securities.

ARTICLE VIII.

MISCELLANEOUS

Section 8.1 Notices. Except as otherwise provided in this Agreement, notices and other communications under this Agreement shall be in writing and shall be deemed properly served if: (i) mailed by registered or certified mail, return receipt requested, (ii) delivered by a re cognized overnight courier service,
(iii) delivered personally, or (iv) sent by facsimile transmission addressed to each Party at its address for notices specified on Schedule I attached hereto, or at such other address, or to the attention of such officer, as any Party shall have furnished to each other Party in writing pursuant to this Section
8.1. Such notice shall be deemed to have been received: (i) three (3) Business Days after the date of mailing if sent by certified or registered mail, (ii) one
(1) Business Day after the date of delivery if sent by overnight courier,
(iii) the date of delivery if personally

20

delivered, or (iv) the next succeeding Business Day after transmission by facsimile with confirmation of receipt.

Section 8.2 Waiver and Amendment. Any term of this Agreement may be amended, and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of (a) the Company, (b) American Mobile and (c) Investors (other than Baron) holding, (i) in the case of amendments to or waivers of provisions of this Agreement generally, eighty-one percent (81%) of the aggregate of the Common Stock Deemed Outstanding held by Investors (other than Baron), and (ii) in the case of any other non-material change or technica l
correction of this Agreement, a majority of the aggregate of the Common Stock Deemed Outstanding held by Investors (other than Baron); provided that no Investor's rights, preferences or obligations hereunder may be materially adversely modified without the consent of such Investor unless the rights, preferences or obligations hereunder of each other Investor is modified in a substantially equivalent manner. Any amendment or waiver effected in accordance with this Section 8.2 shall be binding upon each future Holder and the Company.

Section 8.3 Specific Performance. Each Party acknowledges (i) that it will be impossible to measure in money the damage to each other Party if any of them or any legal representative of any Party fails to comply with any of the provisions of this Agreement, (ii) that every such provision is material, and (iii) that in the event of any such failure, the Company and the Investors will not have an adequate remedy at law or in damages. Accordi ngly, each Party hereto consents to
the issuance of an injunction or the enforcement of other equitable remedies against it at the suit of an aggrieved Party without the posting of any bond or other security, to compel specific performance of all of the terms hereof and to prevent any disposition of shares of Capital Stock in contravention of any terms of this Agreement, and waives any defense thereto, including, without limitation, the defenses of (i) failure of consideration, (ii) breach of any other provision of this Agreement and (iii) availability or relief in damages.

Section 8.4 GOVERNING LAW.THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PROVISIONS THEREOF.

EACH OF THE PARTIES ACKNOWLEDGES THAT (i) IT IS A KNOWLEDGEABLE, INFORMED, SOPHISTICATED BUSINESS ENTITY CAPABLE OF UNDERSTANDING AND EVALUATING THE PROVISIONS SET FORTH IN THIS AGREEMENT, INCLUDING THIS SE CTION 8.4, AND
(ii) IT HAS BEEN REPRESENTED BY SUCH COUNSEL AND OTHER ADVISORS OF ITS CHOOSING AS IT HAS DEEMED APPROPRIATE IN CONNECTION WITH ITS DECISION TO ENTER INTO THIS AGREEMENT.

Section 8.5 Parties In Interest. This Agreement shall be binding upon and shall inure to the benefit of each Party and their respective successors and assigns as provided for herein, and by their signatures hereto, and each Party intends to and does hereby become bound.

21

Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any Person other than the Parties hereto and their respective successors and assigns any legal or equitable right, remedy or claim under or in or in respect of this Agreement or any provision herein contained.

Section 8.6 Severability of Provisions. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

Section 8.7 Plural, Singular. When used herein, the singular of each term include
s the plural and the plural of each term includes the singular.

Section 8.8 Counterparts. This Agreement may be executed in any number of counterparts all of which taken together shall constitute one agreement and any Party hereto may execute this Agreement by signing any such counterpart.

Section 8.9 Descriptive Headings: The descriptive headings of the several sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

Section 8.10 Future Assurances. Each Party shall execute and deliver all such future instruments and take such other and further action as may be reasonably necessary or appropriate to carry out the provisions of this Agreement and the intention of the Parties as expressed herein.

Section 8.11 Termination. This Agreement shall be immediately terminated upon any of the following: (i) the unanimous written consent to t he termination
hereof by the Parties hereto, (ii) the dissolution, bankruptcy or receivership of the Company, or (iii) at such time as only one (1) Holder remains a Party hereto.

22

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly signed as of the date first above written.

XM SATELLITE RADIO HOLDINGS INC.                                AMERICAN MOBILE SATELLITE CORPORATION

        /s/ Hugh Panero                                                 /s/ Gary M. Parsons
By:  _______________________________________________            By:  ________________________________
Name: Hugh Panero                                               Name: Gary M. Parsons
Title: President & CEO                                          Title: Chairman of the Board of Directors

BARON ASSET FUND                                                CLE
AR CHANNEL INVESTMENTS,  INC.

on behalf of BARON ASSET FUND SERIES

        /s/ Ronald Baron                                                /s/ Randall R. Mays
By:  _____________________________________________              By:  _____________________________________________
Name: Ronald Baron                                              Name: Randall R. Mays
Title: Chairman & CEO                                           Title: Executive VP/CEO

COLUMBIA XM RADIO PARTNERS, LLC                                 DIRECTV ENTERPRISES, INC.
By Columbia Capital LLC, its Managing Member

       /s/ James B. Fleming                                            /s/ Steven J. Cox
By:  _____________________________________________              By:  _____________________________________________
Name:                                                           Name:
Title:                                                          Title:

GENERAL MOTORS CORPORATION                                      MADISON DEARBORN CA
PITAL PARTNERS III, L.P.
                                                                By Madison Dearborn Partners III, L.P., its general partner
       /s/ Mark Gibbens                                         By Madison Dearborn Partners, LLC, its general partner
By:  _____________________________________________
Name: Mark Gibbens                                                      /s/ James N. Perry
Title: Director, Business Development                           By:  _____________________________________________
       As Attorney-in-fact for Eric Feldstein                   Name: James N. Perry
       Vice President and Treasurer                             Title: Managing Director

MADISON DEARBORN SPECIAL EQUITY III, L.P.                       SPECIAL ADVISORS FUND I, LLC
By Madison Dearborn Partners III, L.P., its general partner     By Madison Dearborn Partners III, L.P., its manager
By Madison Dearborn Partners, LL
C, its general partner          BY MADISON DEARBORN PARTNERS, LLC, ITS GENERAL PARTNER

        /s/ James N. Perry                                              /s/ James N. Perry
By:  _____________________________________________              By:  _____________________________________________
Name:                                                           Name:
Title:                                                          Title:


TELCOM--XM INVESTORS, L.L.C.

        /s/ Rahul Prakash
By:  _____________________________________________
Name: Rahul Prakash
Title: President

2

SCHEDULE I

NAMES, ADDRESSES AND FACSIMILE NUMBERS OF PARTIES

The Company:                            XM Satellite Radio Holdings Inc.       202-969-7124
                                        1250 23rd Street, N.W., Suite 57
                                        Washington, DC  20037
                                        Attention:  Joseph M. Titlebaum, Esq.

American Mobile:                        American Mobile Satellite Corporation  703-758-6134
                                        10802 Parkridge Blvd.
                                        Reston, VA  220
91
                                        Attention:  Randy S. Segal, Esq.

Baron:                                  Baron Asset Fund                       212-583-2014
                                        767 Fifth Avenue, 49th Floor
                                        New York, NY 10153
                                        Attention: Linda Martinson, Esq.

Clear Channel:                          Clear Channel Investments, Inc.        210-822-2299
                                        200 Concord Plaza, Suite 600
                                        San Antonio, TX  78216
                                        Attention:  Mr. Mark Hubbard

Columbia:                               Columbia XM Radio Partners, L.L.C.     703-519-3904
                                        201 North Union Street, Suite 300
                                        Alexandria, Virginia 22314
                                        Attention:  Mr. James B. Fleming

DIRECTV:                                DIR
ECTV Enterprises, Inc.              310-964-4114
                                        2230 East Imperial Highway
                                        El Segundo, CA 90245
                                        Attention:  Mr. Steven J. Cox

GM:                                     General Motors Corporation             212-418-6258
                                        100 Renaissance Center
                                        Detroit, MI  48265  1000
                                        Attention:  Mr. Mark Gibbens

Telcom:                                 TelcomXM Investors, L.L.C.             703-706-3801
                                        211 North Union Street, Suite 300
                                        Alexandria, VA 22314
                                        Attention: Hal B. Perkins, Esq.

Madison:                                Madison Dearborn Partners, Inc.        312-895-1221
                                        Three First National Plaza

                     Chicago, Illinois 60602
                                        Attention:  Mr. James N. Perry




Exhibit 10.2

XM SATELLITE RADIO HOLDINGS INC.


REGISTRATION RIGHTS
AGREEMENT

July 7, 1999


TABLE OF CONTENTS

Article I. DEFINITIONS.................................................   2

      Section 1.1    Definitions.......................................   2

Article II. REGISTRATION RIGHTS........................................   6

      Section 2.1    Demand Registrations..............................   6
      Section 2.2    Shelf Registration................................   9
      Section 2.3    Piggyback Registration Rights.....................  10
      Section 2.4    Registration Procedures...........................  11
      Section 2.5    Hold-Back Agreements..............................  14
      Section 2.6
 Black-Out Periods for Registration Statements.....  14
      Section 2.7    American Mobile Rights............................  15

Article III. INDEMNIFICATION AND CONTRIBUTION..........................  16

      Section 3.1    Indemnification by the Company....................  16
      Section 3.2    Indemnification by Holders........................  16
      Section 3.3    Conduct of Indemnification Proceedings............  17
      Section 3.4    Contribution......................................  17

Article IV. MISCELLANEOUS..............................................  18

      Section 4.1    Rule 144..........................................  18
      Section 4.2    Specific Performance..............................  18
      Section 4.3    Amendments and Waivers............................  18
      Section 4.4    Notices...........................................  19
      Section 4.5    Transfers.........................................  19
      Section 4.6    Execution in Counterparts.
........................  19
      Section 4.7    GOVERNING LAW; CHOICE OF FORUM; JURY TRIAL WAIVER.  20
      Section 4.8    Severability......................................  20
      Section 4.9    Headings..........................................  20
      Section 4.10   No Inconsistent Agreement.........................  20
      Section 4.11   Further Assurances................................  21
      Section 4.12   Entire Agreement..................................  21


REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of July 7, 1999 ("Agreement"), is hereby entered into by and among XM Satellite Radio Holdings Inc., a corporation duly organized under the laws of the State of Delaware (the "Company"), American Mobile Satellite Corporation, a corporation duly organized under the laws of the State of Delaware ("American Mobile"), the Baron Asset Fund series ("Baron") of Baron Asset Fund, a business trust organized under th e
laws of the Commonwealth of Massachusetts, Clear Channel Investments, Inc., a corporation duly organized under the laws of the State of Nevada ("Clear Channel"), Columbia XM Radio Partners, LLC, a limited liability company duly organized under the laws of the State of Virginia ("Columbia"), DIRECTV Enterprises, Inc. a corporation duly organized under the laws of the State of Delaware ("DIRECTV"), General Motors Corporation, a corporation duly organized under the laws of the State of Delaware ("GM"), Madison Dearborn Capital

Partners III, L.P., ("Madison Capital"), Madison Dearborn Special Equity III, L.P. ("Madison Equity") and Specia
l Advisors Fund I, LLC ("Madison Advisors"

and, collectively with Madison Capital and Madison Equity, each an entity duly organized under the laws of the State of Delaware, "Madison") and TelcomXM Investors, L.L.C., a limited liability company duly organized under the laws of the State of Delaware ("Telcom"). Baron, Clear Channel, Columbia, DIRECTV, GM, Madison and Telecom are collectively referred to herein as the "Investors". The Company, American Mobile, and the Investors are collectively referred to herein as the "Parties".

W I T N E S S E T H

WHEREAS, the Investors (other than Baron) have agreed to make an investment in the Company through the purchase of Series A Subordinated Convertible Notes (the "Convertible Notes" or the "Notes") pursuant to a certain Note Purchase Agreement, dated June 7, 1999, by and among the Company and the Investors (other than Baron) (the "Note Purchase Agreement");

WHEREAS, the Company has agreed to execute this Agreement to provide the Investors with certain rights to cause the registration of the Class A Common Stock (as hereafter defined) issuable upon conversion of the Notes or upon conversion of shares of Series A Convertible Preferred Stock;

WHEREAS, American Mobile is a shareholder of the Company;

WHEREAS, the Company has agreed to execute this Agreement to provide American Mobile with rights to cause the registration of shares of Class A Common Stock held by it;

WHEREAS, the Company, American Mobile, WorldSpace, Inc. and Baron have entered into the January 15 Let
ter Agreements, which provide that, from and after the completion of a substantial public or private equity financing by the Company of $100 million or more, Baron shall benefit, on a "most favored nation" basis, from any reduction in the restrictions on transfer, improvements in rights to receive information regarding the Company and any


registration rights accepted by any other investor in the Company pursuant to the terms of such financing;

WHEREAS, the Investors hereby acknowledge the rights granted to Baron under the January 15 Letter Agreements, and the Parties desire that this Agreement constitute the sole evidence of such rights from the date hereof;

WHEREAS, Baron hereby acknowledges that the rights granted to it under this Agreement constitute the sole evidence of such rights from the date hereof, and that the January 15 Letter Agreements shall terminate as of the date hereof; and

WHEREAS, the Parties desire herein to provide certain registration rights to each Investor and to American Mobile.

NOW, THEREFORE, in consideration of the fo regoing and the promises and
covenants contained herein, the Parties agree as follows:

ARTICLE I.

DEFINITIONS

Section 1.1 Definitions. Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them in the Note Purchase Agreement. The following terms, as used herein, have the following meanings:

"Accredited Investor" has the meaning specified in the Note Purchase Agreement.

"Additional Demand Registration" has the meaning specified in Section 2.1(e).

"Affiliate", as applied to any specified Person, shall mean any other Person, directly or indirectly, controlling or controlled by or under direct or indirec
t common control with such specified Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control") as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. For purposes of this definition, a member of a limited liability company or a partner of a partnership shall be deemed an Affiliate of said company or partnership.

"Agreement" means this Registration Rights Agreement (including any Schedules hereto), as it may from time to time be amended, supplemented or modified in accordance with its terms.

"American Mobile" has the meaning specified in the Preamble.

"Baron" has the meaning specified in the Preamble.

2

"Board" or "Board of Directors" means the Board of Directors of the Company or a committee consisting of one or more directors lawfully exercising the relevant powers of the Board.

"Board Resolution" means a resolution duly adopted by the Board of Directors, certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.

"Business Day" means any day other than a Saturday, Sunday or any

other day on which commercial banks are authorized or required by law to be closed in New York City or the District of Columbia.

"Class A Common Stock" means the Class A Common Stock, par value $0.01 per share, of the Company, having one (1) vote per share.

"Class B Common Stock" means the Class B Common Stock, par value $0.01 per share, of the Company, having three (3) votes per share.

"Class C Common Stock" means the Class C Common Stock, par value $0.01 per share, of the Company, having zero (0) votes per share.

"Clear Channel" has the meaning specified in the Preamble.

"Closing Date" means the date of the closing under the N ote Purchase
Agreement, or such later date as the Parties hereto shall mutually agree.

"Columbia" has the meaning specified in the Preamble.

"Commencement of Commercial Operations" means the commencement of commercial operations of XM Satellite Radio Inc. as publicly announced by it.

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

"Common Stock" means all classes and series of the common stock, $0.01 par value per share, of the Company, any stock into which such common stock shall have been changed or converted o r any stock resulting from any
capital reorganization or reclassification of such common stock, and all other stock of any class or classes (however designated) of the Company the holders of which have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions of any shares entitled to preference.

"Company" has the meaning specified in the Preamble.

"Convertible Notes" has the meaning specified in the Recitals.

"Demand Registration" has the meaning specified in Section 2.1(a).

3

"DIRECTV" has the meaning specified in the Preamble.

          "End of Suspension Notice"  has the meaning specified in Section
           ------------------------
2.6(b).

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, all as the same shall be in effect at the time.

"Exchange Agreement" means that certain Exchange, Amendment and Recapitalization Agreement, dated on or about the date hereof, betw een the
Company and American Mobile.

"Fair Market Value" means the price that would be paid in an arm's- length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy. If there is any dispute as to the Fair Market Value of any security of the Company between the Investor who holds such security and the Company, the Fair Market Value of such security shall be determined by a firm of independent appraisers of national standing valuing such security on an as-converted basis.

"GM" has the meaning specified in the Preamble.

"High Yield Debt" has the meaning specified in the Note Purchase Agreement.

"Holders" means each of Baron, Clear Channel, Columbia, DIRECTV, GM,


Madison, Telcom and American Mobile, severally, and any transferees of registration rights hereunder permitted pursuant to Section 4.5.

"Holders' Notes" means the Notes, the $21 Million Notes and the New American Mobile Note.

"Initial Public Offering" means the closing of a firm commitment underwritten public offering of shares of Common Stock

"Investors" has the meaning specified in the Preamble.

"January 15 Letter Agreements" means, collectively, (i) that certain letter agreement between American Mobile, Baron and WorldSpace and (ii) that certain letter agreement between American Mobile and Wor ldSpace, each such
letter agreement dated as of January 15, 1999.

"Losses" has the meaning specified in Section 3.1.

"Madison" has the meaning specified in the Preamble.

"Managing Underwriters" has the meaning specified in Section 2.1(c).

"New American Mobile Note" has the meaning specified in the Exchange Agreement.

"Notes" has the meaning specified in the Recitals.

4

"Note Purchase Agreement" has the meaning specified in the Recitals.

"Person" means any individual, partnership, corporation, joint venture, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof.

"Piggyback Registration" has the meaning specified in Section 2.3(a).

"Qualified Initial Public Offering" means the closing of a firm comm
itment underwritten public offering of Common Stock in an offering which (a) raises not less than $100 million in gross proceeds and (b) for which the offering price of the securities offered thereby is at least (i) 125% of the Conversion Price if the offering occurs within six months of the Closing Date or
(ii) 150% of the Conversion Price if the offering occurs more than six months after the Closing Date, unless the Company obtains Requisite Approval (as such term is defined in the Note Purchase Agreement) for a lower offering price or lower amount of funds raised at which the Notes may be automatically converted.

"Qualified Institutional Buyer" has the meaning specified in the Note Purchase Agreement.

"Registrable Securities" means the shares of Class A Common Stock of the Company issued or issuable (i) upon conversion of t he Notes (ii) upon
conversion of the Series A Convertible Preferred Stock issued or issuable upon conversion of the Notes or (iii) upon conversion of the Class B Common Stock held by American Mobile or issued or issuable upon conversion of the New American Mobile Note or the $21 Million Notes that may be available for registration from time to time pursuant to the terms hereof; provided, however, that such securities shall cease to be Registrable Securities when a Registration Statement with respect to the registration of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of pursuant to such Registration Statement, or when such securities have been sold without restriction pursuant to Rule 144 under the Securities Act. All references to "Registrable Securities" held by a Holder shall include all Registrable Securities issuable to such Holder upon conversio n
of any Convertible Securities (as such term is defined in the Shareholders Agreement) held by such Holder.

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

"Securities Act" means the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

"Series A Convertible Preferred Stock" means the Series A Convertible Preferred Stock, par value $1.00 per share, of the Company, having zero (0) votes per share.

"Shareholders Agreement" means that certain Shareholders Agreement,

dated on or about the date hereof, by and among the Parties hereto.

"Shelf Registration" has the meaning specified in Section 2.2(a).

5

"Suspension Event"  has the meaning specified in Section 2.6(a).
 ----------------

"Suspension Notice"  has the meaning specified in Section 2.6(b).
 -----------------

"TCM Group" means Telcom, Columbia and Madison, collectively.

"Telcom" has the meaning specified in the Preamble.

"$21 Million Notes" means the convertible notes issued by the Company to American Mobile as of January
15, 1999.

"Underwritten Offering" has the meaning specified in Section 2.1(c).

"WorldSpace" means WorldSpace, Inc., a corporation duly organized under the laws of the State of Maryland.

ARTICLE II.

REGISTRATION RIGHTS

Section 2.1 Demand Registrations. No Holder shall have any right to exercise any of the demand registration rights granted herein until the date which is twelve (12) months after the Closing Date.

(a) Right to Demand. At any time after the date which is twelve (12) months after the Closing Date, any Holder may notify the Company that it intends to offer to or cause to be offered for public sale all or any portion of the Registrab
le Securities held by or issuable to it (a "Demand Registration"), then, subject to the rights of the Company set forth in Section 2.1(b) and the registration rights of each other Holder set forth in Section 2.3, the Company will use its best efforts to cause such Registrable Securities as may be requested by such Holder to be registered under the Securities Act, pursuant to a Registration Statement on such form as may then be available to the Company for sale in an underwritten offering or a non-underwritten offering, as elected by such Holder, and to keep such Registration Statement effective until the earlier of: (i) the date six months from the date of effectiveness thereof, or
(ii) the date on which all of the Holders' Registrable Securities registered thereunder are sold; provided, however, that the requesting Holder must request registration of Registrable Securities with a Fair Market Value, on the date of such reque
st, of at least $10 million (unless the Fair Market Value of all of the Registrable Securities held by or issuable to such Holder is less than $10 million, in which event all of the Registrable Securities held by or issuable to such Holder must be included in such registration in order to effect such registration). Subject to the rights of each Holder as set forth in Section 2.1(e), each of Baron, Clear Channel, DIRECTV, GM and the TCM Group (which, for purposes of this Section 2.1(a), shall be considered a single "Holder") shall be entitled to one Demand Registration as provided herein, and American Mobile shall be entitled to two Demand Registrations as provided herein. The Company may postpone the filing of any Registration Statement required under this
Section 2.1 for a reasonable period of time, not to exceed 120 days following receipt by the Company of the Holder's request, if a Suspension Event (as hereinafter defined) has occurred and is continuing.

6

(b) Company Priority on Registration. Notwithstanding any other provision of this Agreement to the contrary, upon receipt by the Company of a request for a Demand Registration from a Holder, the Company shall have the right, within 30 days of receipt of such notice, to notify such Holder of the Company's intention to commence a primary public offering of securities for its own account (other than a registration effected solely to implement an employee benefit plan or a transaction to which Rule 145 or any other similar rule of the Commission under the Securities Act is applicable) by the filing of a Registration Statement with the Commission and, in such a case, the Compa ny shall not have any obligation to
honor the request to register the shares held by such notifying Holder; in which event such request shall be deemed never to have been made; provided, however, that the Company shall commence such public offering by the filing of such a Registration Statement within 60 days of so notifying that Holder. In addition, the Company shall not be required to cause a Registration Statement demanded pursuant to this Section 2.1 to become effective prior to 120 days following the effective date of a Registration Statement initiated by the Company, if the request for registration has been received by the Company subsequent to the giving of written notice by the Company, made in good faith, to the Holders to the effect that the Company is commencing to prepare a company-initiated Registration Statement (other than a registration effected solely to implement an employee benefit plan or a transaction to which Rule 145 or any other similar
rule of the Commission under the Securities Act is applicable); provided, however, that the Company shall use its best efforts to achieve such effectiveness promptly.

(c) Selection of Managing Underwriters. The offering of Registrable Securities pursuant to any Registration Statement filed under this Article II shall be in the form of an underwritten offering ("Underwritten Offering"), if the Holders of a majority of the Registrable Securities requested to be registered in such offering so elect. In such event, the Company shall select one or more managing underwriters to act in connection with such Underwritten Offering (the "Managing Underwriters"), which Managing Underwriters shall be approved by the Holder initiating such offering, which approv al shall not be
unreasonably withheld. Any request by the Holders of Registrable Securities for an Underwritten Offering shall, in addition to specifying the number of shares requested to be registered, specify the anticipated per share price range for such offering.

(d) Priority on Underwritten Offering. If the Managing Underwriters for an Underwritten Offering demanded by the Holders pursuant to this Section 2.1 notify the Company and such Holders that in their opinion the number of Registrable Securities requested to be included in such offering (together with any other shares of Common Stock which the Company is required to include in such registration) exceeds the number of shares which can be sold in such offering in an orderly manner within a price range acceptable to the Holders of the majority of the Registrable Securities requested to be included in such offering, the Company will include in such offering t he maximum amount of
Registrable Securities requested to be included pursuant to this Agreement, which, in the opinion of the Managing Underwriters, can be sold in such offering in an orderly manner within an acceptable price range, and such amount shall be allocated pro rata among the Holders thereof on the basis of the number of shares of Registrable Securities requested to be included in such registration by each such Holder pursuant to Section 2.1(a) and Section 2.3(a); provided, however, that American Mobile's right to register its Registrable Securities pursuant to this Section 2.1(d) shall be subordinate to the rights of the other Holders hereunder.

7

(e) Cut-back. In the event that, in connection with any exercise by any Holder of a Demand Registration, other Holders exercise Piggyback Registration rights as provided in Section 2.3, and following such exercise the Managing Underwriters in an Underwritten Offering notify the Company that in their opinion the number of Registrable Securities requested to be included in such offering exceeds the number of shares which can be sold in an orderly manner in such offering within a price range acceptable to the initiating Holder such that the initiating Holder is unable to sell at least 75% of the number of shares originally requested to be registered by it, such initiating Hold er shall be
entitled to an additional Demand Registration exercisable at such later time as such Holder may elect (an "Additional Demand Registration"). If such Additional Demand Registration is exercised and such initiating Holder is unable to sell in such offering, cumulatively with the number of shares sold in the first offering requested by it, at least 75% of the number of shares originally requested to be registered by it, such initiating Holder shall be entitled to successive Additional Demand Registrations until it has sold in all such Additional Demand Registrations, cumulatively with the first offering requested by it, at least 75% of the amount originally requested to be registered by it.

(f) American Mobile Registration Rights. American Mobile shall be entitled to exercise two Demand Registrations, subject to the rights of the Company set forth in Section 2.1(b) and subject to the right of each other Hold er to
exercise Piggyback Registration rights in connection with a demand by American Mobile; provided that each other Holder shall have priority over American Mobile
(i) with respect to registration of its Registrable Securities in such offering and (ii) with respect to registration of Registrable Securities pursuant to
Section 2.2(c). In the event that American Mobile, in a Demand Registration it has initiated, is not able to sell at least 75% of the number of shares originally requested to be registered by it, then American Mobile shall be entitled to an Additional Demand Registration exercisable at such later time as American Mobile may elect. If such Additional Demand Registration is exercised and American Mobile is unable to sell in such offering, cumulatively with the number of shares sold in the first offering requested by it, at least 75% of the number of shares originally requested to be registered by it, American Mobile shall be entitled to successive Additional Demand Registrations until it has sold in all such Additional Demand Registrations, cumulatively with the first offering requested by it, at least 75% of the amount originally requested to be registered by it.

(g) Inclusion by the Company of its Common Stock in an Underwritten
Offering. If the Managing Underwriters for an Underwritten Offering notify the Company that in their opinion the number of Registrable Securities to be included in an Underwritten Offering is less than the number of shares which can be sold in an orderly manner in such offering within a price range acceptable to the Holder initiating such offering, the Company may include in such registration, on its own behalf, up to the greatest number of shares of Common Stock which in the opinion of the Managing Underwriters can be sold ( together
with the Registrable Securities demanded to be included in such registration) in an orderly manner within the price range acceptable to the Holder initiating such offering.

(h) Participation in Underwritten Registrations. Notwithstanding any other provision of this Section 2.1 or Section 2.3 to the contrary, no Person may participate in any Underwritten Offering hereunder unless such Person: (i) agrees to sell such Person's securities 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,

8

underwriting agreements and other documents required under the terms of such underwriting arrangements; provided, however, that no Holder of Registrable Securities included in any Underwritten Offering shall be required to make any representations or warranties to the Company or the underwriters other than representations and warranties regarding such Holder and such Holder's intended method of distribution and no Holder shall be required to undertake joint or joint and several obligations with any other Person.

(i) Expenses of Underwriting Offering. The Company shall pay any and all registration expenses inc
ident 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 2.1. Each Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities included in the Underwritten Offering and the fees of any counsel retained by such Holder in connection therewith.

Section 2.2 Shelf Registration.

(a) Shelf Registration. Following the Commencement of Commercial Operations and at the request of the Holders holding Registrable Securities having a Fair Market Value of not less than $25 million (collectively, the "Requesting Holders"), the Company shall notify (such notice a "Shelf Notification") each Holder not a Requesting Holder of the Company's intention to prepare and file with the Commission a Registrat ion 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 all or a portion of the Registrable Securities, and shall thereafter prepare and file such Registration Statement (the "Shelf Registration"). Each Holder not a Requesting Holder shall notify the Company within thirty (30) days of receipt of a Shelf Notification if it intends to include Registrable Securities held by it in such Shelf Registration; otherwise, such Holder shall have no right to include its Registrable Securities in such Shelf Registration or in any subsequent Shelf Registration; provided that a Holder not a Requesting Holder may subsequently request a Shelf Registration pursuant to this Section 2.2(a) if such Holder (i) notifies the Company within thirty (30) days of a Shelf Notification that (a) upon request of th e Company,
it has agreed not to include its Registrable Securities in such Shelf Registration, or (b) by reason of contractual obligation or law, it cannot at the time of the Shelf Notification include its Registrable Securities in a Shelf Registration and (ii) in each subsequent request for a Shelf Registration, such Holder (collectively with other Holders not Requesting Holders making such request) must request registration of Registrable Securities with an aggregate Fair Market Value on the date of such request of not less than $25 million in Registrable Securities held by or issuable to such Holder(s). Each Shelf Registration shall be on a Form S-3 or another appropriate form (unless the Holders of the Registrable Securities offered thereby reasonably request a specific form) permitting registration of such Registrable Securities for resale by the Holders in the manner or manners reasonably designated by them (including, without limitation, one or more underwritten offerings).

(b) Effectivene ss. The Company shall use reasonable efforts to cause the Shelf Registration to become effective under the Securities Act as soon as 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,

9

the Company shall use reasonable efforts to keep the Shelf Registration continuously effective until the date on which all of the Registrable Securities registered thereunder from time to time are sold.

(c) Priority in Underwritten Offering from Shelf Registration. If any of the Registrable Securities to be registered pursuant to Shelf Registration are to be sold in an Underwritten Offering, and if the Managing Underwriters notify the Company and the Holders of such Registrable Securities that in their opinion, the number of Registrable Securities requested to be included in such offering exceeds the number of shares which can be sold in such offering in an orderly manner
within an acceptable price range, there shall be included in such Underwritten Offering the maximum amount of Registrable Securities requested to be included, pursuant to this Agreement, which in the opinion of the Managing Underwriters can be sold in an orderly manner within an acceptable price range, and such amount shall be allocated pro rata among the Holders of such Registrable Securities requested to be included in such Underwritten Offering on the basis of the number of shares of Registrable Securities requested to be included in such registration by each such Holder. American Mobile's right to register its Registrable Securities pursuant to this Section 2.2(c) shall be subordinate to the rights of the other Holders hereunder.

Section 2.3 Piggyback Registration Rights.

(a) Requests for Piggyback Registration. If, at any time, the Company proposes to effect a registered o
ffering of its Common Stock (including pursuant to Section 2.1 and Section 2.2), the Company will give prompt written notice to all Holders of its intention to effect such a registration and, subject to
Section 2.3(b) and Section 2.3(c), will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after the date the Company's notice is given (a "Piggyback Registration"); provided, however, that the Holders shall not have any right to cause a Piggyback Registration in connection with any Initial Public Offering by the Company or in any offering by the Company of High Yield Debt.

(b) Priority on Primary Registrations. If, in connection with any proposed Piggyback Registration in connection with an Underwritten Offering initiated by the Company (other than pursuant to Section 2.1), the Managing Underwriters notify the Company 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 securities the Company proposes to sell and (ii) second, the greatest number of the Registrable Securities requested to be included pursuant to this Agreement, pro rata among the Holders thereof on the basis of the number of shares requested to be included in such registration by each such Holder, in each case up to the greatest number of shares of Common Stock which, in the opinion of the Managing Underwriters, can be sold in an orderly manner in the price range of such offering; provided, however, that American Mobile shall not be entitled to participate in any
such Piggyback Registration until all shares of Registrable Securities held by other Holders which have been requested to be included in such Piggyback Registration have been so included.

(c) Priority on Secondary Registrations. Subject to Section 4.10(b), if a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company's

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securities (other than the Registrable Securities), and the Managing Underwriters notify the Company 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 an orderly manner within an acceptable price range, the Company will include in such offering (i) first, the securities requested to be included pursuant to this Agreement by the holders requesting such registration, and (ii) second, the greatest number of the Registrable Securities and any other securities requested to be included pursuant to this Agreement (including by the Company), subject to Section 2.1(g), pro rata among the Holders thereof and the holders of such other securities on the basis of the number of shar es requested
to be included in such registration by each such holder, in each case up to the greatest number of shares of Common Stock which in the opinion of the Managing Underwriters can be sold in an orderly manner in the price range of such offering; provided, however, that American Mobile shall not be entitled to participate in any such Piggyback Registration until all shares of Registrable Securities held by other Holders which have been requested to be included in such Piggyback Registration have been so included.

(d) Participation in Piggyback Registrations. Notwithstanding any other provision of this Section 2.3 to the contrary, no Person may participate in any Piggyback Registration hereunder unless such Person: (i) agrees to sell such Person's securities on the basis provided in the applicable underwriting arrangements, which shall contain customary terms and conditions, and (ii) co
mpletes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided, however, that no Holder of Registrable Securities included in any Piggyback Registration shall be required to make any representations or warranties, jointly or severally, to the Company or the underwriters other than representations and warranties regarding such Holder and such Holder's intended method of distribution, and no Holder shall be required to undertake joint or joint and several obligations with any other Person.

(e) Expenses of Piggyback Registration. The Company or Persons other than the Holders 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 2.3. Each Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities included in the Piggyback Registration and the fees of any counsel retained by such Holder in connection therewith.

Section 2.4 Registration Procedures. The Company hereby covenants and agrees that it shall:

(a) perform its obligations with respect to a Registration Statement pursuant to Section 2.1, Section 2.2 or Section 2.3 hereof and effect or cause to be effected the registration of the Registrable Securities under the Securities Act to permit the sale of such Registrable Securities by the Holders in accordance with their intended method or methods of distribution, and that it shall prepare and file with the Commission a Registration Statement with respect to such Registrable Securities and use its best efforts t
o cause such Registration Statement to become effective (provided that, before filing a Registration Statement or prospectus or any amendments or supplements thereto, it will furnish to one counsel selected by each Holder participating in such registration (each of Baron, Clear Channel, DIRECTV, GM and the TCM Group shall, for such purposes, be considered a single "Holder") copies of all such

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documents proposed to be filed, which documents will be subject to the review of such counsel) and it will incorporate in such Registration Statement the reasonable comments of such counsel not inconsistent with the Company's disclosure obligations under applicable securities laws;

(b) prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for the period required hereunder (or if no period is so required, a period of not less than one hundred eighty (180) days or such shorter period which is sufficient to complete the distribution of the securities registered under the Registration Statement) a nd comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement;

(c) furnish to each seller of Registrable Securities, the Managing Underwriters, if any, and their respective counsel, prior to the filing thereof with the Commission, such number of copies of such Registration Statement, each amendment and supplement thereto, the prospectus included in such Registration Statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller and to use its best efforts to reflect in each such document, when so filed with the Commission, such comments as the sellers of Registrable Securities or their counsel shall reasonably propose;

(d) use its best effort s to comply with the requirements of any applicable blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided, however, that the Company will not be required to: (i) qualify generally to 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) notify each seller of such Registrable Securities as promptly as practicable in any of the following circumstances: (i) at any time when a prospectus relating thereto 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 any such seller, the Company will prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, 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 a Registration Statement and any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; (iii) of any request by the Commission for amendment or supplements to the 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 the Registration Statement or the in itiation of any proceedings for that purpose; and (v) the receipt by the Company of any notification with respect to the suspension of the

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qualification of the securities included therein for sale in any jurisdiction or the initiation of any proceeding for such purpose;

(f) cause all such Registrable Securities 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;

(g) enter into such agreements on terms reasonably acceptable to the Company (including underwriting agreements) in form, scope and substance as are customary in underwritten offerings, and take all other reasonable actions necessary to facilitate the registration or the disposition of the Registrable Securities included in any Registration Statement including, without limitation, the participation of senior management in " road shows" and similar activities, provided that such activities do not interfere with the duties of senior management in a manner that would likely be detrimental to the best interests of the Company;

(h) take such action as may be necessary so that: (i) any 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) any 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 misleading; and (iii) any prospectus forming part of any Registration Statement, and any amendment or supplement to such prospectus, does not include an un true 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;

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

(j) cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to any Registration Statement free of any restrictive legend and registered in such names as the Holders may request in connection with the sale of Registrable Securities pursuant to such Registration Statement; and

(k) obtain and furnish to each selling Holder, immediately prior to the effectiveness of the Registration Statement (and, in the case of an Underwritten Offering, at the time of delivery of any Registrable Securities sold pursuant thereto) a cold comfort letter from the Company's independent public accountants in the same form and covering the same matters as is typically delivered to underwriters and, in the event that an underwriter or underwriters have been retained in connection with such registration, such cold comfort letter to be provided to the selling Holders shall be the same cold comfort letter delivered to such underwriter or underwriters.

Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.4(e) hereof, such Holder will immediately discontinue disposition of Registrable Securities

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pursuant to a Registration Statement until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 2.4(e) hereof, and, if so directed by the Company, such Holder will deliver to the Company (at the expense of the Company) all copies in its possession, other than permanent file copies then in such Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. If the Company shall give any such notice to suspend the disposition of Registrable Securities pursuant to a Registration Statement, the Company shall extend the period during which the Registration Statement shall be maintained effective pursuant to this Agreement 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 Holders shall have received copies of the supplemented or amended prospectus necessary to resume such dispositions.

Section 2.5 Hold-Back Agreements.

(a) Restrictions on Public Sale by the Holders. Each Holder of Registrable Securities shall be deemed to have agreed not to effect any public sale or public distribution of securities of the Company of the same or similar class or classes of the securities included in a 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, but not to exceed a 90-day period beginning on, the effective date of the
Registration Statement (except pursuant to an Underwritten Offering being conducted by the Managing Underwriters), except to the extent otherwise agreed in writing by the Managing Underwriter. The foregoing restriction shall apply to all Holders automatically for the period of three (3) years commencing from the date of the Initial Public Offering, and thereafter shall apply to those Holders electing to include Registrable Securities in a Registration Statement for an Underwritten Offering filed pursuant to Section 2.1, Section 2.2 or Section 2.3. The restrictions set forth in this Section 2.5(a) shall not apply to any private sales of Registrable Securities that are exempt from registration under section 4(2) of the Securities Act.

(b) Restrictions on Public Sale by the Company. The Company shall not effect any public sale or public distribution of any securities which are the same as or substantially similar to the Reg istrable Securities being registered
pursuant to a Registration Statement for an Underwritten Offering filed pursuant to Section 2.1, Section 2.2 or Section 2.3 hereof, or any securities convertible into or exchangeable or exercisable for such securities during the 15-day period prior to, and during the 30-day period beginning on, the effective date of a Registration Statement (except pursuant to the Registration Statement), provided, however, that the foregoing restrictions shall not apply in the case of any registration for public sale or public distribution of any securities for High Yield Debt (regardless of whether or not coupled with warrants, options, or other equity equivalents) by the Company.

Section 2.6 Black-Out Periods for Registration Statements.

(a) Notwithstanding anything to the contrary in this Agreement, commencing ninety (90) days after the effectiveness of a Registration Statement, the Company may, not more than once in any 12-month period, and one additional time during the term of this Agreement (but not during any other Suspension Event or within ninety (90) days after termination of any other

14

Suspension Event), direct the Holders to suspend sales of Registrable Securities registered thereunder, as provided herein, if one or more of the following events (a "Suspension Event") occurs pending negotiations relating to, or consummation of, a material corporate transaction (i) that would require additional disclosure of material information by the Company in the 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 the Registration Statement (or such filings) to become effective or to promptly amend or
supplement the Registration Statement on a post-effective basis, as applicable.

(b) In the case of a Suspension Event, the Company may give notice (a "Suspension Notice") to the Holders to suspend sales of the Registrable Securities so that the Company may correct or update the 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. The Holders agree that they will not effect any sales of the Registrable Securities pursuant to such Registration Statement (or such filings) at any time after they have received a Suspension Notice from the Company and prior to the termination of such Suspension Event. If so directed by the Company, the Holders will deliver to the Company all copies of the prospectus covering the Registrable Securities held by them at the time of receipt of the Suspension Notice. The Holders may recommence effecting sales of t he Registrable Securities pursuant to the 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.

(c) If the Company shall give a Suspension Notice pursuant to this Section 2.6, the Company shall extend the period during which the Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from the date of the giving of the Suspension Notice to and including the date when the Holders shall have received the End of Suspension Notice and copies of the supplemented or amended prospectus necessary to resume sales.

American Mobile Rights. Except as otherwise expressly provided herein, all


references to "Holders" herein includes American Mobile. Notwithstanding anything to the contrary herein, the rights of American Mobile under Sections 2.1, 2.2 and 2.3 shall be subordinate to the corresponding rights of the other Holders; provided, however, that the Company shall in no event hereafter provide any Person with any rights to request the Company to register any Capital Stock of the Company, with priority equal to or superior to that of American Mobile hereunder, except in connection with any offering of High Yield Debt.

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ARTICLE III.

INDEMNIFICATION AND CONTRIBUTION

Section 3.1 Indemnification by the Company. The Company shall indemnify, to the extent permitted by law, each Holder of Registrable Securities, each Person who controls such Holder (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 pros pectus 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 such Holder expressly for use therein or by such Holder's failure to deliver a copy of the Registration Statement or prospectus or any amendments or supplements thereto after the Company has furnished such Holder with a sufficient number of copies of the same and except insofar as the same are caused by or contained in any prospectus if such Holder 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 such Holder
after the Company has furnished such Holder 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 officers, directors, partners, employees, agents and representatives to the same extent as provided above with respect to the indemnification of the Holders of Registrable Securities.

Section 3.2 Indemnification by Holders. In connection with any Registration Statement in which Holders of Registrable Securities are participating, each such Holder 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 such Holder 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 prospe ctus;
provided, however, that such Holder of Registrable Securities shall not be liable in any such case to the extent that the Holder 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

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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 any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds (net of payment of all expenses) received by such Holder upon the sale of the Registrable Securities 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.

Section 3.3 Conduct of Indemnification Proceedings. If any Person shall be enti
tled to indemnity hereunder 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 liabilit y for any settlement
made by the indemnified party without its or their consent (such consent not to be unreasonably withheld).

Section 3.4 Contribution. If the indemnification provided for in this Article III is unavailable to an indemnified party or is insufficient to hold such indemnified party harmless for any Losses in respect of which this Article III 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 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

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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 3.3, if the indemnification provided for in Section 3.1 or Section 3.2 was available to such party. The Parties agree that it would not be just and equitable if contribution pursuant to this Section 3.4 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 3.4, an indemnifying party that is a selling Holder of Regist rable Securities shall
not be required to contribute any amount in excess of the amount by which the net proceeds received by such indemnifying party exceeds the amount of any damages that such indemnifying party 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.

ARTICLE IV.

MISCELLANEOUS

Section 4.1 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 any Holder may reasonably request, all to the extent required from time to time to enable Holders to sell Registrable Securities without registration
under the Securities Act within the limitations of the 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 any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements.

Section 4.2 Specific Performance. Each Holder, 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 Agreement. 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 Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

Section 4.3 Amendments and Waivers. Any term of t his Agreement may be amended, and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of (a) the Company, (b) American Mobile and (c) Investors (other than Baron) holding, (i) in the case of amendments to or waivers of provisions of this Agreement generally, eighty-one percent (81%) of the Registrable Securities held by or issuable to Investors (other than Baron), and
(ii) in the case of any other non-material change or technical correction of this Agreement, a majority of the Registrable Securities held by or issuable to Investors (other than Baron); provided that no Investor's rights, preferences or obligations hereunder may be materially adversely modified without the consent of such Investor unless the rights, preferences or obligations hereunder of each other Investor is modified in a sub stantially equivalent
manner. Any amendment or waiver

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effected in accordance with this Section 4.3 shall be binding upon each future Holder and the Company.

Section 4.4 Notices. Except as otherwise provided in this Agreement, notices and other communications under this Agreement shall be in writing and shall be deemed properly served if: (i) mailed by registered or certified mail, return receipt requested, (ii) delivered by a recognized overnight courier service,
(iii) delivered personally, or (iv) sent by facsimile transmission addressed to each Party at its address for notices specified on Schedule 4.4 attached hereto, or at such other address, or to the attention of such officer, as any Party shall have furnished to each other Party in writing pursuant to this Section
4.4. Such notice shall be deemed to have been received: (i) three (3) Business Days after the date of mailing if sent by certified or registered mail, (ii) one
(1) Business Day after the date of delivery if sent by overnight courier, (iii) the date of delivery if personally delivered, or (iv) the next succeeding Business Day after transmission by facsimile.

Section 4.5 Transfers.

(a) Subject to the transfer restrictions set forth in the Shareholders Agreement, any Holder transferring any portion of its Registrable Securities may transfer to its transferee any registration rights granted herein and then held by such Holder, provided that no Holder may transfer to more than one transferee its rights to initiate any Demand Registration pursuant to Section 2.1, (provided that such transferees shall be able to participate in such Demand Registration and all other registration rights held by such Holder, subject to the terms and conditions set forth in this Agreement), nor shall any such transfer be deemed to create any right to initiate additional demand registrations or obligate the Company to issue notices hereunder to additional Person(s), except to the extent the Company shall have received actual notice of such transfer to such Person(s).

(b) Any assignment or transfer of any registration rights set forth herein shall be subject to the assumption by the transferee of the terms and conditions set forth in this Agreement 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 of this Agreement.

Section 4.6 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an orig inal and all of
which taken together shall constitute one and the same agreement.

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Section 4.7 GOVERNING LAW; CHOICE OF FORUM; JURY TRIAL WAIVER.

THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PROVISIONS THEREOF OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402.

IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE SUPREME COURT OF THE STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK OR THE FEDERAL COURTS LOCATED IN SUCH STATE AND COUNTY, AND RELATED APPELLATE COURTS. THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND
AGREE TO SAID VENUE.

THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 4.8 Severability. The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect. If any provision of this Agreement shall be declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part, such provision shall be interpreted so as to remain enforceable to the maximum extent permissible consistent with applicable law and the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enfo
rceable, and no provisions shall be deemed dependent upon any other covenant or provision unless so expressed herein.

Section 4.9 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

Section 4.10 No Inconsistent Agreement.

(a) The Company will not after the date of this Agreement enter into any agreement with respect to its securities or any amendment to such an agreement that is inconsistent with the rights granted to the Holders in this Agreement, or otherwise conflicts with the provisions hereof.

(b) The Company shall not grant to any person the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable or exercisable for such securities, or grant any rights for additional demand registrations of the Company's securities other than as provided in this Agreement, without t he prior written consent of the Holders of the Registrable Securities if such right is inconsistent with the terms of this Agreement (including without limitation the priorities for registration set forth herein); provided, however, that the foregoing restrictions shall not apply in the case of any registration for public

20

sale or public distribution of any securities for High Yield Debt (regardless of whether or not coupled with warrants, options, or other equity equivalents) by the Company.

Section 4.11 Further Assurances. The Parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

Section 4.12 Entire Agreement. This Agreement supersedes all other agreements, written or oral, concerning the subject matter herein, including the January 15 Letter Agreements, which are hereby terminated.

[Signatures begin on next page]

21

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly signed as of the date first above written.

XM SATELLITE RADIO HOLDINGS INC.                      AMERICAN MOBILE SATELLITE CORPORATION

By: /s/ Hugh Panero                                   By: /s/ Gary M. Parsons
   ----------------------------                          ----------------------------
Name:  Hugh Panero                                    Name:  Gary M. Parsons
Title: President and CEO                              Title: Chairman of the Board of Directors

BARON ASSET FUND                                      CLEAR CHANNEL INVESTMENTS, INC.
on behalf of BARON ASSET FUND SERIES

By: /s
/ Ronald Baron                                  By: /s/ Randall Mays
   ----------------------------                          ----------------------------
Name:  Ronald Baron                                   Name:  Randall Mays
Title: Chairman and CEO                               Title: Exec VP/CFO

COLUMBIA XM RADIO PARTNERS, LLC                       DIRECTV ENTERPRISES, INC.
By Columbia Capital LLC, its Managing Member

By: /s/ James B. Fleming                              By: /s/ Steven J. Cox
   ----------------------------                          ----------------------------
Name:                                                 Name:
Title:                                                Title:

GENERAL MOTORS CORPORATION                            MADISON DEARBORN CAPITAL PARTNERS III, L.P.
                                                      By Madison Dearborn Partners III, L.P., its
By: /s/ Mark Gibbens                                  general partner
   ----------------------------
                   By Madison Dearborn Partners LLC, its general
Name:  Mark Gibbens                                   partner
Title: Director, Business Development
       As Attorney-in-Fact for Eric Feldstein,        By: /s/ James N. Perry
       Vice President and Treasurer                     ------------------------------
                                                      Name:
                                                      Title:

MADISON DEARBORN SPECIAL EQUITY III, L.P.             SPECIAL ADVISORS FUND I, LLC
By Madison Dearborn Partners III, L.P., its general   By Madison Dearborn Partners III, L.P., its
partner                                               manager
By Madison Dearborn Partners LLC, its general         By Madison Dearborn Partners LLC, its general
partner                                               partner

By: /s/ James N. Perry                                By: /s/ James N. Perry
   ----------------------------                          --------------------------
--
Name:                                                 Name:
Title:                                                Title:

22

TELCOM--XM INVESTORS, L.L.C.

By: /s/ Rahul Prakash
   ----------------------------
Name:  Rahul Prakash
Title: President

23

SCHEDULE 4.4
Schedule of Holders

     Name                               Address                       Facsimile
     ----                               -------                       ---------
American Mobile Satellite            10802 Parkridge Blvd.          703-758-6134
 Corporation                         Reston, VA 20191-5416
                                     Attn: Randy S. Segal, Esq.

Baron Asset Fund                     767 Fifth Avenue               212-583-2014
                                     49th Floor
                                     New York, NY 10153

           Attn:  Linda Martinson, Esq.

Clear Channel Investments, Inc.      200 Concord Plaza              210-822-2299
                                     Suite 600
                                     San Antonio, TX  78216-6940
                                     Attn: Mr. Mark Hubbard

Columbia XM Radio Partners LLC       201 North Union Street         703-519-3904
                                     Suite 300
                                     Alexandria, VA  22314
                                     Attn: Mr. James B. Fleming

DIRECTV Enterprises, Inc.            2230 E. Imperial Hwy.          310-964-4114
                                     El Segundo, CA  90245
                                     Attn: Mr. Steven J. Cox

General Motors Corporation           767 Fifth Avenue               212-418-6258
                                     14th Floor
                                     New York, NY  10153
                                     Attn: Mr. Mark Gibbens

Madison Dearborn Capita
l Partners    Three First National Plaza     312-895-1221
 III, L.P.,                          Chicago, IL  60602
Madison Dearborn Special Equity      Attn: Mr. James N. Perry, Jr.
 III, L.P.,
Special Advisors Fund I, LLC

Telcom-XM Investors LLC              211 North Union Street         703-706-3801
                                     Suite 300
                                     Alexandria, VA  22314
                                     Attn: Hal B. Perkins, Esq.

24

Exhibit 10.3

XM SATELLITE RADIO HOLDINGS INC.
$250,000,000
Series A Subordinated Convertible Notes
Due December 31, 2004


NOTE PURCHASE
AGREEMENT


Dated as of June 7, 1999


Table of Contents

                                                                                                Page
                                                                                                ----
1.   Definitions................................................................................  2

2.   Issuance of the Notes......................................................................  17

3.   Interest and Repayment.....................................................................  18
     3.1.  Interest on the Notes.............
...................................................  18
     3.2.  Interest after Maturity..............................................................  18
     3.3.  Payments and Computations............................................................  18
     3.4.  Payment at Maturity or Conversion....................................................  18

4.   Representations, Warranties and Agreements of the Company..................................  18
     4.1.   Incorporation, Standing, etc........................................................  18
     4.2.   Subsidiaries........................................................................  19
     4.3.   Disclosure..........................................................................  19
     4.4.   Qualification.......................................................................  19
     4.5.   Authorization of Agreement and Notes................................................  19
     4.6.   Absence of Defaults and Conflicts........
...........................................  19
     4.7.   Absence of Proceedings..............................................................  20
     4.8.   Possession of Licenses and Permits..................................................  20
     4.9.   No Violations of Laws...............................................................  20
     4.10.  Internal Accounting Controls........................................................  20
     4.11.  Tax Returns and Payments............................................................  20
     4.12.  Indebtedness........................................................................  21
     4.13.  Title to Properties; Liens..........................................................  21
     4.14.  Patents, Trademarks, Authorizations, etc............................................  21
     4.15.  Governmental Consents...............................................................  21
     4.16.  Investment Company Act............................
..................................  21
     4.17.  Public Utility Holding Company Act..................................................  21
     4.18.  Restrictions........................................................................  21
     4.19.  Capitalization......................................................................  22
     4.20.  Seniority of Notes..................................................................  22
     4.21.  Patent Applications.................................................................  22
     4.22.  Material Events.....................................................................  22
     4.23.  Financial Statements................................................................  23
     4.24.  No Undisclosed Fees.................................................................  23
     4.25.  No Transactions with Affiliates.....................................................  23
     4.26.  Satellite Launch...........................................
.........................  23
     4.27.  Appropriate Technology..............................................................  24
     4.28.  CD Radio Litigation.................................................................  24
     4.29.  Registration Rights.................................................................  24

i

                                                                                                Page
                                                                                                ----
5.   Representations and Warranties of the Investor.............................................  24
     5.1.  Risks of Investment..................................................................  24
     5.2.  Investment Experience................................................................  24
     5.3.  Ability to Bear Risk.................................................................  25
     5.4.  Receipt and Review of Documentat
ion..................................................  25
     5.5.  No General Solicitation by Company...................................................  25
     5.6.  Organization, Good Standing, Corporate Authority.....................................  25
     5.7.  Benefit Plan Investor................................................................  25
     5.8.  No Public Market.....................................................................  25
     5.9.  Due Authorization....................................................................  25
     5.10. Qualified Institutional Buyer or Accredited Investor.................................  26

6.   Restrictions on Transfer...................................................................  26
     6.1.  Restrictions; Restrictive Legend.....................................................  26

7.   Covenants..................................................................................  27
     7.1.  Payment of Note and Maintenance of Offi
ce............................................  27
     7.2.  Payment of Taxes and Claims..........................................................  27
     7.3.  Maintenance of Properties and Corporate Existence....................................  27
     7.4.  Compliance with Law..................................................................  28
     7.5.  Notice...............................................................................  28
     7.6.  Merger and Sale of Assets............................................................  28
     7.7.  Limitation on Transactions with Affiliates and Shareholders..........................  29
     7.8.  Limitation on Indebtedness...........................................................  29
     7.9.  Limitation on Restricted Payments....................................................  29
     7.10. Limitation on the Issuance and Sale of Capital Stock.................................  30
     7.11. Limitation on Liens.............................
.....................................  30
     7.12. Protective Provisions................................................................  30
     7.13. Patents..............................................................................  30
     7.14. Financing Purposes...................................................................  30
     7.15. Information Rights...................................................................  30
     7.16. XM Radio System Design...............................................................  31
     7.17. Indemnification for Patent Claims....................................................  31
     7.18. Filing of Restated Certificate of Incorporation......................................  31
     7.19. Limitation on Grants of Rights.......................................................  31

8.   Conversion Provisions......................................................................  31
     8.1.  Company's Right of Conversion...........................
.............................  31
     8.2.  Optional Conversion Right............................................................  31
     8.3.  Issuance of Certificates.............................................................  32
     8.4.  Adjustment to Conversion.............................................................  32
     8.5.  Treasury Shares......................................................................  35
     8.6.  Fractional Shares....................................................................  35
     8.7.  Merger of the Company................................................................  35

ii

                                                                                                Page
                                                                                                ----
     8.8.  Reclassification of Class A Common Stock and/or Class A Convertible Preferred Stock..  35
     8.9.  Reservation of Class A Common Stock and Class A Convertible Preferred Stock..........  36
     8.10. Taxes................................................................................  36
     8.11. Certain Events.......................................................................  36
     8.12. No Rights or Liabilities as Shar
eholders.............................................  37
     8.13. Automatic Conversion of Class A Convertible Preferred Stock Upon Transfer............  37
     8.14. Dividends Paid Between Notice of Conversion and Conversion...........................  37

9.   Put Right If No Qualified Initial Public Offering..........................................  37

10.  Registration, Transfer and Substitution of Note............................................  38
     10.1. Note Register........................................................................  38
     10.2. Transfer and Exchange of Note........................................................  38
     10.3. Replacement of Note..................................................................  38

11.  Conditions to Obligations of the Investors.................................................  38

12.  Events of Default; Acceleration............................................................  40
     12.1. Nature of Events and Acceleration of
Note............................................  40
     12.2. Default Remedies.....................................................................  42
     12.3. Notice of Default....................................................................  42

13.  Seniority of Notes.........................................................................  42

14.  Expenses...................................................................................  42

15.  Survival...................................................................................  42

16.  Amendments and Waivers.....................................................................  42

17.  Notices....................................................................................  43

18.  Execution in Counterparts..................................................................  43

19.  Binding Effect.............................................................................  43

20.  GOVERNING LAW; CHOICE OF FORUM; JURY TRIAL W
AIVER..........................................  43

21.  Miscellaneous..............................................................................  44
     21.1. Conflict.............................................................................  44
     21.2. Severability.........................................................................  44
     21.3. No Waiver............................................................................  44
     21.4. Further Assurances...................................................................  44

iii

ATTACHMENTS:
2(a) Principal Amounts of Notes
5.7 Benefit Plan Investor
17 Notices

EXHIBIT A: Form of Notes

iv

NOTE PURCHASE AGREEMENT

NOTE PURCHASE AGREEMENT, dated as of June 7, 1999, by and between XM SATELLITE RADIO HOLDINGS INC., a Delaware corporation with its principal office located at 1250 23rd Street N.W., Suite 57, Washington, D.C. 20037 (the "Company"), and each of the investors listed on Attachment 2(a) hereto, (each, an "Investor," and collectively, the "Investors"), (collectively, the "Parties," and each, a "Party").

W I T N E S S E T H:

WHEREAS, the Company is engaged in the development of a satellite digital audio radio service in the United States;

WHEREAS, the Company desires to receive financing in the aggregate principal amount of Two Hundred Fifty Million Dollars ($250,000,000) (the "Financing") for (i) capital expenditures, (ii) working capital and (iii) repaying certain loans from WorldSpace, Inc., (collectively, the "Financing Purposes");

WHEREAS, each of the Investors desires to provide the Company the Financing for the Financing Purposes through the purchase of Series A Subordinated Convertible Notes due December 31, 2004 (each as hereinafter defined a "Convertible Note" or a "Note" and collectively the "Convertible Notes" or "Notes"), substantially in the form attached hereto as Exhibit A;

WHEREAS, upon the consummation of the XM Exchange Agreement (as defined below), American Mobile shall be the holder of all the issued and outstanding shares of Capital Stock of the Company;

WHEREAS, the Company, American Mobile, WorldSpace, Inc. and Baron Asset Fund Series have entered into a certain letter agreement (the "Baron Ass et
Fund Letter Agreement") dated as of January 15, 1999, pursuant to which Baron (as defined below), from and after the completion of a substantial public or private equity financing by the Company of $100 million or more, shall benefit, on a "most favored nation" basis, from any reduction in the restrictions on transfer, improvements in rights to receive information regarding the Company and any registration rights accepted by any other investor in the Company pursuant to the terms of such financing;

WHEREAS, each Investor is aware of the rights granted to Baron under the Baron Asset Fund Letter Agreement; and

WHEREAS, the Parties desire to set forth the terms and conditions of and to provide for the issuance by the Company of the Convertible Notes described herein.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

1

1. Definitions The following terms when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof):

Accredited Investor: means

(i) Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity.

(ii) Any broker or dealer registered pursuant to section 15 of the Exchange Act.

(iii) Any insurance company as defined in Section 2(13) of the Securities A ct.

(iv) Any investment company registered under the Investment Company Act or a business development company as defined in section 2(a)(48) of that Act.

(v) Any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act.

(vi) Any private business development company as defined in section 202(a)(22) of the Advisers Act.

(vii) Any director or executive officer of the Company.

(viii) Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds $1,000,000.

(ix) Any natural person who had an individual income in excess of $200,000 in each of the last two calendar years, or joint income with that person's spouse, in excess of $300,000 in each of those years, and has a reasonable expectation of reaching the same income level in the current calendar year.

(x) Any entity with total assets at the time of purchase of the Note in excess of $5,000,000, which was not formed for the purpose of investing in a Note and which is one of the following:

(A) a corporation; or

(B) a partnership; or

(C) a Massachusetts or similar business trust; or

(D) a tax-exempt organization described in Section 501(c)(3)

of the Internal Revenue Code.

(xi) Any trust with total assets in excess of $5,000,000 which was not formed for the purpose of investing in a Note and whose purchase of a Note has been directed by a person who has such knowledge and experience in financial and business matters that he

2

is capable of evaluating the merits and risks of the investment.

(xii) Any employee benefit plan within the meaning of Title I of ERISA which satisfies at least one of the following conditions:

(A) it has total assets in excess of $5,000,000; or

(B) the investment decision is being made by a plan fiduciary which is a bank, savings and loan association, insurance company or registered investment adviser; or

(C) it is a self-directed plan (i.e., a tax-qualified defined contribution plan in which a participant may exercise control over the investment of assets credited to his or her account) and the decision to invest is made by those participants investin g, and each such participant qualifies as an accredited investor.

(xiii) Any employee benefit plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions, which has total assets in excess of $5,000,000.

(xiv) Any entity in which all of the equity owners are persons described above.

Advisers Act: means the Investment Advisers Act of 1940, as amended.

Affiliate: means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or ind
irectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

Agreement: means this Note Purchase Agreement (including any Schedules and Exhibits hereto), as it may from time to time be amended, supplemented or modified in accordance with its terms.

Agreements and Instruments: have the meaning specified in Section 4.6.

American Mobile: means American Mobile Satellite Corporation, a Delaware corporation with its principal office located at 10802 Parkridge Blvd., Reston VA 20191-5416.

American Mobile Exchange Agreement: means the exchange, amendment and recapitalization agreement dat
ed on or about the date hereof among American Mobile and the Company, providing for the restructuring of the Investment of American Mobile in the Company, substantially in a form consistent with the Term Sheet.

Bankruptcy: means, with respect to any Person, the happening of any of the following events:

3

(i) such Person shall commence a proceeding or make an application or petition to a court or other judicial or administrative forum for an order that such Person be declared bankrupt or insolvent or be wound up or that an order be entered for the liquidation, reorganization or for other relief with respect to the debts of such Person or that a provisional liquidator be appointed;

(ii) any application shall be made or any involuntary case or proceeding shall be commenced against such Person seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian, administrator or othe r similar official of it or any substantial part of its property, (unless the application is withdrawn, struck out or dismissed, or the case or proceeding is dismissed or terminated, within 30 days of it being made); or

(iii) a liquidator is appointed for such Person.

Baron Asset Fund Letter Agreement: has the meaning specified in the Recitals.

Baron: means Baron Asset Fund, acting on behalf of Baron Asset Fund Series, and any Person under common control.

Benefit Plan Investor: means any: (i) employee benefit plan (as defined in Section 3(3) of ERISA, whether or not such plan is subject to the provision of Title I of ERISA), (ii) any plan described in Section 4975(e)(1) of the Internal Revenue Code, or (iii) any entity whose underlying assets include plan assets b
y reason of a plan's Investment in the entity.

Board or Board of Directors: means the Board of Directors of the Company or a committee consisting of one or more directors lawfully exercising the relevant powers of the Board.

Board Resolution: means a resolution duly adopted by the Board of Directors, certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.

Business Day: means any day other than a Saturday, Sunday or any other day on which commercial banks are authorized or required by law to be closed in New York City, the District of Columbia or, in the case of the determination of LIBOR, London, England.

Capital Stock: means, with res
pect to any Person, any and all shares, interests, warrants, options, participations, rights to acquire or other equivalents (however designated, whether voting or non-voting) in equity of such Person, whether now outstanding or issued subsequent hereto, including, without limitation, all series and classes of Common Stock and Preferred Stock.

Capitalized Interest: has the meaning specified in Section 3.1.

Capitalized Lease: means, as applied to any Person, any lease of any property (whether real, personal or mixed) of which the discounted present value of the rental

4

obligations of such Person as lessee, in conformity with GAAP, is required to be capitalized on the balance sheet of such Person; and "Capitalized Lease Obligations" means the discounted present value of the rental obligations under such lease.

Capitalized Lease Obligations: has the meaning specified under the definition of "Capitalized Lease."

CARIBSS-1 Satellite: means the satellite held by WorldSpace International Network known as "CARIBSS-1" or "AmeriStar."

Change of Control: means the acquisition by any Person or any group

of persons acting in concert, other than American Mobile or an Affiliate of American Mobile, of more than 50% of the voting securities of the Company.

Citibank, N.A.: means Citibank, N.A., a bank organized under the laws of the United States.

Class A Common Stock: means the Class A Common Stock, par value $0.01 per share, of the Company, having one (1) vote per share.

Class B Common Stock: means the Class B Common Stock, par value $0.01 per share, of the Company, having three (3) votes per share.

Class C Common Stock: means the Class C Common Stock, par value $0.01 per share, of the Company, having zero (0) votes per share.

Class A Convertible Preferred Stock: means the Class A Convertible
Preferred Stock, par value $1.00 per share, of the Company, having zero (0) votes per share.

Clear Channel: means Clear Channel Communications Inc., a Texas corporation.

Clear Channel Operational Assistance Agreement: means that certain agreement by and between Clear Channel and the Company dated on or about the date hereof, related to certain operational matters involving the Company.

Closing: means the consummation of the transactions contemplated by this Agreement, including the sale and purchase of the Notes.

Closing Date: means the date of closing of the XM Exchange Agreement or such later dat
e as the Parties hereto shall mutually agree.

Columbia Capital: means Columbia XM Radio Partners LLC, a limited liability company.

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

5

Common Stock: means all classes of the common stock, $0.01 par value per share, of the Company, any stock into which such common stock shall have been changed or any stock resulting from any capital reorganization or reclassification of such common stock, and all other stock of any class or classes (however designated) of the Company the holders of which have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions of any shares entitled to preference.

Company: has meaning specified in the Preamble.

Compensation Committee: means the committee of the Board of Directors responsible for executive compensation and issuances of employee stock under the Company's Stock Plan.

Confidential Memorandum: has the meaning specified in Section 5.4.

Conversion Price: means $509,711 per share, as such price may be adjusted pursuant to this Agreement.

Conversion Stock: has the meaning specified in Section 2(c).

Convertible Note: has the meaning specified in Section 2.

Convertible Notes: has the meaning specified in Section 2.

Currency Agreement: means a
ny foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any of its Subsidiaries against fluctuations in currency values to or under which the Company or any of its Subsidiaries is a party or a beneficiary on the date hereof or becomes a party or a beneficiary thereafter.

DIRECTV: means DIRECTV Enterprises, Inc., a Delaware corporation.

DIRECTV Operational Assistance Agreement: means that certain agreement by and between DIRECTV, Inc. and the Company dated on or about the date hereof, relating to certain operational matters involving the Company.

Disclosure Schedule: means the written disclosures to the representations and warranties
of the Company delivered to the Investors in connection with this Agreement.

Disqualified Stock: means any class or series of Capital Stock of any Person that by its terms or otherwise is (i) required to be redeemed prior to the Stated Maturity of the Notes, (ii) redeemable at the option of the holder of such class or series of Capital Stock at any time prior to the Stated Maturity of the Notes, or (iii) convertible into or exchangeable for Capital Stock referred to in clause (i) or (ii) above or Indebtedness having a scheduled maturity prior to the Stated Maturity of the Notes.

ERISA: means the Employee Retirement Income Security Act of 1974, as amended.

6

Event of Default: has the meaning specified in Section 12.1.

Exchange Act: means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, all as the same shall be in effect at the time.

Fair Market Value: means the price that would be paid in an arm's- length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined in good faith by the Board of Directors, whose determination shall be c onclusive
if evidenced by a Board Resolution; provided that for purposes of Section 9 of this Agreement determining the Fair Market Value of a Note, such value shall be determined by a firm of investment bankers of national standing, selected by the Holders exercising a put under Section 9, with the consent of the Company, such consent not to be unreasonably withheld, with such firm valuing the equity value of the Company on an as-converted basis, without taking account of a control premium or a minority discount.

Family of Investment Companies: has the meaning specified under the definition of "Qualified Institutional Buyer."

Federal Bankruptcy Code: means Title 11, United States Code.

FCC: means the Federal Communications Commission.

FCC License: means the Company's license from the FCC to operate its satellite digital audio radio service in the United States.

Financing: has the meaning specified in the Recitals.

Financing Purposes: has the meaning specified in the Recitals.

GAAP: means generally accepted accounting principles in the United

States of America as in effect as of the date hereof, including, without limitation, those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a sign ificant segment
of the accounting profession.

GM: means General Motors Corporation, a Delaware corporation.

Governmental Licenses: has the meaning specified in Section 4.8.

Guarantee: means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance, or supply funds for the purchase, or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financia l
statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the

7

obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning.

High Yield Debt: means secured or unsecured debt securities issued by the Company in a registered public offering or an offering to Qualified Institutional Buyers and/or institutional Accredited Investors under Rule 144A of the Securities Act of at least $50 million after the Closing Date, with or without a
ttached warrants or quasi-equity rights.

Holder: means, with respect to each Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to
Section 10.

Holders: means, with respect to the Notes, all persons in whose names such Notes are registered in the register maintained by the Company pursuant to this Agreement.

HSR Act: means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Hughes: means Hughes Space and Communications International, Inc., a Delaware corporation.

Incur: means, with respect to any Indebtedness, to incur, create, issue, assu
me, Guarantee or otherwise become liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, such Indebtedness; provided, that neither the accrual of interest nor the accretion of original issue discount shall be considered an Incurrence of Indebtedness.

Indebtedness: means, with respect to any Person at any date of determination (without duplication), (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto, but excluding obligations with respect to letters of credit (including trade letters of credit) securing obligations (other than obligations described i n (i) or (ii) above or (v), (vi)
or (vii) below) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if drawn upon, to the extent such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement), (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services, except Trade Payables, (v) all obligations of such Person as lessee under Capitalized Leases, (vi) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided that the amount of such Indebtedness shall be the lesser of (A) the Fair Market Value o f such asset at
such date of determination and (B) the amount of such Indebtedness, (vii) all Indebtedness of other Persons Guaranteed by such Person to the extent such Indebtedness is Guaranteed by such Person and (viii) to the extent not otherwise included in this definition, obligations under Currency Agreements and Interest Rate

8

Agreements. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation,

provided, however, that (A) the amount outstanding at any time with respect to any Indebtedness issued with original issue discount is the original issue price (plus any accreted value thereon) of such Indebtedness and (B) Indebtedness shall not include any liability for federal, state, local or other tax es.

Interest Capitalization Date: has the meaning specified in Section 2(a).

Interest Period: has the meaning specified under the definition of "LIBOR."

Interest Rate: means a rate per annum of LIBOR plus 5% of the unpaid principal amount of the Note (including without limitation any Capitalized Interest).

Interest Rate Agreement: means any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement designed to protect the Company or any Subsidiaries of the Company against fluctuations in interest rates in respect of Indebtedness to or under which the Company or any of its Subsidiaries is a party or a beneficiary on the date hereof or becomes a part
y or a beneficiary hereafter, provided that the notional principal amount thereof does not exceed the principal amount of the Indebtedness of the Company and its Subsidiaries that bears interest at floating rates.

Internal Revenue Code: means the Internal Revenue Code of 1986, as amended.

Investment: in any Person means any direct or indirect advance, loan or other extension of credit (including without limitation by way of Guarantee or similar arrangement, but excluding advances to customers in the ordinary course of business that are, in conformity with GAAP, recorded as accounts receivable on the balance sheet of the Company or its Subsidiaries) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Ca
pital Stock, bonds, notes, debentures or other similar instruments issued by, such Person.

Investment Company Act: means the Investment Company Act of 1940, as amended.

Investor and Investors: has the meaning specified in the Preamble.

Investor Note: has the meaning specified in Section 2.

ITU: means the International Telecommunication Union.

LIBOR: means (i) the arithmetic mean (rounded upward, if necessary, to the nearest 1/100th of 1%) of the offered quotations (expressed as a rate per annum) for Dollar deposits for the then next occurring six month period (each an "Interest Period") as at 11:00 A.M., London time, on the day two London Business
Days prior to the first day of such Interest Period as set forth on the Reuters information display page entitled "LIBO" (or such

9

other page as may replace the LIBO page on that system for the purpose of displaying London interbank offered rates) (the "Reuters Screen") available to subscribers of the Reuters electronic display terminal, provided that two or more such offered quotations are available on the Reuters Screen; or

(ii) if fewer than two such offered quotations are available on the Reuters Screen, or if the Reuters Screen is unavailable, the arithmetic mean (rounded upwards, if necessary, to the nearest 1/100th of 1%) of the respective rates notified to Citibank, N.A. by at least three money center banks in the London interbank market as the rate at which it is offered Dollar deposits and in an amount equal or comparable to the Note and for the Interest Period at or a bout 11:00 A.M., London time, on the day two London Banking Days prior to the first day of such Interest Period.

Lien: means any mortgage, pledge, security interest, encumbrance,

lien or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof or any agreement to give any security interest).

Madison Dearborn: means Madison Dearborn Capital Partners III, L.P., Madison Dearborn Special Equity III, L.P., and Special Advisors Fund I, LLC.

Material: means material in relation to the business, operations, affairs, financial condition, assets, or properties of the Company and its Subsidiaries taken as a whole.

Material Adverse Effect: means a material adverse effect on the

properties, business, operations, earnings, assets, liabilities or financial condition of the Company and the Subsidiaries, taken as a whole, or on the ability of the Company or its Subsidiaries to perform their respective obligations under this Agreement, the Note or any of the Transaction Documents.

Maturity Date: has the meaning specified in Section 2, as it may be modified or amended pursuant to the terms hereof.

Note: has the meaning specified in Section 2.

Notes: has the meaning specified in Section 2.

OnStar Distribution Agreement: means the distribution agreement between GM/OnStar, a division of General Motors Corporation, and XM Satellite Radio Inc. providing for the install
ation and distribution of XM receivers in General Motors automobiles.

Party or Parties: has the meaning specified in the preamble to this Agreement.

Permitted Investment: means (i) short-term cash investments; (ii) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses in accordance with GAAP; and (iii) stock, obligations or securities received in satisfaction of judgments.

Permitted Liens: means (i) Liens for taxes, assessments, governmental charges or claims that are being contested in good faith by appropriate legal proceedings promptly

10

instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (ii) statutory and common law Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other similar Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemplo yment
insurance and other types of social security; (iv) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory or regulatory obligations, bankers' acceptances, surety and appeal bonds, government contracts, performance and return-of-money bonds and other obligations of a similar nature incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money); (v) easements, rights-of-way, municipal and zoning ordinances and similar charges, encumbrances, title defects or other irregularities that do not materially interfere with the ordinary course of business of the Company or its Subsidiaries; (vi) Liens (including extensions and renewals thereof) upon real or personal property acquired after the date hereof; provided that (a) such Lien is created solely for the purpose of securing Indebtedness Incurred, in accordance with Section 7.8, (1) to finance the cost of the item of property or assets subject there to and such
Lien is created prior to, at the time of or within six (6) months after the later of the acquisition, the completion of construction or the commencement of full operation of such property or (2) to refinance any Indebtedness previously so secured, (b) the principal amount of the Indebtedness secured by such Lien does not exceed one hundred percent (100%) of such cost and (c) any Lien permitted by this clause shall not extend to or cover any property or assets other than such item of property or assets and any improvements on such item;
(vii) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Subsidiaries, taken as a whole; (viii) Liens encumbering property or assets under construction arising from progress or partial payments by a customer of the Company or its Subsidiaries relating to such property or assets; (ix) any interest or title of any Person in the property subject to the Satellite Contract; (x) Liens ari sing from filing Uniform Commercial Code financing statements regarding leases; (xi) Liens in favor of the Company or its Subsidiaries; (xii) Liens arising from the rendering of a final judgment or order against the Company or its Subsidiaries that does not give rise to an Event of Default; (xiii) Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and the products and proceeds thereof; (xiv) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (xv) Liens encumbering customary initial deposits and margin deposits, and other Liens that are within the general parameters customary in the industry and incurred in the ordinary course of business, in each case, securing Indebtedness under Interest Rate Agreements and Currency Agreements and forward contracts, options, future contracts, futures options or sim ilar agreements or arrangements designed solely to protect the Company or its Subsidiaries from fluctuations in interest rates, currencies or the price of commodities; (xvi) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Company or any of its Subsidiaries in the ordinary course of business in accordance with the past practices of the Company and its Subsidiaries prior to the date hereof; (xvii) Liens on receivables to secure receivables-based financing permitted under Section 7.8;

11

and (xviii) Liens in respect of Indebtedness permitted or approved under Section 7.8; (xix) Liens existing on the date hereof and disclosed herein; (xx) Liens granted after the date hereof on any assets or Capital Stock of the Company or its Subsidiaries created in favor of the holder of the Notes; (xxi) Liens with respect to the assets of any Subsidiaries of the Company granted by such Subsidiaries to the Company to secure Indebtedness owing to the Company.

Person: means any individual, partnership, corporation, joint venture, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof.

Potentia
l Event of Default: means an event or condition which, with notice or lapse of time or both, would become an Event of Default.

Preferred Stock: as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation.

Qualified Initial Public Offering: has the meaning specified in Section 8.1.

Qualified Institutional Buyer: means:

(i) Any of the following entities, acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with the entity:

(A) Any insurance company as defined in section 2(13) of the Securities Act;

(B) Any investment company registered under the Investment Company Act or any business development company as defined in section 2(a)(48) of that act;

(C) Any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958 (the "Small Business Investment Act");

(D) Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees;

(E) Any employee benefit plan within the meaning of Title I of
ERISA;

(F) Any trust fund whose trustee is a bank or trust company and whose participants are exclusively plans of the types identified in paragraph

12

(a)(i)(D) or (E) above, except trust funds that include as participants individual retirement accounts or H.R. 10 plans;

(G) Any business development company as defined in section 202(a)(22) of the Advisers Act;

(H) Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation (other than a bank as defined in section 3(a)(2) of the Securities Act or a savings and loan association or other institution referenced in section 3(a)(5)(A) of Securities Act or a foreign bank or savings and loan association or equivalent institution), partnership, or Massachusetts or similar business trust; and

(I) Any investment adviser registered under the Advisers Act.

(ii) Any dealer registered pursuant to section 15 of the Exchange Act, acting for its own account or the accounts of other Qualified Institutional Buyers, that in the aggregate owns and invests on a discretionary basis at least $10 million of securities of issuers that are not affiliated with the dealer, provided, however, that securities constituting the whole or a part of an unsold allotment to or subscription by a dealer as a participant in a public offering shall not be deemed to be owned by such dealer.

(iii) Any dealer registered pursuant to section 15 of the Exchange Act acting in a riskless principal transaction on behalf of a Qualified Institutional Buyer.

(iv) Any investment company registered under the Investment Company Act, acting for its own account or for the accounts of other Qualified Institutional Buyers, that is part of a family of investment companies which own in the aggregate at least $100 million i n securities of issuers, other than issuers that are affiliated with the investment company or are part of such family of investment companies. "Family of investment companies" means any two or more investment companies registered under the Investment Company Act, except for a unit investment trust whose assets consist solely of shares of one or more registered investment companies, that have the same investment adviser (or, in the case of unit investment trusts, the same depositor), provided, however, that for purposes of this section:

(A) Each series of a series company (as defined in Rule 18f-2 under the Investment Company Act) shall be deemed to be a separate investment company; and

(B) Investment companies shall be deemed to have the same adviser (or depositor) if their advisers (or depositors) are majority-owned subsidiaries of the same parent, or if one investment company's
adviser (or depositor) is a majority-owned subsidiary of the other investment company's adviser (or depositor).

(v) Any entity, all of the equity owners of which are Qualified Institutional Buyers, acting for its own account or the accounts of other Qualified Institutional Buyers,

13

and

(vi) Any bank as defined in section 3(a)(2) of the Securities Act, any savings and loan association or other institution as referenced in section 3(a)(5)(A) of the Securities Act, or any foreign bank or savings and loan association or equivalent institution, acting for its own account or the accounts of other Qualified Institutional Buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with it and that has an audited net worth of at least $25 million as demonstrated in its latest annual financial statements, as of a date not more than 16 months preceding the date of sale of the Notes in the case of a U.S. bank or savings and loan association, and not more tha n 18 months preceding such date of sale for a foreign bank or savings and loan association or equivalent institution.

Registration Rights Agreement: means the registration rights agreement by and among the Parties hereto, American Mobile and Baron to be entered into at Closing, containing the terms set forth in the Term Sheet and other customary terms and conditions.

Regulatory Agreement: means that certain regulatory agreement by and among American Mobile, WorldSpace, Inc., WorldSpace International Network, and the Company, dated on or about the date hereof.

Repayment Event: means any event or condition which gives the holder of any note, debenture or other evidence of Indebtedness (or any Person acting on such holder's behalf) the right to require, pursuant to an accel eration of
claims or prior to the Stated Maturity thereof, the repurchase, redemption or repayment of all or a portion of such Indebtedness by the Company or its Subsidiaries.

Requisite Approval: means written approval, consent or waiver by the Holders of a majority of the aggregate outstanding principal amount of the Convertible Notes.

Responsible Officer: shall mean the Chairman, President, Chief Executive Officer, Chief Financial Officer or General Counsel of the Company.

Reuters Screen: has the meaning specified under the definition of "LIBOR."

Satellite Contract: means the Satellite Purchase Contract for In- Orbit Delivery by and between XM Satellite Radio Inc. and Hughes dated March 20, 19
98, as amended from time to time.

Schedules: means the schedules attached to the Disclosure Schedule.

Securities: has the meaning specified in Section 5.1.

Securities Act: means the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

14

Shareholders' Agreement: means the shareholders' agreement by and among the Company, the Investors and American Mobile to be entered into at Closing containing the terms set forth in the Term Sheet.

Small Business Investment Act: has the meaning specified under the definition of "Qualified Institutional Buyer."

Stated Maturity: means, (i) with respect to any debt security, the date specified in such debt security as the fixed date on which the final installment of principal of such debt security is due and payable and (ii) with
respect to any scheduled installment of principal of or interest on any debt security, the date specified in such debt security as the fixed date on which such installment is due and payable.

Stock Plan: means any duly approved employee restricted stock plan and/or stock option incentive plan of the Company, including without limitation the Company's 1998 Shares Award Plan dated as of June 1, 1998, any amendments and/or restatements thereof.

Subsidiaries: means, with respect to any Person, any corporation, association or other business entity of which more than fifty percent (50%) of the voting power of the outstanding Voting Stock is owned, directly or indirectly, by such Person or one or other Subsidiaries of such Person.

Tax: means any federal, state, local, or foreign income, gross

receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Internal Revenue Code (S) 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

TCM Group: means Telcom, Columbia Capital and Madison Dearborn.

TCM Group Operational Assistance Agreement: means that certain agreement by and between an entity to be formed by the TCM Group and the Company dated on or about the date hereof, related to certain operational matters involving the Company.

T
elcom: means Telcom-XM Investors L.L.C., a Delaware limited liability company.

Term Sheet: means the Summary of Principal Terms and Conditions of the Proposed Issuance of Series A Subordinated Convertible Notes in the form accepted by the Parties simultaneously with the execution of this Agreement.

Trade Payables: means, with respect to any Person, any accounts payable or any other indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such Person or any of its Subsidiaries arising in the ordinary course of business in connection with the acquisition of goods or services.

15

Transaction Documents: means all documents delivered in connection with the transactions contemplated by this Agreement, including without limitation the Notes, the XM Exchange Agreement, the OnStar Distribution Agreement, the Shareholders Agreement, the DIRECTV Operational Assistance Agreement, the OnStar Distribution Agreement, the Clear Channel Operational Assistance Agreement, the TCM Group Operational Assistance Agreement, the WorldSpace Operational Assistance Agreement, the Satellite Contract, the Registration Rights Agreement and any documents or instruments contemplated by or executed in connection with any of the transactions contemplated hereby or thereby.

Voting
Stock: means with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person.

WorldSpace International Network: means WorldSpace International Network Inc., a British Virgin Islands corporation.

WorldSpace, Inc.: means WorldSpace, Inc., a Maryland corporation.

WorldSpace Operational Assistance Agreement: means that certain agreement by and between Clear Channel and the Company dated on or about the date hereof, related to certain operational matters involving the Company

XM Exchange Agreement: means the agreement among American Mobile,

WorldSpace, Inc. and the Company, dated on or about the date hereof, providing for the restructuring of the investment of WorldSpace, Inc. in the Company, or any substantially equivalent agreement.

XM Satellite Radio Inc.: means XM Satellite Radio Inc., a Delaware corporation with its principal office at 1250 23rd St. NW, Suite 57, Washington, D.C. 20037.

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2. Issuance of the Notes (a) The Company has duly authorized the Series A Subordinated Convertible Notes Due December 31, 2004, in the principal amount as is set forth on Attachment 2(a) for each Investor (each, an "Investor Note") (each such Investor Note, together with any Notes issued in substitution or exchange therefor pursuant to this Agreement, are herein called the "Convertible Note" or the "Note" and collectively, the "Convertible Notes" or the "Notes"). Each Note will bear interest from the date thereof at the Interest Rate, capitalized quarterly in arrears in each year on the day which numerically corresponds to the date of the Note in each of the three, six, nine and twelve mon
ths subsequent to the month of the Note (or, if any such month has no such numerically corresponding day, on the last Business Day of such month) commencing with the date three months from the date thereof (each, an "Interest Capitalization Date"), will mature either: (x) on December 31, 2004, or (y) by reason of automatic extension without any action by any Party, if the Company issues High Yield Debt prior to June 30, 2001, on the first Business Day following the date that is six (6) months from the maturity date of such High Yield Debt or, following such first issuance, any other High Yield Debt issued prior to June 30, 2002, unless earlier converted in accordance with the terms hereof (the "Maturity Date"), and will be in substantially the form of Exhibit A attached hereto, with such changes thereto, if any, as may be approved by the Parties.

(b) Each Note shall be governed by, and the rights and the benefits of th e Investor determined in accordance with, the terms and conditions of this Agreement.

(c) Any voluntary or mandatory conversion of the principal amount (including without limitation any Capitalized Interest) of any of the Convertible Notes under the terms of this Agreement, whether or not such Convertible Note is held by the respective Investor or any subsequent Holder, shall be as follows: (i) the Note purchased by Clear Channel shall be convertible solely into Class A Common Stock; (ii) the Note purchased by DIRECTV shall be convertible solely into Class A Convertible Preferred Stock; (iii) the Note purchased by GM shall be convertible solely into Class A Convertible Preferred Stock; and (iv) the Notes purchased by Telcom, Columbia Capital and Madison Dearborn shall be convertible solely into Class A Common Stock;

provided, however, that if the Holder of either the DIRECTV Note or the GM Note

is a non-Affiliate of DIRECTV or GM, respectively, such Note shall be convertible solely into Class A Common Stock. For purposes of this Agreement, the stock into which any such Convertible Note has been converted in accordance with this Section 2(c) shall be referred to as the "Conversion Stock."

(d) No prepayment of any Note shall be permitted without the approval from the Holders of Notes not being prepaid representing a majority of the aggregate outstanding principal amount of the Notes.

17

3. Interest and Repayment With respect to each Note:

3.1. Interest on the Notes Any and all accrued interest on the unpaid principal amount of each Note shall be capitalized and added to such unpaid principal amount, as of each Interest Capitalization Date, as additional principal amounts ("Capitalized Interest") upon which future interest payments shall accrue at the Interest Rate.

3.2. Interest after Maturity In the event the Company shall fail to make any payment of the principal amount of, or interest on, any Note when due, after giving effect to any applicable grace period provided for in this Agreement, the Company shall pay interes
t on such unpaid amount, payable from time to time on demand, from the date such amount shall have become due to the date of payment thereof (after as well as before judgment), accruing on a daily basis, at a per annum rate equal to the sum of the Interest Rate plus one percent (1.0%).

3.3. Payments and Computations (a) The Company will pay all sums becoming due on each Note for interest or principal in the manner and at the address specified for such purpose as each Investor shall from time to time specify to the Company in writing for such purpose, without the presentation or surrender of the Note or the making of any notation thereon, except that if a Note is paid in full, following such payment, the Note shall be surrendered to the Company at its principal office for cancellation.

(b) Interest on each Note shall be calculated for the actual number of days (including the first day but excluding the last day of any relevant period) elapsed and shall be computed on the basis of a 360-day year of twelve 30-day months.

3.4. Payment at Maturity or Conversion (a) The outstanding principal amount of each Note (including without limitation any Capitalized Interest), together with any accrued interest thereon, shall be due and payable in full in cash on the earlier of: (i) the Maturity Date, or (ii) such other date as the Note becomes due and payable pursuant to this Agreement.

(b) Upon any conversion of any Note hereunder, the principal amount of each Note (including without limitation all Capitalized Interest), together with any accrued interest thereon, shall be converted into a number of shares of either Class A Common Stock or Class A Preferred Stock, as appropriate, equal to such principal amount and interest divided by the Conversion Price.

4. Representations, Warranties and Agreements of the Company The Company represen
ts, warrants and agrees as follows:

4.1. Incorporation, Standing, etc. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted and as presently proposed to be conducted, to enter into this Agreement, to issue the Notes and to carry out the terms of this Agreement and the Notes. The Company has, by all necessary corporate action, duly authorized the execution and

18

delivery of this Agreement and of the Notes and the performance of its obligations hereunder and under the Notes.

4.2. Subsidiaries XM Satellite Radio Inc. is the only Subsidiary of the Company. The Subsidiary of the Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. The Subsidiary of the Company has all requisite power and authority to own and operate its properties and to carry on its business as now conducted and as presently proposed to be conducted. Except as disclosed in Schedule 4.2, all the outstanding shares of Capital Stock of the Subsidiary of the Company are duly authorized, validly issued, fully paid and non-assessable, and all s
uch shares are owned beneficially and of record by the Company free and clear of any Lien.

4.3. Disclosure The Confidential Memorandum delivered to the Investor does not include any untrue statement of material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

4.4. Qualification Each of the Company and its Subsidiaries is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction in which the character of the properties owned or leased by it therein or in which the transaction of its business makes such qualification necessary.

4.5. Authorization of Agreement and Notes This Agreement and the Note have been duly authorized, executed and delivered by the Company. Upon acceptance of this Agreement by the signature of a Responsible Officer on the signature page
hereof, this Agreement will constitute a legal, valid, binding and enforceable obligation of the Company, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

4.6. Absence of Defaults and Conflicts Except as disclosed in Schedule
4.6, neither the Company nor any of its Subsidiaries is in violation of its

respective certificate of incorporation, bylaws or other charter documents or is in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which either of them is a party or by which either of them may be bound, or to which either of the
property or assets of the Company or its Subsidiaries is subject (collectively, "Agreements and Instruments"); and the execution, delivery and performance of this Agreement and any other Agreement or Instrument entered into or issued or to be entered into or issued by the Company or any of its Subsidiaries in connection with the transactions contemplated hereby or thereby, and the consummation of the transactions contemplated herein or therein (including without limitation the issuance of the Note) and compliance by the Company with its obligations hereunder and thereunder, have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or its Subsidiaries pursuant to such Agreements and Instruments, nor will suc
h action result in any violation of the provisions of the certificate of incorporation, bylaws or

19

other charter documents of the Company or its Subsidiaries or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or its Subsidiaries or any of their assets or properties.

4.7. Absence of Proceedings Except as disclosed in Schedule 4.7, there is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending or, to the best of the Company's knowledge, threatened, against or affecting the Company or its Subsidiaries or any of their respective officers or directors in their capacity as such or any
of their respective property or assets.

4.8. Possession of Licenses and Permits Except as disclosed in Schedule
4.8, (i) the Company and its Subsidiaries possess such material permits,

certificates, licenses, approvals, consents, orders and other authorizations (collectively, "Governmental Licenses") issued by the appropriate Federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by them or planned to be conducted by them as described in the Confidential Memorandum; (ii) the Company and its Subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses;
(iii) all of the Governmental Licenses are valid and in full force and effect;
(iv) and neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to the revocation, withdrawal, cancellation, modification, suspension or non-renewal of any such Governmental Licenses.

4.9. No Violations of Laws Neither the Company nor its Subsidiaries have violated any law, including without limitation (i) the U.S. Communications Act of 1934, as amended, and the rules or regulations promulgated thereunder, (ii) any applicable state law or regulation concerning intra-state telecommunications, and (iii) any foreign law or regulation concerning international communications, in each case the violation of which would have a Material Adverse Effect.

4.10. Internal Accounting Controls The books, records and accounts of the Company and its Subsidiaries accurately and fairly reflect, in all material respects, in reasonable detail, the transactions in and dispositions of the assets of the Company and its Subsidiaries. The Company and its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded amount for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

4.11. Tax Returns and Payments The Company and its Subsidiaries have filed all income tax returns required by law to be filed by them and have paid all taxes shown to be due and payable on such returns and all other taxes, assessments, fees and other governmental charges levied upon them and their respective properties, assets, income and franchises which are due and payable, to the extent such taxes and assessments have become due and payable and before they have become delinque
nt, except for any taxes and assessments the amount,

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applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or its Subsidiaries, as the case may be, has established adequate reserves in accordance with GAAP. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of Federal, state and foreign income taxes for all fiscal periods are adequate in the reasonable opinion of the Company and, to the best of the Company's knowledge, there are no additional assessments for such periods or any basis therefor.

4.12. Indebtedness Except as disclosed in Schedule 4.12, neither the Company nor any of its Subsidiaries is in default and no waiver of default is
currently in effect, in the payment of any interest or principal on any Indebtedness of the Company or such Subsidiaries.

4.13. Title to Properties; Liens Except as disclosed in Schedule 4.13, the Company and its Subsidiaries each have good and marketable title to all of their respective properties and assets, free and clear of all Liens, except for Permitted Liens.

4.14. Patents, Trademarks, Authorizations, etc. Except as disclosed in Schedule 4.14, the Company and its Subsidiaries own, possess or have the right to use (without any known conflict with the rights of others) all patents, trademarks, service marks, trade names, copyrights, licenses and authorizations which are necessary to the conduct of their respective businesses as conducted on the date hereof.

4.15. Governmental Consents Except as disclosed in S chedule 4.15 or as may
be required to be obtained or made under the Securities Act and applicable state securities laws in connection with the exercise of any registration rights of a Holder provided for in the Registration Rights Agreement, neither the Company nor its Subsidiaries are required to procure, make or file any consent, approval or authorization of, or any notice to, of filing, registration or qualification with, any court or administrative or governmental body in order to execute and deliver this Agreement and the Notes and to perform its obligations hereunder and under any and all Transaction Documents.

4.16. Investment Company Act The Company is not, and upon the issuance of the Note as herein contemplated will not be, an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act, nor is the Company an "open- ended investment trust,"
"unit investment trust" or "face-amount certificate company" that is or is required to be registered under Section 8 of the Investment Company Act.

4.17. Public Utility Holding Company Act The Company is not a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," as such terms are defined in the Public Utility Holding Company Act of 1935, as amended.

4.18. Restrictions Except for the restrictions contained herein or under applicable law, there will be no other restrictions upon the Notes (including any restrictions set forth in any existing shareholder agreement), with the exception of any restrictions contained in the Shareholders' Agreement and in the Registration Rights Agreement.

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4.19. Capitalization The authorized, issued and outstanding Capital Stock of the Company is as set forth in Schedule 4.19 hereof under "Capitalization"; and all issued and outstanding shares of the Capital Stock of the Company are validly issued, fully paid and non-assessable. After giving effect to the closing of all of the transaction contemplated in (i) the XM Exchange Agreement and (ii) this Agreement (including the conversion of all Notes into Conversion Stock), and without regard to options issued under the Stock Plan, Holders will hold 47.4% of issued and outstanding shares of Common Stock of the Company and 60.1% of issued and outstanding shares of Capital Stock of the Company, without
giving effect to options under the Stock Plan. Except for the Notes issued to American Mobile in connection with the American Mobile Exchange Agreement, the Notes issued by American Mobile to Baron, and options and rights granted pursuant to the Company's Stock Plan, neither the Company nor any of its Subsidiaries has outstanding any securities convertible into or exchangeable for any shares of its Capital Stock nor does it have outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, any of its Capital Stock or securities convertible into or exchangeable for any of its Capital Stock. Prior to the Closing, the Company will duly authorize and reserve for issuance the Conversion Stock and the Conversion Stock will, when issued, be duly and validly issued, fully paid and non-assessable and free from all initial Liens
. 4.20. Seniority of Notes The Notes shall rank senior to all other existing Indebtedness of the Company as of the date of issuance of the Notes.

4.21. Patent Applications As of the Closing Date, the Company has filed with the U.S. Patent and Trademark Office applications for not less than five
(5) patents regarding technology anticipated to be employed in its XM Radio System.

4.22. Material Events Except as disclosed on Schedule 4.22, since March 31, 1999, there has not been with respect to the Company or any of its Subsidiaries:

(a) any event with respect to their properties, business, prospects, operations, earnings, assets, liabilities or condition (financial or otherwise) which could reasonably be expected to result in a Material Adverse Effect; or

(b) any damages, destruction or loss to the properties or assets of the Company or any o f its Subsidiaries, whether or not covered by insurance, that has or could reasonably be expected to have a Material Adverse Effect or that in the aggregate exceed $100,000; or

(c) any loss or waiver by the Company of any of its Subsidiaries of any right, not in the ordinary course of business, or any material debt owed to it; or

(d) other than the sales of assets in the ordinary course of business (including pursuant to sale leaseback transactions), any sale, transfer or other disposition of, or agreements to sell, transfer or otherwise dispose of, any assets by the Company or any of its Subsidiaries in excess of $100,000 in the aggregate, or any cancellation or agreement to cancel any debt or claims of the Company or any of its Subsidiaries; or

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(e) any declaration or setting aside or payment of any dividend (whether in cash, property or stock) or any distribution (whether in cash, property or stock) or other payment with respect to any of the Capital Stock of the Company or any of its Subsidiaries, or any repurchase, purchase or other acquisition of, or agreement to repurchase, purchase or otherwise acquire, any of the Company's or any of its Subsidiaries' Capital Stock; or

(f) any amendment or termination of any contract, agreement or license to which the Company or any of its Subsidiaries is a party or by which it is bound, except where such amendment or termination could not be reasonably expected to have a Material Adverse Effect; or

(g) any resignation or termination or empl oyment of any key employee, and there is no impending or threatened resignation or termination or terminations of employment of any key employee; or

(h) any labor dispute (including, without limitation, any negotiation, or request for negotiation, for any labor representation or any labor contract) affecting the Company or any of its Subsidiaries; or

(i) any application of any existing (or the enactment of any new) environmental law or personnel, product safety law or other governmental regulation that has or which could reasonably be expected to have a Material Adverse Effect.

4.23. Financial Statements The financial statements and schedules of the Company and its consolidated subsidiaries included in the Confidential Memorandum comply as to form in all material respects with applicable accounting requirements, present fairly the financial conditions of the Company and its consolidated subsidiaries, as of the respective dates thereof and the results of

operations and cash flows of the Company and its consolidated subsidiaries, for the respective periods covered thereby, all in conformity with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

4.24. No Undisclosed Fees Except as disclosed in writing to the Investors, there are no fees or payments to be made by the Company to bankers, brokers or agents with regard to the financing.

4.25. No Transactions with Affiliates Except as disclosed in the Confidential Memorandum, neither the Company nor the Subsidiaries has engaged in any transaction with an Af
filiate on terms any less favorable to the Company or the Subsidiaries, as the case may be, then would likely have been obtainable in arm's length dealing with a Person not an Affiliate.

4.26. Satellite Launch The Company has no reason to believe that the scheduled launch of it satellites will not occur during the scheduled launch periods under the Satellite

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Contract as described in the Confidential Memorandum, except as the Satellite Contract may be amended prior to the Closing.

4.27. Appropriate Technology The Company has no reason to believe that the technology utilized in the XM Radio System (as such term is defined and described in the Confidential Memorandum) is not fit to accomplish its intended purpose as described in the Confidential Memorandum.

4.28. CD Radio Litigation The Company believes it more likely than not that it will prevail in the action alleging patent infringement brought by CD Radio, as described in the Confidential Memorandum, regarding the Company's use of certain technology in the development of a satell ite digital audio radio
service.

4.29. Registration Rights Except as provided in the Registration Rights Agreement, there are no contracts, agreements or understandings between the Company and any other Person granting such Person the right to require the Company to file a Registration Statement under the Securities Act with respect to any Securities that the Company owned or to be owned by such a Person or to require the Company to include such Securities in the Securities registered pursuant to any of the Registration Statements filed by the Company under the Securities Act.

5. Representations and Warranties of the Investor Each Investor represents and warrants to and agrees with the Company that:

5.1. Risks of Investment It recognizes that the purchase of a Note and any securities which may be issued upon the conversion thereof (collectively, the "Securities") i
nvolves a high degree of risk including, but not limited to, the following: (i) the Company is a development stage business with no operating history and requires substantial funds in addition to the proceeds of the Financing; (ii) an investment in the Company is highly speculative, and only investors who can afford the loss of their entire investment should consider investing in the Company and purchasing the Securities; (iii) the Investor may not be able to liquidate his investment; (iv) transferability of the Securities is restricted; (v) in the event of a disposition of the Securities, the Investor could sustain the loss of its entire investment and (vi) the Company does not anticipate the payment of dividends in the foreseeable future. Such Investor has reviewed the description of such risks set forth in the Confidential Memorandum.

5.2. Investment Experience It has prior investment experience, including investment in securities which are non-listed, unregiste red and/or not traded on
the Nasdaq National or SmallCap Market, a national or other stock exchange or on the automated quotation system of the National Association of Securities Dealers, Inc., for actively traded stocks, or has employed the services of an investment adviser, attorney and/or accountant experienced in evaluating such investments to read all of the documents furnished or made available by the Company to it and to evaluate the merits and risks of such an investment on such Investor's behalf. To the extent necessary, it has retained, at its own expense, and relied upon appropriate professional advice regarding the investment, tax and legal merits and consequences of this Agreement and its purchase of the Securities hereunder.

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5.3. Ability to Bear Risk Either by reason of its business or financial experience or the business or financial experience of its professional advisers (who are unaffiliated with, and who are not compensated by, the Company or any Affiliate or selling agent of the Company, directly or indirectly) each Investor has the capacity to protect its own interests in connection with the transaction contemplated hereby, and is able to bear the economic risk which it hereby assumes.

5.4. Receipt and Review of Documentation It hereby acknowledges receipt and review of (i) the Private Placement Memorandum dated May 1999, the Summary of Principal Terms and Conditions attached the reto as supplemented and amended
through the date hereof by the Term Sheet, (collectively, the "Confidential Memorandum"), and (ii) this Agreement and all attachments to it; and hereby represents that it has been furnished by the Company during the course of this transaction with information regarding the Company which such Investor has requested, has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Company concerning the terms and conditions of the Securities, and has received any additional information which it has requested.

5.5. No General Solicitation by Company It was contacted regarding the sale of the Securities by the Company (or an authorized agent or representative thereof) with whom the Investor had a prior substantial pre-existing relationship and no securities were offered or sold to it by the Company (or an authorized agent or representative thereof) by m eans of any form of general
solicitation or general advertising, including: (i) any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio, or (ii) attendance at any seminar or meeting whose attendees were invited by any general solicitation or general advertising.

5.6. Organization, Good Standing, Corporate Authority It (or if it is an employee benefit plan governed under ERISA, the fiduciary signing on its behalf) is duly organized and validly existing as a corporation or limited liability company, as the case may be, and in good standing under the laws of its jurisdiction of organization, with requisite power and authority (corporate and other) to own its properties and conduct its business.

5.7. Benefit Plan Investor Each Investor agrees to complete Attachment 5.7

as it applies to it.

5.8. No Public Market It understands that there currently is no public market for the Securities. It understands and hereby acknowledges that, except as provided herein, the Company is under no obligation to register any of the Securities under the Securities Act or any state securities or "blue sky" laws.

5.9. Due Authorization The execution and delivery of, and the performance by such Investor of its obligations under, this Agreement have been duly and validly authorized, and, assuming due authorization, execution and delivery by the Company, upon acceptance of the Agreement by the signature of a duly authorized officer of such Investor on the signature page hereof, this Agreement will constitute a legal, valid, binding obligation of such Investor, enforceable against such Investor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, m oratorium and similar laws affecting
creditors' rights

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generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

5.10. Qualified Institutional Buyer or Accredited Investor It is:
(a) either

(i) a Qualified Institutional Buyer, or

(ii) an Accredited Investor; and

(b) aware that the sale of Securities to it is being made in reliance on the exemption from the registration requirements provided by Section 4(2) of the Securities Act and the regulations promulgated thereunder; and

(c) acquiring such Securities for its own account or the account of an Accredited Investor or a Qualified Institutional B uyer, as the case may be, and not with a view to any resale or distribution thereof.

6. Restrictions on Transfer Restrictions; Restrictive Legend Each Investor agrees on its own behalf and on behalf of any investor account for which it is purchasing the Securities, and each subsequent holder of the Securities by its acceptance thereof will agree, to offer, sell or otherwise transfer such Securities only in compliance with the terms and conditions set forth in the Shareholders' Agreement. Each Investor acknowledges that each certificate representing Securities will contain a legend substantially to the following effect:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDG
ED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE THE SUBJECT OF A CERTAIN SHAREHOLDERS' AGREEMENT WHICH, AMONG OTHER THINGS, CONTAINS RESTRICTIONS ON THE TRANSFER OF SUCH SECURITIES. A COPY OF THE SHAREHOLDERS' AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY.

Upon any registration of any Securities, pursuant to the Registration Rights Agreement, or upon termination of the Shareholders' Agreement, the Company shall remove the applicable legend(s) from the certificate(s) representing such Securities promptly upon request of the Holder thereof and shall promptly deliver replacement certificate(s) to such Holder.

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7. Covenants For so long as any Note is outstanding, the Company will, and will cause each of its Subsidiaries to, perform or comply with, as required, each of the following covenants:

7.1. Payment of Note and Maintenance of Office The Company will punctually pay or cause to be paid the principal and interest due in respect of such Note according to the terms thereof and hereof and will maintain an office within the continental boundaries of the United States of America where notices, presentations and demands in respect of this Agreement and the Note may be made upon it and will notify the holder of such Note of any change of location of such office. Such office is presen
tly maintained at 1250 23rd Street NW, Suite 57, Washington, DC 20037.

7.2. Payment of Taxes and Claims The Company will, and will cause its Subsidiaries to, pay and discharge promptly (a) all taxes, assessments and other governmental charges imposed upon it or any of its properties or assets or in respect of any of its franchises, business, income or profits before the same shall become delinquent and (b) all lawful claims of materialmen, mechanics, carriers, warehousemen, landlords and other similar Persons for labor, materials, supplies and rentals which, if unpaid, might by law become a lien or charge upon its property; provided, however, that none of the foregoing need be paid while being contested in good faith by appropriate proceedings initiated within the period allowed by applicable law, rule or regulation and diligently conducted so long as (i) adequate book reserves have been established in accordance wi
th GAAP with respect thereto and (ii) neither the Company's nor such Subsidiaries' title to or right to the use of its properties is materially adversely affected thereby.

7.3. Maintenance of Properties and Corporate Existence The Company will and will cause each of its Subsidiaries to:

(a) maintain its property in good condition and make all necessary renewals, replacements, additions, betterments and improvements thereto, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be conducted properly and advantageously at all times;

(b) keep adequately insured, by financially sound and reputable insurers, all of its property of a character usually insured by entities engaged in the same or a similar business similarly situated against loss or damage of the kinds and in amounts customarily insured against by such entities and with deductibles or co-insurance no greater than is customary, and carry, with such insurers in customary amounts and with deductibles or co-insurance no greater than is customary, such other insurance, including public liability insurance and liability insurance against claims for any violation of applicable law, as is usually carried by entities engaged in the same or a similar business similarly situated;

(c) keep proper books of record and account in which full, true and correct entries will be made of all its business transactions and generally maintain a system of accounting established and administered in accordance with GAAP;

(d) set aside on its books from its earnings for each fiscal year, beginning with the first such year ending subsequent to the date hereof and for each fiscal year thereafter, in

27

amounts deemed adequate in the opinion of the Company, all proper accruals and reserves which, in accordance with GAAP, should be set aside from such earnings in connection with its business, including, without limitation, reserves for depreciation, obsolescence and/or amortization and accruals for taxes for such period, including all taxes based on or measured by income or profits; and

(e) except as otherwise permitted or contemplated hereby, do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and such rights, patents, trademarks, copyrights, licenses, permits, franchises and governmental authorizations as the Company determines to be necessary for the present and presently planned future conduct of its business.

7.4. Compliance with Law Neither the Company nor its Subsidiaries will:

(a) violate any laws, ordinances, governmental rules or regulations to which it is, or might become, subject, unless the same are being contested by the Company or such Subsidiaries in good faith and by appropriate proceedings which shall effectively prevent the imposition of any penalty on the Company or such Subsidiaries for such noncompliance; or

(b) fail to use its best efforts to obtain or retain (as applicable) any patents, trademarks, service marks, trade names, copyrights, design patents, licenses, permits, franchises or other governmental authorizations necessary to the ownership of its property or to the conduct of its business.

7.5. Notice The Company will give prompt written notice to the Holder of any Event of Default or Potential Event of Default hereunder.

7.6. Merger and Sale of Assets Except with Requisite Appr oval:

(a) Except to the extent provided for in the XM Exchange Agreement, the Company will not consolidate or merge with or into any other Person or permit any other Person to consolidate with or merge into it, or sell, lease, transfer or otherwise dispose of all or substantially all of its assets (as an entirety or substantially an entirety in one transaction or a series of related transactions);

(b) No Subsidiary of the Company may consolidate or merge with or into any other Person or permit any other Person to consolidate with or merge into it (unless in either case the Subsidiary is the surviving entity and it remains a wholly-owned Subsidiary of the Company), or sell, lease, transfer or otherwise dispose of all or substantially all of its assets (as an entirety or substantially an entirety in one transaction or a series of related transactions); or

(c) The Company shall not sell, assign, lease, convey, transfer, or otherwise dispose of, nor mort gage, pledge, hypothecate, charge or otherwise encumber any of its interests in XM Satellite Radio Inc., including without limitation, (i) any equity investment in XM Satellite Radio Inc., and (ii) all Indebtedness of XM Satellite Radio Inc. in favor of the Company.

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7.7. Limitation on Transactions with Affiliates and Shareholders Except with Requisite Approval or as provided in the XM Exchange Agreement, the American Mobile Exchange Agreement and the Transaction Documents, the Company will not, and will not permit the Subsidiaries of the Company to, directly or indirectly, enter into, renew or extend any transaction (including, without limitation, the purchase, sale, lease or exchange of property or assets, or the rendering of any service) with any holder (or any Affiliate of such holder) of five percent (5%) or more of any class of Capital Stock (as converted) of the Company or with any Affiliate of the Company or its Subsidiaries, except up on
fair and reasonable terms no less favorable to the Company or such Subsidiaries than would likely be obtained, at the time of such transaction or, if such transaction is pursuant to a written agreement, at the time of the execution of the agreement providing therefor, in a comparable arm's length transaction with a Person that is not such a holder or an Affiliate.

7.8. Limitation on Indebtedness (a) Except with Requisite Approval, neither the Company nor its Subsidiaries will incur (i) Indebtedness (other than Indebtedness in respect of the Notes, the notes issued pursuant to the XM Exchange Agreement and the American Mobile Exchange Agreement and Indebtedness existing as of the date hereof) in an aggregate principal amount in excess of $25,000,000 at any one time outstanding; or (ii) any Indebtedness that is senior to or pari passu in right of payment with the Notes except as provided in
Section 13 hereof.

(b) For purposes of determining any particul ar amount of Indebtedness under this Section, (i) Guarantees, Liens or obligations with respect to letters of credit supporting Indebtedness otherwise included in the determination of such particular amount shall not be included, (ii) any Permitted Liens shall not be treated as Indebtedness, and (iii) Indebtedness incurred in respect of the Satellite Contract shall not be included in any determination under this Section.

(c) Notwithstanding any other provision of this Section, (i) the maximum amount of Indebtedness that the Company or its Subsidiaries may Incur shall not be deemed to be exceeded due solely to fluctuations in the exchange rates of currencies, and (ii) except with Requisite Approval, neither the Company nor any of its Subsidiaries may Incur any Indebtedness that is expressly subordinated to any other Indebtedness of the Company or such Subsidiaries, as the case may be, unless such Indebtedness, by its terms or the terms of any agreement or instrument pursuant to which such Indebtedne ss is outstanding, is also expressly made subordinate to the Notes at least to the extent that such Indebtedness is subordinated to such other Indebtedness.

7.9. Limitation on Restricted Payments Except with Requisite Approval, the Company will not, and will not permit its Subsidiaries, directly or indirectly, to: (i) purchase, redeem, retire or otherwise acquire for value, or declare or pay any dividend or make any distribution on or with respect to, any shares of its Capital Stock (other than the exercise by the Company of its repurchase rights as to Common Stock issued to employees or others providing services at original cost upon termination of their employment or other service relationship with the Company in connection with the exercise) held by Persons other than the Company or its Subsidiaries; (ii) make any voluntary or optional principal payment, or voluntary or optional redemption, repurchase, defeasance, or other acquisition or retirement
for value, of Indebtedness of the Company (other than, in each case, the purchase, repurchase or the

29

acquisition of Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in any case due within one
(1) year of the date of acquisition); or (iii) make any Investment, other than a Permitted Investment, in any Person.

7.10. Limitation on the Issuance and Sale of Capital Stock Except with Requisite Approval, the Company will not issue or sell, and will not permit the Subsidiaries or the Company, directly or indirectly, to issue or sell, any shares of Capital Stock of the Subsidiaries or the Company (including options, warrants or other rights to purchase shares of such Capital Stock) except: (i) to the Company; (ii) in connection with
an initial public offering of Common
Stock; (iii) to the extent required under the Company's Stock Plan; (iv) in respect of the Stock Plan, provided that such Capital Stock does not exceed 10% on a fully diluted basis of shares of Capital Stock issuable upon conversion of the Convertible Notes; and (v) to the purchasers of any issuance of High Yield Debt in such issuance.

7.11. Limitation on Liens Except with Requisite Approval, the Company will not, and will not permit any Subsidiaries of the Company to, create, incur, assume or suffer to exist any Liens of any kind other than Permitted Liens.

7.12. Protective Provisions Except with Requisite Approval, the Company will not take any action which: (i) materially alters or changes the business of the Company, (ii) effects a voluntary liquidation, dissolution or winding up of the Company, or (iii) is an action outside the ordinary cou rse of business,
including without limitation the issuance of additional equity or equity-linked securities, or the execution of material agreements with a value in excess of $25 million.

7.13. Patents Not later than four months after the Closing Date, the Company shall have filed with the U.S. Patent and Trademark Office applications for not less than twenty (20) patents regarding technology anticipated to be employed in its XM Radio System unless otherwise agreed by Holders providing Requisite Approval.

7.14. Financing Purposes The net proceeds of the Financing shall be used by the Company solely for the Financing Purposes.

7.15. Information Rights (a) The Company will deliver to the Holder audited annual financial statements within 90 days of the close of each fiscal year and unaudited quarterly financial statements within 30 days of the end of each fiscal quarter. Annual budgets will be delivered to the Holder within 30
days prior to the commencement of each fiscal year. The Company will provide the Holder or its representatives with access to the books, records and properties of the Company and officers of the Company so long as such access does not violate any federal or applicable state law. The Holder hereby agrees to maintain the confidentiality of all non-public information received from the Company, and to execute any further documents or instruments as the Company may reasonably require to ensure such confidentiality.

(b) The Company, pursuant to the terms of the Baron Asset Fund Letter Agreement, will grant to Baron the same information rights as are granted to the Holder in this Section 7.15. Baron will be subject to the same obligations to maintain the confidentiality of all non-public information received from the Company, and the Company will require Baron to

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execute such further documents or instruments as the Holders may reasonably be required by the Company to execute to ensure such confidentiality.

7.16. XM Radio System Design Prior to the implementation of the Company's final transmission system and receiver design choice, the Company shall: (a) obtain an opinion of non-infringement by competent outside patent counsel regarding the XM Radio System, which opinion shall be delivered to the Investors; and (b) obtain the Requisite Approval with respect to any material changes in such design, which approval shall not be unreasonably withheld or delayed.

7.17. Indemnification for Patent Claims The Company shall defend, hold

harmless, and indemnify, to the extent permitted by law, each Holder, each Person who controls such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), Affiliates of each such Holder and their respective officers, directors, partners, employees, agents and representatives against all losses arising out of or in connection with any claims of patent infringement relating to the intellectual property of the Company or any of its Subsidiaries and asserted by reason of such Holder's ownership of any Note or any Conversion Stock.

7.18. Filing of Restated Certificate of Incorporation Prior to the Closing, the Company shall file with the Secretary of State of Delaware a restated Certificate of Incorporation with terms consistent with those set forth in the Term Sheet and with such other terms and conditions not inconsistent with the Term Sheet which are necessary to effect the transactions cont emplated by
this Agreement.

7.19. Limitation on Grants of Rights The Company shall not provide capacity on a "most favored nation" basis in connection with any future financing it may enter into without Requisite Approval.

8. Conversion Provisions

8.1. Company's Right of Conversion Each of the Notes (together with interest accrued on the principal amount (including Capitalized Interest) of such Note or portion thereof to be converted) shall be automatically converted into Conversion Stock at the Conversion Price upon the closing of a firm commitment underwritten public offering of Common Stock in an offering which (a) raises not less than $100 million in gross proceeds and (b) for which the offering price of the securities offered thereby is at least (i) 125% of the Conversion Price if the offering occurs within six months of the Closing Date or
(ii) 150% of the Conversion Price if the offering occurs more than six months after the Closing Date (a "Qualified Initial Public Offering"), unless the Company obtains the Requisite Approval for a lower offering price or lower amount of funds raised at which the Notes may be automatically converted.

8.2. Optional Conversion Right Each Holder shall have the right, at its option, at any time, subject to terms and provisions of this Agreement, as applicable, to convert the unpaid principal amount (including Capitalized Interest) of each of its Notes or any portion thereof held by such Holder (together with interest accrued on the principal amount of such

31

Note or portion thereof to be converted) into shares of the respective class of Conversion Stock at the Conversion Price, promptly after surrender of such Note, accompanied by written notice of conversion specifying the principal amount thereof to be converted duly executed, to the Company at any time during usual business hours at the office of the Company at, and, if so required by the Company, accompanied by a written instrument or instruments of transfer in form satisfactory to the Company, duly executed by such Holder or its attorney duly authorized in writing. The conversion of all or any portion of the principal and interest of a Note into Conversion Stock is hereinafter sometimes referred to as the "conversion" of such Note. Notwithstanding any oth er provision hereof, if a
conversion of a Note is to be made in connection with a sale of the Company or other event, such conversion may, at the election of any Holder tendering such Note for conversion, be expressly conditioned upon the consummation of such other event, in which case such conversion shall not be deemed to be effective until the consummation or occurrence of such other event.

8.3. Issuance of Certificates The Company and the Holder surrendering a Note for conversion shall promptly make all filings, which may be required in connection with such conversion under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). The Company and any such Holder shall provide each other with such necessary information and assistance as may reasonably be requested in connection with such filings. As promptly as practicable after the surrender of a Note for conversion (and, if applicable, the specified waiting period under the HSR Act), as here in provided, the Company
at its expense shall deliver or cause to be delivered at its said office to or upon the written order of the holder of such Note so surrendered certificates bearing, if required by the terms hereof, the restrictive legends set forth in
Section 6.1 hereof, representing the number of fully paid and nonassessable shares of Conversion Stock into which such Note may be converted in accordance with the provisions hereof. Subject to the following provisions of this Section 8.3, such conversion shall be deemed to have been made at the close of business on the date that such Note shall have been surrendered for conversion with a written notice of conversion duly executed and any instruments of transfer as may have been requested by the Company (or, if applicable, the expiration of the specified waiting period under the HSR Act), so that the rights of the holder of such Note as a holder shall cease at such time and the Person entitled to receive the shares of Conversion Stock upon conversi on of such Note shall be
treated for all purposes as having become the record holder or holders of such shares of Conversion Stock at such time and such conversion shall be at the Conversion Price; provided, however, that no such surrender on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the Person entitled to receive the shares of Conversion Stock upon such conversion as the record Holder of such shares of Conversion Stock on such date, but such surrender shall be effective to constitute the Person entitled to receive such shares of Conversion Stock as the record Holder thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open.

8.4. Adjustment to Conversion The Conversion Price shall be adjusted from time to time as follows:

(a) In case the Company shall: (i) declare a dividend or make a distribution o n outstanding shares of Capital Stock in shares of Common Stock,
(ii) subdivide any of the outstanding shares of Common Stock into a greater number of shares, or (iii) combine any of

32

the outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect at the time of the record date for such dividend or distribution or the effective date of such subdivision or combination shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior thereto by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to any such record date for such dividend or distribution or the effective date of such subdivision or combination and the denominator of which shall be the number of shares of Common Stock outstanding immediately after the payment of such dividend or distribution or the effective date of such
subdivision or combination.

(b) In case the Company shall issue or sell shares of Common Stock without consideration or for a consideration per share less than the Conversion Price in effect immediately prior to any such issuance or sale, (excluding any notes issued to American Mobile pursuant to the American Mobile Exchange Agreement) the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior thereto by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to any such issuance plus the number of shares which the aggregate offering price of the total number of shares of Common Stock proposed to be issued would purchase at a price per share equal to the Conversion Price in effect immediately prior to such issuance and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issuance plus the number of additional shares of Common Stock proposed to be issued. Such adjustment shall be made upon the closing with respect to the shares of Common Stock so issued based upon the number of shares of Common Stock actually issued. Subject to the right provided for in Section 8.4(e), the granting of stock options with an exercise price less than the Conversion Price in effect at the time of grant and the award of stock grants for no cash consideration or for cash consideration less than the Conversion Price in effect at the time of award shall be deemed to be an issuance at such time by the Company of the shares of Common Stock covered by such options or grants for consideration less than the Conversion Price and shall result in an adjustment to the Conversion Price as provided above based upon the exercise price under any such stock options and the cash consideration receivable under any such stock grants.

(c) In case the Company shall issue (whether directly or by assumption in a merger or otherw ise) or sell any securities convertible into shares of Common Stock (or any rights, warrants, options to subscribe for or purchase securities convertible into shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock) and the conversion price per share thereunder (or the sum, if greater, of the consideration per share received upon the issuance of any such rights, warrants, options or convertible or exchangeable securities plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise thereof and the conversion price per share under the convertible securities purchasable upon exercise thereof) is less than the Conversion Price in effect immediately prior to any such issuance, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior thereto by a fraction, the numerator of which shall be the number of shares of Common Stock o utstanding immediately prior to any such issuance plus the number of shares which the aggregate conversion price under the convertible securities so issued (or the sum, if greater, of the aggregate consideration received or receivable upon issuance of any

33

such rights, warrants, options or convertible or exchangeable securities plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise thereof and the aggregate conversion price under the convertible securities purchasable upon exercise thereof) would purchase at a price per share equal to the Conversion Price in effect immediately prior to such issuance and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issuance plus the number of additional shares of Common Stock issuable upon the full conversion of all of the securities proposed to be issued (or all of the securities issuable upon full exercise of all of such rights, warrants, options or conve rtible or
exchangeable securities proposed to be issued and the conversion of the convertible securities purchasable upon such exercise). Such adjustment shall be made whenever such convertible securities (or rights, warrants or options to purchase convertible securities) are issued; provided, however, that, to the extent shares have not been delivered upon expiration of the conversion period for such convertible securities, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect had the adjustments made upon the issuance of such convertible securities (or the issuance of such rights, warrants or options to purchase convertible securities) been made upon the basis of delivery of only the number of shares actually delivered.

(d) No adjustment in the Conversion Price shall be required: (i) with respect to shares issued upon conversion of any Note (or upon conversion of any shares of Class A Converti ble Preferred Stock which are subsequently converted into shares of Class A Common Stock), or (ii) unless such adjustment would require an increase or decrease in the Conversion Price of at least 0.2%; provided, however, that any adjustment which by reason of clause (ii) of this Section 8.4(d) is not required to be made shall be carried forward and taken into account in the determination of, and shall be included in, any subsequent adjustment.

(e) No adjustment in the Conversion Price shall be required with respect to shares issued pursuant to the Stock Plan if: (i) such shares, together with all other shares issued under Stock Plan, do not exceed 10% of the fully diluted shares of Common Stock of the Company giving pro forma effect to the conversion of the Notes, and (ii) such Stock Plan has been approved by a Compensation Committee of the Board of Directors, or an equivalent committee of the Board of Directors, which committee shall include at least one director designated by th e Holders and which approval shall include the approval of such director so designated.

(f) Whenever the Conversion Price is adjusted as provided herein, the Company shall promptly mail to each Holder a certificate signed by the chief financial officer of the Company setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment and the computation thereof.

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8.5. Treasury Shares For purposes hereof, the number of shares of Capital Stock of the Company outstanding at any given time shall not include shares owned or held by or for the account of the Company. The disposition of any such shares shall be considered an issue or sale of Class A Common Stock or Class A Convertible Preferred Stock for the purposes of this Section.

8.6. Fractional Shares If Conversion of any Note results in a fraction, the Company shall issue fractional shares up to one-ten thousandth of one share and shall pay any remaining balance in cash.

8.7. Merger of the Company In case of any consolidation with or merger of the Company wit
h another corporation, or in case of any sale, lease or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, the Holder shall have the right thereafter to convert any Notes into the kind and amount of shares of stock and other securities and property or cash receivable upon such consolidation, merger, sale, lease or conveyance by a Holder of the number of shares of Conversion Stock of the Company into which such Note might have been converted immediately prior to such consolidation, merger, sale, lease or conveyance.

8.8. Reclassification of Class A Common Stock and/or Class A Convertible
Preferred Stock In case of any reclassification or change of the shares of Class A Common Stock and/or Class A Convertible Preferred Stock of the Company issuable upon conversion of the Notes (other than a change in par value, or from par value to no par value,
or as a result of a subdivision or combination, but including any change in the shares of Class A Common Stock and/or Class A Convertible Stock of the Company into two or more classes or series of shares) or in case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation and in which there is a reclassification or change of the shares of Class A Common Stock or Class A Convertible Preferred Stock of the Company issuable upon conversion of the respective Note (other than a change in par value, or from par value to no par value, or as a result of a subdivision or combination, but including any change in the shares of Class A Common Stock and/or Class A Convertible Preferred Stock of the Company into two or more classes or series of shares), the Company shall provide that the Holders shall have the right thereafter to convert the Notes into the kind and amount of shares of stock and other securities and property or cash receivable upon such r
eclassification, change, consolidation or merger by a holder of the number of shares of Class A Common Stock or Class A Convertible Preferred Stock of the Company into which the Note might have been converted immediately prior to such reclassification, change, consolidation or merger, and there shall be an adjustment of the Conversion Price which shall be as nearly equivalent as may be practicable to the adjustments of the Conversion Price otherwise provided for in this Section. The above provisions hereof shall similarly apply to successive reclassifications and changes of shares of Class A Common Stock and/or Class A Convertible Preferred Stock of the Company and to successive consolidations, mergers, sales or conveyances involving such reclassifications and changes of shares of Class A Common Stock and/or Class A Convertible Preferred Stock. The Company shall not effect any such consolidation, merger, sale, transfer or other disposition, unless prior to or simultaneously with the consummation thereof the successor corporation (if other
than the Company) resulting from such consolidation or merger or the corporation purchasing or otherwise acquiring such properties shall assume, by written

35

instrument executed and mailed or delivered to the Holders at the last address of such Holders appearing on the books of the Company, the obligation to deliver to such holders such shares of stock, securities or properties as, in accordance with the foregoing provisions, such Holders may be entitled to acquire. The above provisions of this subparagraph shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers, or other dispositions.

8.9. Reservation of Class A Common Stock and Class A Convertible Preferred
Stock The Company covenants that it will at all times reserve and keep available out of its authorized Cla
ss A Common Stock and Class A Convertible Preferred Stock, solely for the purpose of issuance: (i) upon conversion of the respective Notes as provided herein and/or in the respective Note Purchase Agreement(s); and (ii) upon any automatic conversion of the Class A Convertible Preferred Stock provided for in Section 8.13 such number of shares of Class A Common Stock and Class A Convertible Preferred Stock as shall then be issuable upon the conversion of the Notes, or the Class A Convertible Preferred Stock, as the case may be. The Company covenants that all shares of Class A Common Stock and Class A Convertible Preferred Stock which shall be so issuable shall be duly and validly issued and fully paid and non-assessable, free from preemptive or similar rights on the part of the holders of any shares of Capital Stock or securities of the Company, and free from all Liens or other charges with respect to the issuance thereof. The Company will take all such action as may be necessary to assure that such shares
of Class A Common Stock and Class A
Convertible Preferred Stock may be so issued without violation by the Company of any applicable law or regulation, or of any requirements of any domestic securities exchange or other public trading market upon which the Class A Common Stock or Class A Convertible Preferred Stock may be listed or quoted.

8.10. Taxes The issuance of certificates for shares of Conversion Stock upon the conversion of any Note, and the issuance of Class A Common Stock upon conversion of Class A Preferred Stock, shall be made without charge to the converting Holder for any Tax in respect of the issuance of such certificates, and such certificates shall be issued in the name of, or in such name as may be directed by, the Holder of such Note or Class A Preferred Stock; provided, however, that the Company shall not be required to pay any Tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate in a name other than that of the Holder of such Note or Class A Preferred Stock, and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requiring the issuance thereof shall have paid to the Company the amount of such Tax or shall have established to the satisfaction of the Company that such Tax has been paid. The Holder shall be responsible for the payment of all applicable income Taxes in connection with the conversion of the Note or Class A Preferred Stock.

8.11. Certain Events If any event occurs as to which in the opinion of the Board of Directors of the Company the other provisions of this Section 8 are not strictly applicable or if strictly applicable would not fairly protect the conversion rights of the Holder of a Note in accordance with the essential intent and principles of such provisions, then such Board of Directors shall appoint a firm o
f independent certified public accountants (which may be the regular auditors of the Company) of recognized national standing, which shall give its opinion upon the adjustment, if any, on a basis consistent with such essential intent and principles,

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necessary to preserve, without dilution, the rights of the Holder. Upon receipt of such opinion by the Board of Directors, the Company shall forthwith make the adjustment described therein; provided, however, that no such adjustment pursuant to this Section shall have the effect of increasing the Conversion Price as otherwise determined pursuant to Section 8 hereof except in the event of a combination of shares of the type contemplated in Section 8.4 and then in no event to an amount larger than the conversion price as adjusted pursuant to
Section 8.4.

8.12. No Rights or Liabilities as Shareholders No Note shall entitle any Holder thereof to any of t
he rights of a shareholder of the Company. No provision of this Agreement or of any Note, in the absence of the actual conversion of such Note or any part thereof by the Holder thereof into Conversion Stock issuable upon such conversion, shall give rise to any liability on the part of such Holder as a shareholder of the Company, whether such liability shall be asserted by the Company or by creditors of the Company.

8.13. Automatic Conversion of Class A Convertible Preferred Stock Upon
Transfer The Parties hereby agree that upon any transfer or sale of any shares(s) of Class A Convertible Preferred Stock to a non-Affiliate of the Holder thereof, such Holder must surrender to the Company the certificate(s) representing such shares to the Company, and such shares of Class A Convertible Preferred Stock shall, without any action being required by any party or by the Company, be automatically converted into shares of C lass A Common Stock on a
one-for-one basis. Any transfer or sale of any Affiliate to which shares of Class A Convertible Preferred Stock have been transferred or sold shall automatically cause the conversion of such shares into Class A Common Stock. Any attempt to transfer any share(s) of Class A Convertible Preferred Stock in violation of this Section 8.13 shall be deemed null and void and the Company shall be entitled to refuse to recognize such attempted transfer on its books and records.

8.14. Dividends Paid Between Notice of Conversion and Conversion In the event a Holder provides written notice to the Company of intent to convert a Note or portion thereof into Conversion Stock pursuant to Section 8.2, but such conversion has not yet been effected by the record date for any cash dividend or distribution, the Company shall adjust the Conversion Price or make such other equitable adjustment as necessary in order to give the Holder of such Note the
economic advantage it would have received if conversion had occurred at the time such Holder delivered such notice to the Company. Such adjustment shall be made successively whenever any event specified above shall occur.

9. Put Right If No Qualified Initial Public Offering (a) In the event that a Qualified Initial Public Offering has not occurred prior to June 30, 2004, each Holder shall have the right to notify the Company of such Holder's intention to put its Convertible Note to the Company at a put price equal to the greater of: (i) the sum of the outstanding principal amount and accrued interest on such Convertible Note, or (ii) the Fair Market Value as of a date not more than thirty (30) days from the date of purchase of the shares of Class A Common Stock into which such a Convertible Note is directly or indirectly convertible.

(b) Upon receipt of such notice the Company shall, within one year of the da te of such notice, have the option, at its discretion, with the concurrence of the Holders of a

37

majority in the aggregate principal amount of the Convertible Notes to either:
(i) become subject to the reporting requirements of the Exchange Act and register the Class A Common Stock underlying the securities held by such Holder for resale under the Securities Act, or (ii) repurchase such Convertible Notes at the put price stated above no later than June 30, 2005 and the Maturity Date shall be extended to such date; provided, however, that in the event any High Yield Debt instruments of the Company so require, such payment shall be further delayed until the Company is able to first repay such High Yield Debt and the Company will use its best efforts to arrange for such repayment of the High Yield Debt.

10. Registration, Transfer and Substitution of Note Note Register
The Company will keep at its principal office a register in which the Company will provide for the registration of the Notes and the registration of transfers of the Notes. The Company may treat the Person in whose name the Note is registered on such register as the owner and holder thereof (the "Holder") for the purpose of receiving payment of the principal of and interest on the Note and for all other purposes, whether or not the Note shall be overdue, and the Company shall not be affected by any notice to the contrary.

10.2. Transfer and Exchange of Note Upon surrender of one or more Notes for registration of transfer or for exchange to the Company at its principal office with evidence that all applicable transfer taxes have been paid, the Company at its expense will execute and deliver in exchange therefor one or more
Notes in the aggregate unpaid principal amount(s) of such surrendered Note(s). Each such new Note shall be registered in the name of such Person, or its nominee, as such Holder or transferee may request, dated so that there will be no loss of interest on such surrendered Note and otherwise of like tenor.

10.3. Replacement of Note Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of the Note and, in the case of any such loss, theft or destruction, upon delivery of an indemnity bond in such reasonable amount and form as the Company may determine (or of an indemnity agreement from the Holder reasonably satisfactory to the Company), or, in the case of any such mutilation, upon the surrender of such Holder for cancellation to the Company at its principal office, the Company at its expense will execute and deliver, in lieu thereof, a new Note of like tenor, dated so that there will be no loss of interest
on such lost, stolen, destroyed or
mutilated Note. Any Note in lieu of which any such new Note has been so executed and delivered by the Company shall not be deemed to be an outstanding Note for any purpose of this Agreement.

11. Conditions to Obligations of the Investors Each Investor's obligation to purchase its respective Note at the Closing is subject to the fulfillment on or prior to the Closing of the following conditions, of which conditions (a),
(b) and (e) may be waived at the option of such Investor to the extent permitted by law:

(a) The representations and warranties made by the Company in Section 4 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects at the Closing Date with the same force and effect as if they had been made on and as of said date, and shall be so certified by a Responsible Officer of the Company.

(b) All covenants, agreements and con ditions contained in this Agreement to be

38

performed by the Company on or prior to such purchase shall have been performed or complied with in all material respects.

(c) There shall not then be in effect any legal or other order enjoining or restraining the transactions contemplated by this Agreement.

(d) There shall not be in effect any law, rule or regulation prohibiting or restricting such purchase or requiring any consent or approval of any Person which shall not have been obtained to issue the Note (except as otherwise provided in this Agreement).

(e) The XM Exchange Agreement shall close concurrently with the issuance of the Notes in the manner contemplated in such agreement with all of the conditions therein satisfied.

(f) In connection with the issuance and sale of t he Convertible Notes to all of the Investors, the Company shall have received gross proceeds of not less than $125 million.

(g) The Investor shall have received an opinion of counsel to the Company with respect to the Confidential Memorandum and the legality of the Convertible Notes, in form and substance reasonably satisfactory to the Investor.

(h) Each of the Clear Channel Operational Assistance Agreement, the DIRECTV Operational Assistance Agreement, the TCM Group Operational Assistance Agreement and the OnStar Distribution Agreement shall continue in full force and effect.

(i) Each of the Investors and the Company shall have entered into the Registration Rights Agreement and the Shareholders' Agreement.

(j) The Investor shall have received a duly executed copy of the Regulatory Agreement.

(k) No public disclosure related to this Note Purchase Agreement shall have been made prior to Closing, except with Requisite Approval or as required by law.

(l) The Investors sha ll have received assurances from Hughes, to the reasonable satisfaction of the Investors, that upon receipt of sums due, Hughes will amend the Satellite Contract with respect to the construction schedule as reasonably acceptable to the Investors.

(m) American Mobile shall have delivered a letter to the Investors representing that consummation of the transactions contemplated by this Agreement and the Transaction Documents will not result in American Mobile having to file an application with the FCC to effect a change of control.

(n) The Secretary of the Company shall have delivered to the Investors a Secretary's Certificate, dated the date hereof, certifying that the conditions specified in Sections 11(a) and 11(b) have been fulfilled.

(o) XM Satellite Radio Inc. shall have provided to the Investors a Guarantee of the Obligations of the Company in respect of this Agreement and each of the Notes, which

39

Guarantee shall be subordinated to: (i) any Guarantees issued by XM Satellite Radio Inc. in connection with any High Yield Debt issued by the Company, and
(ii) any High Yield Debt issued directly by XM Satellite Radio Inc.

(p) The Company shall have filed with the Secretary of State of Delaware a restated Certificate of Incorporation with terms consistent with those set forth in the Term Sheet and with such other terms and conditions not inconsistent with the Term Sheet which are necessary to effect the transactions contemplated by this Agreement.

12. Events of Default; Acceleration Nature of Events and Acceleration of
Note If any of the following events ( "Events of Default") shall

occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise):

(a) any payment of principal on the Note is not made when and as such payment becomes due at maturity, upon acceleration, redemption or repurchase, or otherwise;

(b) any payment of interest on the Note (other than Capitalized Interest) is not made when and as such payment becomes due and payable, and such failure to make payment continues and has not been made, waived or extended by the Holders capable of providing Requisite Approval for a period of fifteen (15) days;

(c) the Company fails to comply with or perform any of its covenants set forth in this Agreement or the Note (other than a default specified in clause
(a) or (b) above), and such failure continues for a period of thirty (30) days after the day on which written notice thereof is given to the Company by the H olders capable of providing Requisite Approval;

(d) any warranty or representation by or on behalf of the Company contained in this Agreement or in any instrument furnished in compliance with this Agreement is false or incorrect in any material respect on the date as of which made;

(e) there occurs with respect to any Indebtedness of the Company or its Subsidiaries in excess of $25 million: (i) an event of default that has caused the holder thereof to, or provided the holder thereof the right to, declare such Indebtedness to be due and payable prior to its Stated Maturity and such Indebtedness has not been discharged in full, and/or (ii) the failure to make a principal payment at the final (but not any interim) fixed maturity and such payment shall not have been made, waived or extended within thirty (30) days of such payment default;

(f) any final judgment or order (not covered by insurance) for the payment of money in excess of $10 million in the aggregate for all such final judgments

or orders against the Company or its Subsidiaries (treating any deductibles, self-insurance or retention as not so covered) shall be rendered against the Company its Subsidiaries and shall not be paid or discharged, and: (i) the final judgment or order that causes the aggregate amount for all such final judgments or orders outstanding and not paid or discharged against all such Persons to exceed $10 million shall remain unsatisfied, unvacated and unstayed pending appeal for a period of 30 consecutive days after the entry thereof, or (ii) enforcement proceedings shall have been commenced by any creditor upon such judgment or order;

40

(g) the Company or its Subsidiaries shall commence a voluntary case under any chapter of the Federal Bankruptcy Code, or shall consent to (or fail to contest within ten (10) days) the commencement of an involuntary case against the Company or its Subsidiaries under the Federal Bankruptcy Code;

(h) the Company or its Subsidiaries shall institute proceedings for liquidation, rehabilitation, readjustment or composition (or for any related or similar purpose) under any law (other than the Federal Bankruptcy Code) relating to financially distressed debtors, their creditors or property, or shall consent to (or fail to contest within ten (10) days) the institution of any such proceedings against the Company or its Subsidiaries;

(i) a court or oth er governmental authority or agency having jurisdiction in the premises shall enter a decree or order: (i) for the appointment of a receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the Company or its Subsidiaries or of any part of the property of such Person, or for the winding-up or liquidation of the affairs of such Person, and such decree or order shall remain in force and undischarged and unstayed for a period of more than thirty (30) days, or (ii) for the sequestration or attachment of any property of the Company or its Subsidiaries without its unconditional return to the possession of such Person, or its unconditional release from such sequestration or attachment, within thirty (30) days thereafter;

(j) the Company: (i) shall be in default under any of the OnStar Distribution Agreement, the Clear Channel Operational Assistance Agreement, the DIRECTV Operational Assistance Agreement, or the TCM Group Operational Assistance Agreement, and (ii) and shall not have remedied such default within thirty (30) days of receipt of notice thereof; or

(k) the Company shall not have launched its first satellite by December 31, 2003;

then, in the case of any such Event of Default referred to in clause (g), (h), or (i) of this Section 12.1, automatically, or, in the case of any other such Event of Default, at the option of the Holders capable of providing Requisite Approval exercised by written notice to the Company, the Notes, together with the interest accrued thereon, shall forthwith become and be due and payable, without any other presentment, demand, protest or notice of any kind, all of which are hereby expressly waived.

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12.2. Default Remedies If an Event of Default exists, the Holders may exercise any right, power or remedy permitted to them by law, either by suit in equity or by action at law or both, whether for specific performance of any covenant or agreement contained in this Agreement or in aid of the exercise of any power granted in this Agreement, or the Holders may proceed to enforce payment of the Notes or to enforce any other legal or equitable right of the Holders. No course of dealing on the part of the Holders or any delay or failure on the part of the Holder to exercise any right shall operate as a waiver of such right or otherwise prejudice such Holder's powers and remedies. If an Event of Default exists, the Company will
pay to the Holder, to the extent not
prohibited by law, such further amount as shall be sufficient to cover the cost and expenses of collection or other proceedings, including, but not limited to, reasonable attorneys' fees.

12.3. Notice of Default If any one (1) or more of the Events of Default specified in Section 12.1 shall occur, or if the holder of any evidence of Indebtedness of the Company gives any notice or takes any other action with respect to a claimed default, the Company will forthwith give written notice thereof to the Holders describing the notice or action and the nature of the claimed default, including any Event of Default.

13. Seniority of Notes (a) The Notes shall rank senior to all of the Company's existing Indebtedness as of the date hereof; and the Parties hereby agree and acknowledge that the Notes shall be subordinated to any High Yield Debt which may be issued by the Company at any time after the Closing in

accordance with customary market standards as advised by the Company's investment bankers.

(b) Except to the extent provided in Section 13(a) above or with Requisite Approval, the Company shall not assume or incur any Indebtedness senior in rank to, or on a parity with, any of the Notes.

14. Expenses The Company will pay at Closing all reasonable fees and expenses relating to the sale and purchase of the Convertible Notes and to any amendment or modification to this Agreement or the Convertible Notes, including the reasonable fees and disbursements of outside counsel for the Investors.

15. Survival All express representations and warranties contained in this Agreement or made in writing by or on behalf of the Company in connection with the transactions contemplated by this Agreement shall survive the execution and delivery of this Agreement, any investigation at any time made by the Investor or on the Investor's behalf, the issuance of the Note hereu nder, and any
disposition, payment or conversion of the Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement or in connection with the transactions contemplated hereby shall be deemed representations and warranties of the Company under this Agreement.

16. Amendments and Waivers Any term of this Agreement or of the Note may be amended, and the observance of any term of this Agreement or of the Note may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and with the written consent of Holders holding Notes in aggregate principal amounts equal to or greater than, (i) in the case of amendments to or waivers of provisions of this Agreement generally, eighty-one percent (81%), (ii) in the case of

42

any modification to Section 2, Section 3 or the Conversion Price, one hundred percent (100%), and (iii) in the case of any other non-material change or technical correction of this Agreement, the Requisite Approval. For the avoidance of doubt, a non-material or technical correction shall mean a change in the terms of this Agreement which has no material adverse effect or consequence to the rights, preferences and obligations of holders of the Convertible Notes or Conversion Stock. Any amendment or waiver effected in accordance with this Section 16 shall be binding upon each future Holder of the Note and the Company.

17. Notices Except as otherwise provided in this Agreement, notices and other communications under this Agreement sha ll be in writing and shall be
deemed properly served if: (i) mailed by registered or certified mail, return receipt requested, (ii) delivered by a recognized overnight courier service,
(iii) delivered personally, or (iv) sent by facsimile transmission, addressed to the General Counsel for each party at the address set forth on Attachment 17 for such party or at such other address or to the attention of such other officers as such party shall have furnished in writing pursuant to this Section 17. Such notice shall be deemed to have been received: (i) three (3) days after the date of mailing if sent by certified or registered mail, (ii) one (1) day after the date of delivery if sent by overnight courier, (iii) the date of delivery if personally delivered, or (iv) the next succeeding business day after transmission by facsimile.

18. Execution in Counterparts This Agreement may be executed in any number

of counterparts and by different Parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

19. Binding Effect This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns, except that the Company shall not have the right to assign its rights or obligations hereunder or any interest herein without the prior written consent of the Holder which may be withheld for any reason.

20. GOVERNING LAW; CHOICE OF FORUM; JURY TRIAL WAIVER (a) THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PROVISIONS THEREOF OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402.

(b) IN THE EVENT THAT A JUDI CIAL PROCEEDING IS NECESSARY, THE SOLE FORUM FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE SUPREME COURT OF THE STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK OR THE FEDERAL COURTS LOCATED IN SUCH STATE AND COUNTY, AND RELATED APPELLATE COURTS. THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.

(c) THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

43

21. Miscellaneous

21.1. Conflict In the event of any conflict between the terms and conditions of the Term Sheet and either the Registration Rights Agreement or the Shareholders' Agreement, the terms and conditions of the Term Sheet shall prevail.

21.2. Severability The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect. If any provision of this Agreement shall be declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part, such provision shall be interpreted so as to remain
enforceable to the maximum extent permissible consistent with applicable law and the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enforceable, and no provisions shall be deemed dependent upon any other covenant or provision unless so expressed herein.

21.3. No Waiver It is agreed that a waiver by any party of a breach of any provision of this Agreement shall not operate, or be construed, as a waiver of any subsequent breach by the breaching party.

21.4. Further Assurances The Parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement, including without limitation, entering into the Registration Rights Agreement and the Shareholder's Agr eement.

44

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly signed as of the date first above written.

XM SATELLITE RADIO HOLDINGS INC.                                XM SATELLITE RADIO INC.

        /s/ Hugh Panero                                                 /s/ Hugh Panero
By:  _______________________________________________            By:  ________________________________
Name: Hugh Panero                                               Name: Hugh Panero
Title: President & CEO                                          Title: President & CEO

CLEAR CHANNEL COMMUNICATIONS INC.                               COLUMBIA XM RADIO PARTNERS, LLC

                                          By Columbia Capital LLC, its Managing Member

        /s/ Randall T. Mays                                             /s/ James B. Fleming, Jr.
By:  _____________________________________________              By:  _____________________________________________
Name:                                                           Name: James B. Fleming, Jr.
Title:                                                          Title: Managing Member

DIRECTV ENTERPRISES, INC.                                       GENERAL MOTORS CORPORATION

        /s/ Steven J. Cox                                               /s/ Mark G. Gibbens
By:  _____________________________________________              By:  _____________________________________________
Name:                                                           Name: Mark G. Gibbens
Title:                                                          Title: Director, Business Development

                        As Attorney-in-fact for Eric Feldstein
                                                                       Vice President and Treasurer

MADISON DEARBORN CAPITAL PARTNERS III, L.P.                     MADISON DEARBORN SPECIAL EQUITY III, L.P.
By Madison Dearborn Partners III, L.P., its general partner     By Madison Dearborn Partners III, L.P., its general partner
By Madison Dearborn Partners LLC, its general partner          By Madison Dearborn Partners LLC, its general partner

        /s/ James N. Perry                                              /s/ James N. Perry
By:  _____________________________________________              By:  _____________________________________________
Name:                                                           Name:
Title:                                                          Title:




MADISON DEARBORN SPECIAL ADVISORS FUND I, LLC                   TELCOM--XM INVESTORS, L.L.C.
By Madison Dearborn Partners III, L.P., its manager
By Madison Dearborn Partners LLC, its general partner                   /s/ Hal B. Perkins
                                                                By:  _____________________________________________
        /s/ James N. Perry                                      Name: Hal B. Perkins
By:  _____________________________________________              Title: V.P. & General Counsel
Name:
Title:

Agreed and Accepted by:

AMERICAN MOBILE SATELLITE CORPORATION

By:  _____________________________________________
Name:
Title:

45

                           Attachment 2(a)
                           ---------------

Name of Investor            Principal Amount of Note
----------------            ------------------------
Clear Channel...................  $75,000,000.00
DIRECTV.........................  $50,000,000.00
GM..............................  $50,000,000.00
Telcom..........................  $25,000,000.00
Columbia Capital................  $25,000,000.00
Madison Dearborn................  $25,000,000.00

A-1

Attachment 5.7
Benefit Plan Investor

(Check appropriate box):

(a) It is not, nor are any of the underlying assets with respect to which the purchase is being made, a Benefit Plan Investor.

(b) It, or one or more of the underlying assets with respect to which the purchase is being made, is a Benefit Plan Investor.

(NAME OF INVESTOR: )

A-2

Attachment 17
Notices

Party                                                  Address                       Fax No.
--------------------------------------  -------------------------------------  --------------------
XM Satellite Radio Holdings Inc.        1250 23rd Street, N.W.                         202-969-7050
                                        Suite 57
                                        Washington, D.C.  20037-1100

XM Satellite Radio Inc.                 1250 23rd Street, N.W.
                202-969-7050
                                        Suite 57
                                        Washington, D.C.  20037-1100

Clear Channel Communications, Inc.      200 Concord Plaza                              210-822-2299
                                        Suite 600
                                        San Antonio, TX  78216-6940

Columbia XM Radio Partners LLC          201 North Union Street                         703-519-3904
                                        Suite 300
                                        Alexandria, VA  22314

DIRECTV Enterprises, Inc.               2230 E. Imperial Hwy.                          310-964-4114
                                        El Segundo, CA  90245

General Motors Corporation              767 Fifth Avenue                               212-418-6258
                                        14th Floor
                                        New York, NY  10153

Madison Dearborn Capital Partners       Three First National Pla
za                     312-895-1225
 III, L.P.,                             Chicago, IL  60602
Madison Dearborn Special Equity III,
 L.P.,
Special Advisors Fund I, LLC.

Telcom-XM Investors L.L.C.              211 North Union Street                         703-706-3837
                                        Suite 300
                                        Alexandria, VA  22314

A-3

EXHIBIT A

[Form of Note]

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE THE SUBJECT OF A CERTAIN NOTE PURCHASE AGREEMENT AND A CERTAIN SHAREHOLDERS' AGREEMENT WHICH, AMONG OTHER THINGS, CONTAIN RESTRICTIONS ON THE TRANSFER OF S UCH SECURITIES. A COPY OF THE
NOTE PURCHASE AGREEMENT AND THE SHAREHOLDERS' AGREEMENT ARE AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY.

U.S. $[ ] Dated: _______, 1999

FOR VALUE RECEIVED, the undersigned, XM SATELLITE RADIO HOLDINGS INC., a Delaware corporation with its principal office located at 1250 23rd Street N.W., Suite 57, Washington, D.C. 20037 (the "Company"), promises to pay to the order of [INVESTOR], a [ ] corporation with its principal office located at [ ] or its assignee (collectively, the "Holder"), the principal amount of $[ ], in the lawful currency of the United States of America, or such lesser or greater amount as shall then remain outstanding under this Note, at the times and in the manner provided in that certain Note Purchase Agreement dated as of June 7, 1999, by and among the Company, the Holder and the other Parties thereto, to which reference is hereby made and which i
s incorporated herein by reference, no later than December 31, 2004, or such other date upon which this Note shall become due and payable pursuant to the Note Purchase Agreement, whether by reason of extension, acceleration or otherwise (the "Maturity Date"). Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Note Purchase Agreement.

The Company promises also to pay interest on the unpaid principal amount hereof at a rate equal to the Interest Rate, as provided in the Note Purchase Agreement, computed on the basis of the actual number of days
(including the first day but excluding the last day of any relevant period)
elapsed over a 360 day year, in accordance with the provisions of the Note Purchase Agreement. Interest shall be calculated on the outstanding principal amount of this Note for the period commencing on the Closing Date, and continuing through the Maturity Date, or the date of any permitted Conversion thereof. Interest on any pas
t due amount of interest or principal, accruing on a daily basis, shall be payable on demand at a per annum rate equal to the Interest Rate plus 1%.

E-1

This Note is convertible into shares of [Class A Common Stock] [Class A Convertible Preferred Stock] of the Company at the Conversion Price as provided for in the Note Purchase Agreement, subject to the terms, conditions and restrictions contained or referred to therein.

As provided for in the Note Purchase Agreement, any and all interest payments accrued on the unpaid principal amount of this Note shall (unless otherwise paid) be capitalized on a quarterly basis and added to such unpaid principal amount, as of the respective Interest Capitalization Date, as additional principal amounts upon which future interest payments shall accrue at the Interest Rate.

This Note is the Note referred to in the Note Purchase Agreement amon g
the Company, the Holder and the other Investors and in the Registration Rights Agreement among the Company, the Holder, the other Investors, Baron and American Mobile dated on or about the date hereof and is entitled to the benefits thereof. In case an Event of Default shall occur and be continuing, the principal of and accrued interest on this Note may be declared, at the option of the Holder, to be due and payable in the manner and with the effect provided in the Note Purchase Agreement.

Any payments made hereunder shall be applied first against costs and expenses of the Holder hereunder; then against default interest, if any; then against interest due hereunder; and then against principal due hereunder.

All notices and other communications hereunder shall be in writing and, for purposes of this Note, shall be delivered in accordance with, and effective as provided in, the Note Purchase Agreement.

The Company hereby waives presentment, demand, protest or notice of an
y kind in connection with this Note.

This Note shall be construed in accordance with, and be governed by the laws of, the State of New York without giving effect to any conflicts of law provisions of such laws (other than New York General Obligations Law Sections 5- 1401 and 5-1402). The Company hereby irrevocably submits to the exclusive jurisdiction of the New York Supreme Court and the United States District Court located in the County of New York, State of New York, with respect to any action or proceeding arising out of or relating to this Note and irrevocably agrees that service of process in any such action or proceeding may be effectuated in any manner permitted by law, including by mailing or delivering a copy of such process to the Company at its address set forth above.

This Note shall be binding upon the Company and inure to the benefit of the Holder and its respective successors and permitted assigns. The Holder may assign all, or any part of, or any interest in, the Holder's rights and
benefits hereunder only to the extent and in the manner permitted in the Note Purchase Agreement and the Shareholders' Agreement. To the extent of any such assignment, such assignee shall have the same rights and benefits against the Company and shall agree to be bound by and to comply with the terms and conditions of the Note Purchase Agreement and the Shareholders' Agreement as it would have had if it were the Holder hereunder.

E-2

Neither any failure nor any delay on the part of the Holder in exercising any right, power or privilege under this Note shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any other right, power or privilege.

The Company agrees to pay on demand all losses, costs and expenses, if any, including attorneys' fees, incurred by the Holder in connection with the enforcement of this Note in the event default occurs in the payment of any amounts due hereunder.

IN WITNESS WHEREOF, the Company has caused this Note to be executed by its officer thereunto duly authorized as of the date first above written.

XM SATELLITE RADIO HOLDINGS IN

C.

By:
Name:

Title:

GUARANTY

XM Satellite Radio Inc. hereby unconditionally guarantees the full and timely payment when due of all amounts payable under this Note and the performance by the Company of all of its obligations hereunder.

XM SATELLITE RADIO INC.

By:

Name:

Title:

E-3

EXHIBIT 10.4

***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.

TECHNOLOGY LICENSING AGREEMENT

This TECHNOLOGY LICENSING AGREEMENT (this "Agreement") is entered into on July 24, 1998, but intended to be effective as of January 1, 1998, by and b
etween WorldSpace Management Corporation, a corporation organized under the laws of the State of Delaware ("WorldSpace"), American Mobile Radio Corporation, a corporation organized under the laws of the State of Delaware ("AMRC"), AMRC

Holdings, a corporation organized under the laws of the State of Delaware ("AMRC

Holdings") and American Mobile Satellite Corporation, a corporation organized under the laws of the State of Delaware ("AMSC") (each a "Party" and together the "Parties").

WHEREAS, AMRC is taking steps to commence the establishment of a Digital Audio Radio Service ("DARS") sate llite system in the United States (the

"AMRC System") under the license granted to AMRC in October 1997 by the U.S. Federal Communications Commission, as such license may from time to time be modified or amended;

WHEREAS, WorldSpace recognizes that in connection with the establishment of the AMRC System it will be necessary and/or desirable for AMRC to have the use of certain technology comprised of patents, patent applications, software, databases, know-how and the intellectual property rights therein owned by, licensed to or developed from time to time by WorldSpace or any corporation, partnership or other entity controlled by, controlling or under common ownership or control with WorldSpace (a "WorldSpace Affiliate" and together with WorldSpace, the "WorldSpace Group
") and to be used in any digital radio broadcasting system being implemented outside the United States by the WorldSpace Group or in which the WorldSpace Group participates (such system, the "WorldSpace System"); and

WHEREAS, AMSC recognizes that in connection with the establishment of the AMRC System it will be necessary and/or desirable for AMRC to have the use of certain technology comprised of patents, patent applications, software, databases, know-how and the intellectual property rights therein owned by, licensed to or developed from time to time by AMSC and used by AMSC in its mobile satellite business in the United States (the "AMSC System");

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. Licensed Technology. (a) The technologies set forth below in this Section 1(a) are collectively referred to herein as "WorldSpace Licensed Technology:"

[*****] Pages 1-2

(b) The technologies set forth below in this Section 1(b) are collectively referred to herein as "AMSC Licensed Technology:"

***** 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.

(i) the technologies described in that certain document entitled "Final MT Performance Specification", which sets forth functional and performance specifications for mobile terminals for AMSC's MSAT system;

(ii) [*****]

(iii) technology owned by AMSC or licensable by AMSC relating to the Seavey low-profile omnidirectional L-band antenna developed by AMSC as part of its low-rate codec project;

(iv) all other technologies now or from time to time used in the AMSC System and which have practical application to the AMRC System and which AMSC owns, acquires or licenses and is permitted to sublicense to AMRC, subject to the provisions of Section 7 hereof; and

(v) all improvements made from time to time by AMSC to any of the items set forth in Subsections (i) through (iv) above.

(c) The WorldSpace Licensed Technology and the AMSC Licensed Technology are collectively referred to herein as the "Licensed Technology".

2. Grant of License. (a) WorldSpace hereby grants to AMRC a license to use the WorldSpace Licensed Technology for the development, implementation and commercialization of the AMRC System for transmission in and over the geographic area of the United States and its territories.

(b) AMSC hereby grants to AMRC a license to use the AMSC Licensed Technology for the development, implementation and commercialization of the AMRC System for transmission in and over the geographic area of the United States and its territories.

(c) The licenses granted under Subsections (a) and (b) of this
Section shall include the right for AMRC to incorporate the WorldSpace Licensed Technology or the AMSC Licensed Technology, as the case may be, in AMRC's own technology and exploit all such rights granted to AMRC herein with respect to the Licensed Technology without obligation to make any payment of any kind to WorldSpace, AMSC or any third party except to the extent expressly set forth in
Section 4 of this Agreement.

3. Sublicensing; Reservation of Certain Rights. (a) Under the licenses set forth in Section 2, AMRC shall have the non-exclusive right (subject to the provisions of this Section 3) to use the Licensed Technology for the development, implementation and commercialization of a DARS satellite system. Subject to the terms and conditions set forth herein, each of WorldSpace and AMSC shall retain all rights not expressly granted hereunder, including the right to use the WorldSpace Licensed Technology and the AMSC Licensed Technology, respectively, for any purpose whatsoever.

***** 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.

(b) AMRC shall have the right to sublicense the WorldSpace Licensed Technology to any third party, in connection with the development, implementation and commercialization of the AMRC System, including, for example, chipset manufacturers, terrestrial repeater manufacturers and receiver manufacturers, provided, however, that (i) AMRC shall pay to WorldSpace [*****] of the fees received from AMRC's sublicensee with respect to any WorldSpace Licensed Technology so sublicensed that are in excess of the minimum payments, if any, to be made to WorldSpace for such sublicensed technology under Section 4 hereof; and (ii) AMRC shall not permit any such sublicensee to further sublicense the WorldSpace Licensed Technology without the prior written consent of WorldSpace, which consent shall not be unreasonably withheld.

(c) WorldSpace reserves the right to license the WorldSpace Licensed Technology to any third party for use in a DARS satellite system other than the AMRC System for transmission in and over the geographic area of the United States or its territories; provided, however, that any such license negotiated by WorldSpace shall be subject to the consent of AMRC, which consent shall not be unreasonably withheld; and provided further, that (i) if such third party is CD Radio, Inc. or any affiliate thereof, all payments made by such third party with respect to such license shall be for the benefit of WorldSpace and (ii) if such third party is neither CD Radio Inc. nor an affiliate thereof, WorldSpace and AMRC shall determine the proper allocation of the receipt of such payments at the time of the execution of such license.

(d) AMRC shall have the right to sublicense the AMSC Licensed Technology to any third party, in connection with the development, implementation and commercialization of the AMRC System, including, for example, chipset manufacturers, terrestrial repeater manufacturers and receiver manufacturers, without obligation to pay any sublicensing fees to AMSC; provided, however, that (i) AMRC shall pay to AMSC [*****] of the fees received from AMRC's sublicensee with respect to any AMSC Licensed Technology so sublicensed that are in excess of the minimum payments, if any, to be made to AMSC for such sublicensed technology and (ii) AMRC shall not permit any sublicensee to further sublicense the AMSC Licensed Technology without the prior written consent of AMSC, which consent shall not be unreasonably withheld.

(e) AMSC reserves the right to license the AMSC Licensed Technology to any third party for use in a DARS Satellite System other than the AMSC System or the AMRC System for transmission in and over the geographic area of the United States or its territories, provided, however, that any such license for use outside the AMSC System or the AMRC System in the United States or its territories negotiated by AMSC shall be subject to the consent of AMRC, which consent shall not be unreasonably withheld.

4. Royalty Payments. In the event that AMRC uses the Licensed Technology or any portion thereof, except the MCM Technology discussed in Subsection 4(c), in connection with a DARS satellite system, AMRC shall make royalty payments to WorldSpace or AMSC, as the case may be, as follows.

[*****]


***** 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.

In the event that WorldSpace shall be required to pay to Thomson any additional fees relating to AMRC's use of the WorldSpace Licensed Technology, then WorldSpace shall promptly give notice of such fees to AMRC and AMRC shall be liable for and pay such fees.

Any such royalties payable to WorldSpace that are not paid when due as aforesaid shall accrue interest from the date on which payment becomes due at nine percent (9%) per annum, compounded quarterly, with any payments received being applied first to the oldest quarterly installments and accumulated interest thereon.

In the event that the WorldSpace Group should negotiate a reduction in the royalty payments payable to the owners of certain components of the [*****], then the royalty payments specified in this Subsection 4(a) shall be reduced

dollar for dollar (or on an appropriate percentage basis) to reflect any such reduction.

(b) [*****] In connection with the use of the [*****], AMRC shall make the following payments to WorldSpace: [*****] per year, payable on January 1 of each year, with the payment for 1998 payable upon signing of this Agreement.

Any such royalties payable to WorldSpace that are not paid when due as aforesaid shall accrue interest from the date on which payment becomes due at nine percent (9%) per annum, compounded quarterly, with any payments received being applied first to the oldest annual installments and accrued interest thereon.

(c) [*****] In connection with the development of the [*****], AMRC shall make the following payments to WorldSpace, regardless of the success or failure of the development of the [*****], as follows:

(i) [*****], payable upon delivery of such portion of the [*****] as shall be embodied in the [*****] to be supplied to AMRC at or around September 30, 1998

(ii) [*****] per fiscal quarter beginning with the first quarter following such delivery until such time that the sum of such quarterly royalty fees equals [*****]; and

(iii) [*****] of such costs as may be incurred by WorldSpace relating to the further development of the [*****] beyond the [*****] mentioned above, up to a maximum additional amount payable by AMRC under this Subsection (iii) equal to [*****];

provided, however, that (x) each of the quarterly royalty fees contemplated by Subsection (c)(ii) shall accrue interest from the first day of the related fiscal quarter at nine percent (9%) per annum, compounded quarterly, (y) no payments with respect to the quarterly royalty fees contemplated by Subsection
(c)(ii) need be made prior to the time that AMRC records quarterly gross revenues in excess of [*****], determined in accordance with GAAP, and (z) any

***** 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.

payments made with respect to the quarterly royalty fees contemplated by Subsection (c)(ii) shall be allocated first to the oldest quarterly royalty payments and accrued interest thereon (an illustrative schedule of such quarterly royalty payments contemplated under Subsection (c)(ii) is attached hereto as Annex 1); provided, further, that any such royalty fees contemplated by Subsection (c)(iii) payable to WorldSpace that are not paid when due as aforesaid shall accrue interest from the date on which payment becomes due at nine percent (9%) per annum, compounded quarterly, with any payments received being applied first to the oldest annual installments and accrued interest thereon.

In the event that the additional costs to be incurred by WorldSpace relating to the further development of the [*****] beyond the [*****] mentioned in Subsection (iii) above are anticipated by WorldSpace to exceed [*****], then

AMRC and WorldSpace shall jointly determine whether costs in excess of [*****] relating to the further development of the [*****] should be incurred and, if so, the manner of payment and financing, if any, of such costs.

(d) Other Licensed Technology. Licensed Technology other than that described in Subsections 4(a) through 4(c) above shall be made available to AMRC on a royalty-free basis except for such Licensed Technology (i) that is sublicensed to AMRC and for which WorldSpace or AMSC, as the case may be, must pay a royalty, in which case AMRC shall pay an incremental royalty to WorldSpace or AMSC, as the case may be, based on the royalty paid by WorldSpace or AMSC, respectively, or (ii) with respect to which the relevant parties agree otherwise.

5. Improvements to Licensed Technology. (a) AMRC grants to the WorldSpace Group a royalty-free, non-exclusive and irrevocable license to use and sublicense, world-wide, any and all improvements made by or for AMRC to the WorldSpace Licensed Technology; provided, however, that any sublicense granted by WorldSpace shall be subject to the consent of AMRC, which consent shall not be unreasonably withheld.

(b) AMRC grants to AMSC a royalty-free, non-exclusive and irrevocable license to use and sublicense, world-wide, any and all improvements made by or for AMRC to the AMSC Licensed Technology; provided, however, that any sublicense granted by AMSC shall be subject to the consent of AMRC, which consent shall not be unreasonably withheld.

6. AMRC Technology. (a) AMRC grants to the WorldSpace Group and to AMSC a royalty-free, non-exclusive and irrevocable license to any and all technology (and all improvements thereto) hereafter developed by AMRC relating to the AMRC System (the "AMRC-Developed Technology"), which AMRC-Developed Technology may be used and sublicensed (i) worldwide outside the United States and its territories or (ii) inside the United States and its territories only (A) in the case of the WorldSpace Group, in connection with the WorldSpace System, or (B) in the case of AMSC, in connection with the AMSC System (other than in connection with any DARS satellite system).

(b) WorldSpace hereby grants to AMRC a royalty-free, non-exclusive and irrevocable license to use and sublicense all improvements made by the WorldSpace Group to


such AMRC-Developed Technology for the development, implementation and commercialization of the AMRC System.

(c) AMSC hereby grants to AMRC a royalty-free, non-exclusive and irrevocable license to use and sublicense all improvements made by AMSC to such AMRC-Developed Technology for the development, implementation and commercialization of the AMRC System.

7. Third Party Technology. (a) In the event that AMRC obtains from any third party the right to use any technology which could be used in connection with the development, implementation and commercialization of the DARS satellite system for transmission in and over the geographic area of the United States or its territories, AMRC shall make all reasonable efforts to obtain for the WorldSpace Group and AMSC the right to use such technology in connection with the development, implementation and commercialization (i) outside the United States, of the WorldSpace System and the AMSC System, respectively and (ii) inside the United States and its territories, of the AMSC System (other than in connection with any DARS satellite system).

(b) In the event that WorldSpace or AMSC obtains from any third party the right to use any technology which could be used in connection with the development, implementation and commercialization of a DARS satellite system for transmission in and over the geographic area of the United States or its territories, WorldSpace or AMSC, as the case may be, shall make all reasonable efforts to obtain for AMRC the right to use such technology in the United States and its territories in connection with the development, implementation and commercialization of the AMRC System.

8. Representations and Warranties. (a) Each Party hereby represents and warrants to each of the other Parties as follows:

(i) it is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation;

(ii) it has the corporate power and authority to own its assets, carry on its business and execute and deliver this Agreement and to perform its obligations hereunder, including without limitation to grant to the other Parties the rights granted hereunder in accordance with the terms hereof;

(iii) it has taken all appropriate and necessary action to authorize the execution, delivery and performance of this Agreement;

(iv) all consents, approvals, licenses and authorizations of, and all filings and registrations with, any governmental or regulatory authority or other third party necessary for the due execution, delivery, performance and enforceability of this Agreement, have been obtained and are in full force and effect; and

(v) this Agreement constitutes a legal, valid and binding obligation, enforceable in accordance with its terms; the execution, delivery and performance of this Agreement will not violate any provision of any laws or regulations applicable to it.


(b) WorldSpace hereby represents and warrants that:

(i) it has valid and enforceable ownership rights in and to, or has the rights from the appropriate third parties to license rights in and to, the WorldSpace Licensed Technology, including but not limited to any and all patents, copyrights, trade secrets, designs, software, and any and all other technology therein;

(ii) it has not previously assigned, pledged or otherwise encumbered any rights to the WorldSpace Licensed Technology in a manner that conflicts with the rights granted herein;

(iii) to the best knowledge of WorldSpace, no element of the WorldSpace Licensed Technology violates or infringes any patent, copyright, trademark, trade secret or other proprietary right of any third party; and

(iv) there are no judgments, orders, injunctions, decrees, awards or settlements outstanding (whether rendered by a court, tribunal, administrative agency or arbitral tribunal) against WorldSpace or referencing WorldSpace by name or by which WorldSpace is bound which affects the WorldSpace Licensed Technology or the use of the WorldSpace Licensed Technology in any manner material to the transactions contemplated hereby; and there is no litigation, judicial or arbitral action, or claim involving the WorldSpace Licensed Technology or the transaction contemplated by this Agreement which is pending or, to the knowledge of WorldSpace, threatened against WorldSpace.

(c) AMSC hereby represents and warrants that:

(i) it has valid and enforceable ownership rights in and to, the AMSC Licensed Technology, including but not limited to any and all patents, copyrights, trade secrets, designs, software, and any and all other technology therein;

(ii) it has not previously assigned, pledged or otherwise encumbered any rights to the AMSC Licensed Technology in a manner that conflicts with the rights granted herein;

(iii) to the best knowledge of AMSC, no element of the AMSC Licensed Technology violates or infringes any patent, copyright, trademark, trade secret or other proprietary right of any third party; and

(iv) there are no judgments, orders, injunctions, decrees, awards or settlements outstanding (whether rendered by a court, tribunal, administrative agency or arbitral tribunal) against AMSC or referencing AMSC by name or by which AMSC is bound which affects the AMSC Licensed Technology or the use of the AMSC Licensed Technology in any manner material to the transactions contemplated hereby; and there is no litigation, judicial or arbitral action, or claim involving the AMSC Licensed Technology or the


transaction contemplated by this Agreement which is pending or, to the knowledge of AMSC, threatened against AMSC.

(d) THE PARTIES ACKNOWLEDGE THAT THE WARRANTIES EXPRESSED HEREIN ARE THE SOLE WARRANTIES AND ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WHICH ARE HEREBY EXPRESSLY DISCLAIMED.

9. Certain Covenants. (a) Each Party agrees to use reasonable efforts to inform the other Parties promptly of the existence of any technology or improvement referred to in Sections 5, 6 and 7 of which it becomes aware which could be used in connection with the development, implementation and commercialization of a DARS satellite system.

(b) Each Party agrees to make available to the other Parties any detailed specifications required for such other Party to make use of the technology licensed hereunder.

(c) WorldSpace agrees not to sell, assign or transfer to any third- party any element of, or interest in, the WorldSpace Licensed Technology for transmission in and over the geographic area of the United States and its territories in a manner inconsistent with the licenses granted under this Agreement.

(d) AMSC agrees not to sell, assign or transfer to any third-party any element of, or interest in, the AMSC Licensed Technology for transmission in and over the geographic area of the United States and its territories in a manner inconsistent with the licenses granted under this Agreement.

(e) AMRC agrees not to sell, assign or transfer to any third-party any element of, or interest in, the AMRC-Developed Technology in a manner inconsistent with the licenses granted under this Agreement.

(f) Until such time as may otherwise be agreed by the Parties hereto, WorldSpace shall provide to AMRC, promptly after the end of each fiscal quarter, information regarding the costs incurred for, and the status of, any and all technologies developed in connection with the MCM Technology.

10. Confidentiality. (a) The Parties recognize that in the course of performance of this Agreement, either of them may disclose to the other information about the disclosing Party's business or activities which such Party considers proprietary and confidential including, without limitation, trade secrets, marketing and business plans, customer lists, and information concerning the operations of the Parties (all of such proprietary and confidential information is hereinafter referred to as the "Confidential Information"). The Party who receives any Confidential Information (the "Receiving Party") agrees to maintain a confidential status for such Confidential Information, to treat such Confidential Information in the same manner as it treats its own Confidential Information, not to use any such Confidential Information for any purpose other than the purpose for which it was originally disclosed to the Receiving Party, and not to disclose any of such Confidential Information to any third party, except to such vendors, consultants and other parties necessary for such Party to conduct its business, or unless such information: (i) is or has become available to the public from a source other than the Receiving Party; (ii) was already known to the Receiving Party from sources other than the other Party at

the time it was disclosed to the Receiving Party; (iii) is disclosed to the Receiving Party by a third party who is not under any legal obligation prohibiting such disclosure; or (iv) is required to be disclosed by law.

(b) The Parties acknowledge that they may be required to disclose Confidential Information to governmental agencies or authorities by law or in connection with the obtaining of approvals for the Company, and each shall endeavor to limit disclosure to that purpose. If either Party is required to disclose Confidential Information pursuant to this Section, such Party will immediately give the other Party written notice of any such disclosure, which notice shall specify the substance of the disclosure. The Party making such a disclosure shall take all reasonable steps to prevent further disclosure of such Confidential Information.

(c) The provisions of this Section 10 shall survive the termination of this Agreement for any reason whatsoever. Upon such termination, the Parties shall return or destroy any Confidential Information which may have been transmitted by the other Party, as well as any copy or other reproduction, including without limitation, electronic data reproductions or representations.

1. 11. Termination and Default. (a) The term of this Agreement shall commence on the date first written above and shall be automatically renewed yearly thereafter, unless sooner terminated in accordance with this
Section 11.

(b) If any of WorldSpace or AMSC, on the one hand, or AMRC on the other hand, shall:

(i) breach any of the terms and conditions of this Agreement, and shall fail to remedy such breach within ninety (90) days after an arbitrator duly appointed in accordance with Section 13 hereof determines that any of WorldSpace or AMSC, on the one hand, or AMRC, on the other hand, has breached or violated any of its material obligations hereunder, unless such breach is so remedied; or

(ii) become insolvent or go into liquidation or receivership or be admitted to the benefits of any procedures for the settlement or postponement of debts or be declared bankrupt; or

(iii) become a party to dissolution proceedings;

then (except as otherwise expressly provided herein), by providing written notice, (A) AMRC may terminate this Agreement (1) with respect to WorldSpace to the extent WorldSpace is the subject of any matter covered by Subsection (i),
(ii) or (iii) above or (2) with respect to AMSC to the extent AMSC is the subject of any matter covered by Subsection (i), (ii) or (iii) above; (B) WorldSpace may terminate its obligations under this Agreement, to the extent AMRC is the subject of any matter covered by Subsection (i), (ii) or (iii) above or (C) AMSC may terminate its obligations under this Agreement, to the extent AMRC is the subject of any matter covered by Subsection (i), (ii) or (iii) above.

(c) After termination of this Agreement, AMRC shall return all documents (and copies thereof) and other embodiments of the Licensed Technology to WorldSpace or AMSC, as appropriate, or shall certify that such documents have been destroyed.


12. GOVERNING LAW. THIS AGREEMENT, INCLUDING ALL ANNEXES, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OR CHOICE OF LAWS PROVISIONS THEREOF.

13. Arbitration. (a) Any controversy or claim arising out of or relating to this Agreement or the breach hereof shall be settled by arbitration in Washington, D.C. in accordance with the Expedited Arbitration Rules of JAMS/Endispute. The award of the arbitrator, JAMS/Endispute, shall be binding upon the parties hereto.

(b) Each Party hereby submits to the jurisdiction of any arbitral tribunal referred to above, agrees that any award rendered by the arbitrators against it may be executed against its assets in any jurisdiction and submits to the jurisdiction of the courts in such jurisdiction in any legal proceedings relating to the execution of such award.

14. LIMITATION OF LIABILITY. (a) NO PARTY HERETO NOR ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, INDEPENDENT CONTRACTORS, PARTNERS OR STOCKHOLDERS SHALL BE LIABLE TO ANY OTHER PARTY HERETO FOR ANY LOSS OR DAMAGE WHATSOEVER
(INCLUDING ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE)
ARISING FROM THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE, UNLESS

(1) ARISING FROM THE WILLFUL MISCONDUCT OF SUCH PARTY, OR

(2) ARISING FROM THE GROSS NEGLIGENCE OF SUCH PARTY, IN WHICH CASE SUCH LIABILITY SHALL BE LIMITED TO LOSSES OR DAMAGES OTHER THAN SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSSES OR DAMAGES IN AN AMOUNT NOT TO EXCEED THE ROYALTY PAYMENT, IF ANY, RECEIVED BY SUCH PARTY WITH RESPECT TO THE RELEVANT TECHNOLOGY LICENSED BY SUCH PARTY HEREUNDER.

(b) In the event of a claim of infringement of a third party's intellectual property rights arising from the WorldSpace Licensed Technology, WorldSpace will, to the extent consistent with its contractual, fiduciary, regulatory and other obligations, cooperate with AMRC as may be reasonably requested in the defense of such claim.

(c) In the event of a claim of infringement of a third party's intellectual property rights arising from the AMSC Licensed Technology, AMSC will, to the extent consistent with its contractual, fiduciary, regulatory and other obligations, cooperate with AMRC as may be reasonably requested in the defense of such claim.

(d) In the event of a claim of infringement of a third Party's intellectual property rights arising for the AMRC Developed Technology, AMRC will, to the extent consistent with its contractual, fiduciary, regulatory and other obligations, cooperate with WorldSpace and/or AMSC, as the case may be, as may be reasonably requested in the defense of such claim.


15. Notices. Any and all notices or other communications or deliveries required or permitted to be given pursuant to any of the provisions of this Agreement shall be deemed to have been duly given for all purposes if sent by certified or registered mail, return receipt requested and postage prepaid, hand delivered or sent by a nationally recognized overnight courier to the address listed below or at such other address as any Party may specify by notice given to the other Party in accordance with this Section 15.

Notices to AMRC shall be sent to:

AMRC Holdings, Inc.
1250 23rd Street, N.W.
Suite 57
Washington, D.C. 20037
Attn: Chief Financial Officer Telephone: 202-969-6000
Facsimile: 202-969-6001

Notices to AMSC should be sent to:

American Mobile Satellite Corporation 10802 Parkridge Boulevard
Reston, VA 20191
Attn: General Counsel
Telephone: 703-758-6130
Facsimile: 703-758-6134

Notices to WorldSpace shall be sent to:

WorldSpace Management Corporation 2400 N Street, N.W.
Washington, D.C. 20037
Attn: Assistant General Counsel Telephone: 202-969-6000
Facsimile: 202-969-6001

The date of giving of any such notice shall be the date of delivery when delivered by hand or by overnight courier, or three days following the posting of the mail.

16. Waiver. No failure or delay by any Party at any time to enforce one or more of the terms, conditions or obligations of this Agreement shall constitute a waiver of such terms, conditions or obligations or shall preclude such Party from requiring performance by the other Party at any time. No waiver of the provisions hereof shall be effective unless in writing and signed by the Party to be charged with such waiver. No waiver shall be deemed a continuing waiver or waiver in respect of any subsequent breach or default, either of similar or different nature, unless expressly so stated in writing.

17. Entire Agreement. This Agreement contains the entire understanding of the parties hereto with respect to the subject matter contained herein. This Agreement supersedes all prior agreements and understanding between the parties with respect to such subject matter.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized directors, officers or representatives as of the date and year first above written.

WORLDSPACE MANAGEMENT CORPORATION

By   /s/ Noah Samara
     ----------------------------
     Name:  Noah Samara
     Title: Chairman & CEO

AMERICAN MOBILE SATELLITE CORPORATION

By   /s/ Gary Parsons
     ----------------------------
     Name:  Gary Parsons
     Title: Chairman & CEO

AMRC HOLDINGS, INC.

By   /s/ Hugh Panero
     ----------------------------
     Name:  Hugh Panero
     Title: President & CEO

AMERICAN MOBILE RADIO CORPORATION

By   /s/ Hugh Panero
     ----------------------------
     Name:  Hugh Panero
     Title: President & CEO

Attachments:

Annex 1 - Illustration of Royalty Payments contemplated under Section 4(c)


***** 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.

Annex 1

Illustration of Royalty Payments Contemplated under Section 4(c)

[*****]


AMENDMENT NO. 1 TO TECHNOLOGY LICENSING AGREEMENT

This AMENDMENT NO. 1 TO TECHNOLOGY LICENSING AGREEMENT (this
"Amendment") is entered into as of June 7, 1999, and amends that certain TECHNOLOGY LICENSING AGREEMENT (the "Technology Agreement") entered into on July 30, 1998, but intended to be effective as of January 1, 1998, by and between WorldSpace Management Corporation, a corporation organized under the laws of the State of Delaware ("WorldSpace"), XM Satellite Radio Inc. (formerly known as American Mobile Radio Corporation ("AMRC")), a corporation organized under the

laws of the State of Delaware ("XM"), XM Satellite Radio Holdings Inc. (formerly

known as AMRC Holdings), a corporation organized under the laws of the State of Delaware ("XM Holdings") and American Mobile Satellite Corporation, a corporation organized under the laws of the State of Delaware ("American Mobile") (each a "Party" and together the "Parties").

WHEREAS, XM is employing various technologies developed by WorldSpace (and its affiliates) and AMSC in connection with the development and implementation of XM's satellite digital audio radio system pursuant to a license granted in October 1997 by the U.S. Federal Communications Commission and

WHEREAS, XM is taking steps to commence the establishment of a Digital Audio Radio Service ("DARS") satellite system in the United States and other nations in North America in the footprint of XM's satellites under the license granted to XM in October 1997 by the U.S. Federal Communications Commission (the "XM System"), as such license may from time to time be modified or amended and such other licenses as may be required by appropriate governmental agencies in such other nations in North America in the footprint of XM's satellites; and

WHEREAS, WorldSpace recognizes that in connection with the establishment of the XM System it will be necessary and/or desirable for XM to have the use of certain technology comprised of patents, patent applications, software, databases, know-how and the intellectual property rights therein owned by, licensed to or developed from time to time by WorldSpace or any corporation, partnership or other entity controlled by, controlling or under common ownership or control with WorldSpace (a "WorldSpace Affiliate" and together with WorldSpace, the "WorldSpace Group"; for purposes of this agreement WorldSpace Inc., a minority shareholder in WorldSpace International Network Inc., the parent company of WorldSpace , is recognized as a member of the WorldSpace Group) and to be used in any digital radio broadcasting system being implemented outside the United States by the WorldSpace Group or in which the WorldSpace Group participates (such system, the "WorldSpace System"); and

WHEREAS, the Parties have determined that it is desirable and appropriate to clarify and amend certain provisions of the Technology Agreement in connection with the

1

entering into of the Exchange Agreement by American Mobile, WorldSpace, Inc. and the other parties thereto;

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. Technology Transfer. (a) It was and remains the intent of XM, American Mobile and WorldSpace that no transfer of equipment or technology from XM to WorldSpace (or any of its affiliates) or to American Mobile will be made pursuant to the Technology Agreement or otherwise unless the transfer is consistent with the requirements of the U.S. export control laws, including the Export Administration Regulations and the International Traffic in Arms Regulations.

(b) For the avoidance of doubt, the Technology Agreement is hereby amended by the addition of new Section 18 thereto as follows:

18. Export Control. No transfer of equipment or technology (x) from AMRC to WorldSpace or any WorldSpace Affiliate or to AMSC, (y) from WorldSpace or any WorldSpace Affiliate to AMRC or AMSC or (z) from AMSC to WorldSpace or any WorldSpace Affiliate or AMRC, will be made pursuant to this Agreement or otherwise unless the transfer is consistent with the requirements of the U.S. export control laws, including the Export Administration Regulations and the International Traffic in Arms Regulations.

(c) XM hereby confirms that it understands that it may be required to enter into technical assistance agreements that meet the requirements of the U.S. export control laws, including the Export Administration Regulations and the International Traffic in Arms Regulations, in connection with access by foreign nationals to data subject to U.S. export control regulations. XM further understands that the export of certain information required for (i) the development of its payload by Alcatel S.A. in France and (ii) the export of its satellites for launch on the Sea Launch System are subject to the export control licensing requirements imposed by applicable U.S. law and regulation, including the Export Administration Regulations and the International Traffic in Arms Regulations. In this connection, XM agrees to obtain, and will enable the appropriate third parties to obtain, all necessary U.S. governmental approvals for such technical assistance agreements and export licenses in a time frame consistent with the scheduled launch of the XM Satellite Radio system.

(d) XM hereby covenants that any technical information it has in its possession which is subject to the requirements of the U.S. export control laws, including the Export Administration Regulations and the International Traffic in Arms Regulations, will be retained in accordance with the XM Satellite Radio Inc. Export Control Management Policy.

2

2. Use of Technology. (a) The parties hereby confirm that it was and remains the intent of XM, American Mobile and WorldSpace that (i) XM be permitted to use the WorldSpace Licensed Technology and AMSC Licensed Technology for commercialization of the XM System anywhere in the footprint of XM's satellites launched for the XM system, and (ii) any use by WorldSpace (or any of its licensees or affiliates) of any XM-developed (or XM improved) technology licensed to WorldSpace under the Technology Agreement be limited to U.S. use by the WorldSpace Group at its U.S.-based facilities for the WorldSpace Group's satellite DARS systems outside the United States. XM, American M obile and
WorldSpace hereby agree to confirm their intent and to amend the Technology Agreement as set forth in Section 2(b)-(g) hereof.

(b) The phrase "and other nations in North America in the footprint of AMRC's satellites launched for the XM System (as defined in Amendment No. 1 hereto)" is hereby inserted after the words "United States" in the second line of the first recital on page one of the Technology Agreement and the phrase "and such other licenses as may be required by appropriate governmental agencies in such other nations in North America in the footprint of AMRC's satellites launched for the XM System " is hereby inserted after the word "amended" in the fourth line of the first recital on page one of the Technology Agreement.

(c) The phrase "and other nations in North America in the footprint of AMRC's satellites launched for the XM System" is hereby inserted after the word "territories" appearing the fourth line of Section 2(a) of the Technology Agreement.

(d) The phrase "and other nations in North America in the footprint of AMRC's satellites launched for the XM System" is hereby inserted after the word "territories" appearing the fourth line of Section 2(b) of the Technology Agreement.

(e) The following proviso is hereby added to the end of Section 5(a) of the Technology Agreement:

provided, further, that the license of the WorldSpace Group to use such improvements in the United States shall be limited to the use of such improvements at the U.S.-based facilities for the WorldSpace Group's satellite DARS systems outside the United States.

(f) The following parenthetical phrase is hereby added following the words "AMSC Licensed Technology" in Section 5(b) of the Technology Agreement:

(other than in connection with any DARS satellite system)

3

(g) The following parenthetical phrase is hereby added following the words "WorldSpace System" in clause (ii)(A) of Section 6(a) of the Technology Agreement :

(solely to the extent such technology (and improvements) is used in the U.S.-based facilities for the WorldSpace Group's satellite DARS systems outside the United States.)

3. Irrevocable License. The Parties hereby agree to amend the Technology Agreement by (i) deleting the phrase "grants to AMRC a license" in the first line of Section 2(a) thereof, and inserts in its stead the phrase "grants to AMRC an irrevocable license" and (ii) deleting the phrase "grants to AMRC a license" in the first line of Section 2(b) thereof, and inserts in its stead the phrase "grants to AMRC an irrevocable license".

4. Subsequently-Developed Technologies. The Parties hereby agree to amend the Technology Agreement to exclude the licensing of certain technologies developed after the fifth anniversary of the effective date of the Technology Agreement as follows:

(a) Section 6(a) of the Technology Agreement is hereby amended by striking the word "hereafter" and inserting in its place "within five years after the date of this Agreement"

(b) The following phrase is hereby added following the phrase "AMRC System" in the second line of Section 1(a)(iv)

(which technologies shall have been developed within five years after the effective date of this Agreement)

(c) The Technology Agreement is hereby amended by the addition of new
Section 19 thereto as follows:

19. AMRC and the WorldSpace Group shall, to the extent mutually desirable, enter into licensing arrangements on commercially reasonable terms with respect to AMRC-Developed Technology and technology developed by the WorldSpace Group, in each case developed after the fifth anniversary of the effective date of this Agreement.

5. Rights on Termination. The Parties hereby agree to amend the Technology Agreement by deleting Section 11(c) therefrom.

6. Limitation on Damages. The Parties hereby confirm that in the event of any breach of the Technology Agreement by XM, the damages payable by XM shall be limited

4

to money damages only; accordingly equitable relief shall not be available and XM's irrevocable right to use the technology licensed thereunder shall not be terminated; provided however that this restriction on the application of equitable relief as a remedy shall not apply to any breach relating to XM's obligations to license technology or improvements to WorldSpace and AMSC

7. Effective Time. This Amendment shall be effective upon the Closing under that certain Exchange Agreement dated as of June 6, 1999 between American Mobile, XM Holdings and WorldSpace, Inc.

5

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed and delivered by their proper and duly authorized directors, officers or representatives as of the date and year first above written.

WORLDSPACE MANAGEMENT CORPORATION

By /s/ James R. Laramie
   ------------------------------------
Name:  James R. Laramie
Title: Secretary

AMERICAN MOBILE SATELLITE CORPORATION

                                       By  /s/ Randy Segal
                                          -------
-----------------------------
                                       Name:  Randy Segal
                                       Title: Senior Vice President

XM SATELLITE RADIO HOLDINGS, INC.

By  /s/ Joseph M. Titlebaum
   -------------------------------------
Name:  Joseph M. Titlebaum
Title: SVP General Counsel and Secretary

XM SATELLITE RADIO INC.

By  /s/ Joseph M. Titlebaum
   -------------------------------------
Name:  Joseph M. Titlebaum
Title: SVP General Counsel and Secretary

6

EXHIBIT 10.5

*** 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.

TECHNICAL SERVICES AGREEMENT

THIS TECHNICAL SERVICES AGREEMENT ("Agreement") is entered into on July 24, 1998, but intended to be effective as of January 1, 1998, between AMRC Holdings, Inc., a cor
poration duly organized and existing under the laws of the State of Delaware (the "Company"), and American Mobile Satellite Corporation, a corporation duly organized and existing under the laws of the State of Delaware (the "Service Provider"), each of which may be referred to individually as a "Party" or collectively as the "Parties." This Agreement and all addenda contemplated hereby are collectively referred to as the "Agreement" unless indicated otherwise.

WHEREAS, the Federal Communications Commission ("FCC" or "Commission") has issued to the Company one of two digital audio radio satellite ("DARS") licenses


to provide audio programming via satellite to the United States (the

"Business");

WHEREAS, the Service Provider possesses, inter alia, technical expertise and know-how in the areas of engineering, satellite system design and development, ground segment infrastructure design and development, and similar areas related to the development of a DARS system;

WHEREAS, the Company has selected the Service Provider, and the Service Provider is willing, to perform the Services specified herein on the terms and conditions set forth herein; and

WHEREAS, on or about the date hereof the Company has entered into a substantially identical agreement with WorldSpace Management Corporation ("WorldSpace"), acting as service provider thereunder, as represented in Section 5.2 hereof.

NOW, THEREFORE, in consideration of the mutual obligations a nd benefits set
forth in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Company and the Service Provider agree to the following terms and conditions:

1. Services

1.1  (a)  The Service Provider shall, at the request of the Company, provide
          certain technical, engineering, marketing and strategic planning, or
          any other services as may be requested by the Company in connection
          with the establishment or operation of the Business (the "Services").
                                                                    --------
          The Services may be provided to the Company, or to its subsidiary,
          American Mobile Radio Corporation.  Nothing in this Agreement shall
          obligate the Company to purchase a minimum or specific amount of
          Services.

     (b)  The Board of Directors of the Company or one or more of its authorized
          designees shall meet no later than the 30th day before the beginnin
g
          of each calendar quarter in order to determine the goals which the
          Company must achieve in the following quarter, including the Company's
          support needs in achieving those goals.  No later than the 15th day
          before the beginning of each calendar quarter, the Company shall
          inform the Service Provider of the Services to be provided by the
          Service Provider in the furtherance of achieving those goals.  No
          later than the 10th day before the beginning of each calendar quarter,
          the Service Provider shall submit to the Company an itemization (each,
          an "Itemization")
              -----------

          confirming the Service Provider will provide the Services specified by
          the Company for the coming quarter, broken down by employee, rate per
          hour and total cost estimates.

     (c)  The Company and the Service Provider shall agree upon the amount of
          compensation for the Services in accordance with Section 2.1, in a
          written addendum to this Agreement, which shall attach the related
          Itemization (the "Addendum," and collectively the "Addenda").
                            --------                         -------

     (d)  The Service Provider shall monitor the actual costs of the Services
          provided on a monthly basis (and may, if it elects do so, on a more
          frequent basis) and shall provide a written notice (the "Initial Cost
                                                                   ------------
          Notice") to the Company during any quarter prior to the incurrence or
          ------
          expenditure of one hundred percent (100%) of the cost estimates for
          such quarter, as set forth in the Itemization to the Addendum for such
          quarter, or as promptly thereafter as may be practicable.
          Notwithstanding the foregoing, no failure or delay in providing any
          such notice shall relieve the Company of the obligation to make
          payment for services as provided herein.  In addition, in the event
          that the actual cost of the Services provided by the Service Provider
          during any quarter exceeds or is expected to exceed one hundred twenty
          percent (120%) of the cost estimates for such Services as set forth in
          the Itemization attached to the related Addendum, the Service Provider
          shall provide notice to the Company of any such excess (the "Excess
                                                                       ------
          Cost Notice") as promptly as practicable after the Service Provider
          -----------
          determines that the actual cost is expected to exceed one hundred
          twenty percent (120%) of the cost estimates.

          At the Company's request, the Service Provider shall modify the
          Services to be provided in any calendar quarter, subject to the
          Service Provider's ability to provide the Services effectively and
          efficiently; the Service Provider shall then provide Services as if
          such modification had appeared on the Itemization attached to the
          related Addendum; and such modification shall in due course be
          reflected in an amendment of such Addendum in accordance with Section
          12.5.

     (e)  The Parties agree that Addendum No. 1 entered into simultaneously
          herewith sets forth the Services rendered and to be rendered during
          the first quarter of 1998.

1.2 The Service Provider shall use its best efforts to ensure that the Services provided hereunder are consistent with accepted industry standards. Such Services shall be provided by the Service Provider as described in this Agreement when and where required by the Company, in a timely and professionally competent manner.

1.3 The Service Provider shall render Services in compliance with all applicable federal, state and local requirements, including, without limitation, all equal employment opportunity, compensation, benefit plan, disability, workers' compensation, anti-discrimination, and safety and health laws.

1.4 In order for the Service Provider to provide the Services hereunder, the Company shall disclose to the Service Provider such information and data which is reasonably requested by the Service Provider. The Service Provider shall use such information and data exclusively in the performance of its obligations hereunder, and such disclosure shall be subject to the terms and conditions of this Agreement, including Section 7, if such disclosure is of Confidential Information as defined herein.

2

1.5 Technology and the intellectual property rights therein owned by the Service Provider and provided to the Company in connection with the provision of Services herewith shall be subject to a Technology Licensing Agreement between and among the Parties.

2. Payment Terms

2.1 Costs for Services Rendered:

(a) Unless agreed otherwise, the Service Provider shall be compensated at the rates set forth in Annex I for Services performed, plus reimbursement of reasonable out-of-pocket expenses. Such rates shall be determined by the Service Provider and shall not be changed without the prior written consent of the Company. The Company shall pay the Service Provider for such Services as set forth below:

(i) In the event that the actual cost of the Services provided by the Service Provider during any quarter are equal to or less than one hundred twenty percent (120%) of the cost estimates for such Services as set forth in the Itemization attached to the related Addendum, then

the Company shall be obligated to pay the actual costs for such Services;

(ii) in the event that (x) the actual cost of the Services provided by the Service Provider during any quarter exceeds one hundred twenty percent (120%) of the cost estimates for such Services as set forth in the Itemization attached to the related Addendum and (y) the Service Provider fails to provide the Company with either the Initial Cost Notice or the Excess Cost Notice, then the Company shall be obligated

to pay no more than one hundred twenty percent (120%) of the cost estimates for such Services as originally set forth in the Itemization attached to the related Addendum; and

(iii) in the event that (x) the actual cost of the Services provided by the Service Provider during any quarter is expected to exceed one hundred twenty percent (120%) of the cost estimates for such Services as set forth in the Itemization attached to the related Addendum and
(y) the Service Provider has provided

(A) the Initial Cost Notice, the Company shall be authorized to modify the Services being provided during such quarter, in consultation with the Service Provider, in order to reduce the cost of Services for such quarter, or

(B) the Excess Cost Notice, the Company shall be authorized to direct the Service Provider to modify or suspend providing Services for the remainder of such quarter after the incurrence or expenditure of one hundred twenty percent (120%) of such cost estimates;

in the event the Company does not provide to the Service Provider notice of modification or suspension of Services as provided above, the Service Provider shall continue to perform the Services for the duration of such quarter and the Company shall be obligated to pay for the actual cost of the Services, which cost shall in due course be reflected in an amendment of such Addendum in accordance with Section 12.5.

(b) Unless agreed otherwise, all properly documented reasonable out-of- pocket expenses shall be charged by the Service Provider to the Company at actual cost; provided,

3

however, that without the Company's prior written approval the Company shall not be obligated to reimburse out-of-pocket expenses in excess of $20,000 per month.

(c) The Company shall be under no obligation to make any payments other than those contemplated by this Agreement.

2.2 Right to Inspect: Upon the Company's reasonable request, the Service Provider shall provide the Company with copies of all documents reasonably necessary for the Company's independent determination of the Service Provider's costs invoiced for Services rendered. The Company or its agent shall also have the right to inspect during normal business hours any item, including, without limitation, meters, invoices, contracts, records or such additional documents reasonably necessary for the Company or its agent to audit the Service Provider's out-of-pocket expenses, provided, however that the Company shall give the Service Provider at least 24 hours advance notice of its intention to inspect any item in accordance with this Section 2.2.

2.3 Quarterly Invoice: Within thirty (30) days following the end of each calendar quarter, the Service Provider shall submit to the Company an invoice setting forth a description of the Services rendered during the preceding calendar quarter, plus out-of-pocket expenses incurred during such period. A proper invoice shall set forth the amount charged for each separate Service rendered on a separate line, and the total sum due for all Services for the relevant period. Each invoice shall be payable upon receipt by the Company and unpaid amounts relating thereto shall accrue interest at nine percent (9%) per annum, from and after the thirtieth day following the date of issuance of the such invoice, provided that such invoice is promptly delivered following issuance to the Company.

2.4 Disputes:

(a) The Company shall have the right to dispute all or a portion of any invoice rendered by the Service Provider for which the Company has reasonable cause. The Company shall inform the Service Provider in writing of the basis for such dispute and the amount withheld within thirty (30) days of the Company's receipt of the relevant invoice.

(b) In the event it is determined, either by agreement of the Parties or by dispute resolution pursuant to Section 8 hereof, that the disputed amount is properly due and payable, the Service Provider shall be entitled to the interest earned on such disputed amount for each day after payment of the invoice was due until the day the disputed portion is paid by the Company. Interest shall be calculated at the rate equal to nine percent (9%) per annum.

(c) Any payment made by the Company, or failure of the Company to provide written notice of the dispute within the above thirty (30) day period, shall not prejudice the Company's right to contest its liability for any payment under this Agreement, unless such failure to give notice materially prejudices the Service Provider.

2.5 Right of Set-off: If the Service Provider fails fully and satisfactorily to provide any of the Services for which the Company has made payment, the Company shall have the right to set-off such payments against future payments to be made by the Company to the Service Provider under this
Section 2. Such set-off rights shall be in addition to, and not in substitution for, any and all other rights and remedies available to the Company under this Agreement or applicable law.

4

3. Schedule and Availability

With effect from January 1, 1998, the Service Provider shall perform the Services as instructed by the Company and as from time to time agreed in the Addenda. However, the Service Provider shall not be obligated to devote its full-time efforts to the performance of the Services.

4. Termination

4.1. On or after the date of the commencement of commercial operation of the Business following the launch of the Company's first satellite, either Party may, at any time, for its convenience and at its sole option, after giving the other Party thirty (30) days written notice, terminate this Agreement. The termination of this Agreement, or of any renewal thereof, shall discharge any further obligation of either Party hereto with respect to this Agreement, or any renewal thereof, provided however that the obligations set forth in Section 12.6 shall survive.

4.2. Upon termination, the Service Provider shall be entitled to compensation and disbursements for Services rendered up to the date of termination and the Company shall be entitled to receive any work product for which full payment has been made, or in the alternative (at the sole discretion of the Company) to be reimbursed the amount paid for such Services and/or work product not returned or not completed.

5. Representations and Warranties

5.1 Each Party hereby represents and warrants to the other Party as follows:

(a) It is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation;

(b) It has the corporate power and authority to own its assets, carry on its business and execute and deliver this Agreement and to perform its obligations hereunder;

(c) It has taken all appropriate and necessary action to authorize the execution, delivery and performance of this Agreement;

(d) All consents, approvals, licenses and authorizations of, and all filings and registrations with, any governmental authority necessary for the due execution, delivery, performance and enforceability of this Agreement, have been obtained and are in full force and effect; and

(e) This Agreement constitutes a legal, valid and binding obligation, enforceable in accordance with its terms. The execution, delivery and performance of this Agreement will not violate any provision of any applicable laws or regulations.

5.2 The Company hereby represents and warrants that, but for the description of services to be provided, it has entered into a substantially identical agreement with WorldSpace.

5.3 The Service Provider hereby represents and warrants that it has, or has unfettered access to, the technical, engineering, marketing and strategic planning and other necessary knowledge and skills necessary to render satisfactorily the Services as provided herein.

6. Independent Contractor

5

This Agreement does not constitute or create a joint venture, pooling arrangement, partnership, or formal business organization of any kind between and among any of the Parties and the rights and obligations of the Parties shall be only those expressly set forth herein. The Service Provider will perform the Services as an independent contractor and shall not be considered, for any purpose, to be an employee, agent or servant of the Company or its affiliated companies. Neither the Service Provider nor the Service Provider's personnel shall be entitled to workers' compensation, medical coverage or similar benefits, or any life, disability or other insurance protection provided by the Company or any of its affiliated companies for their respective employees. The Service Provider shall be solely responsible for the payment of social security benefits, unemployment insurance, pension benefits, withholding any required amounts for income and other employment-related taxes and benefits of its employees, for providing its own transportation, and shall make its own arrangements for injury, illness or other insurance coverage to protect itself, its affiliated companies, its subcontractors and personnel from any costs, expenses, damages, loss and/or liability arising out of performance of the Services, or any transportation associated therewith. The Service Provider has no power or authority to act for, represent, or bind the Company or its affiliated companies in any manner. Any attempt by the Service Provider to act on behalf of or to bind the Company shall be void and grounds for immediate termination of this Agreement.

7. Confidentiality

7.1  (a)  The Parties recognize that in the course of performance of the
          Agreement, either of them may disclose to the other information about
          the disclosing Party's business or activities which such Party
          considers proprietary and confidential including, without limitation,
          trade secrets, marketing and business plans, customer lists, and
          information concerning the operations of the Parties (all of such
          proprietary and confidential information is hereinafter referred to as
          the "Confidential Information").  The Party who receives any
          Confidential Information (the "Receiving Party") agrees to maintain a
          confidential status for such Confidential Information, to treat such
          Confidential Information in the same manner as it treats its own
          Confidential Information, not to use any such Confidential Information
          for any purpose other than the purpose for which it was originally
          disclosed to the Receiving Party, and not to disclose any of such
          Confidential Information to any third party, unless such information:

          (i)   is or has become available to the public from a source other
                than the Receiving Party;

          (ii)  was already known to the Receiving Party from sources other than
                the other Party at the time it was disclosed to the Receiving
                Party;

          (iii) is disclosed to the Receiving Party by a third party who is
                not under any legal obligation prohibiting such disclosure; or

          (iv)  is required to be disclosed by law.

     (b)  The Parties acknowledge that they may be required to disclose
          Confidential Information to governmental agencies or authorities by
          law or in connection with the obtaining of approvals for the Company,
          and each shall endeavor to limit disclosure to that purpose.  If
          either Party is required to disclose Confidential Information pursuant
          to this paragraph, such Party will immediately give the other Party
          written notice of any such disclosure,

                                       6

          which notice shall specify the substance of the disclosure. The Party
          making such a disclosure shall take all reasonable steps to prevent
          further disclosure of such Confidential Information.

7.2 Survival of Confidentiality: The provisions of this Section 7 shall survive the termination of this Agreement for any reason whatsoever. Upon such termination, the Parties shall return or destroy any Confidential Information which may have been transmitted by the other Party, as well as any copy or other reproduction, including without limitation, electronic data reproductions or representations.

8. Dispute Resolution

8.1. In the event of any dispute between the Parties arising out of or in connection with this Agreement or the interpretation hereof, the Parties shall, in the first instance, make a good faith effort to settle such dispute amicably.

8.2. If amicable settlement cannot be reached within thirty (30) days following written notice by one Party to the other Party of the existence of any such dispute, the matter will be referred to binding arbitration in Washington, D.C. in accordance with the Expedited Arbitration Rules of JAMS/Endispute. The award of the arbitrator, JAMS/Endispute, shall be binding upon the parties hereto.

8.3. Each Party hereby submits to the jurisdiction of any arbitral tribunal referred to above, agrees that any award rendered by the arbitrators against it may be executed against its assets in any jurisdiction, and submits to the jurisdiction of the courts in such jurisdiction in any legal proceedings relating to the execution of such award.

9. Notices

All notices and other communications required or permitted hereunder shall be given in writing by hand delivery, by facsimile, or by registered or certified mail, return receipt requested, postage prepaid, addressed to the Party to receive the same at its respective address set forth below, or at such other address as may from time to time be designated by either Party to the other Party hereunder in accordance with this Section 9:

7

To the Service Provider:

American Mobile Satellite Corporation
10802 Parkridge Boulevard
Reston, VA 22091

Attn: General Counsel
Telephone: 703-758-6130
Facsimile: 703-758-6134

To the Company:

AMRC Holdings, Inc.
1250 23rd Street, N.W.
Suite 57
Washington, D.C. 20037
Attn: Chief Financial Officer
Telephone: 202-969-6000
Facsimile: 202-969-6001

All notices shall be effective when received. A notice is considered received if a written confirmation of receipt appears thereon or there exists a written fax confirmation. Either Party may by notice to the other Party designate a new address for notices, such new address to be effective ten (10) days after receipt of designation.

10. Taxation

All customs, duties, taxes of any kind, charges, fees and assessments of any nature whatsoever ("Assessments") which may be imposed by any local or other governmental body with respect to the Services (other than taxes on the income of the Service Provider or employment-related taxes paid by the Service Provider pursuant to Section 6) shall be borne by the Company. The Company shall indemnify and hold harmless the Service Provider against any Assessments made against it and any costs incurred by the Service Provider in defending against such Assessments. Any Assessments incurred in the performance of this Agreement shall be treated as an out-of-pocket expense under Section 2.1.

11. Indemnity

11.1 Each Party hereby agrees to indemnify and hold the other Party harmless against any and all costs, losses, claims, actions, demands, damages and liabilities (including attorneys' fees) incurred by the indemnifying Party arising out of or in respect of (i) any act, failure to act, or any assumption of any obligation or responsibility by the indemnifying Party, or by any of its directors, officers or employees, which is in contravention or violation of or in conflict with any of the terms or provisions of this Agreement, or (ii) any breach of any of the representations or warranties made by the indemnifying Party under this Agreement. The Service Provider further agrees to indemnify and hold harmless the Company against any and all costs, losses, claims, actions, demands, damages and liabilities (including attorneys' fees) arising out of or in respect of the gross negligence or willful misconduct of the Service Provider in providing the Services.

11.2 THE SERVICE PROVIDER MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE AGREEMENT OR THE PERFORMANCE OF THE SERVICES

8

PROVIDED HEREUNDER OR THE WORK FURNISHED HEREUNDER, WHETHER ARISING UNDER
LAW OR AT EQUITY.

11.3 IN NO EVENT SHALL EITHER PARTY OR A PARTY'S AFFILIATES AND ITS OR THEIR SUBCONTRACTORS AND ITS OR THEIR OFFICERS, EMPLOYEES AND AGENTS, BE LIABLE, IN CONTRACT, IN TORT, OR OTHERWISE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY NATURE ARISING AT ANY TIME OR FROM ANY CAUSE WHATSOEVER, INCLUDING SPECIFICALLY, BUT WITHOUT LIMITATION, LOSS OF PROFITS OR REVENUE, LOSS OF FULL OR PARTIAL USE OF ANY EQUIPMENT, DELAYS, COST OF REPLACEMENTS, COST OF CAPITAL, LOSS OF GOODWILL, OR OTHER SUCH DAMAGES.

12. Miscellaneous

12.1 Entire Agreement. This Agreement, together with the Annexes and Addenda hereto, constitute the entire agreement of the Parties hereto with respect to the performance of Services by the Service Provider for the Company and supersedes and terminates all prior arrangements and agreements between the Service Provider and the Company or any of its affiliates with respect to the subject matter hereof.

12.2 No Waiver. No failure by either Party hereto to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder by either Party preclude any other or future exercise of that right or any other right hereunder by that Party.

12.3 Severability. In case any one or more of the provisions of this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

12.4 Assignment. Neither Party may assign or transfer, in whole or in part, its rights or interests in this Agreement, nor may either Party delegate responsibilities hereunder without the prior written consent of the other Party, which consent may be withheld for any reason whatsoever, provided, however, that the Service Provider may assign or transfer this Agreement or the right and duties hereunder, in whole or in part, to any division, subsidiary or affiliate or successor entity, or to any corporation under common control of such Party or with which such Party may merge or to which such Party may sell all or substantially all of its assets.

12.5 Amendment. This Agreement may not be amended, terminated or superseded except by an agreement in writing between the Company and the Service Provider.

12.6 Survival: Any provision of this Agreement which can reasonably be construed as surviving the expiration or termination of the Agreement, including but not necessarily limited to the indemnification and confidentiality provisions, shall so survive.

12.7 Governing Law: This Agreement, including all Addenda and Annexes, shall be governed by, and construed in accordance with, the laws of the State of New York without regard to the conflicts or choice of laws thereof.

12.8 Agreement to Execute Documents: The Parties agree in good faith to execute any and all documents required for the performance of this Agreement.

9

12.9 Counterparts: This Agreement may be executed in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument.

IN WITNESS WHEREOF, this Agreement has been executed by the Parties, effective as of the date above indicated.

AMRC HOLDINGS, INC. AMERICAN MOBILE SATELLITE

CORPORATION

By /s/ Hugh Panero                  By /s/ Gary Parsons
   -----------------                   ------------------
Name:  Hugh Panero                  Name:  Gary Parsons
Title: President & CEO              Title: Chairman & CEO

Attachments:

Annex 1 - Rates for Services

Addendum No. 1 to the Technical Services Agreement

10

****** 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.

ANNEX 1

Rates for Services

The billable rates for the Service Provider are as follows:

                                                       Hourly
                                                        Rate
                                                       ------
[*****]


ADDENDUM NO. 1 TO
TECHNICAL SERVICES AGREEMENT

This Addendum No. 1 to the Technical Services Agreement (the "Agreement") dated as of January 1, 1998, is entered into by and among AMRC Holdings, Inc. (the "Company") and American Mobile Satellite Corporation (the "Service Provider"), each of which may be referred to individually as a "Party" or collectively as the "Parties."

Capitalized terms used herein without definition shall have the respective meanings set forth in the Agreement.

1. Services Provided. The Company and the Service Provider hereby agree that the Services requested by the Company and to be provided by the Service Provider during the First Quarter of 1998 are:

1) Amendment to FCC Application: Assist in preparing American Mobile Radio Corporation's amended filing with the Federal Communications Commission, including the technical and business specifications.

2) Technical Evaluation: Evaluation of alternative technologies and system architecture, including support in discussions with potential third party manufacturers.

3) Business Evaluation: Evaluation of potential marketing and business plan activities, including through third party proposals.

4) Other Services: Other Services as requested from time to time by the

Company.

2. Payment for Services. The Service Provider shall be compensated for providing the Services described in Section 1.1 in accordance with the Itemization attached hereto.

IN WITNESS WHEREOF, this Addendum No. 1 to the Agreement has been executed by the Parties, on the date above first written.

AMRC HOLDINGS, INC.                      AMERICAN MOBILE SATELLITE
                                         CORPORATION


By /s/ Hugh Panero                       By /s/ Gary Parsons
   -----------------                        ------------------
Name:  Hugh Panero                       Name:  Gary Parsons
Title: President & CEO                   Title: Chairman & CEO


****** 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.

                         Form of Itemization
                            (AMSC - AMRC)

Hourly                                                        Total
 Rate        Jan.       Feb.       March        April       Billings
------      -----      -----       -----        -----       --------

[*****]

2

AMENDMENT NO. 1 TO TECHNICAL SERVICES AGREEMENT

This AMENDMENT NO. 1 TO TECHNICAL SERVICES AGREEMENT (this
"Amendment") is entered into as of June 7, 1999, and amends that certain TECHNICAL SERVICES AGREEMENT (the "AMSC TSA") entered into on July 24, 1998, but intended to be effective as of January 1, 1998, by and between XM Satellite Radio Holdings Inc. (formerly known as AMRC Holdings), a corporation organized under the laws of the State of Delaware ("XM") and American Mobile Satellite

Corporation, a corporation organized under the laws of the State of Delaware ("American Mobile") (each a "Party" and together the "Parties");

WHEREAS, XM is receiving technical and business assistance from American Mobile in connection with the development and implementation of XM's satellite digital audio radio system pursuant to a license granted by the U.S. Federal Communications Commission (the "XM System");

WHEREAS, the Parties have determined that it is desirable and appropriate to clarify and amend certain provisions of the AMSC TSA in connection with the entering into of the Exchange Agreement by American Mobile and the other parties thereto;

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:

(a) It was and remains the intent of XM and American Mobile that no transfer of equipment or technology from XM to American Mobile will be made pursuant to the AMSC TSA or otherwise unless the transfer is consistent with the requirements of the U.S. export control laws, including the Export Administration Regulations and the International Traffic in Arms Regulations.

(b) For the avoidance of doubt, the AMSC TSA is hereby amended by the addition of new Section 12.10 thereto as follows:

12.10 Technology Transfer. No transfer of equipment or technology from AMRC to AMSC will be made pursuant to this Agreement or otherwise unless the transfer is consistent with the requirements of the U.S. export control laws, including the Export Administration Regulations and the International Traffic in Arms Regulations.

(c) XM hereby confirms that it understands that it may be required to enter into technical assistance agreements that meet the requirements of the U.S. export control laws, including the Export Administration Regulations and the International Traffic in Arms Regulations, in connection with access by foreign nationals to data subject to U.S. export control

1

regulations. XM further understands that the export of certain information required for (i) the development of its payload by Alcatel S.A. in France and
(ii) the export of its satellites for launch on the Sea Launch System are subject to the export control licensing requirements imposed by applicable U.S. law and regulation, including the Export Administration Regulations and the International Traffic in Arms Regulations. In this connection, XM agrees to obtain, and will enable the appropriate third parties to obtain, all necessary U.S. governmental approvals for such technical assistance agreements and export licenses in a time frame consistent with the scheduled launch of the XM Satellite Radio system.

(d) XM hereby covenants that any technica l information it has in its possession which is subject to the requirements of the U.S. export control laws, including the Export Administration Regulations and the International Traffic in Arms Regulations, will be retained in accordance with the XM Satellite Radio Inc. Export Control Management Policy.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized directors, officers or representatives as of the date and year first above written.

AMERICAN MOBILE SATELLITE CORPORATION

By  /s/ Randy Segal
   ------------------------------------
Name:  Randy Segal
Title: Senior Vice President

XM SATELLITE RADIO HOLDINGS, INC.

                                       By  /s/ Joseph
M. Titlebaum
                                          -------------------------------------
                                       Name:  Joseph M. Titlebaum
                                       Title: SVP General Counsel and Secretary

2

Exhibit 10.6

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

SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT
FOR IN-ORBIT DELIVERY

By and Between

XM SATELLITE RADIO INC.

and

HUGHES SPACE AND COMMUNI

CATIONS

INTERNATIONAL, INC.

July 21, 1999


SECOND AMENDED AND RESTATED

SATELLITE PURCHASE CONTRACT

FOR IN-ORBIT DELIVERY

By and Between

XM SATELLITE RADIO INC.

and

HUGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC.

PROPRIETARY NOTICE

The attached Contract and the information contained therein are confidential and proprietary to XM Satellite Radio Inc. and Hughes Space and Communications International, Inc., and shall not be published or disclosed to any third party without the express written consent of a duly authorized
representative of XM Satellite Radio Inc. and Hughes Space and Communications International, Inc.


TABLE OF CONTENTS
SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY

TERMS AND CONDITIONS

EXHIBIT A -    SPACECRAFT PERFORMANCE SPECIFICATIONS

EXHIBIT B -    STATEMENT OF WORK (FLOW)

EXHIBIT C -    PRODUCT ASSURANCE PLAN

EXHIBIT D -    TEST PLAN REQUIREMENTS [ON GROUND AND IN-ORBIT]

EXHIBIT E -    RADIATION ENVIRONMENT SPECIFICATIONS

EXHIBIT F -    LONG-LEAD ACTIVITIES AND ITEMS

EXHIBIT G -    PAYMENT PLAN AND TERMINATION LIABILITY AMOUNTS


               EXHIBIT G-1  -- PAYMENT PLAN FOR INTEREST ON IN-ORBIT
                    INCENTIVE AMOUNTS

               EXHIBIT G-2  -- GROUND SPARE SATELLITE PAYMENT PLAN AND

                TERMINATION LIABILITY AMOUNTS

               EXHIBIT G-3  -- 4TH AND 5TH OPTIONAL SATELLITES PAYMENT
                    PLAN AND TERMINATION LIABILITY AMOUNTS


SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY

By and Between

XM SATELLITE RADIO INC.

And

HUGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC.

TERMS AND CONDITIONS


ATTACHMENTS, ANNEXES AND SCHEDULES

ATTACHMENTS AND ANNEXES

Attachment A                                  Form of Request for Payment

Annex I to Attachment A                       Form of Contractor Certificate

Schedule I to Annex I to Attachment A         List of Exceptions

Schedule II to Annex I to Attachment A        List of Disputes

Attachment B                                  Key Personnel

SCHEDULES

Schedule 19.3       Capitalization and Subsidiaries

Schedule 19.4       Litigation

Schedule 19.5       Title to Properties and Assets

Schedule 19.6       Financial Statements

Schedule 1
9.7       Certain Actions

Schedule 19.8       Disclosed Liabilities


****** 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.

TABLE OF CONTENTS
TERMS AND CONDITIONS

 1.  DEFINITIONS AND CONSTRUCTION....................................................................    3
       1.1   Certain Definitions.....................................................................    3
       1.2   Other Terms.............................................................................   14
       1.3   Integra
tion and Construction............................................................   14
       1.4   Headings; Number and Gender.............................................................   15
2.   SCOPE OF WORK...................................................................................   16
       2.1   General.................................................................................   16
       2.2   Long-Lead Activities and Items..........................................................   16
3.   EFFECTIVE DATE OF CONTRACT (EDC); [*****].......................................................   17
       3.1   Effective Date of Contract (EDC)........................................................   17
       3.2   Contractor Work Commitment..............................................................   17
       3.3   [*****]; Expiration Thereof; Remedies...................................................   20
4.   CONTRACT PRICE.........................................................
.........................   22
       4.1   Contract Price..........................................................................   22
       4.2   Changes in Contract Price...............................................................   23
       4.3   Taxes and Duties........................................................................   23
5.   PAYMENT.........................................................................................   24
       5.1   Requests for Payment and Invoices.......................................................   24
       5.2   Payment.................................................................................   25
       5.3   Disputed Amounts........................................................................   26
       5.4   Set Off.................................................................................   28
       5.5   Late Payment............................................................................   28
       5.6   Payments Cur
rent at Launch..............................................................   28
       5.7   Security Interest.......................................................................   28
6.   ACCESS TO WORK..................................................................................   30
       6.1   Facilities..............................................................................   30
       6.2   Office Space............................................................................   30
       6.3   Security................................................................................   30
       6.4   Data and Documentation..................................................................   31
       6.5   Electronic Access.......................................................................   31
       6.6   Meetings and Reviews....................................................................   32
       6.7   Laws................................................................
....................   32
       6.8   No Relief...............................................................................   32
       6.9   Major Subcontracts......................................................................   33
       6.10  Consultant Access.......................................................................   33
7.   DELIVERY AND DELIVERY INCENTIVES................................................................   34
8.   INSPECTION AND FINAL ACCEPTANCE.................................................................   37
       8.1   Preliminary Inspections.................................................................   37
       8.2   Shipment Readiness Review...............................................................   37

i

       8.3   Flight Readiness Review.................................................................   39
       8.4   Launch Readiness Review.................................................................   40
       8.5   In-Orbit Testing and Final Acceptance of Satellites.....................................   40
       8.6   Final Acceptance of Ground Spare Satellite..............................................   41
       8.7   Satellite Control Center (SCC) Equipment and Software...................................   41
       8.8   Dynamic Spacecraft Simulator and Communications Payload Simulator.......................   42
       8.
9   Data and Documentation..................................................................   42
       8.10  Launch and Early Operations (LEOP)......................................................   43
       8.11  Operations Support Services (OSS).......................................................   43
       8.12  Training................................................................................   43
9.   TITLE AND RISK OF LOSS..........................................................................   45
       9.1   Transfer of Title.......................................................................   45
       9.2   Transfer of Risk of Loss................................................................   45
10.  LIQUIDATED DAMAGES FOR LATE DELIVERY............................................................   46
      10.1   Liquidated Damages......................................................................   46
      10.2   Remedy..............................................
....................................   47
      10.3   Termination for Unexcused Delay.........................................................   47
11.  EXCUSABLE DELAY.................................................................................   49
      11.1   Excusable Delay Defined.................................................................   49
      11.2   Equitable Adjustments...................................................................   49
      11.3   Maximum Excusable Delay; Termination....................................................   50
12.  IN-ORBIT PERFORMANCE INCENTIVE PAYMENTS.........................................................   51
      12.1   Total Amount At Risk....................................................................   51
      12.2   In-Orbit Performance Incentives.........................................................   51
      12.3   Calculation and Earning of Incentive Amounts............................................   51
      12.4   D
isputed Performance....................................................................   53
      12.5   Roll-Over of Incentive Amounts..........................................................   53
      12.6   Payment and Interest....................................................................   54
      12.7   Interest on Roll-Over Incentive Amounts.................................................   55
      12.8   Security for Performance Incentive Payments.............................................   56
      12.9   Exclusive Remedy........................................................................   57
13.  CORRECTIVE MEASURES IN UNLAUNCHED SATELLITES AND OTHER DELIVERABLE ITEMS........................   58
      13.1   Notice of Defects.......................................................................   58
      13.2   Duty to Correct.........................................................................   58
14.  CHANGES IN SCOPE OF WORK.........................................
...............................   60
      14.1   Changes Requested by Customer...........................................................   60
      14.2   Changes Requested by Contractor.........................................................   60
      14.3   Pricing of Changes......................................................................   61
      14.4   Storage.................................................................................   61
15.  PERMITS AND LICENSES; COMPLIANCE WITH LAWS......................................................   64
      15.1   United States Permits, Licenses, and Laws...............................................   64
      15.2   Non-United States Permits, Licenses, and Laws...........................................   64
      15.3   Review of Applications..................................................................   64
      15.4   Contractor Violation of Law.............................................................   65
16.  SUBCONTRACTS..
..................................................................................   66
      16.1   Major Subcontracts......................................................................   66
      16.2   Selection or Replacement of Major Subcontractors........................................   66

ii

      16.3   No Privity of Contract..................................................................   66
      16.4   Subcontractor Relations.................................................................   66
17.  PERSONNEL AND KEY PERSONNEL.....................................................................   68
      17.1   Personnel Qualifications................................................................   68
      17.2   Key Personnel Positions.................................................................   68
      17.3   Assignment of Key Personnel.............................................................   68
18.  CONT
RACTOR'S REPRESENTATIONS, COVENANTS, AND WARRANTIES.........................................   70
      18.1   Organization; Good Standing and Qualification...........................................   70
      18.2   Authorization...........................................................................   70
      18.3   Warranties for Deliverable Items........................................................   70
19.  CUSTOMER'S REPRESENTATIONS, WARRANTIES AND COVENANTS............................................   74
      19.1   Organization; Good Standing and Qualification...........................................   74
      19.2   Authorization...........................................................................   74
      19.3   Capitalization and Subsidiaries.........................................................   74
      19.4   Litigation..............................................................................   74
      19.5   Title to Properties and Assets......................
....................................   75
      19.6   Financial Statements....................................................................   75
      19.7   Certain Actions.........................................................................   75
      19.8   Undisclosed Liabilities.................................................................   75
      19.9   Compliance with Other Instruments.......................................................   76
      19.10  Customer's Financial Strength...........................................................   76
      19.11  Cross-Defaults..........................................................................   76
      19.12  Code....................................................................................   76
      19.13  Intellectual Property...................................................................   77
      19.14  Other Contracts.........................................................................   77
      19.15  N
on-Misleading Statements...............................................................   77
      19.16  Control of Customer.....................................................................   77
      19.17  Customer Financial Covenant.............................................................   77
20.  INTELLECTUAL PROPERTY RIGHTS....................................................................   78
      20.1   Ownership of IP and IP Rights...........................................................   78
      20.2   License Rights..........................................................................   78
      20.3   Joint Program Inventions................................................................   79
      20.4   Survival of Intellectual Property Rights................................................   80
21.  INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION..............................................   81
      21.1   Contractor Intellectual Property Indemnification.........
...............................   81
      21.2   Customer Intellectual Property Indemnification..........................................   81
      21.3   Total Liability.........................................................................   82
22.  CONFIDENTIAL INFORMATION........................................................................   83
      22.1   Confidentiality Obligations.............................................................   83
      22.2   Exceptions..............................................................................   83
      22.3   No License..............................................................................   84
      22.4   Return of Confidential Information......................................................   84
      22.5   Inconsistent Legends....................................................................   84
      22.6   Survival of Confidentiality Obligations.................................................   84
23.  NON-COMPETITIO
N OBLIGATION......................................................................   85
24.  INDEMNIFICATION.................................................................................   86
      24.1   Contractor's Indemnification............................................................   86
      24.2   Customer's Indemnification..............................................................   86

iii

      24.3   Cross-Indemnification For Inter-Party Waiver of Liability...............................   87
      24.4   Indemnification Procedures..............................................................   87
      24.5   Waiver of Subrogation...................................................................   88
      24.6   Survival of Indemnifications............................................................   88
25.  INSURANCE.......................................................................................   89
      25.1   General Obligations.....................................................................   89
      25.2
   Launch Insurance........................................................................   89
      25.3   Preparation of Claims...................................................................   90
26.  LIMITATIONS OF LIABILITY........................................................................   91
27.  DISPUTE RESOLUTION..............................................................................   93
      27.1   Informal Dispute Resolution.............................................................   93
      27.2   Arbitration.............................................................................   93
      27.3   Litigation..............................................................................   95
28.  LAUNCH SERVICES.................................................................................   97
29.  CUSTOMER'S RESPONSIBILITIES.....................................................................  102
30.  OPTIONS......................................................
...................................  103
      30.1   Options Granted.........................................................................  103
      30.2   Option to Delay Frequency Specification Beyond Two (2) Months...........................  103
      30.3   Ground Spare Satellite..................................................................  103
      30.4   Launch Campaign and LEOP Services for Ground Spare Satellite and/or 4th and 5th
               Optional Satellites...................................................................  106
      30.5   4th and 5th Optional Satellites.........................................................  107
      30.6   [RESERVED]..............................................................................  108
      30.7   Reflectors for the Ground Spare Satellite...............................................  108
      30.8   Optional Launch Vehicles................................................................  108
      30.9   Contract Adjus
tments....................................................................  109
31.  FAILURE TO MAKE ADEQUATE PROGRESS...............................................................  109
32.  TERMINATION.....................................................................................  110
      32.1   Termination for Customer's Convenience..................................................  110
      32.2   Termination For Contractor's Default....................................................  112
      32.3   Termination for Customer's Default......................................................  114
      32.4   Termination for Excusable Delay.........................................................  117
      32.5   Time of the Essence.....................................................................  118
33.  INTER-PARTY WAIVER OF LIABILITY.................................................................  119
34.  GENERAL.......................................................................
..................  120
      34.1   Assignment..............................................................................  120
      34.2   Entire Agreement........................................................................  120
      34.3   Amendments..............................................................................  121
      34.4   Waiver of Breach of Contract............................................................  121
      34.5   Severability............................................................................  121
      34.6   Applicable Law..........................................................................  121
      34.7   Notices.................................................................................  121
      34.8   Parties Not Agents......................................................................  122
      34.9   Release of Information..................................................................  122
      34.10  Calculation of Inte
rest.................................................................  123

iv

      34.11  Survival................................................................................  123
      34.12  No Third-Party Beneficiaries............................................................  124
      34.13  Consents and Approvals..................................................................  124
      34.14  Lender Requirements.....................................................................  124
      34.15  Covenant of Good Faith..................................................................  125
      34.16  Counterparts............................................................................  125
35.  OTHER
 BUSINESS..................................................................................  126

v

SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY

THIS SECOND AMENDED AND RESTATED SATELLITE PURCHASE CONTRACT (this "Contract") is made and entered into as of the 21st day of July, 1999, by and between XM SATELLITE RADIO INC., a Delaware corporation with its principal offices located at 1250 23rd Street, Suite 57, N.W., Washington, D.C. 20037 (formerly named American Mobile Radio Corporation and hereinafter referred to as "Customer"), and HUGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation with its principal offices located at 2260 E. Imperial Way, El Segundo, California 90245, U.S.A. (hereinafter "Contractor"). As used in this Contract, "Party" means eit
her Customer or Contractor, as appropriate, and "Parties" means Customer and Contractor.

WHEREAS, Customer is implementing a Digital Audio Radio Satellite ("DARS") system designed to provide digital audio radio services to the continental United States; AND

WHEREAS, Customer anticipates providing the business referred to above through two (2) geostationary satellites; AND

WHEREAS, Contractor is a space technology company that designs, manufactures, and integrates a range of space products, including satellites and facilities for managing and controlling satellites; AND

WHEREAS, the Parties have reached agreement on the terms and conditions of procurement by Customer from Contractor of two Hughes 702 Satellites, to be delivered in-orbit, and related items, services and activities, including satellite control center equipment and software, launch services, and long-lead items for a Ground Spare Satellite, and options to purchase other additional equipment and services, including add
itional satellite(s), as set forth and
further defined in this Contract; AND

WHEREAS, Customer and Contractor entered into a Satellite Purchase Contract for In-Orbit Delivery dated March 20, 1998 (the "Original Satellite Purchase Contract"), as amended by Amendment No. 1 dated May 6, 1998 and Amendment No. 2 dated June 5, 1998, and as amended and restated by the Amended and Restated Satellite Purchase Contract dated June 17, 1999 (the "First Amended and Restated Satellite Purchase Contract"; AND

WHEREAS, Customer officially changed its name from American Mobile Radio Corporation to XM Satellite Radio Inc. on October 7, 1998, its office location, points of contact and authorized representatives; AND

WHEREAS, the Parties have reached agreement on additional changes to the First Amended and Restated Satellite Purchase Contract; AND

WHEREAS, this document amends and restates the First Amended and Restated Satellite Purchase Contract and shall be the sole agreement between the Parties as to the Work to be performed hereunder by Contractor.

1

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and intending to be legally bound hereby, the Parties agree as follows:

2

1. DEFINITIONS AND CONSTRUCTION

1.1 Certain Definitions.

In this Contract, the following terms shall have the meaning stated hereunder:

(a) "Affiliate" means, with respect to an entity, any other entity Controlling or Controlled by or under common Control with such entity.

(b) "Amendment to this Contract" or "Amendment" means a written agreement modifying the terms of this Contract in accordance with Article 34.3 (Amendments).

(c) "Approval" means written approval. This term is as defined, whether or not capitalized in this Contract.

(d) "ARP" or "After Receipt of Payment" means July 7, 1999, the date upon which Contractor received Program Calendar Payment No. 1 in the amount of Sixty- Eight Million Dollars ($68,000,0 00).

(e) "Associates" means, with respect to an entity, its directors, officers, employees agents, consultants, and assigns.

(f) "Available for Shipment" means that a Spacecraft has successfully passed all in-plant acceptance tests, has successfully undergone a Shipment Readiness Review and has been declared ready to be shipped to the Designated Launch Site.

(g) "Background Intellectual Property" means Intellectual Property first made, developed, or created prior to the negotiation or performance of this Contract and necessary to the use of any Deliverable Item.

(h) "Back-Up Satellite Control Center" means Customer's back-up satellite control center, in addition to Customer's Primary Satellite Control Center, located in the Washington, D.C. area.

(i) "Business Day" means any day other than the following: a Saturday, Sunday, and any other day on which national banks are authorized to be closed in New York City, New York.

(j) "Calendar Day" means any day.

(k) "Cal
endar Payment" means any of those payments listed as specific calendar payments in Exhibit G (Payment Plan and Termination Liability Amounts).

(l) "Communications Payload Simulator" means the equipment, software, and interfaces required to simulate a single Time Division Multiplexed (TDM) chain, pursuant to the requirements of Exhibit B (SOW).

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****** 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.

(m) "Conduct Spacecraft Critical Design Review (SCDR)" means that ten (10) Business Days prior to the date Contractor is ready to perform the SCDR, Contractor shall provide to Customer (i) written notice that Contractor has completed all necessary activities in order to proceed to SCDR, and (ii) the Design Review Package, as further described in Exhibit B (SOW). Customer shall then have five (5) Business Days upon receipt of such notice and Design Review Package to review same and provide specific comments to Contractor. At the Spacecraft Critica l Design Review meeting, Contractor shall (i) identify, compile, and maintain a uniform program listing of all action items through closure, including identification of new items to be developed or items to be modified in order to meet the requirements of this Contract, (ii) establish detailed action plans to address and carry out all action items identified, including timetables for performance and identification of responsible personnel, and (iii) prepare and distribute SCDR minutes and action item assignments, all of which demonstrate that each Spacecraft shall be Available for Shipment to the Designated Launch Site no later than [*****] (with respect to the first Spacecraft) and [*****] (with respect to the second Spacecraft).

(n) "Conduct Spacecraft Preliminary Design Review (SPDR)" means that ten
(10) Business Days prior to the date Contractor is ready to perform the SPDR, Contractor shall provide to Customer (i) written notice that Contractor has completed all necessary activities in order t
o proceed to SPDR and (ii) the Design Review Package, as further described in Exhibit B (SOW). Customer shall then have five (5) Business Days upon receipt of such notice and Design Review Package, to review same and provide specific comments to Contractor. At the Spacecraft Preliminary Design Review meeting, Contractor shall (i) identify, compile, and maintain a uniform program listing of all action items through closure, including identification of new items to be developed or items to be modified in order to meet the requirements of this Contract, (ii) establish detailed action plans to address and carry out all action items identified, including timetables for performance and identification of responsible personnel, and (iii) prepare and distribute SPDR minutes and action item assignments, all of which demonstrate that each Spacecraft shall be Available for Shipment to the Designated Launch Site at no later than [*****] (with respect to the first Spacecraft) and [*****] (with respect to the second Sp acecraft).

(o) "Confidential Information" means all information, of any nature and in any form, whether written, oral or recorded or transmitted electronically or by tape or other similar manner, regarding the business, finances, operations, prospects, plans, or affairs of the Furnishing Party (including its Affiliates, Subcontractors, or Consultants), and all data, processes, materials, and software in source code and object code form, related documentation, and other technical data that is confidential and embodies trade secrets and other proprietary information of the Furnishing Party, which information is designated in writing by the Furnishing Party as confidential, provided, however, that if disclosed orally, such information must be confirmed and designated in writing in summary form as confidential within thirty (30) Calendar Days of the time at which oral disclosure took place. Confidential Information shall also include Data and Documentation.

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****** 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.

(p) "Constructive Total Loss" and "Total Loss" shall have the meaning ascribed to them in the policy for Launch Insurance.

(q) "Consultant" means a person or organization retained by Customer to provide Customer with technical advice and related services and identified by Customer to Contractor as such in accordance with Article 6 (Access to Work).

(r) "Contract" or "Second Amended and Restated Satellite Purchase Contract" means the written instrument herein dated the day and year first written above, including any Amendments made pur suant to Article 34.3 (Amendments), embodying the agreement between Contractor and Customer and including the Terms and Conditions, Exhibits (and Appendices thereto), Attachments, Annexes, and Schedules annexed hereto and made a part of this Contract.

(s) "Contract Price" means the firm fixed price set forth in Article 4.1 (Contract Price).

(t) "Control" and its derivatives mean, with respect to an entity, the legal, beneficial, or equitable ownership, directly or indirectly of fifty percent (50%) or more of the capital stock (or other ownership interest if not a corporation) of such entity ordinarily having voting rights or the power to direct the management policies of such entity, whether through the ownership of voting stock, by contract, or otherwise.

(u) "Correction Plan" means a plan submitted by Contractor that details the means by which Contractor shall correct a failure to make adequate progress toward completion of any Work under this Contract in accordance with Article 31 (F ailure to Make Adequate Progress).

(v) "Customer Coverage Area" means the United States.

(w) "Cure Period" shall have the meaning set forth in Article 3.3 ([*****]; Expiration Thereof; Remedies).

(x) "Customer Personnel" means Customer employees, Consultants or representatives, or Customer's Consultants' employees.

(y) "Data and Documentation" means that data and documentation to be supplied by Contractor pursuant to the requirements of Exhibit B (SOW).

(z) "Defect" means (i) with respect to any Deliverable Item, and any and all components thereof, any material defect or nonconformance in design, material or workmanship, or failure to perform in accordance with the specifications and requirements set out or referred to in this Contract; (ii) with respect to services, a failure to meet any material specification or requirement set forth in this Contract or to conform to a high standard consistent with industry practice; (iii) any material error, omission or inconsistency in Data and Documentation,

5

including specifications and drawings, set forth in or required by this Contract; and (iv) with respect to Training, a material procedural error.

(aa) "Deliverable Item" means the items listed in Table 7.1 of Article 7 (Delivery), and other items so identified in Exhibit B (Statement of Work) or any Amendment to this Contract.

(bb) "Deliver" or "Delivery" or "Delivered" means, with respect to a Deliverable Item, delivery by Contractor of a Deliverable Item in accordance with the requirements of this Contract.

(cc) "Delivery Date(s)" means, with respect to a Deliverable Item, the delivery date set forth in Table 7.1 of Article 7 (Delivery), as such date may be extended, as appropriate, to reflect all periods during which an Excusable Delay exists or any similar extension of time as may be agreed to by the Parties in accordance with Article 34.3 (Amendments).

(dd) "Delivery Schedule" means the schedule for Delivery of the Work as set forth in Table 7.1 of Article 7 (Delivery).

(ee) "Demand" means, in the context of Article 31 (Failure to Make Adequate Progress), a demand made by Customer to Contractor for Contractor to provide a Correction Plan in the event Contractor is failing to make adequate progress in the performance of this Contract.

(ff) "Designated Launch Site" means, with respect to a Satellite, the Launch facility provided by the Launch Agency.

(gg) "Dispute" has the meaning set forth in Article 27 (Dispute Resolution).

(hh) "Dollars" means United States Dollars.

(ii) "Dynamic Spacecraft Simulator" has the meaning ascribed to it in Exhibit B (SOW).

(jj) "Effective Date of Contract" or "EDC" means March 23, 1998, the date set forth in Article 3.1 (Effective Date of Contract (EDC)).

(kk) "Excusable Delay" has the meaning set forth in Article 11 (Excusable Delay).

(ll) "Exhibit" or "Exhibits" means any and all exhibits, and any appendices thereto, to this Contract, which are attached hereto and incorporated herein.


****** 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.

(mm) "[*****] Payment" means that Milestone Payment that Customer shall pay to Contractor on or before the final day of the [*****], plus any applicable Cure Period, as such payment is further described in Exhibit G (Payment Plan and Termination Liability Amounts).

(nn) "Final Acceptance" of a Deliverable Item has the meaning set forth in Article 8 (Inspection and Final Acceptance).

(oo) "Financing Agreements" means any and all documents and agreements evidencing and/or securing monies provided on a full or partial debt basis by any F inancing Entity to Customer to fund the construction, delivery, or Launch of the Satellites or the purchase of Long-Lead Items for the Ground Spare Satellite.

(pp) "Financing Entity" means any entity (other than Contractor, or parties related to Contractor, or competitors of Contractor), e.g., commercial bank, merchant bank, investment bank, commercial finance organization, corporation, or partnership, providing money on a full or partial debt basis to Customer to fund the construction, Delivery, or Launch of the Satellites or purchase of Long-Lead Items for an Ground Spare Satellite.

(qq) "First Milestone Payment" means the first Milestone Payment identified in Exhibit G (Payment Plan and Termination Liability Amounts), equaling [*****].

(rr) "Flight Readiness Review" or "FRR" shall have the meaning ascribed to it in Article 8.3 (Flight Readiness Review).

(ss) "Foreground Intellectual Property" means Intellectual Property first made, developed, or created in connection with this Contract that is embodied or reflected in this Contract, in any Amendment thereto, or in any annexed Parts, and incorporated into or employed in the use of any Deliverable Item.

(tt) "Furnishing Party" means the Party who furnishes Confidential Information to the other Party.

(uu) "Ground Spare Satellite" shall refer to the satellite that Customer may elect to purchase for on-ground Delivery pursuant to Article 30 (Options).

(vv) "Handover" shall have the meaning set forth in Article 8.5 (In-Orbit Testing and Final Acceptance of Satellites).

(ww) "Incentive Amount" means any amount required to be paid pursuant to Article 12 (In-Orbit Performance Incentive Payments).

(xx) "Including" and its derivatives (such as "include" and "includes") shall mean including without limitation. This term is as defined, whether or not capitalized in this Contract.

7

(yy) "In-Orbit Testing" means the in-orbit tests and analyses Contractor shall perform in accordance with Exhibit D (Test Plan Requirements).

(zz) "Insurers" means those entities providing Launch Insurance.

(aaa) "Intellectual Property" means all designs, methods, concepts, layouts, software, inventions (whether or not patented or patentable), processes, technical data and documentation, technical information and drawings, and similar matter in which an Intellectual Property Right may subsist.

(bbb) "Intellectual Property Rights" means all common law and statutory proprietary rights, including patent, patent application, patent registration, copyright, trademark, service mark, trade secret, mask work rights, moral rights, data rights and similar rights existing from time to time under the intellectual property Laws of the United States, any state or foreign jurisdiction or international treaty regime.

(ccc) "Intentional Ignition" means, with respect to a Satellite, the meaning attributed to the term "Launch" in the Launch Agreement between Contractor and Sea Launch; provided, however, where a Launch Vehicle other than Sea Launch is used, the term "Intentional Ignition" shall have the meaning attributed to it in the applicable Launch Agreement.

(ddd) "Launch" means, with respect to a Satellite, the meaning attributed to it in the Launch Agreement between Contractor and Sea Launch, i.e., the point in time when an electronic signal is sent to command the opening of any first stage propellant valves. A Launch is deemed to have occurred even if there is a Total Failure, Total Constructive Failure or Partial Failure of the Launch Vehicle (as such terms are defined in the Launch Agreement).

(eee) "Launch Agency" means the entity selected by Contractor to perform Launch Services, which entity shall be Sea Launch, provided Customer does not exercise its option to select an alternate Launch Agency as provided in Article
28 (Launch Services) or paragraph (b) of Article 10.3 (Termination for Unexcused Delay).

(fff) "Launch Agreement" means any Subcontract between Contractor and a Launch Agency to perform the Launch Services for one or both of the Satellites.

(ggg) "Launch Campaign" means, with respect to a Satellite, those services provided by Contractor in support of each Launch mission prior to Launch, including packing and shipping the Satellite in an environmentally controlled container to the Designated Launch Site, procuring and maintaining all-risk ground insurance up to, but not including, Launch (as required by Article 25 (Insurance)), providing high-pressure injection of propellant into the Satellite's fuel tanks, configuring the Satellite so as to render it Ready for Launch, Launch Vehicle Interface Act ivities, and assisting the Launch Agency in assuring the Satellite is properly integrated with the Launch Vehicle, all as further defined in Exhibit B (SOW).

(hhh) "Launch Date" means the specific day within the Launch Period or Launch Slot on which a Launch shall occur.

8

(iii) "Launch Insurance" means, with respect to a Satellite, insurance that covers the Satellite from the period beginning at Launch and ending no sooner than determination of acceptability of the Satellite for insurance purposes or determination of Constructive Total Loss or Total Loss. Such insurance shall cover, with respect to such Satellite, all unpaid Milestone Payments, the Incentive Amounts (except, in the case of Incentive Amounts, where Customer elects to purchase an additional Satellite pursuant to Article 30 (Options)), and all interest required to be paid on the foregoing.

(jjj) "Launch and Early Operations" or "LEOP" means, with respect to a Satellite, those services provided by Contractor in support of each launch mission after La unch and through Final Acceptance of the Pre-Eclipse Test Report and Post-Eclipse Test Report, such as providing telemetry, tracking and control to direct the Satellite into its Specified Orbital Location, positioning and stabilizing the Satellite to hold its pointing position to the Earth, conducting in-orbit tests (including payload In-Orbit Testing) and furnishing the Pre- Eclipse Test Report and Post-Eclipse Test Report, pursuant to the requirements of Exhibit B (SOW) and Exhibit D (Test Plan Requirements).

(kkk) "Launch Period" means the three-month period from November 1, 2000 through February 1, 2001, with respect to the first Satellite, and the three- month period from February 15, 2001 through May 15, 2001, with respect to the second Satellite, during which such periods the Launch of each Satellite is scheduled to occur.

(lll) "Launch Readiness Review" shall have the meaning ascribed to it in Article 8.4 (Launch Readiness Review).

(mmm) "Launch Services" means the Launch of a L aunch Vehicle and related services provided by a Launch Agency, including furnishing the Launch Vehicles, launch support, and equipment and facilities, for the purpose of launching the Satellites into orbit.

(nnn) "Launch Slot" means, with respect to a Satellite, the thirty (30) Calendar Day period within its applicable Launch Period or prior to such Launch Period that is selected by Contractor and Customer, and mutually agreed upon by Contractor and the Launch Agency on or before twelve (12) months prior to the Launch Period for such Satellite, during which such thirty (30) Calendar Day period the Launch of such Satellite is scheduled to occur.

(ooo) "Launch Vehicle" means a launch vehicle provided by the Launch Agency to Launch either of the Satellites, which Launch Vehicle shall be a Sea Launch, or, in the event Customer exercises its option to select an alternate Launch Vehicle for either or both Satellites, pursuant to Article 28 (Launch Services), or in accordance with paragraph (b) of Article 10.3 (Termination for Unexcused Delay), the Launch Vehicle shall be the alternate Launch Vehicle selected by Customer.

(ppp) "Launch Vehicle Interface Activities" means, with respect to a Satellite, those services to be provided by Contractor, prior to Launch, in support of each Launch, including analysis support, interface drawing support, and technical meeting support, required by the Launch Vehicle Agency, and launch pad activity support, pursuant to the requirements of Exhibit B (SOW).

9

****** 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.

(qqq) "Law" or "Laws" means any laws, including rules, regulations, codes, injunctions, judgments, orders, ordinances, decrees, rulings, and charges thereunder, of any federal, state, local or municipal government of any country (and all agencies thereof) having jurisdiction over any portion of the Work.

(rrr) "London Inter-Bank Offer Rate" or "LIBOR" means the rate per annum shown, on the third (3rd) London Business Day preceding the day of commencement of an interest calculation period, on page 3750 of the Dow Jones & Company Telerate scr een or any successor page as the composite offered rate for London interbank deposits in an amount approximately equal to the amount on which the interest is to be applied for a three-month period (the "Rate Base"), as shown under the heading "USD" as of 11:00 a.m. (London Time); provided that in the event no such rate is shown, LIBOR shall be the rate per annum (rounded to the nearest 1/100th of one percent) based on the rates at which U.S. dollar deposits approximately equal in principal amount to the Rate Base and for a three-month period are displayed on page "LIBO" of the Reuters Monitor Money Rates Service or such other page as may replace the LIBO page on that service for the purpose of displaying London interbank offered rates of major banks as of 11:00 a.m. (London time) (it being understood that if at least two such rates appear on such page, the rate will be the arithmetic mean of such displayed rates); provided that in the event fewer than two such rates are displayed, or if no such rate is r elevant, LIBOR shall be the rate per annum equal to the rate offered by Credit Suisse, New York Branch, at approximately 11:00 a.m. (London Time) to prime banks in the London interbank market on deposits in U.S. dollars in an amount approximately equal in principal amount to the aggregate principal balance of the Rate Base for a three-month period.

(sss) "Long-Lead Activities" means those activities to be performed by Contractor, a list of which is to be set forth in Exhibit F (Long-Lead Activities and Items), in accordance with the requirements of Article 2.2 (Long- Lead Activities and Items).

(ttt) "Long-Lead Items" means the Satellite components, materials, hardware, equipment and other related items that Contractor shall procure in performance of the Long-Lead Activities.

(uuu) "Losses" means all losses, liabilities, damages, royalty payments and claims, and all related costs and expenses (including reasonable legal fees and disbursements and costs of investigation, expert fees, lit igation, settlement, judgment, interest, and penalties).

(vvv) "Major Calendar Payment" means, with respect to each Satellite, the payment of [*****] to be made by Customer to Contractor with respect to each Launch Vehicle in accordance with paragraph (c)(1) of Article 5.1(Requests for Payment and Invoices) herein and Exhibit G (Payment Plan and Termination Liability Amounts).

(www) "Major Subcontract" means a Subcontract related to the performance of this Contract and valued at Two Million Five Hundred Thousand Dollars ($2,500,000) or more.

10

****** 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.

(xxx) "Major Subcontractor" means a Subcontractor who is a party to a Major Subcontract.

(yyy) "Material Adverse Effect" means any material adverse change in (i) the legality, validity, or enforceability of this Contract or (ii) the ability of Customer or Contractor to perform this Contract.

(zzz) "Milestone" means a portion of the definitive, measurable Work upon completion of which a payment is to be made in accordance with Exhibit G (Payment Plan and Termination Liability Amounts).

(aaaa) "Milestone Payment" means any of thos e payments listed as specific milestone payments in Exhibit G (Payment Plan and Termination Liability Amounts).

(bbbb) "Mission Support Services" means, with respect to a Satellite, twenty-four (24) hour on-call Contractor support services for each day of the actual operational lifetime of the Satellites (including operation of the Satellite beyond the Orbital Design Life) delivered hereunder, as such services are more fully described in Exhibit B (SOW).

(cccc) "[*****]" means the period of [*****] Calendar Days commencing the day after EDC.

(dddd) "Operations Support Services" or "OSS" means, with respect to a Satellite, those support services to be provided by Contractor, as requested by Customer, beginning upon Handover of each Satellite and ending three (3) months after Handover, which services shall be provided concurrently with LEOP through Final Acceptance of the Post-Eclipse Test Report.

(eeee) "Orbital Design Life" means, with respect to a Satellite, the contracted for de sign and performance life of fifteen (15) years for each Satellite, commencing upon Handover.

(ffff) "Partial Loss" shall have the meaning ascribed to it in the policy of Launch Insurance.

(gggg) "Pending" means, with respect to a legal action, lawsuit, proceeding or investigation, an action, suit, proceeding, or investigation as to which Customer has knowledge or received written notice.

(hhhh) "Post-Eclipse Test Report" means, with respect to a Satellite, that so-named document that is a Deliverable Item under Exhibit B (SOW), the requirements of which are set forth in Exhibit D (Test Plan Requirements).

(iiii) "Pre-Eclipse Test Report" means, with respect to a Satellite, that so-named document that is a Deliverable Item under Exhibit B (SOW), the requirements of which are set forth in Exhibit D (Test Plan Requirements).

11

(jjjj) "Primary Satellite Control Center" means Customer's satellite control facility located in Washington, D.C.

(kkkk) "Program Invention" means any invention, discovery, or improvement conceived of and first reduced to practice in the performance of the Work under this Contract. Information relating to Program Inventions shall be treated as proprietary information in accordance with the provisions of this Contract.

(llll) "Properly Operated Satellite" means a Satellite which is being monitored and commanded by Customer in accordance with the applicable Data and Documentation for operations (as such Data and Documentation may be amended by the Parties) furnished by Contractor to Customer under this Contract.

(mmmm) "Quarterly Incen tive Payment Amount" means, with respect to each Satellite, an amount equal to Two Hundred Eight Thousand Three Hundred Thirty- Three Dollars and Thirty-Three Cents ($208,333.33) (that is, Twelve Million Five Hundred Thousand Dollars ($12,500,000) divided by sixty (60) (that is, 15 years
x 4 quarters per year)), as may be adjusted in accordance with the terms of this Contract.

(nnnn) "Ready for Launch" means, with respect to a Satellite, the time of successful completion by Contractor of the on-ground testing and delivery of the on-ground preliminary checklist report, including successful completion of launch site satellite testing and physical integration with the Launch Vehicle, including Flight Readiness Review and Launch Readiness Review, in accordance with Exhibit B (SOW) and Exhibit D (Test Plan Requirements), such that the only activity remaining prior to Launch is the Launch countdown.

(oooo) "Receiving Party" means the Party who receives Confidential Information from the Furnishing Party.

(pppp) "Request for Payment" means a request for payment from Contractor in the form of Attachment A hereto.

(qqqq) "Satellite" means each of the two (2) Hughes 702 satellites to be Delivered by Contractor to Customer pursuant to this Contract and that conforms to all the requirements of this Contract.

(rrrr) "Satellite Control Center(s)" means, collectively, the Primary Satellite Control Center and Back-Up Satellite Control Center, and, individually, the Primary Satellite Control Center or Back-Up Satellite Control Center.

(ssss) "Satisfactorily Operating Satellite" means, with respect to a Satellite, that such Satellite meets or exceeds the performance specifications set forth in Exhibit A (Satellite Performance Specifications).

(tttt) "Satellite Control Centers (SCC) Equipment and Software" means the equipment and software to be Delivered to, and installed by Contractor in, the Primary Satellite Control Center and the Back-Up Satellite Control Center in accordance with the requirements of Exhibit B (SOW).

12

(uuuu) "Shipment Readiness Review" shall have the meaning ascribed to it in Article 8.2 (Shipment Readiness Review).

(vvvv) "Similar Satellite System" means any digital audio broadcasting satellite system in S-band, using an access mode to the satellite and a digital format substantially as described in Exhibit A (Spacecraft Performance Specifications).

(wwww) "Similar Satellite Service" means digital audio broadcasting satellite service provided by a Similar Satellite System.

(xxxx) "Spacecraft" means Satellite.

(yyyy) "Spacecraft Performance Specifications" means the technical specifications set forth in Exhibit A (Spacecraft Performance Specifications), as may be amended pursuant to this Contract.

(zzzz) "Specified Orb ital Location" means, with respect to each Satellite, the geostationary synchronous orbital location specified in Exhibit A (Spacecraft Performance Specifications).

(aaaaa) "Statement of Work" or "SOW" means the Work described in Exhibit B to this Contract and to be provided by Contractor, as may be amended pursuant to this Contract.

(bbbbb) "Subcontract" means a contract awarded by Contractor to a Subcontractor or a contract awarded by a Subcontractor.

(ccccc) "Subcontractor" means a person, firm, corporation, or business entity that has been awarded a Subcontract.

(ddddd) "Termination Liability Amounts" means the amounts listed as Termination Liability Amounts in Exhibit G (Payment Plan and Termination Liability Amounts) of this Contract, as may be amended pursuant to this Contract.

(eeeee) "Test Plan" means the test plans set forth in Exhibit D (Test Plan Requirements), as may be amended pursuant to this Contract.

(fffff) "Test Requirements" means the test plans and test procedures set forth in Exhibit D (Test Plan Requirements), as may be amended pursuant to this Contract.

(ggggg) "Total Amount at Risk" means a total firm-fixed sum of Twenty-Five Million Dollars ($25,000,0000) eligible to be earned by Contractor as performance incentive payments ($12,500,000 per Satellite) pursuant to Article
12 (In-Orbit Performance Incentive Payments), as such Total Amount at Risk may be adjusted in accordance with Article 12.1 (Total Amount at Risk).

(hhhhh) "Training" means the training to be provided under this Contract, including training for operation of the Satellites in geostationary orbit, as more fully described in Exhibit B (SOW).

13

(iiiii) "Work" means all design, development, construction, manufacturing, labor, services, and acts, including tests to be performed, and any and all Deliverable Items, including the Satellites, Satellite Control Center Equipment and Software, Dynamic Spacecraft Simulator, Communications Payload Simulator, Long-Lead Activities and Items, Data and Documentation, Launch Campaign, Launch Services, LEOP services, OSS, MSS, Training, and equipment, materials, articles, matters, services, and things to be furnished and rights to be transferred under this Contract, or any Subcontract entered into by Contractor, all as further described in Exhibit B (SOW).

1.2 Other Terms.

Other terms in this Contract are defined in the context in which they are use
d and shall have the meanings there indicated.

1.3 Integration and Construction.

The documents listed below in this Article 1.3 (Integration and Construction), including any Exhibits, Attachments, Schedules, and Annexes, as amended from time to time in accordance with Article 34.3 (Amendments), constitute this Contract and shall be deemed to constitute one fully integrated agreement between the Parties. In the event of any conflict or inconsistency among the provisions of the various documents of this Contract, such conflict or inconsistency shall be resolved by giving a descending level of precedence to the documents in the order set forth below:

(a) Terms and Conditions

(b) Exhibit G - Payment Plan and Termination Liability Amounts

(c) Exhibit G-1 - Payment Plan for Interest on In-Orbit Incentive Amounts

(d) Exhibit G-2 - Ground Spare Satellite Payment Plan and Termination Liability Amounts

(e) Exhibit G-3 - 4th and 5th Optional Satellites Payment Plan and Te rmination Liability Amounts

(f) Exhibit B - Statement of Work (SOW)

(g) Exhibit A - Spacecraft Performance Specifications

(h) Exhibit D - Test Plan Requirements

(i) Exhibit C - Product Assurance Plan

(j) Exhibit E - Radiation Environment

(k) Exhibit F - Long-Lead Activities and Items

14

1.4 Headings; Number and Gender.

The Article headings are for convenience of reference only and shall not be considered in interpreting the text of this Contract. Words in the singular include the plural and vice versa, and words imputing the masculine gender include the feminine and neuter genders where the context so requires.

15

2. SCOPE OF WORK

2.1 General.

(a) In accordance with the requirements of this Contract, Contractor shall sell and Customer shall purchase the Work.

(b) Contractor shall furnish and perform the Work in accordance with the provisions of this Contract and in the manner specified in the following documents:

     (1)   Terms and Conditions

     (2)   Exhibit A                 - Spacecraft Performance Specifications

     (3)   Exhibit B                 -  Statement of Work (SOW)

     (4)   Exhibit C                 -  Product Assurance Plan

     (5)   Exhibit D                 -  Test Plan Requirements (On-Ground and In-Orbit)

     (6)   Exhibit E                 -  Radiation Enviro
nment

     (7)   Exhibit F                 -  Long-Lead Activities and Items

     (8)   Exhibit G                 -  Payment Plan and Termination Liability Amounts

     (9)   Exhibit G-1               -  Payment Plan for Interest on In-Orbit Incentive Amounts

     (10)  Exhibit G-2               -  Ground Spare Satellite Payment Plan and Termination
                                        Liability Amounts

     (11)  Exhibit G-3               -  3rd and 4th Optional Satellites Payment Plan and  Termination
                                        Liability Amounts

(c) Exhibits A, B, C, D, E, F, G, G-1, G-2, and G-3 are attached to and incorporated into these Terms and Conditions.

2.2 Long-Lead Activities and Items.

The preliminary list of Long-Lead Items is attached to this Contract as Exhibit F (Long-Lead Activities and Items). The final list shall be provided by Contractor on or before September 31, 1999.

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3. EFFECTIVE DATE OF CONTRACT (EDC; [*****])

3.1 Effective Date of Contract (EDC).

This Contract shall be effective as of, and the effective date of this Contract (the "Effective Date of Contract" or "EDC") shall be, March 23, 1998.

3.2 Contractor Work Commitment.

Beginning upon EDC and continuing for the term of the [*****], Contractor shall commence the Work in full compliance with the requirements of this Contract and perform sufficient Work to maintain the Delivery Dates for the Satellites. Such Work during the [*****] shall be comprised of the completion or
provision, as the context indicates, of the following work effort as may be more fully described in Exhibit B (SOW):

(a) program kickoff meeting;

(b) System Requirements Status Review and release of Satellite Payload and Bus specifications;

(c) release of performance specifications for: communications receivers, IF processors, output combiner, TWTA, and frequency generator;

(d) subcontract, or select vendor for, TWTA electronic power converters;

(e) mutually agree upon EIRP requirements and finalize Exhibit A (Spacecraft Performance Specifications) (that is, close "TBRs," "TBSs," and "TBDs");

(f) detailed payload block diagram;

(g) payload panel layout;

(h) detailed mass budget;

(i) detailed power budget;

(j) top level propellant budgets for all potential alternate Launch Vehicles;

(k) preliminary field-of-view drawings for all sensors and all antennas; and

(l) preliminary list of Long-Lead Activities a nd Items for the Ground Spare Satellite.

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3.3 [*****]; Expiration Thereof; Remedies.

(a) The [*****] shall terminate upon the earlier of (i) receipt of the
[*****] Payment (as more fully described in Exhibit G (Payment Plan and Termination Liability Amounts)) by Contractor, or (ii) [*****] Calendar Days from EDC plus any applicable cure period not to exceed sixty (60) Calendar Days (the "Cure Period"). Prior to expiration of the [*****], Customer shall provide Contractor with a status report of Customer's funding plans for the first six
(6) months of Milestone Payments u nder this Contract.

(b) In the event Contractor has not received the [*****] Payment on or before the date of expiration of the [*****] and Contractor has completed the work effort required by Article 3.2 (Contractor Work Commitment) above, the following shall apply during the Cure Period:

(1) Contractor shall be entitled to stop Work;

(2) the Delivery Schedule shall be adjusted on a day-for-day basis, together with adjustments for associated delays related to establishment of Launch Periods and Launch Slots;

(3) the Payment Plan set forth in Exhibit G (Payment Plan and Termination Liability Amounts) shall be adjusted in accordance with the revised Delivery Schedule; and

(4) the Contract Price shall be increased by an aggregate total of
[*****] during the Cure Period, on a daily pro rata basis in accordance with the following table:

               Table 3.3(b)
                           Contract Price Increases
----------------------------------------------------------------------------
Following [*****]                                  Increase (USD)
(Cure Period)
----------------------------------------------------------------------------
1st 30 Calendar Days                                  [*****]
                                             (or daily pro-rated portion
                                             thereof (daily rate of [*****])
----------------------------------------------------------------------------
2nd 30 Calendar Days                                  [*****]
                                             (or daily pro-rated portion

        thereof (daily rate of [*****])
----------------------------------------------------------------------------

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****** 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.

For example, if Contractor receives the [*****] Payment on the fortieth
(40th) Calendar Day after expiration of the [*****], the Contract Price shall be increased by [*****] (that is, [*****] for the first thirty (30) Calendar Days plus [*****] for the ten (10) Calendar Days in excess of the first thirty (30) Calendar Days ([*****] multiplied by 10 for the last ten (10) Calendar Days)).

In the event the above Contract Price increases are incurred, the Parties shall mutually agree to appropriate amendments to Exhibit G (Payment Plan and T
ermination Liability Amounts).

(c) In the event Contractor does not receive the [*****] Payment on or before the expiration of the Cure Period and Contractor has completed the work specified in Article 3.2 (Contractor Work Commitment) above, the following shall apply:

(1) Contractor shall be entitled to retain the first [*****] Milestone Payments and the Calendar Payment for Long-Lead Items made during such [*****] in full;

(2) With the exception of Contractor's Intellectual Property, Contractor shall deliver to Customer all inventory, technical documents and all work in process relating to the Work developed or produced by Contractor during the [*****], provided that all payments (other than the [*****] Payment) have been made by Customer; and

(3) this Contract shall terminate and the Parties shall have no further obligations to each other, except as exp ressly set forth in Article 22 (Confidential Information).

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****** 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.

4. CONTRACT PRICE

4.1 Contract Price.

(a) In accordance with this Contract, Customer shall pay Contractor for the Work the Contract Price set forth in Table 4.1 below. The Contract Price shall be paid in accordance with Article 5 (Payment).

(b) The total Contract Price is allocated as follows:

                                                             Table 4.1
                                                          Contract Price
--------------------------------------------------------------------------------
--------------------------------------
    Item                                                                                                   (USD)
----------------------------------------------------------------------------------------------------------------------
    1.  1st and 2nd Satellites
                                                                                       $                [*****]
----------------------------------------------------------------------------------------------------------------------
    2.  Launch Services for the 1st and 2nd Satellites                                 $                [*****]
----------------------------------------------------------------------------------------------------------------------
    3.  Operations Support Services for 1st Satellite                                  $                [*****]
-----------------------------------
-----------------------------------------------------------------------------------
    4.  Operations Support Services for 2nd Satellite                                  $                [*****]
----------------------------------------------------------------------------------------------------------------------
    5.  Communications Payload Simulator, Satellite Control Centers Equipment and
        Software, Dynamic Spacecraft Simulator                                         $                [*****]

----------------------------------------------------------------------------------------------------------------------
    6.  Long-Lead Activities and Items for Ground Spare Satellite
                                                                                       $                [*****]
----------------------------------------------------------------------------------------------------------------------

        CONTRACT PRICE                                                                 $
          447,513,000
----------------------------------------------------------------------------------------------------------------------

(c) In addition to the Deliverable Items identified in Table 4.1 above, the Contract Price includes:

(1) all related Training and Data and Documentation;

(2) on-ground insurance covering the Work up to, but not including, Launch of the Launch Vehicles;

(3) transportation, including air shipment, to the Launch Site and other related charges;

(4) Launch Campaigns for the first and second Satellites;

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(5) LEOP for the first and second Satellites;

(6) Mission Support Services for the first and second Satellites;

(7) pre-Launch deferred payments; and

(8) Incentive Amounts.

(d) The Contract Price does not include:

(1) Launch Insurance;

(2) any interest on the pre-Launch deferred payments;

(3) any interest on the Incentive Amounts; and

(4) Ground Software source code license.

4.2 Changes in Contract Price.

This is a firm-fixed price Contract. Except as otherwise expressly provided in this Contract, the Contract Price is not subject to any escalation or to any adjustment or revision.

4.3 Taxes and Duties.

The Contract Price includes all app licable taxes and duties related to the
Work in effect as of the Effective Date of Contract, and thereafter, including all taxes on the import of any Satellite, or component part thereof, or any other component of the Work into any United States, French, Chinese and/or Japanese jurisdictions, if applicable, for Launch or other purpose, personal property taxes, imposts, sales, use, excise, value added, and all other import and export taxes levied in connection with the performance of the Work, wherever the Work is being carried out.

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****** 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. PAYMENT.

5.1 Requests for Payment and Invoices.

(a) Customer shall make Milestone Payments, Major Calendar Payments and other Calendar Payments to Contractor in accordance with the Payment Plan set forth in Exhibit G (Payment Plan and Termination Liability Amounts).

(b) With the exception of the First Milestone Payment, which shall have been paid on or before EDC, and the [*****] Payment, which shall be paid to Contractor no later than the last day of the [*****] or the last day of the Cure Period, if any, as required by Article 3 (Eff ective Date of Contract (EDC); [*****]), each Milestone Payment shall be due upon Contractor completing the applicable Milestone and submitting to Customer a Request for Payment, accompanied by a certificate in the form of Annex I to Attachment A hereto together with such supporting data as Contractor deems necessary or appropriate. A Milestone shall not be regarded as completed, and no payment shall be made, until all the Work relevant to that Milestone has been completed and documented in accordance with applicable specifications and procedures and all the relevant documentation and Training required under this Contract for such Milestone has been provided to Customer.

(c) With the exception of Program Calendar Payment No. 1, which shall be paid on or before July 9, 1999, Contractor shall, with respect to each Calendar Payment, provide Customer with a Request for Payment at least ten (10) Calendar Days but no more than forty-five (45) Calendar Days in advance of the date when such payment is requ ired to be made by Customer pursuant to Exhibit G (Payment Plan and Termination Liability Amounts); provided, however, each Major Calendar Payment shall be subject to satisfaction by Contractor of the following conditions precedent:

(1) with respect to the Major Calendar Payment applicable to the first Launch Vehicle, as specified in Exhibit G (Payment Plan and Termination Liability Amounts), Contractor will invoice Customer
[*****] Calendar Days prior to the date of the scheduled Launch;

(2) with respect to the Major Calendar Payment applicable to the second Launch Vehicle, as specified in Exhibit G (Payment Plan and Termination Liability Amounts), Contractor will invoice Customer
[*****] Calendar Days prior to the date of the scheduled Launch;

(3) with each such invoice for a Major Calendar Payment, Contractor shall provide certification that the official Launch manifest, as established by the Launch Agency, provides that the Launch Date for such Launch

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****** 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.

Vehicle is no more than [*****] Calendar Days from the due date of the Major Calendar Payment for the first launch and no more than [*****] Calendar Days from the due date of the relevant Major Calendar Payment for the second Launch.

(d) Contractor shall telefax and airmail signed copies of each Request for Payment, invoice and accompanying certificate and any supporting data to:

XM Satellite Radio Inc.
1250 23rd Street, N.W., Suite 57 Washington, DC
20037
Attention: Mr. Heinz Stubblefield Sr. Vice President and CFO
Fax Number: 202-969-7113

5.2 Payment.

(a) Milestone Payments, Major Calendar Payments and Other Calendar

Payments.

(1) Customer shall pay Contractor in full each Milestone Payment, Major Calendar Payment, and other Calendar Payments, as set forth in Exhibit G (Payment Plan and Termination Liability Amounts), within thirty (30) Calendar Days after delivery, in accordance with the procedures and upon satisfaction of the conditions set forth in Article 5.1 (Requests for Payment and Invoices), of a Request for Payment, accompanied by a certificate in the form of Annex I to Attachment A hereto, with respect to a Milestone Payment, and of an invoice, with respect to any Major Calen dar Payment or other Calendar Payment, by wire transfer to the following bank account:

Bank: Bank of America

Address: Concord, California, U.S.A.

Account No.: [*****]

(2) In no event shall the cumulative Milestone Payments made to Contractor for the Work at any point in time exceed the cumulative amounts specified up to that point in time for Milestone Payments for the Work as set forth in Exhibit G (Payment Plan and Termination Liability Amounts), as may be modified from time to time pursuant to Article 34.3 (Amendments).

(3) In the event of early completion by Contractor of a Milestone in advance of such Milestone completion date as set forth in Exhibit G (Payment Plan and Termination Liability Amounts), Customer shall not be obligated to

25

make the corresponding Milestone Payment to Contractor in advance of the payment due date therefore as set forth in Exhibit G.

(4) Notwithstanding the foregoing, Customer, in its sole discretion, may agree to make a partial payment to Contractor for the partial completion of a Milestone event.

(5) Major Calendar Payments are to be made by Customer if the conditions precedent thereto are met by Contractor notwithstanding if Contractor is otherwise in default of this Contract under Article 32.2 (Termination for Contractor's Default); the Parties intend that Customer's remedy in such event

is termination of this Contract (in which case no payments would be made) and not withholding of Major Calendar Payments.

(6) Except for disputed amounts under Article 5.3 (Disputed Amounts), all payments made by Customer to Contractor prior to and including the Major Calendar Payments and other Calendar Payments shall be deemed fully earned by Contractor upon receipt of such payments.

(b) Other Payments. Except as otherwise expressly stated herein, all other payments by Customer due Contractor shall be made by wire transfer to the bank account identified in paragraph (a) above within thirty (30) Calendar Days after receipt by Customer of a telefaxed Request for Payment (followed by an airmailed original received by Customer within five (5) Calendar Days of receipt of such telefaxed request).

5.3 Disputed Amounts.

(a) If
Customer does not agree that the Milestone associated with a Request for Payment has been satisfactorily completed, Customer shall give written notice to Contractor within ten (10) Calendar Days after receipt by Customer of a Request for Payment. Upon receipt of such notice, the Parties' respective Program Managers shall meet and use good faith efforts to resolve such disagreement.

(b) If the Parties' Program Managers fail to resolve such disagreement within thirty (30) Calendar Days after receipt by Customer of the Request for Payment, Customer shall deposit, subject to paragraph (d) below, within five (5) Calendar Days after expiration of the aforementioned thirty (30) Calendar Day period, all or a portion of the disputed Milestone Payment, in accordance with Table 5.3 below, into a separate, interest-bearing account to be established by Contractor at Contractor's commercial bank to hold solely and separately from all other corporate funds ("In-House Escrow Account"), any such amounts that may b e disputed hereunder up to the limitations set forth in paragraph (c) below.

(c) In no event shall any disputed amounts deposited into the In-House Escrow Account exceed the limitations set out below in Table 5.3:

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****** 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.

                                                    Table 5.3
                Schedule of Disputed Amounts that may be Deposited in the In-House Escrow Account
-----------------------------------------------------------------------------------------------------------------
Period in which Disputed Amounts Arise                       Limitation on Disputed Amounts that may be Deposited
                                                                          in the In-House E
scrow
                                                                                Account
-----------------------------------------------------------------------------------------------------------------
EDC through the last day of the ninth (9th) month                               [*****]
 following EDC
-----------------------------------------------------------------------------------------------------------------
The first day of the tenth (10th) month following EDC                           [*****]
 through the last day of the eleventh (11th) month
 following EDC
-----------------------------------------------------------------------------------------------------------------
The first day of the twelfth (12th) month following EDC                         [*****]
 to the date of Launch of the second Satellite                        (excluding Incentive Amounts)
-----------------------------------------------------------------------------------------------------------------

(d) To t
he extent, if any, the aggregate of disputed Milestone Payment amounts exceeds the applicable limitation for the period in which the dispute over the Milestone Payment arises, Customer shall pay to Contractor the excess over the applicable limitation, pending resolution of the dispute in accordance with the provisions of this Article 5.3 (Disputed Amounts).

(e) The respective Chief Executive Officers of each Party shall meet to resolve the dispute within five (5) Calendar Days after the aforementioned thirty (30) Calendar Days following receipt by Customer of the Request for Payment.

(f) Withheld amounts shall remain in the In-House Escrow Account, or if any amounts are paid to Contractor pursuant to paragraph (d) above, Contractor shall retain such amounts, until the Chief Executive Officers resolve the dispute relating to such disputed payments. In the event the Chief Executive Officers cannot resolve such dispute, the Parties may, upon mutual agreement, seek resolution of such dispute purs uant to Article 27.2 (Arbitration). In any event, such unresolved dispute shall be referred to arbitration pursuant to Article
27.2 (Arbitration) after six (6) months following the date upon which such dispute was referred to the Chief Executive Officers. Contractor agrees that prior to the resolution of any dispute, including any disputes ultimately resolved in favor of Contractor, Contractor shall not remove or use any amounts deposited in the In-House Escrow Account.

(g) In the event it is determined by the Chief Executive Officers or any arbitral tribunal that the payment deposited in the In-House Escrow Account or any part thereof is due and payable to Contractor, Contractor may then release that amount from such Account for Contractor's use and retain all interest accrued thereon. In the event it is determined by the Chief Executive Officers or any arbitral tribunal that the withheld payment or any part thereof is due and payable to Customer, such amount shall be refunded to Customer within five (5) Calendar Days after such determination, including, to the extent of the Chief Executive Officers' determination, any amounts paid by Customer, under paragraph (d) above, in excess of the

27

limitation on disputed amounts otherwise eligible to be placed in the In-House Escrow Account, together with interest on the total thereof to be calculated in accordance with Article 34.10 (Calculation of Interest).

5.4 Set Off.

In the event one Party has not paid the second Party any amount that is due and payable to the second Party under this Contract, such second Party shall have the right to set off such amount against payments due to the first Party, provided any amount in dispute pursuant to Article 5.3 (Disputed Amounts) shall not be considered eligible for setoff while the dispute is being resolved.

5.5 Late Payment.

(a) The Parties acknowledge and agree that, with respect to any Milestone Payments, Major Calendar Payments , and other Calendar Payments, Contractor may suffer damages as the result of any delayed receipt of such payments and the rapid decrease, over time, of the value of the Work. Accordingly, the Parties agree that time is of the essence in the receipt by Contractor of Milestone Payments, Major Calendar Payments, and other Calendar Payments, properly due Contractor, and, subject to Article 32.3 (Termination for Customer's Default), Contractor may, upon a default in such payment by Customer, immediately and without further notice to Customer, exercise all its rights and remedies in accordance with the terms of this Contract.

(b) For any payment under this Contract that is overdue, the Party entitled to such payment shall also be entitled to interest on such payment for each day the payment is overdue until the day payment is made, such interest to be calculated in accordance with Article 34.10 (Calculation of Interest), unless expressly provided otherwise in this Contract.

5.6 Payments Current at Launch.

(a) With respect to any Milestone, Major Calendar Payment, or other Calendar Payment, Contractor may suspend performance if Customer does not comply with the provisions of Article 5.3 (Disputed Amounts).

(b) Contractor shall not be required to proceed to Launch of a Satellite unless (i) Customer is current on all payments due at that point in time with respect to such Satellite, (ii) any and all disputes related to any Milestone Payment and pertaining only to such Satellite to be Launched are resolved, and
(iii) any such Milestone Payment amount (related to such Satellite) held in escrow pursuant to Article 5.3 (Disputed Amounts) is released to Contractor, if it is ultimately determined that Contractor is entitled to such payments.

5.7 Security Interest.

(a) Until Contractor's receipt of the Major Calendar Payments, or as provided in paragraph (c) below, whichever occurs first, Customer hereby grants Contractor a first priority security interest in any right, title, or in terest Customer may have or be deemed to have in the Work to secure Customer's obligations to Contractor under this Contract. Until Contractor's receipt of the Major Calendar Payments, Customer shall have no interest in the Work, except as

28

specifically provided in this Article 5.7 (Security Interest) and in paragraph
(c) of Article 32.2 (Termination for Contractor's Default).

(b) The Parties agree that, upon Contractor's reasonable request, Customer shall sign and permit Contractor to file, for precautionary purposes, appropriate Uniform Commercial Code financing statements or any similar document having the same effect in foreign countries, reflecting Contractor's right, title, and interest to the Deliverable Items prior to receipt of the Major Calendar Payments, provided that Contractor, at its sole expense, shall be responsible for preparing such financing statements and terminating such financing statements as required by this Article 5.7 (Security Interest).

(c) Subject to Article 5.6 (Payments Current at Launch), Contractor agrees to release and terminate its security interest, and to terminate any related financing statements, in accordance with the following:

(1) with respect to the first Satellite, Contractor's security interest therein shall be released and terminated upon Launch of the first Satellite;

(2) with respect to the second Satellite and all other Deliverable Items under this Contract, Contractor's security interest in the second Satellite and all other Deliverable Items comprising the Work, shall be released and terminated upon Launch of the second Satellite; and

(3) with respect to a Launch Vehicle, Contractor's security interest therein shall be released and terminated upon Contractor's receipt of the Major Calendar Payment applicable to such Launch Vehicle.

(d) Customer represents and warrants that, prior to release of Contractor's security interest in accordance with this Article 5.7 (Security Interest), Customer's assets do not and will not secure the liabilities of any parent entity, or any other person or other entity.

(e) The preceding representations and warranties of Customer apply, with respect to the first Satellite, only prior to Launch of the first Satellite, and, with respect to the second Satellite and all other Deliverable Items, only prior to Launch of the second Satellite. Such representations and warranties of Customer shall not apply to any financing entered into by Customer or Customer's Affiliates to obtain the funding for a Major Calendar Payment required pursuant to this Contract which results in the Major Calendar Payment being made substantially concurrently with such financing being obtained for such payment.

29

6. ACCESS TO WORK

6.1 Facilities.

(a) Subject to Article 6.10 (Consultant Access), Contractor shall provide Customer Personnel reasonable access to all Work (including work-in-progress, documentation, and testing) at the facilities of Contractor and the Subcontractors, during regular business hours, or such other times as Work is being performed under this Contract, provided such access does not unreasonably interfere with such Work and access to Work is coordinated through Contractor's program office.

(b) The Parties agree that Customer Personnel shall be provided fifteen
(15) non-escort permanent badges and twenty-five (25) escort permanent badges to agreed work areas where the Work is being performed, subject to Customer identifyi ng such personnel to Contractor and such personnel satisfying Contractor's normal security clearance requirements.

(c) Contractor shall arrange with the Launch Agency(ies) for Customer VIPs to attend the Launch of a Satellite, subject to any limitations of such Launch Agency.

6.2 Office Space.

Contractor shall provide office space and facilities at Contractor's facilities for the accommodation of up to six (6) Customer Personnel. Contractor shall make reasonable work space available for such Customer Personnel at environmental test facilities (if located off site) and shall use reasonable efforts to ensure that facilities are provided for up to two (2) such Customer Personnel at other selected Major Subcontractors' plants on a temporary basis to attend meetings or witness tests, except that (i) with respect to facilities at a Designated Launch Site, Contractor shall use reasonable efforts to ensure that office space facilities are provided for up to five (5) Custo mer
Personnel and, in the case of a Launch by Sea Launch, Contractor shall ensure that two (2) Customer Personnel are entitled to a berth on a viewing boat for an extended period of time prior to and during Launch and (ii) the facilities at the Payload Subcontractor (Alcatel) shall be on a permanent basis. At a minimum, Contractor shall provide desks, chairs, office supplies, local telephone service, reasonable long distance telephone usage, car parking facilities, and access to meeting rooms, copying machines and facsimile equipment, and, as available, access to and use of video conferencing facilities at Contractor's facilities. Customer shall reimburse Contractor for all long distance telecommunications charges, whether incurred in connection with voice or facsimile transmission or video conferencing.

6.3 Security.

Customer Personnel visiting any facility of Contractor or a Subcontractor
(i) will abide by Contractor's security regulations and/or those of its Subcontractors and any and a ll applicable Laws of the jurisdiction in which a Contractor or Subcontractor facility is located, provided, however, Customer Personnel are advised in writing of any such security regulations prior to such visits; (ii) subject to Article 20 (Intellectual Property Rights) and Article 22 (Confidential Information), will use any information received in connection with the access provided hereunder only in the performance of this Contract; and
(iii) will not remove any documents,

30

materials, or other items from any facility of Contractor or its Subcontractors (other than Data and Documentation and other documents delivered to Customer Personnel for Customer's use and with no requirement to return to Contractor) without the express written consent of Contractor's Program Manager.

6.4 Data and Documentation.

(a) Customer Personnel will have reasonable access at the facilities of Contractor and the Subcontractors, for evaluation and inspection purposes only, to (i) Data and Documentation; (ii) Work-in-progress, technical and schedule data and documentation relevant to the Work; (iii) drawings, circuit diagrams and schematics, specifications, standards or process descriptions relevant to the Work; and (iv) data and documen tation provided to Contractor by its Subcontractors relevant to the Work. To facilitate Customer's work in this respect, Contractor will allow Customer Personnel reasonable access to all indexes related to the materials set forth in this paragraph (a).

(b) Subject to Article 6.3 (Security), where the materials described in paragraph (a) are necessary for evaluation of designs, performance considerations, assessment of test plans and test results, or for any other purpose connected with the design, qualification, testing, Final Acceptance, or operation of the Work, or any part thereof, and the components thereto, Contractor will, subject to Article 22 (Confidential Information), make available to Customer Personnel copies of such documentation on the reasonable request of Customer Personnel at no charge to Customer.

(c) All Data and Documentation shall be in the English language.

(d) Any data provided by a Party to the other Party in electronic form shall be embodied in, or in a form co mpatible with, commercially available software.

6.5 Electronic Access.

(a) With respect to electronically generated information, Contractor will provide Customer with a copy of and/or electronic access (via the Internet, Contractor e-mail, proprietary or otherwise, or as agreed upon) to such information as is necessary to keep Customer advised, on a current basis, of program issues, decisions, and problems. Contractor shall provide Customer Personnel access to Contractor's electronic mail systems through the Internet, such access to be at Customer's cost. If requested in writing by Customer, Contractor shall establish secure data links between its and Customer's facilities such that Customer has remote electronic access to those project- related documents identified in Exhibit B (SOW); provided, however, Contractor shall be required to provide such links for a high-data transfer rate (such as for satellite telemetry) only on an as needed basis, with each Party bearing the costs of establishin g the link at its end.

(b) Contractor will also provide Customer Personnel with "real time" access to all measured data for the Work taken at Contractor's and/or Subcontractors' facilities on a non-interference, no-cost basis.

31

6.6 Meetings and Reviews.

(a) Customer Personnel shall be entitled to attend the meetings and reviews (including meetings and reviews held by electronic means) of Contractor and of Contractor with any Subcontractor(s) where such meetings and reviews (or portions of such meetings and reviews) are related to Customer's project schedule, management, engineering, design, manufacturing, integration, testing, or Launch and shall have the right to participate in and make recommendations, but not to control, give directions or assign actions, in all meetings and reviews at the system, subsystem and unit level, as well as in internal program reviews. Contractor shall (i) submit an agenda at least ten (10) Calendar Days in advance of the meeting or review , (ii) take minutes, (iii) maintain an action items list, and (iv) circulate the minutes and action items to Customer within five (5) Calendar Days following the meeting or review.

(b) In the event a meeting or review is convened at the facilities of Contractor or a Subcontractor relating to the Work, Contractor shall, except as otherwise provided in these Terms and Conditions of this Contract, provide reasonable advance notice in writing to Customer (e.g., one week for regularly scheduled meetings) and shall make reasonable and appropriate arrangements to facilitate the entry of Customer Personnel to the meeting place.

(c) Notwithstanding the foregoing, Customer and Contractor acknowledge and agree that a large number of meetings, including impromptu meetings, will be held during the normal course of performance of this Contract and that, in all instances of meetings relating to this Contract, notice to Customer or Customer's presence at all such meetings may not be practicable. Accordingl y, Contractor is not required to provide notice to Customer of such impromptu, unscheduled, informal and otherwise casual meetings (informal meetings), provided that Contractor shall supply to Customer within a reasonable time following any such informal meeting, any material notes, decisions, actions items or other such product of such informal meetings that would otherwise be provided to Customer at meetings Customer would normally attend.

6.7 Laws.

Contractor's obligations under this Article 6 (Access to Work) shall be subject to any and all applicable Laws of any country, state, or territory having jurisdiction over the Work, and to Contractor's standard security rules and regulations; provided, however, Contractor shall use its best efforts to ensure its internal security rules and regulations do not unduly restrict access or viewing by Customer Personnel.

6.8 No Relief.

The inspection, examination, observation, agreement to or approval, waiver or deviation by Customer with r
espect to any design, drawing, specification, or other documentation produced under this Contract shall not relieve Contractor from fulfilling its contractual obligations or result in any liability being imposed on Customer, unless and to the extent such waiver, deviation, agreement, or approval specifically provides in writing for such relief to Contractor or such imposition of liability on Customer.

32

6.9 Major Subcontracts.

Contractor shall require that any Major Subcontract entered into substantially concurrently with or following the execution of this Contract include a provision substantially similar to this Article 6 (Access to Work) to ensure Customer's rights under this Contract, but Contractor shall not be required to amend any bulk procurement contract to include such provision.

6.10 Consultant Access.

Customer shall submit to Contractor the individual name(s) and citizenship information pertaining to any proposed representatives or Consultants who require access to any premises and/or any Contractor or Subcontractor proprietary information, and Contractor shall have the right to approve such access for such representativ
es or Consultants. Contractor shall approve or disapprove of any such individual name(s) submitted by Customer for such access within five (5) Business Days of Customer's submission except in the case of submissions made during Contractor's end-of year Holiday shutdown, in which case Contractor shall provide such approval or disapproval within ten (10) Business Days. Such approval shall not be withheld by Contractor unless (i) Contractor reasonably believes such representative or Consultant is employed by, or is an Affiliate of a direct competitor of Contractor, or (ii) Contractor has knowledge of incidents in which such representative or Consultant demonstrated behavior or activity that, in Contractor's reasonable judgment, is incompatible with Contractor's ability to achieve the objectives of this Contract. In the event Contractor disapproves of a representative or Consultant proposed by Customer, Contractor shall provide Customer with an explanation, which need not be written, of its reasons for di
sapproval.

33

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7. DELIVERY AND DELIVERY INCENTIVES

(a) Deliverable Items, as listed in Table 7.1 below, shall be Delivered by Contractor to the destinations indicated, on or before the dates ("Delivery Dates") specified in such Table, as such Delivery Dates may be adjusted in accordance with this Contract.

                                                       Table 7.1
                                                   Delivery Schedule
-----------------------------------------------------------------------------------
-------------------------------------
            Deliverable Item               Delivery Date or Performance Date                  Place of Delivery
------------------------------------------------------------------------------------------------------------------------
  1.  1st Satellite, Launch                December 31, 2000*                         Specified Orbital Location for
      Campaign, Launch Services,                                                      the Satellite, and other
      and LEOP (1st Satellite                                                         locations for the provision of
      through Handover)                                                               services as specified in Exhibit
                                                                                      B (SOW)
----------------------------------------------------------------------------------------------------
--------------------
  2.  Pre-Eclipse Test Report with         [*****] following completion of            Customer's Facilities
      respect to the 1st Satellite         In-Orbit Testing
------------------------------------------------------------------------------------------------------------------------
  3.  Post-Eclipse Test Report             [*****] following the end of the           Customer's Facilities
      with respect to the 1st              first full eclipse period after
      Satellite                            Launch
------------------------------------------------------------------------------------------------------------------------
  4.  2nd Satellite, Launch                April 11, 2001*                            Specified Orbital Location for
      Campaign, Launch Services,                                                      the Satellite, and other
      and LEOP (2nd Satellite                                                         locations for the provision of
      thro
ugh Handover)                                                               services as specified in Exhibit
                                                                                      B (SOW)
------------------------------------------------------------------------------------------------------------------------
  5.  Pre-Eclipse Test Report with         [*****] following completion of            Customer's Facilities
      respect to the 2nd Satellite         In-Orbit Testing
------------------------------------------------------------------------------------------------------------------------
  6.  Post-Eclipse Test Report             [*****] following the end of the           Customer's Facilities
      with respect to the 2nd              first full eclipse period after
      Satellite                            Launch
------------------------------------------------------------------------------------------------------------------------

34

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Table 7.1 Delivery Schedule

------------------------------------------------------------------------------------------------------------------------
  7.  Operations Support Services          [*****]                                    Primary Satellite Control Center,
                                                                                      Washington, DC or Back-Up

                                                                      Satellite Control Center
------------------------------------------------------------------------------------------------------------------------
  8.  Mission Support Services             [*****]                                    Contractor's Facilities
------------------------------------------------------------------------------------------------------------------------
  9.  Communications Payload               [*****]                                    Customer's facilities in
      Simulator**                                                                     Washington, DC
------------------------------------------------------------------------------------------------------------------------
 10.  Satellite Control Centers            [*****]                                    Customer's Primary and Back-Up
      Equipment and Software***                                                       Satellite Control Centers in

                                                                               Washington, DC area
------------------------------------------------------------------------------------------------------------------------
 11.  Dynamic Spacecraft Simulator         [*****]                                    Primary Satellite Control Center,
      Software and Hardware                                                           Washington, D.C.
------------------------------------------------------------------------------------------------------------------------
 12.  Training                             Per Exhibit B (SOW)                        Per Exhibit B (SOW)
------------------------------------------------------------------------------------------------------------------------
 13.  Data & Documentation                 Per Exhibit B (SOW)                        Per Exhibit B (SOW)
------------------------------------------------------------------------------------------------------------------------
<
/TABLE>

* Assumes (i) Customer makes Program Calendar Payment No.1 on or before July 9,
1999 and (ii) Customer makes timely payment in respect of Engineering Model
Reflector Work Nos. 1, 2 and 3 in accordance with Exhibit G (Payment Plan and
Termination Liability Amount).

** In case of a problem with the Satellite, the engineering models delivered
with the Communications Payload Simulator will be returned to Contractor, at
Contractor's cost, for investigation and testing.

*** If after final definition of the training program provided for in Exhibit B
of this Contract, Customer determines, in its reasonable discretion, that the
[*****] time period available for on-site operator training at Customer's
facilities is not sufficient, Contractor agrees to install, at [*****],
software that is the then current release of the Satellite Control Center
Software to be provided under this Contract in order to provide additional time
for such training.

    (b) Contractor understands and agrees that, with respect
to the Delivery
Dates for all Deliverable Items, whether those items are set out in this
Contract or subsequent Amendments to this Contract, time is of the essence under
this Contract. Nothing in the foregoing sentence shall in any way modify either
the specific remedies for default specified elsewhere in this Contract,
including Article 10 (Liquidated Damages for Late Delivery), Article 32.2
(Termination for


                                      35

******  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.

Contractor's Default), or Article 10.3 (Termination for Unexcused Delay), or the
specific dispute resolution requirements specified in this Contract.

     (c) Packing and shipping shall be in accordance with standard commercial
         practices of the aerospace industry and applicable Laws and shall be
         effected in such a manner so as to ensure that the item reaches its
         destination undamaged.

     (d) Contractor's obligation to Deliver the Work in accordance with the
         Delivery Schedule set forth in Table 7.1 above is conditio
ned upon the
         following occurring on or before July 9, 1999: (i) Contractor receives
         Program Calendar Payment No. 1 in the amount of Sixty-Eight Million
         Dollars ($68,000,000) and (ii) Customer raises a minimum of [*****] in
         financing.

     (e) If Contractor Launches both the first Satellite and the second
         Satellite on or before December 31, 2000, Customer shall pay Contractor
         an amount equal to Six Million Dollars ($6,000,000) (in addition to the
         Contract Price) on or before thirty (30) Calendar Days after Launch of
         the second Satellite.


                                      36

8.   INSPECTION AND FINAL ACCEPTANCE

     8.1  Preliminary Inspections.


     Preliminary inspections of all Work may be made by Customer or its
designated representative at Contractor's or a Subcontractor's facility.  All
such inspections shall be made in the presence of a representative of
Contractor.  In the event Customer informs Contractor in writing of any Defects
in the Work, Contractor shall remedy such Defects pursuant to the procedures to
remedy Defects as set forth in Article 13 (Corrective Measures in Unlaunched
Satellites and Other Deliverable Items).

     8.2  Shipment Readiness Review.

     (a)  Prior to shipment of each Satellite to the Designated Launch Site,
Contractor shall conduct a Shipment Readiness Review in accordance with the
r
equirements contained in Exhibit B (SOW) and Exhibit D (Test Plan Requirements)
at Contractor's plant. The Shipment Readiness Review shall consist of reviewing
the Satellite's ground test results in accordance with Exhibit D (Test Plan
Requirements). Contractor shall provide Customer at least fifteen (15) Business
Days advance written notice of the first Shipment Readiness Review for each
Satellite. Customer shall have the right to witness such review and the right to
either concur or not concur that the Satellite under review meets the
requirements of this Contract and is ready for shipment.

     (b) The Shipment Readiness Review shall verify:

         (1)  the Satellite's ground testing has been completed in accordance
              with Exhibit D ( Test Plan Requirements); and

         (2)  except as provided in paragraph (c) below, all Defects have
              been corrected; and

         (3)  the Satellite, ground support equipment for handling and/or
              transporting the Satellite
in preparation for Launch, and
              supporting documentation are ready for shipment based on an
              inspection of the Satellite and such ground support equipment and
              an examination of such supporting documentation; and

         (4)  all ground equipment, consisting of the Satellite Control Center
              Equipment and Software, Dynamic Spacecraft Simulator, and
              Communications Payload Simulator, have been Delivered.

     (c) It is the intent of the Parties that all Work that can be accomplished
at Contractor's facility will be completed prior to shipment to the Designated
Launch Site. Notwithstanding that intent, Contractor may, with respect to
certain limited Defects, conclude that such Defects can be effectively remedied
after shipment, in which case Contractor may, after receipt of written approval
from Customer, ship a Satellite to the Designated Launch Site where such Defects
shall be remedied.

                                      37

     ******  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.


     (d) Successful completion of the Shipment Readiness Review for each
Satellite shall arise upon the occurrence of any of the following:

         (1) The Shipment Readiness Review demonstrates compliance in all
             respects with the provisions of paragraph (b) above; Customer
             shall notify Contractor of its acceptance of the Shipment
             Readiness Review within a maximum of three (3) Business Days
             following completion of such review; or

         (2) The Shipment Readiness Review complies in a
ll respects with
             paragraph (b) above, save for minor non-conformances or
             discrepancies that have not been corrected but which Contractor
             demonstrates to Customer's satisfaction at the review have no
             adverse effect upon the performance of the Satellite; Customer
             shall notify Contractor of its acceptance of the Shipment Readiness
             Review and the waiver of its right to compel correction within
             three (3) Business Days following completion.

     (e)  If the Shipment Readiness Review reveals any Defects that require
correction, Customer shall, within three (3) Business Days after such review,
notify Contractor in writing of its rejection of the Shipment Readiness Review
and request correction of such Defects. Contractor shall, at its expense,
promptly correct the Defects referred to therein and, promptly following such
correction, shall notify Customer that the corrections have been made and shall
invite Customer to send
 Customer Personnel to attend an inspection at which they
will be entitled to verify such corrections have been satisfactorily made
(second round Shipment Readiness Review). Customer shall be given at least three
(3) Business Days written notice of such inspection. The provisions of this
Article 8.2 (Shipment Readiness Review) shall thereafter apply similarly to that
inspection as if that inspection was the original Shipment Readiness Review. In
the event of any disagreement between Customer and Contractor relating to the
second round Shipment Readiness Review, the Senior Executive Level
representatives of the Parties shall use best reasonable efforts promptly to
resolve such dispute.

     (f) In the event of any waiver by Customer of its right to compel
correction of a Defect, Contractor shall nevertheless provide Customer with a
written price proposal for the cost of correction of such Defect at the time of
waiver ("Baseline Correction Cost").

     (g) Notwithstanding anything to the contrary her
ein, Contractor shall
correct any Defects previously waived by Customer, if requested by Customer and
if time permits consistent with the Launch schedule. In such event, Contractor
and Customer agree that the cost of such correction shall be shared as follows:
Contractor shall be solely responsible for the cost of correction of the
previously waived Defect up to the Baseline Correction Cost. If the cost of
correction of the previously waived Defect exceeds the Baseline Correction Cost,
Contractor and Customer [*****] above and beyond the Baseline

                                      38

******  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.

Correction Cost, up to a maximum aggregate increased cost amount of [*****].
Any cost of correction in excess of the Baseline Correction Cost [*****], shall
be the sole responsibility of Customer.

     (h) Upon successful completion of the Shipment Readiness Review, such
Satellite shall be deemed to be Available for Shipment and shall be shipped to
its applicable Designated Launch Site.

     8.3 Flight Readiness Review.

     (a)  Prior to integration of each Satellite with a Launch Vehicle at the
Designated Launch Site, a Flight Readiness Review (FRR)
 shall be conducted by
Contractor in accordance with Exhibit B (SOW) and Exhibit D (Test Plan
Requirements). Contractor shall give Customer at least five (5) Business Days
written notice of the FRR. The purpose of the FRR is for Contractor to confirm
that each Satellite is ready to be integrated with a Launch Vehicle. Prior to
integration of such Satellite with a Launch Vehicle, any Defects in such
Satellite or other equipment as may remain from the Shipment Readiness Review,
or resulting from shipment or otherwise discovered during Satellite launch
preparations, shall have been remedied pursuant to the procedures to remedy
Defects as set forth in Article 13 (Corrective Measures in Unlaunched Satellites
and Other Deliverable Items).

     (b) Successful completion of the FRR shall arise upon the occurrence of any
of the following:

         (1) The FRR demonstrates compliance in all respects with the provisions
             of this Contract; Customer shall notify Contractor in writing of
             its
 acceptance of the FRR at the FRR; or

         (2) The FRR demonstrates compliance with the provisions of this
             Contract, save for minor non-conformances or discrepancies that
             have not been corrected but that Contractor, at the review,
             demonstrates to Customer's satisfaction have no adverse effect upon
             the performance of the Satellite; Customer shall notify Contractor
             in writing of its acceptance of the FRR and the waiver of its right
             to compel correction at the FRR.

      (c) If the FRR reveals any Defects that require correction, Customer
shall, at the FRR, notify Contractor in writing of its rejection of the FRR and
request correction of such Defects. Contractor shall, at its expense, correct
such Defects and, following such correction, shall notify Customer that the
corrections have taken place and invite Customer to send Customer Personnel to
attend an inspection to verify that such corrections have been satisfactorily
ma
de (second round FRR). Customer shall be given at least three (3) Business
Days written notice of such inspection. Customer shall notify Contractor in
writing of its acceptance or rejection of the second round FRR at the second
round FRR. In the event of any disagreement between Customer and Contractor
relating to the second round FRR, the Senior

                                      39

******  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.

Executive Level representatives of the Parties shall use reasonable efforts
promptly to resolve such dispute.

     (d) In the event of any waiver by Customer of its right to compel
correction of a Defect, Contractor shall nevertheless provide Customer with a
written price proposal for the cost of correction of such Defect at the time of
waiver ("Baseline Correction Cost").

     (e) Notwithstanding anything to the contrary herein, Contractor shall
correct any Defects previously waived by Customer, if requested by Customer and
if time permits consistent
with the Launch schedule. In such event, Contractor
and Customer agree that the cost of such correction shall be shared as follows:
Contractor shall be solely responsible for the cost of correction of the
previously waived Defect up to the Baseline Correction Cost. If the cost of
correction of the previously waived Defect exceeds the Baseline Correction Cost,
Contractor and Customer [*****] above and beyond the Baseline Correction Cost,
up to a maximum aggregate increased cost amount of [*****]. Any cost of
correction in excess of the Baseline Correction Cost [*****] shall be the sole
responsibility of Customer.

     (f) Upon successful completion of the FRR, the Satellite shall be released
by Customer for integration with the Launch Vehicle.

     8.4 Launch Readiness Review.

     In accordance with the provisions of Exhibit B (SOW), Contractor shall
support the Launch Agency during the Launch Agency's Launch Readiness Review.
In the event any Defect in the Satellite is discovered during the Launch
Readiness Review, Contractor shall correct such Defects in accordance with
Article 13 (Corrective Measures in Unlaunched Satellites and Other Deliverable
Items).

8.5  In-Orbit Testing and Final Acceptance of Satellites.

(a)  In-Orbit Testing.
     -----------------

     (1)  Upon arrival of each Launched Satellite at its Specified Orbital
          Location, Contractor shall perform tests and analyses on such
          Satellite in accordance with the In-Orbit Test Plan, developed by
          Contractor and approved by Customer, pursuant to the requirements of
          Exhibit B (SOW) and Exhibit D (Test Plan Requirements) to determine
          whether and to what extent such Satellite meets the requirements set
          forth in such In-Orbit Test Plan.
     (2)  For each Satellite, promptly upon completion of Pre-Eclipse In-Orbit
          Testing, Contractor shall conduct an in-orbit acceptance review and
          provide a documentation package setting forth the in-orbit test data
          r
equired by, and in a condition fully conforming to, the requirements
          of Exhibit B (SOW) and Exhibit D (Test Plan Requirements). "Handover"
          of

                                      40

          a Satellite shall occur upon completion of Pre-Eclipse In-Orbit
          Testing and provision of such In-Orbit Acceptance Test Review
          documentation package. Customer may begin commercial use of a
          Satellite upon Handover of such Satellite.

     (3)  Subject to Article 8.10 (Launch and Early Operations (LEOP)), promptly
          upon completion of Pre-Eclipse In-Orbit Testing, but no later than
          sixty (60) Calendar Days after Launch, Contractor shall furnish
          Customer with the Pre-Eclipse Test Report in full compliance with the
          requirements of this Contract.

     (4)  Promptly upon completion of In-Orbit Testing and one full eclipse
          period, Contractor shall furnish Customer with the Pos
t-Eclipse Test
          Report in full compliance with the requirements of this Contract;
          provided, however, in the case of a Constructive Total Loss,
          Contractor may so furnish such Post-Eclipse Test Report prior to one
          full eclipse period.

     (b)  Final Acceptance of Pre-Eclipse and Post-Eclipse Test Reports and
          -----------------------------------------------------------------
          Satellites.
          ------------

          (1)  Final Acceptance of the Pre-Eclipse Test Report and Post-Eclipse
               Test Report shall be in accordance with the provisions of
               paragraph (c) of Article 8.9 (Data and Documentation).

          (2)  Except as provided in Article 14.4(h)(i) (Storage), Final
               Acceptance of each Satellite shall occur upon successful
               completion of In-Orbit Testing following arrival of the Satellite
               at its Specified Orbital Location and confirmed by Contractor
               provid
ing to Customer the Pre-Eclipse and Post-Eclipse Test
               Reports in a condition fully conforming to the provisions of this
               Contract.

     (c) In all circumstances in which a Satellite is a Constructive Total Loss
or Total Loss, Contractor shall have no further acceptance obligations with
respect to such Satellite, except to provide a loss investigation report.

     8.6 Final Acceptance of Ground Spare Satellite.

         Final Acceptance of the Ground Spare Satellite, if the option to
purchase the Ground Spare Satellite is exercised pursuant to Article 30
(Options), shall occur when such Ground Spare Satellite is Available for
Shipment, unless, within a reasonable period of time (to permit Contractor to
conduct the necessary actions to support a Launch of the Ground Spare Satellite)
prior to the Available for Shipment date for the Ground Spare Satellite,
Customer notifies Contractor that it intends to launch the Ground Spare
Satellite.  In such event,  Final Acceptance of su
ch Ground Spare Satellite
shall be determined in accordance with the appropriate provisions of this
Contract or as otherwise mutually agreed by the Parties.

     8.7 Satellite Control Center (SCC) Equipment and Software.

     Final Acceptance of SCC Equipment and Software shall occur only upon (i)
Contractor furnishing the SCC Equipment and Software  at the places specified in
Table 7.1 of Article 7


                                      41

******  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.

(Delivery), and (ii) completion of acceptance testing in accordance with Exhibit
B (SOW) and a Test Plan to be mutually developed by the Parties and approved by
Customer no later than [*****] demonstrating the SCC Equipment and Software are
furnished in a condition fully conforming to the provisions of this Contract.
The SCC Equipment and Software shall be deemed to be in a condition fully
conforming to the provisions of this Contract unless rejected by Customer in
writing within fifteen (15) Business Days after Delivery of the SCC Equipment
and Software
.  If the SCC Equipment and Software are unacceptable, Customer
shall, within the said fifteen (15) Business Days, notify Contractor in writing
in which respects the SCC Equipment and Software contain any Defects.
Contractor shall promptly correct the Defects referred to therein and notify
Customer that the corrections have been made.  The provisions of this
Article 8.7 (Satellite Control Center (SCC) Equipment and Software) shall
thereafter apply to the corrected SCC Equipment and Software.

     8.8  Dynamic Spacecraft Simulator and Communications Payload Simulator.

     Final Acceptance of each of the Dynamic Spacecraft Simulator and
Communications Payload Simulator ("Simulators") shall occur only upon (i)
Contractor furnishing the Simulators at the places specified in Table 7.1 of
Article 7 (Delivery) and (ii) completion of acceptance testing in accordance
with Exhibit B (SOW) and a Test Plan to be mutually developed by the Parties and
approved by Customer no later than [*****] demonstrating eac
h Simulator is
furnished in a condition fully conforming to the provisions of this Contract.  A
Simulator shall be deemed to be in a condition fully conforming to the
provisions of this Contract unless rejected by Customer in writing within
fifteen (15) Business Days after receipt of said Simulator.  If a Simulator is
unacceptable, Customer shall, within the said fifteen (15) Business Days, notify
Contractor in writing in which respects the Simulator contains any Defects.
Contractor shall promptly correct the Defects referred to therein and notify
Customer that the corrections have been made.  The provisions of this Article
8.8 (Dynamic Spacecraft Simulator and Communications Payload Simulator) shall
thereafter apply to the corrected Simulator.

     8.9  Data and Documentation.

     (a)  Final Acceptance of Data and Documentation, or any part thereof, shall
occur only when the Data and Documentation, or such part thereof, have been
furnished to Customer in a condition fully conforming to the provision
s of this
Contract. Any Data and Documentation furnished to Customer shall be accompanied
by written notice from Contractor specifying that portion of the Data and
Documentation being furnished.

     (b)  Data and Documentation, or any part thereof, other than Data and
Documentation that requires approval and acceptance by Customer in accordance
with (c) below, shall be deemed to be in a condition fully conforming to the
provisions of this Contract unless rejected by Customer in writing within
fifteen (15) Business Days after receipt of said Data and Documentation, or part
thereof. If such Data and Documentation, or part thereof, not requiring approval
and acceptance by Customer, are unacceptable, Customer shall, within the said
fifteen


                                      42

(15) Business Days, notify Contractor in writing in which respects the
Data and Documentation, or part thereof, contain any Defects. Contractor shall
promptly correct the Defects referred to therein and shall notify Customer that
the corrections have been made. The provisions of this Article 8.9 (Data and
Documentation) shall thereafter apply to the corrected Data and Documentation.

     (c)  Final Acceptance of any Data and Documentation requiring approval by
Customer in accordance with Exhibit B (SOW) shall occur when such approval has
been granted by Customer in writing. Customer shall notify Contractor in writing
of its acceptance or rejection of such Data and Documentation within fifteen
(15) Business Days after receipt of such Data and Documentation
 by Customer;
failing such response, the Parties shall be deemed forthwith to be in dispute
and their rights shall be determined in accordance with the provisions of
Article 27 (Dispute Resolution).

     8.10  Launch and Early Operations (LEOP).

     Final Acceptance of LEOP services for each Satellite shall occur upon
Contractor furnishing to Customer LEOP services in accordance with the Delivery
Schedule and in a condition fully conforming to the provisions of this Contract,
including furnishing the Pre-Eclipse Test Report and Post-Eclipse Test Report in
accordance with Article 8.5 (In-Orbit Testing and Final Acceptance of
Satellites).  LEOP services shall be deemed to be in a condition fully
conforming to the requirements of this Contract unless rejected by Customer in
writing within ten (10) Business Days after the date Customer has knowledge of
the non-conforming condition.  If the LEOP services furnished are unacceptable,
Customer shall, within the said ten (10) Business Days, notify Contractor i
n
writing in which respects the LEOP services contain any Defects.  Contractor
shall correct such Defects, to the extent possible,  within fifteen (15)
Calendar Days of receipt of notice and shall notify Customer that the
corrections have been made.  The provisions of this Article 8.10 (Launch and
Early Operations (LEOP)) shall thereafter apply to the corrected LEOP services.

     8.11  Operations Support Services (OSS).

     Final Acceptance of OSS shall occur upon Contractor furnishing to Customer
OSS in accordance with the Delivery Schedule and in a condition fully conforming
to the provisions of this Contract.  OSS shall be deemed in a condition fully
conforming to the requirements of this Contract unless rejected by Customer in
writing within five (5) Business Days after the date Customer has knowledge of
the non-conforming condition.  If the OSS furnished are unacceptable, Customer
shall, within the said five (5) Business Days, notify Contractor in writing in
which respects the OSS contains any D
efects.  Contractor shall promptly correct
such Defects and shall notify Customer that the corrections have been made.  The
provisions of this Article 8.11 (Operations Support Services (OSS)) shall
thereafter apply to the corrected OSS.

     8.12  Training.


     Final Acceptance and Delivery of Training, or any part thereof, shall occur
upon Contractor furnishing Training to Customer, or such part thereof, in
accordance with the Delivery Schedule and in a condition fully conforming to the
provisions of this Contract.  Any


                                      43

Training furnished to Customer shall be accompanied by written notice from
Contractor specifying that portion of the Training being furnished. Training, or
any part thereof, shall be deemed to be in a condition fully conforming to the
requirements of this Contract unless rejected by Customer in writing within five
(5) Business Days after the date Customer has knowledge of the non-conforming
condition. If such Training or part thereof is unacceptable, Customer shall,
within the said five (5) Business Days, notify Contractor in writing in which
respects the Training, or part thereof, contains any Defects. Contractor shall
promptly correct such Defects and shall notify Customer that the corrections
have been made. The provisions of this Article 8.12 (Training
) shall thereafter
apply to the corrected Training.


                                      44

9.   TITLE AND RISK OF LOSS

     9.1  Transfer of Title.

     Transfer of title, free and clear of all liens and encumbrances of any
kind, to each Deliverable Item (other than Satellites) shall pass to Customer at
Final Acceptance of such Deliverable Item.  Transfer of title, free and clear of
all liens and encumbrances of any kind,  to each Satellite shall pass to
Customer at the time of Handover of such Satellite, or, in the event of a
Constructive Total Loss or Total Loss of such Satellite, at the time of such
Constructive Total Loss or Total Loss, or, in the event such Satellite is placed
in storage, as provided in Article 14.4 (Storage).

     9.2  Transfer of Risk of Loss.

     Risk of loss or damage to each Deliverable Item shall pass to Customer
 at
Final Acceptance of such Deliverable Item; provided, however, risk of loss or
damage to each Satellite and its Launch Vehicle shall pass at Launch of such
Launch Vehicle; provided, however, in the event a Satellite is placed in
Storage, risk of loss or damage to such Satellite shall pass in accordance with
Article 14.4 (Storage).


                                      45

******  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.

10.  LIQUIDATED DAMAGES FOR LATE DELIVERY.

     10.1 Liquidated Damages.

     (a)  The Parties acknowledge and agree that failure to meet the Delivery
Dates specified in Article 7 (Delivery) will cause substantial financial loss or
damage being sustained by Customer. The Parties further acknowledge and agree
that the following liquidated damages are believed to represent a genuine
estimate of the loss that would be suffered by Customer by reason of any such
delay (which losses would be difficult or impossible to calculate with
certainty). The liquidate
d damages in this Article 10.1 (Liquidated Damages) are
in addition to the liquidated damages for delay in the launch of the Satellites
described in paragraph (e) of Article 28 (Launch Services).

     (b) In the event Contractor fails to deliver any Satellite on or before the
ninety-seventh (97th) Calendar Day following its respective Delivery Date, as
such date may be adjusted in accordance with this Contract (the "Grace Period
Expiration Date"), Contractor agrees to pay Customer with respect to such
Satellite, as liquidated damages and not as a penalty, the following amounts for
the period beginning on the first (1st) day following the Grace Period
Expiration Date and continuing for a period thereafter not to exceed one hundred
eighty (180) Calendar Days (the "Damages Period"):

         (1)  [*****] for each Calendar Day during the period commencing on the
              first (1st) Calendar Day of the Damages Period for such Satellite
              and continuing through the one hundred twentieth (12
0th) Calendar
              Day of the Damages Period;

         (2)  [*****] for each Calendar Day during the period commencing on the
              one hundred twenty-first (121st) Calendar Day of the Damages
              Period for such Satellite and continuing through the one hundred
              eightieth (180th) Calendar Day of the Damages Period.

     (c) The total amount of liquidated damages for failure to meet the Delivery
Date for a Satellite shall not exceed Eight Million Dollars ($8,000,000); the
total aggregate amount of liquidated damages for failure to meet the Delivery
Dates of the two Satellites shall not exceed Sixteen Million Dollars
($16,000,000).

     (d) The liquidated damages amounts (daily and maximum amounts) set forth in
paragraphs (b) and (c) above shall, at Customer's request, be adjusted pro rata
should the Satellite portion of the Contract Price be modified pursuant to an
Amendment to this Contract.

     (e) With regard to liquidated damages for late delivery of a Sate
llite
pursuant to this Article 10.1 (Liquidated Damages), a delay caused by a Launch
Agency shall be deemed a Contractor Excusable Delay for the first one hundred
eighty (180) Calendar Days of such delay;


                                      46

******  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.

any Launch Agency delay after such one hundred eighty (180) Calendar Days shall
not be deemed an Excusable Delay for the purposes of calculating Contractor's
liquidated damages under this Article 10 (Liquidated Damages for Late Delivery).

     10.2 Exclusive Remedy.

     Except as otherwise specifically provided in this Contract, the liquidated
damages provided in this Article 10 (Liquidated Damages for Late Delivery) shall
be the sole and exclusive remedy for late Delivery of a Satellite and shall be
in lieu of all monetary damages of any kind, provid
ed Customer may terminate
this Contract in accordance with Article 32.2 (Termination for Contractor's
Default).

     10.3  Termination for Unexcused Delay.

     (a) In the event the Damages Period for any Satellite has expired and the
maximum total liquidated damages for such Satellite have been levied,
Customer may exercise its right to terminate this Contract, in whole or in
part, for cause pursuant to the provisions of Article 32.2 (Termination for
Contractor's Default), in which case Customer's rights shall be governed by
the provisions of that Article.

     (b) If, at [*****], the Launch Agency has failed to establish the Launch
Slot for the first Satellite to begin no later than [*****], then Customer may
exercise its right to terminate this Contract, in whole or in part, for cause
pursuant to Article 32.2 (Termination for Contractor's Default), in which case,
Customer's rights and obligations shall be governed by such Article. The
foregoing shall also apply if, with respect to the second Satell
ite, at [*****],
the Launch Agency has failed to establish the Launch Slot for the second
Satellite to begin no later than [*****]. Provided Contractor is able to
schedule Launch for each Satellite on another Launch Vehicle prior to [*****] as
to the first Satellite and [*****] as to the second Satellite, Contractor shall,
as agreed by Customer, schedule such Launch on either an H-IIA or Long March 3B
Launch Vehicle (at no additional cost to Customer) or on another Launch Vehicle.
If Launch is scheduled on a Launch Vehicle other than an H-IIA or Long March 3B
Launch Vehicle, Customer shall pay the difference between the amount Customer is
required to pay for the Sea Launch Launch Vehicle and the cost of such other
Launch Vehicle, including Contractor's reasonable financing costs. In the event
Customer, in accordance with the provisions of this Contract, terminates the
launch portion of this Contract for either or both of the first Satellite and/or
the second Satellite, then (i) the Parties shall amend th
ose portions of this
Contract related to such termination (e.g., transfer of title and risk of loss,
delivery schedule, acceptance, liquidated damages, termination liability and
this Article 10.3(b)) as appropriate to reflect an on-ground delivery of the
relevant Satellite, (ii) Contractor shall perform, without charge (except to the
extent included in the Contract Price), Launch Campaign, Mission Support and
LEOP Services for any launch services substituted by Customer for the Launch
Services terminated hereunder, provided, however, Customer shall pay Contractor
for those extra costs incurred by Contractor as a result of providing Launch
Campaign, Mission Support and LEOP Services to a


                                      47

location other than one contemplated hereunder, (iii) Customer shall pay
Contractor for those extra costs incurred by Contractor as a result of shipping
the applicable Satellite to a launch site other than one contemplated hereunder,
and (iv) if requested by Customer, Contractor shall perform launch management
services for the substituted launch services at a price mutually agreed by the
Parties.

     (c) Liquidated damages shall not accrue for the late Delivery of any
portion of the Work after termination of this Contract for Contractor's default,
in accordance with its terms. Notwithstanding the foregoing, Customer's right to
terminate this Contract, as permitted by this Contract, due to Contractor's late
Delivery shall not prejudice Customer's right to
 collect those liquidated
damages that accrued to Customer prior to any such termination.


                                      48

11.  EXCUSABLE DELAY

     11.1  Excusable Delay Defined.

     (a)  With respect to Contractor's performance of its obligations under this
Contract, an "Excusable Delay" shall be any delay in the performance of the
Work, in whole or in part, caused by an event that is beyond the reasonable
control of Contractor, its Subcontractors or their respective Affiliates,
including any acts of government in its sovereign capacity (including the
refusal, suspension, withdrawal, or non-renewal of export or import licenses
essential to the performance of the Contract); any acts of a Launch Agency
(deemed to be an Excusable Delay under paragraph (e) of Article 10.1 (Liquidated
Damages)); war (whether declared or undeclared), outbreak of national
hostilities, invasion o
r sabotage; fire, earthquake, flood, epidemic, explosion,
or quarantine restriction; strike or work slow down (other than at Contractor's
or a Subcontractor's facilities) not reasonably within Contractor's control;
freight embargoes; acts of God; or failure by Customer to meet its
responsibilities under this Contract where such Customer failure inhibits
Contractor's ability to satisfy its Delivery obligations under this Contract;
provided written notice is given to Customer, in writing, within ten (10)
Business Days after Contractor shall have first learned of the occurrence of
such an event. Notwithstanding the foregoing, failure by Contractor to provide
such notice shall not prevent such an event from qualifying as an Excusable
Delay provided Customer's Program Manager has actual notice of such event by
means of publicly and commonly available sources (e.g., national or global
coverage of major natural disaster) prior to Customer suffering any prejudice
from Contractor's failure to provide such notice.
 Such notice to be provided by
Contractor, as required by the preceding provisions, shall include a detailed
description of the portion of the Work known to be affected by such delay. In
all cases, Contractor shall use best reasonable efforts to avoid or minimize
and/or work around such delay through the implementation of any work-around
plans, alternate sources, or other means Contractor may utilize or expect to
utilize to minimize a delay in performance of the Work. Contractor shall also
provide Customer prompt written notice when the event constituting an Excusable
Delay appears to have ended.

     (b)  In the event Customer disputes the Excusable Delay, Customer shall
inform Contractor in writing within ten (10) Business Days from the date of
receipt of written notice of the event constituting an Excusable Delay and, if
the Parties have not resolved the dispute within ten (10) Business Days of
Contractor's receipt of written notice from Customer, the dispute shall be
resolved pursuant to Article 27
(Dispute Resolution).

     11.2  Equitable Adjustments.

     (a)  In the event of an Excusable Delay under Article 11.1 (Excusable Delay
Defined), there shall be an equitable adjustment to the Delivery Schedule and
Delivery Dates set forth in Table 7.1 of Article 7 (Delivery) (unless the
Excusable Delay is caused by Contractor's failure to provide Customer with the
assistance required by the third sentence of paragraph (a) of Article 25.2
(Launch Insurance)); provided, however, Contractor acknowledges and agrees that
the occurrence of an Excusable Delay shall not entitle Contractor to an increase
in the Contract Price unless the Excusable Delay is caused directly by
Customer's failure to meet its responsibilities under this Contract, including
those detailed in Article 29 (Customer's Responsibilities ), in which event
there shall be an equitable adjustment to the Contract Price only for
incremental

                                      49

costs incurred by Contractor as a result of such Excusable Delay, such
incremental costs to be invoiced to Customer in reasonable detail.

     (b)  Any adjustment made pursuant to this Article 11.2 (Equitable
Adjustments) shall be formalized by the execution of an Amendment to this
Contract wherein such adjustments shall be recorded.

     (c)  In the event of an adjustment in the Delivery Date of any Satellite
due solely to Excusable Delay, there shall be an adjustment in the Delivery Date
of any Satellite or Ground Spare Satellite, if ordered, subsequently to be
Delivered only to the extent such Delivery Date is impacted by the Excusable
Delay and only to the extent necessary to permit at least one hundred twenty
(120) Calendar Days between the Delivery
 of the subject Satellite and any
subsequent Satellite or Ground Spare Satellite, if ordered; provided, however,
in the event the Excusable Delay (of either the first or second Satellite) is
caused by a Launch Agency Delay, the Delivery Date for the Ground Spare
Satellite, if ordered, shall not be extended under this paragraph (c).

     (d)  The occurrence of an Excusable Delay arising from any act or omission
of Customer as set forth herein shall not entitle Customer to an adjustment in
the payment schedule set forth in Exhibit G (Payment Plan and Termination
Liability Amounts).

     11.3  Maximum Excusable Delay; Termination.

     (a)  The maximum total amount of Excusable Delay (not including Excusable
Delay caused directly by Customer's failure to meet its responsibilities under
this Contract) shall be four hundred eighty-five (485) Calendar Days.

     (b)  Customer may terminate this Contract (in whole or in part as to the
following parts: first Satellite and related Launch Services, second Sate
llite
and related Launch Services, and Long-Lead Items), pursuant to Article 32.4
(Termination for Excusable Delay) if and when it becomes reasonably certain that
the aggregate of Excusable Delays (except those Excusable Delays caused directly
by Customer's failure to perform its responsibilities under this Contract) will
exceed four hundred eighty-five (485) Calendar Days.

                                      50

12.  IN-ORBIT PERFORMANCE INCENTIVE PAYMENTS.

     12.1  Total Amount At Risk.

     The Total Amount At Risk shall be placed at risk by Contractor against
failure of the Satellites to meet the criteria set forth or referenced in
Article 12.3 (Calculation and Earning of Incentive Amounts).

     12.2  In-Orbit Performance Incentives.

     Contractor represents that each Satellite will meet the criteria set forth
or referenced in Article 12.3 (Calculation and Earning of Incentive Amounts)
during the Orbital Design Life of each Satellite.  To the extent any Satellite
satisfies the criteria set forth or referenced in Article 12.3 (Calculation and
Earning of Incentive Amounts), Customer shall pay Contractor Incentive Amounts,
to be calculated as specified in
 Article 12.3 (Calculation and Earning of
Incentive Amounts).  The total aggregate amount of incentives paid by Customer
to Contractor for any and all Satellites shall not exceed the Total Amount At
Risk, plus interest thereon calculated pursuant to Article 12.6(b) of this
Contract.

     12.3  Calculation and Earning of Incentive Amounts.

     The Total Amount at Risk shall be earned by Contractor and paid by Customer
to Contractor in the manner and to the extent provided in this Article 12.3
(Calculation and Earning of Incentive Amounts) and paid by Contractor to
Customer in accordance with Article 12.6 (Payment and Interest).

     (a)  Adjustments in Incentive Amounts.
          --------------------------------

               [Reserved.]

     (b)  Quarterly Incentive Payment Amounts.
          -----------------------------------

          (1)  For each Satellite during its Orbital Design Life, a daily pro
               rata portion of the Quarterly Incentive Payment Amount shall be

   earned by Contractor on a daily basis during each calendar
               quarter for each day that such Satellite is a Satisfactorily
               Operating Satellite, provided that assessment and calculation of
               performance shall be performed at the end of each calendar month,
               and such earned portion of the Quarterly Incentive Payment Amount
               shall be invoiced on a quarterly-in-arrears basis, for, and as of
               the last day of, each calendar quarter. Contractor shall begin to
               earn Quarterly Incentive Payment Amounts upon Handover of the
               Satellite to Customer.

          (2)  For purposes of this paragraph (b), to the extent during any
               quarterly period a Satellite is not a Satisfactorily Operating
               Satellite due to Customer's failure to operate a Satellite as a
               Properly Operated Satellite, Contractor's entitlement to payment
               of the Quarterly Incentive Paymen
t Amount shall not be affected.
               Any amounts earned by Contractor under

                                      51

               ****** 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.

               this paragraph (b) shall be paid by Customer to Contractor in
               accordance with Article 12.6 (Payment and Interest).

          (3)  Notwithstanding the foregoing, [*****] will result in a
               negotiation as to whether Contractor shall earn the entire daily
               pro rata portion of the Quarterly Incentive Payment Amount or a
               portion thereof. In the event [*****], Contractor shall earn the
               daily pro rata portion of the Q
uarterly Incentive Payment Amount
               calculated in accordance with paragraph (b)(1) of Article 12.3
               (Calculation and Earning of Incentive Amounts) above. [*****],
               will result in a negotiated reduction of Incentive Amounts or
               such other equitable adjustment as may be agreed to by the
               Parties. In arriving at an equitable adjustment, factors to be
               considered include [*****]. For example, (A) [*****], Contractor
               shall earn no portion of the daily pro rata portion of the
               Quarterly Incentive Payment for such day; (B) [*****], the
               Parties shall negotiate in good faith an adjustment to the daily
               pro rata portion of the Quarterly Incentive Payment Amount for
               that day; (C) [*****], the Parties shall negotiate in good faith
               an adjustment to the daily pro rata portion of the Quarterly
               Incentive Payment Amount that may be earned
 [*****]; and (D)
               [*****], the Parties shall negotiate in good faith a permanent
               adjustment to the daily pro rata portion of the Quarterly
               Incentive Payment Amount.

          (4)  In the event Customer continues to operate a Satellite for
               commercial purposes beyond the Orbital Design Life of such
               Satellite, Contractor shall be entitled to earn, for each quarter
               beyond such Orbital Design Life, a Quarterly Incentive Payment
               Amount in accordance with this paragraph (4); provided, however,
               in no event shall Contractor be entitled to any Quarterly
               Incentive Payment Amount if the cumulative Incentive Amounts,
               excluding interest, earned by Contractor exceed the Total Amount
               at Risk. Contractor shall not be entitled to interest on any
               Incentive Amounts earned pursuant to this paragraph (4).

     (c)  Constructive Total Loss.

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

          (1)  In the event a Satellite is a Constructive Total Loss after
               successful injection of the Satellite into its specified orbit by
               the Launch Vehicle, Contractor shall not be entitled to be paid
               Incentive Amounts pursuant to this Article 12 (In-Orbit
               Performance Incentive Payments) with respect to such Satellite.

                                      52

     12.4  Disputed Performance.

     In the event of a dispute as to the performance of a Launched Satellite,
Customer shall provide Contractor with such technical data, reports, analyses,
and records as are available to support Customer's determination and Contractor
shall be given thirty (30) Calendar Days to verify the data. If, following such
thirty (30) Calendar Day period, Contractor continues to disagree with
Customer's determination and is able to present evidence to the contrary, then
Customer shall consider such evidence and consult with Contractor.   In the
event the Parties do not reach agreement, the Parties agree to have an
independent determination of the Satellite's technical status performed by a
mutually-acceptable technically-qualified
 third party.  The costs incurred in
retaining the third party shall be shared equally between Contractor and
Customer.  The Parties agree that before reference to such mutually-acceptable
technically-qualified third party, an informal forum between the Parties' Chief
Executive Officers shall take place to attempt resolution of said dispute.  In
the event such efforts to resolve the dispute are unsuccessful, the Parties
shall proceed under Article 27.2 (Arbitration).  The foregoing independent
determination may be used by either Party in any arbitration under Article 27.2
(Arbitration), but such determination shall not be binding upon the arbitrators.

     12.5  Roll-Over of Incentive Amounts.

     (a)  In the event the first Satellite Launched pursuant to this Contract is
a Constructive Total Loss or Total Loss for reasons not attributable to
Contractor, all Incentive Amounts applicable to such Satellite shall be eligible
to be earned by Contractor following the Launch and In-Orbit Testing of the
Grou
nd Spare Satellite for each quarter during its Orbital Design Life that the
Ground Spare Satellite is a Satisfactorily Operating Satellite. Earning and
payment of such Incentive Amounts shall be in accordance with Article 12.3
(Calculation and Earning of Incentive Amounts), together with interest on such
Incentives Amounts calculated in accordance with Article 12.7 (Interest on Roll-
Over Incentive Amounts).

     (b)  In the event the second Satellite Launched pursuant to this Contract
is a Constructive Total Loss or Total Loss for reasons not attributable to
Contractor, but the first Satellite Launched was not a Constructive Total Loss
or Total Loss, all Incentive Amounts applicable to such second Satellite shall
be eligible to be earned by Contractor following the Launch and In-Orbit Testing
of the Ground Spare Satellite for each quarter that the Ground Spare Satellite
is a Satisfactorily Operating Satellite. Payment of such Incentive Amounts shall
be in accordance with Article 12.3 (Calculation and E
arning of Incentive
Amounts), together with interest on such Incentives Amounts calculated in
accordance with Article 12.7 (Interest on Roll-Over Incentive Amounts).

     (c)  In the event both the first and second Satellites Launched pursuant to
this Contract are Constructive Total Losses or Total Losses for reasons not
attributable to Contractor, then Contractor shall be eligible to earn the
Incentive Amounts applicable to the first Satellite in accordance with paragraph
(a) above, and with respect to the second Satellite, Contractor shall receive
payment from Customer of the total Incentive Amount applicable to such second
Satellite (that is, $12,500,000) within thirty (30) Calendar Days following
receipt by Customer of any applicable Launch Insurance proceeds therefor unless
Customer ordered an optional fourth Satellite (pursuant to Article 30 (Options))
prior to Launch of the second Satellite, in which case such Incentive Amounts
shall be rolled-over to such optional fourth Satellite. Earning and p
ayment of
such amounts shall be in accordance with Article 12.3 (Calculation and Earning
of Incentive Amounts), together with interest on such amounts to be calculated
in accordance with Article 12.7 (Interest on Roll-Over Incentive Amounts).


                                      53

******  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.

     (d)  In the event Customer has not ordered the Ground Spare Satellite or an
Optional Satellite prior to the Launch of a Satellite, Customer shall insure the
Incentive Amounts as part of the Launch Insurance purchased by Customer.

     12.6  Payment and Interest.

     (a)  Payment.
          -------

     Any payment required to be made by Customer to Contractor in respect of a
Satellite for a Quarterly Incentive Payment Amount shall be invoiced on a
quarterly-in-arrears basis and paid in accordance with Article 5.2 (Payment).

     (b)  Interest.

          --------

          (1)  Interest shall be paid on any Quarterly Incentive Payment Amount
               with respect to a Satellite, such interest to be calculated over
               the period commencing upon Handover of such Satellite by Customer
               ("Quarterly Incentive Commencement Date") and ending on the last
               day of the quarter when the Quarterly Incentive Payment Amount is
               invoiced, at a rate equal to [*****] compounded annually, as
               calculated in accordance with the following formula: I/n/ =
               (Quarterly Incentive Payment Amount earned during a quarter) *
               [(1+[*****])/n*0.25/ - 1], where "n" = quarter number = 1 to 60.
               For example, (A) if a Satellite meets the criteria of a
               Satisfactorily Operating Satellite during the entire first
               quarter following the Quarterly Incentive Commencement Date for
               such Satellite, Contractor shall be entitled to
 payment of the
               Quarterly Incentive Payment Amount plus interest on such amount
               from the Quarterly Incentive Commencement Date to the last day of
               the first quarter (that is, the Quarterly Incentive Payment
               equals: $208,333 plus the quantity $208,333 times the quantity
               [*****], raised to the 1 times 0.25 power, minus 1) resulting in
               a quarterly financing charge of [*****], and a total Quarterly
               Incentive Payment Amount of [*****]; or (B) if the Satellite
               meets the criteria of a Satisfactorily Operating Satellite during
               the entire twenty-fifth (25th) quarter following the Quarterly
               Incentive Commencement Date for such Satellite, Contractor shall
               be entitled to payment of the Quarterly Incentive Payment Amount
               plus interest on such amount from the Quarterly Incentive
               Commencement Date for such Satellite to the last
day of the
               twenty-fifth (25th) quarter (that is, the Quarterly Incentive
               Payment Amount equals: $208,333 plus the quantity $208,333 times
               the quantity [*****], raised to the twenty-five (25) times 0.25
               power, minus 1) resulting in a quarterly financing charge of
               [*****], and a total Quarterly Incentive Payment Amount of
               [*****].


                                      54

          ******  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.

          (2)  Exhibit G-1 (Payment Plan for Interest on In-Obit Incentive
               Amounts) sets forth an interest calculation that assumes
               Contractor has earned all Quarterly Incentive Payment Amounts.
               The actual Quarterly Incentive Payment Amount earned by
               Contractor, and the interest thereon, will be calculated in
               accordance with this Article 12 (In-Orbit Performance Incentive
               Payments).

     12.7  Interest on Roll-Over Incentive Amounts.


    The Incentive Amounts rolled-over to the Ground Spare Satellite pursuant to
paragraphs (a) and/or (b) of Article 12.5 (Roll-Over of Incentive Amounts) shall
bear interest as calculated in accordance with this Article 12 (In-Orbit
Performance Incentive Payments) from the date of declaration of Constructive
Total Loss or Total Loss and ending on the last day of the quarter when the
Quarterly Incentive Payment Amount is invoiced, as more fully provided in
paragraph (b) of Article 12.6 (Payment and Interest).   Interest on rolled-over
Incentive Amounts shall be invoiced and paid on a quarterly-in-arrears basis.
For example, (a) if the first Quarterly Incentive Payment Amount is earned five
(5) quarters after Constructive Total Loss or Total Loss, the Quarterly
Incentive Payment Amount earned during each quarter (QIPA) plus interest thereon
(the sum equals QIPA/n/) is calculated as follows:

               QIPA/n/ = QIPA * (1+ [*****]) /(n + x) * 0.25/

               where: n = quarter number = 1 to 60 c
ommencing with Quarterly
               Incentive Commence Date, and

                    x  = number of days from Constructive Total Loss or Total
                    Loss to Quarterly Incentive Commencement Date converted into
                    quarters.

               therefore, QIPA/1/   = $208,333 * (1 + [*****]) /(1 + 4) * 0.25/

                                    = [*****];

     (b)  if the first Quarterly Incentive Payment Amount is earned five (5)
quarters and twenty (20) days after Constructive Total Loss or Total Loss, the
Quarterly Incentive Payment Amount earned during each quarter (QIPA) plus
interest thereon (the sum equals QIPAn) is calculated as follows:

               QIPA/n/ = QIPA * (1+ [*****]) /(n + x) * 0.25/

               where: n = quarter number = 1 to 60 commencing with Quarterly
               Incentive Commence Date, and

                    x = number of days from Constructive Total Loss or Total
                    Loss to Quarterly Incentive Commencement Date conve
rted into
                    quarters.


                                      55

     ****** 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.

               therefore, QIPA/1/ = $208,333 * (1 + [*****]) /(1 + 4.22) * 0.25/

                                  = [*****].

     12.8  Security for Performance Incentive Payments.

     (a)  In the event Customer does not order the Ground Spare Satellite,
Contractor and Customer agree that, as assurance of the payment of Incentive
Amounts as such amounts may be earned by Contractor and become payable by
Customer, Customer must demonstrate to Contractor, no later than four (4) months
prior to the Launch of the first Satellite, that Customer has a mi
nimum of
[*****] in liquid assets (e.g., cash, cash equivalents and current receivables),
or, at Contractor's option, non-current assets (e.g., property, plant,
equipment) with a market value of at least [*****] and a reasonable expectation
that such market value can be realized within one hundred eighty (180) Calendar
Days of a decision to liquidate. In the case of non-current assets, Customer
shall also grant to Contractor a perfected security interest in such non-current
assets, up to a maximum interest in the amount of [*****], and shall cause all
appropriate documents and financial statements to be filed in order to give
effect to such security interest. Contractor's perfected security interest in
such non-current assets, if granted, shall be released by Contractor if Customer
performs its obligations with respect to payment of all earned Incentive
Amounts, including interest thereon, in accordance with the terms of this
Contract, for a period of twenty-four (24) months commencing upon the date that

the first Quarterly Incentive Payment Amount is due with respect to the first
Launched Satellite. In the event the first Satellite is a Constructive Total
Loss or Total Loss, the requirements of this paragraph (a) shall apply to the
second Satellite.

     (b)  In the event Customer Launches the Ground Spare Satellite as an
additional Satellite (not a replacement) within a period of two (2) years
following the date upon which the first Quarterly Incentive Payment Amount is
due with respect to the first Launched Satellite, Customer shall demonstrate to
Contractor, no later than four (4) months prior to the Launch of the Ground
Spare Satellite, that Customer has a minimum of [*****] in liquid assets (e.g.,
cash, cash equivalents and current receivables), or, at Contractor's option,
non-current assets (e.g., property, plant, equipment) with a market value of at
least [*****] and a reasonable expectation that such market value can be
realized within one hundred eighty (180) Calendar Days of a decision to
l
iquidate. In the case of non-current assets, Customer shall also grant to
Contractor a perfected security interest in such non-current assets, up to a
maximum interest in the amount of [*****], and shall cause all appropriate
documents and financial statements to be filed in order to give effect to such
security interest. Contractor's perfected security interest in such non-current

                                      56

assets, if granted, shall be released by Contractor if Customer performs its
obligations with respect to payment of all earned Incentive Amounts, including
interest thereon, in accordance with the terms of this Contract, for a period of
twenty-four (24) months commencing upon the date that the first Quarterly
Incentive Payment Amount is due with respect to the first Launched Satellite.

     (c)  Contractor expressly acknowledges and agrees that Customer shall not
be required, at any time, to provide a stand-by, irrevocable, or other form of
letter of credit, or any equivalent or external guarantees, in order to secure
Customer's payment obligations with respect to Incentive Amounts, as such
amounts are earned by Contractor.

     12.9  Exclusive Remedy.

     The rights and remedies under this Article 12 (In-Orbit Performance
Incentive Payments) are exclusive for the failure of any Satellite after Launch
to meet the criteria set forth or referenced in Article 12.3 (Calculation and
Earning of Incentive Amounts) and in substitution of any other rights and
remedies either Party may have under this Contract or otherwise at law as a
result of such failure.

                                      57

13.  CORRECTIVE MEASURES IN UNLAUNCHED SATELLITES AND OTHER DELIVERABLE ITEMS

     13.1  Notice of Defects.

     (a)  Customer may notify Contractor in writing when it in good faith
reasonably demonstrates any Defect exists in any Deliverable Item or component
part thereof. In the event Contractor disagrees with Customer or Customer
Personnel as to the existence or nature of a Defect, Contractor shall so advise
Customer in writing. In such event, the Parties shall negotiate in good faith to
determine what Defect, if any, exists and any action required to remedy such
Defect. Except to the extent written waivers are made pursuant to the provisions
of Article 8 (Inspection and Final Acceptance), Customer's failure to notify
Contractor of any Defect shall no
t constitute a waiver of any rights of Customer
or obligations of Contractor under this Contract with respect to any such
Defects.

     (b)  Contractor shall advise Customer as soon as practicable by telephone
and confirm in writing any event, circumstance, or development that materially
threatens the quality of any Deliverable Items or component parts thereof,
including any Satellite, or threatens the Delivery Dates established therefor.

     (c)  Without limiting the generality of the foregoing, if the data
available from any Launched Satellite or from other satellites of a similar
class shows that any Satellite contains a Defect, Contractor shall promptly
inform Customer of such Defect.

     13.2  Duty to Correct.

     (a)  Without limiting the obligations of Contractor or the rights of
Customer under this Contract, prior to Launch of any Satellite or Delivery of
any other Deliverable Item, Contractor shall, at its expense, promptly correct
any Defect related to any Deliverable Item or component t
hereof that Contractor
or Customer discovers during the course of the Work or from other spacecraft of
a class similar to the satellites being built by Contractor, and notwithstanding
that a payment may have been made in respect thereof, and regardless of prior
reviews, inspections, approvals, or acceptances. This provision is subject to
the right of Contractor to have any items containing a Defect returned at
Contractor's expense to Contractor's facility for Contractor to verify and
correct the Defect.

     (b)  At Contractor's expense, Contractor shall use reasonable efforts to
correct any such Defect in any Launched Satellite delivered in-orbit hereunder,
to the greatest extent that such Defect may be corrected by on-ground means,
including transmission by Contractor of commands to such Satellite(s), to
eliminate or mitigate any adverse impact resulting from any such Defect, to
establish work-around solutions, or to otherwise resolve such Defect. Contractor
shall coordinate and consult with Customer
concerning such on-ground resolution
of Defects in Launched Satellites.

     (c)  Contractor shall fulfill the foregoing obligations at its own cost and
expense, including all costs arising from charges for packaging, shipping,
insurance, taxes, and other matters associated with the corrective measures,
unless it is reasonably determined after

                                      58

investigation that Customer directly caused the Defect in question, in which
case Customer shall pay all such costs.

     (d)  If Contractor fails to correct any Defect with respect to those
Satellites that have not been Launched or with respect to any other Deliverable
Item within a reasonable time after notification from Customer and after the
Parties have followed the provisions of Article 13.1 (Notice of Defects) above,
Customer may, by separate contract or otherwise, correct or replace such items
or services, and, unless it is reasonably determined after investigation that
Customer directly caused the Defect in question, Contractor shall pay to
Customer the reasonable cost of such correction or replacement. The amount
payable by Contractor shall be v
erified at Contractor's request by an
internationally recognized firm of accountants appointed by Contractor. The
costs of such verification shall be paid by Contractor. The verification of such
correction cost shall be without prejudice to the right of either Party in any
arbitration proceeding and shall not be binding upon the arbitrators.

     (e)  Contractor acknowledges and agrees that it shall not be entitled to
payment for any additional costs incurred as a consequence of any Defect where
the Defect arises directly from Contractor's fault. If correction of any Defect
causes a delay in the Delivery of any Work, despite the efforts of Contractor to
correct the Defect, the provisions of Article 10 (Liquidated Damages for Late
Delivery) shall apply as appropriate in addition to the remedies in this Article
13 (Corrective Measures in Unlaunched Satellites and Other Deliverable Items)
and Article 31 (Failure to Make Adequate Progress).

     (f)  After notification of a Defect to Contractor, Customer,
in its sole
discretion, may elect in writing, pursuant to Article 34.4 (Waiver of Breach of
Contract), not to require correction or replacement of such items or services or
to waive the Defects noted for the Satellites that have not been Launched, if
any. In such event, Contractor shall promptly provide Customer with a written
price proposal for the cost of correction of such Defect at the time of waiver.

     (g)  Subject to the provisions of any applicable Law, Contractor agrees to
enforce any manufacturer's warranty given to it in connection with any Work to
be provided under this Contract, and upon Customer's written request, Contractor
shall assign to Customer such warranty protection to correct any defective Work
not otherwise corrected by Contractor.

                                      59

14.  CHANGES IN SCOPE OF WORK

     14.1  Changes Requested by Customer.

     (a)  Subject to paragraphs (b), (c), and (d) below, Customer shall be
entitled to direct, during the performance of this Contract, any change within
the general scope of this Contract, including any change that will add, delete,
or change the Work, affect the design of the Satellites, change the method of
shipping or packing, or the place or time of Delivery, or will affect any other
requirement of this Contract.

     (b)  Any change directed by Customer as described in paragraph (a) above
shall be submitted in writing to Contractor. Contractor shall respond to such
directed change in writing to Customer within thirty (30) Calendar Days after
such directed change and shall incl
ude in such response the details of the
impact of such change on the Contract Price, Delivery Schedule, performance
specifications, or other terms of this Contract.

     (c)  Customer shall notify Contractor in writing, within thirty (30)
Calendar Days after receipt of Contractor's response, whether or not Customer
agrees with and accepts Contractor's response. If Customer agrees with and
accepts Contractor's response, Contractor shall proceed with the performance of
this Contract as changed immediately upon the execution by both Parties of an
Amendment reflecting such changes.

     (d)  If the Parties cannot agree on a reasonable price or revised Delivery
Schedule, performance specifications, or other item, as occasioned by Customer's
directed change, and Customer still desires the directed change, Customer shall
direct Contractor to proceed with the change and Customer shall pay Contractor's
proposed price and accept the revised Delivery Schedule or performance
specifications or other item pending an
y decision to the contrary under Article
27 (Dispute Resolution). Contractor shall proceed with the Work as changed and
Customer may dispute the reasonableness of the proposed price, revised Delivery
Schedule, performance specification, or other item under Article 27 (Dispute
Resolution). In the event it is determined pursuant to such dispute resolution
or by the Parties' mutual written agreement that Customer is entitled to a full
or partial refund of amounts paid under this paragraph (d), Customer shall be
entitled to interest on such refunded amounts, such interest running from the
date of payment by Customer to the date of refund at the interest rate set forth
in Article 34.10 (Calculation of Interest).

     14.2  Changes Requested by Contractor.

     (a)  Subject to paragraphs (b) and (c) below, Contractor may request,
during the performance of this Contract, any change within the general scope of
this Contract, including any change that will add or delete Work, affect the
design of the Satellites
, change the method of shipping or packing, or the place
or time of Delivery, or will affect any other requirement of this Contract.

     (b)  Any changes as described in paragraph (a) above requested by
Contractor shall be submitted in writing to Customer at least sixty (60)
Calendar Days prior to the proposed date of the change. If such Contractor
requested change causes an increase or decrease or other impact

                                      60

in the Contract Price, Delivery Schedule, performance specifications, or other
terms of this Contract, Contractor shall submit, with such request, a written
proposal identifying such change and the impact thereof on the Contract Price,
Delivery Schedule, performance specifications, or other terms of this Contract.

     (c)  Customer shall notify Contractor in writing, within thirty (30)
Calendar Days after receipt of the requested change proposal, whether or not
Customer agrees with and accepts such change and the price/schedule/performance
or other impact thereof. If Customer agrees with and accepts Contractor's
requested change and such impact thereof, Contractor shall proceed with the
performance of this Contract as changed and an Amendment to this Con
tract
reflecting the change proposal shall be executed by the Parties.

     14.3  Pricing of Changes.

     When calculating the change in the Contract Price caused by changes in the
Work pursuant to this Article 14 (Changes in Scope of Work), such calculation
shall be consistent with Contractor's standard labor rates and general
administrative and overhead rates then in effect at the time of the change.

     14.4  Storage.

     (a) Storage of a Satellite shall be for a period of either (A) no longer
than six (6) months ( "Short Term Storage") or (B) more than six (6) months but
no longer than three (3) years ("Medium Term Storage"); Short Term Storage shall
be at Contractor's facilities and satisfy the requirements of the storage plan
to be developed by Contractor in accordance with Exhibit B (SOW). Medium Term
Storage will be at a mutually agreed-to facility, and such facility shall be
appropriate for the planned duration of storage.

     (b)  In the event Contractor places a Satellite in storage,
Contractor
shall pay for any associated costs and expenses of such storage, unless
Contractor places such Satellite in storage due to reasons attributable to
Customer.

     (c)  In the event Contractor places a Satellite in storage due to reasons
attributable to Customer, Customer shall pay Contractor reasonable storage
costs, and any related costs that increase the Contract Price or extend the
Delivery Schedule shall be addressed in an Amendment pursuant to Article 14.1
(Changes Requested by Customer) above.

     (d)  For a Satellite placed in storage, Customer shall pay Contractor any
Milestone Payment related to Shipment Readiness Review upon arrival of the
Satellite at the storage site.

     (e)  In the event Contractor places a Satellite into storage pursuant to
this Article 14.4 (Storage) for reasons not attributable to Contractor for more
than twelve (12) months, Contractor shall be entitled to receive, and Customer
shall pay to Contractor, all payments due and owing, less all costs not incurre
d
with respect to the Launch Campaign, LEOP, In-Orbit Testing, MSS, and OSS for
such Satellite, but including the Incentive Amounts applicable to such
Satellite. In the event such Satellite is Launched, those Incentive Amounts
previously paid by Customer to Contractor shall be retained by Contractor,
subject to the following:

                                      61

          (1)  Contractor shall earn such Incentive Amounts in accordance with
               Article 12.3 (Calculation and Earning of Incentive Amounts); and

          (2)  any Incentive Amounts not earned by Contractor pursuant to
               Article 12.3 (Calculation and Earning of Incentive Amounts) shall
               be repaid by Contractor to Customer as set forth below.

     Repayment by Contractor of any unearned Incentive Amounts under this
paragraph (e) shall be due thirty (30) Calendar Days after the date of receipt
by Contractor of a telefaxed invoice (which shall be followed by the airmailed
original) from Customer.  Interest shall be paid (at the rate specified in
Article 34.10 (Calculation of Interest) on any amounts not paid when due
.
Customer's invoice shall be accompanied by sufficient information to support
Customer's claim.  Contractor shall be deemed to have accepted the invoice ten
(10) Business Days after receipt of Customer's invoice unless, within such time
period, Contractor notifies Customer of a dispute.  Any disputes as to the
performance of a Launched Satellite shall be resolved in accordance with the
provisions of Article 12.4 (Disputed Performance).  Contractor shall pay any
undisputed portion of an invoice.

     (f)  In the event Contractor places any Satellite into storage under this
Article 14.4 (Storage) and such storage is required for reasons attributable to
Contractor, the warranty periods for such Satellite and its batteries (and in
the case of the first Satellite to be Delivered hereunder, the SCC Equipment and
Software, Dynamic Satellite Simulator, and Dynamic Spacecraft Simulator) under
Article 18.3 (Warranties for Deliverable Items) shall be extended on a day-for-
day basis for the length of such storage
 period.

     (g)  In the event a Satellite has been in such storage for three (3) years,
or Customer decides prior to the end of such three (3) years not to Launch such
Satellite, the following shall apply:

          (1)  Contractor shall be entitled to receive within thirty (30)
               Calendar Days after the earlier of, receipt of destorage
               notification from Customer or the end of the three (3) year
               period, all payments due and owing, not otherwise paid to
               Contractor pursuant to paragraph (e) above, including Incentive
               Amounts, less all costs not incurred with respect to the Launch
               Campaign, LEOP, In-Orbit Testing, MSS, and OSS for such
               Satellite; and

          (2)  Contractor shall promptly Deliver to Customer, at Customer's
               expense, such Satellite to a location specified by Customer in
               the State of Florida or the State of Delaware, or in such other
               locatio
n as may be mutually agreed upon by the Parties.
               Customer's expenses shall include any applicable state sales tax
               for such storage.

     (h)  Final Acceptance shall occur and title and risk of loss shall pass,
with respect to any Satellite placed in storage in accordance with this Article
14.4 (Storage) as follows: (i) if paragraph (g) applies, upon arrival of the
Satellite at the location specified by Customer, in which case, notwithstanding
Article 4.3 (Taxes and Duties) any and all taxes and duties in connection with
such delivery shall be borne and paid by Customer, or (ii) if the Satellite is

                                      62

Launched, (x) risk of loss shall pass at Launch and (y) title, free and clear of
any liens and encumbrances shall pass at Final Acceptance and Final Acceptance
shall occur in accordance with Article 8.5(b).

                                      63

15.  PERMITS AND LICENSES; COMPLIANCE WITH LAWS

     15.1  United States Permits, Licenses, and Laws.

     (a)  Contractor shall, at its own expense, obtain all United States
Government approvals, permits, and licenses, including any required for export
from or import into the United States, as may be required for the performance of
the Work. Customer agrees to cooperate with Contractor in Contractor's efforts
to obtain any such approvals, permits, or licenses.

     (b)  Contractor shall, at its expense, perform the Work in accordance with
all applicable Laws of the United States and the conditions of all applicable
United States Government approvals, permits, or licenses.

     (c)  Without limiting the generality of the foregoing, Contractor will not,

directly or indirectly, take any action that would cause Customer to be in
violation of U.S. anti-boycott laws under the U.S. Export Administration Act,
the U.S. Internal Revenue Code, or any regulation thereunder. In its performance
of this Contract, Contractor will not, directly or indirectly, make, offer, or
agree to make or offer any loan, gift, donation, or other payment, whether in
cash or in kind, for the benefit or at the direction of any candidate,
committee, political party, government or its subdivision, or any individual
elected, appointed, or otherwise designated as an employee or officer thereof,
for the purpose of influencing any act or decision of such entity or individual
or inducing such entity or individual to do or omit to do anything, in order to
obtain or retain business or other benefits except as may be expressly permitted
under the Foreign Corrupt Practices Act and the regulations promulgated
thereunder.

     15.2  Non-United States Permits, Licenses, and Laws.

     (a)  Contr
actor shall, at its expense, obtain all non-United States
Government approvals, permits, and licenses, as may be required for the
performance of the Work, including those that may be required for Contractor to
perform the Work in compliance with the Laws of any country from which any
Satellite shall be launched. Customer agrees to cooperate with Contractor in
Contractor's efforts to obtain any such non-United States Government approvals,
permits, or licenses.

     (b)  Contractor shall, at its expense, perform the Work in accordance with
all applicable Laws of any country, state, territory, or jurisdiction, and the
conditions of all applicable non-United States Government approvals, permits, or
licenses.

     15.3  Review of Applications.

     Contractor shall review with Customer any application Contractor makes to
any government  department, agency, or entity for any approval, permit, license,
or agreement, as may be required for performance of the Work, prior to
submission of such application.  Con
tractor shall provide Customer a minimum of
three (3) Business Days to review such application prior to submission to such
governmental entity, and Contractor shall in good faith consider any comments
and proposed revisions made by Customer for incorporation into such application.
Customer shall reasonably cooperate with Contractor in Contractor's efforts to

                                      64

procure all such approvals, permits, licenses, and agreements.

     15.4  Contractor Violation of Law.

     Customer shall not be responsible in any way for the consequences, direct
or indirect, of any violation by Contractor, its Subcontractors, or their
respective Affiliates or Associates of any Law or of any country whatsoever.

                                      65

16.  SUBCONTRACTS

     16.1  Major Subcontracts

     (a)  Contractor has represented that in the performance of the Work
required by this Contract it will be necessary for Contractor or its
Subcontractors to enter into the Major Subcontracts with certain of the entities
identified in Exhibit D (Test Plan Requirements) hereto. Contractor shall select
the Major Subcontractors only from those entities approved by Customer and
listed in Exhibit D (Test Plan Requirements), and, to the extent permitted by
the Subcontractor agreement, Customer shall be provided with copies of the
technical content and a copy of the full text of any Major Subcontract
(excluding price and payment schedule) promptly upon execution thereof, and upon
Customer's request.

     (b)  A
s of the Effective Date of Contract, the approved list of Major
Subcontractors is as specified in Exhibit D (Test Plan Requirements). Contractor
shall notify Customer promptly in writing upon selection of a Major
Subcontractor and upon any change in any Major Subcontractor, said change to be
only from the list of alternatives in Exhibit D (Test Plan Requirements).

     (c)  Customer's acknowledgment or approval of any Major Subcontractor or
Subcontractor shall not relieve Contractor from any obligations or
responsibilities under this Contract.

     16.2  Selection or Replacement of Major Subcontractors.

     Contractor shall notify Customer if a Subcontractor identified in Exhibit D
(Test Plan Requirements) is substituted for another Major Subcontractor on the
list in Exhibit D (Test Plan Requirements); however, Customer's approval of such
termination or substitution shall not be required. Subcontractors shall be
selected based upon the offering of the best combination of reliability,
quality, price,
and delivery time.

     16.3  No Privity of Contract.

     Nothing in this Contract shall be construed as creating any contractual
relationship between Customer and any Subcontractor.  Contractor is fully
responsible to Customer for the acts or omissions of Subcontractors and all
persons used by Contractor or a Subcontractor in connection with performance of
the Work.  Any failure by a Subcontractor to meet its obligations to Contractor
shall not constitute a basis for Excusable Delay, except as provided in Article
11 (Excusable Delay), and shall not relieve Contractor from meeting any of its
obligations under this Contract.

     16.4  Subcontractor Relations.

     By appropriate written agreement, Contractor shall use commercially
reasonably efforts to require each Major Subcontractor, to the extent of the
Work to be performed by such Major Subcontractor, to be bound to Contractor by
the terms of this Contract and to assume toward

                                      66

Contractor all the obligations and responsibilities that Contractor, by this
Contract, assumes toward Customer except to the extent otherwise provided in
Article 6.9 (Major Subcontracts).

                                      67

17.  PERSONNEL AND KEY PERSONNEL

     17.1  Personnel Qualifications.

     Contractor shall assign properly qualified and experienced personnel to the
program contemplated under this Contract, and Contractor shall use best
reasonable efforts to retain such personnel on Customer's program for the
duration of such program.

     17.2  Key Personnel Positions.

     Key personnel ("Key Personnel") shall be the personnel filling the
following or equivalent positions:

          (1)  Contractor Program Manager;
          (2)  Contract Manager;
          (3)  Spacecraft Systems Engineer;
          (4)  Payload Program Manager;
          (5)  Payload Chief Systems Engineer;
          (6)  Production, Integration and Test Manager;
          (7)  Product Assuranc
e Manager, provided that such Product Assurance
               Manager shall not be engaged in more than two (2) programs during
               the performance of this Contract; and
          (8)  Launch Services Manager.

     17.3  Assignment of Key Personnel.

     (a)  Contractor will assign individuals from within Contractor's
organization to the Key Personnel positions to carry out the Work.

     (b)  Key Personnel will be familiar with programs similar to Customer's
program.

     (c)  Before assigning an individual to any Key Personnel positions, whether
as an initial assignment or a subsequent assignment, Contractor shall notify
Customer of the proposed assignment, shall introduce the individual to
appropriate Customer representatives and, upon request, provide such
representatives with the opportunity to interview the individual and shall
provide Customer with the individual's resume. If Customer in good faith objects
to the qualifications of the proposed individual within fifteen (15) Busines
s
Days after being notified thereof, then Contractor agrees to discuss such
objections with Customer and resolve such concerns on a mutually agreeable basis
or; if unable to do so, to select another candidate acceptable to Customer. The
Key Personnel that have been approved as of the Effective Date of Contract are
listed in Attachment B (Key Personnel). Should the individuals filling the
positions

                                      68

of Key Personnel leave such positions for whatever reason, Contractor shall
follow the procedures set forth in this Article 17.3 (Assignment of Key
Personnel) to select replacement personnel.

                                      69

18.  CONTRACTOR'S REPRESENTATIONS, COVENANTS, AND WARRANTIES

     18.1  Organization; Good Standing and Qualification.

     Contractor represents and warrants that:

     (a)  it is a corporation duly organized, validly existing and in good
standing under the Laws of Delaware;

     (b)  it has all requisite power and authority to own and operate its
material properties and assets and to carry on its respective business as now
conducted in all material respects; and

     (c)  it is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect.

     18.2  Authorization.

     Contractor represents and warrants that:

     (a)  it has all requisite corporate power
and authority to enter into this
Contract and to carry out the transactions contemplated by this Contract;

     (b)  the execution, delivery, and performance of this Contract and the
consummation of the transactions contemplated by this Contract have been
authorized by the requisite corporate action of Contractor and do not conflict
with any other agreement or obligation to which it is a party or which binds its
assets; and

     (c)  this Contract is a valid and binding obligation of Contractor,
enforceable in accordance with its terms, except Contractor makes no
representation or warranty as to the enforceability of remedies due to
applicable bankruptcy, insolvency, moratorium, reorganization, or similar laws
relating to or affecting the enforcement of creditor's rights or by reason of
general principles of equity.

     18.3  Warranties for Deliverable Items.

     (a)  Satellites.
          ----------

     Contractor represents that each Satellite furnished under this Contract
shall be free from D
efects other than Defects waived in writing by Customer.
This representation shall begin on the date of Handover of a Satellite and
Customer's exclusive remedy for breach of this representation is set forth in
Article 12 (In-Orbit Performance Incentive Payments).

     (b)  SCC Equipment and  Software.
          ---------------------------

     Contractor represents and warrants that the SCC Equipment and Software
Delivered under this Contract shall be free from Defects other than Defects
waived in writing by Customer.  This warranty shall begin on the date of Final
Acceptance of the respective Deliverable Item and run for one (1) year.

                                      70

     (c)  Communications Payload Simulator and Dynamic Spacecraft Simulator.
          -----------------------------------------------------------------

     Contractor represents and warrants that each of the Communications Payload
Simulator and Dynamic Spacecraft Simulator Delivered under this Contract shall
be free from Defects other than Defects waived in writing by Customer.  This
warranty shall begin on the date of Final Acceptance of the respective
Deliverable Item and run for one (1) year.

     (d)  Data and Documentation.
          ----------------------

     Contractor represents and warrants that the Data and Documentation to be
furnished hereunder shall be free from Defects.  This warranty shall begin on
the date of Final Acceptance of the
 last portion of the Data and Documentation
to achieve Final Acceptance and run for a period of one (1) year.  A Customer
claim under this warranty clause shall not affect the validity of Final
Acceptance.

     (e)  Batteries.
          ---------

     Contractor represents and warrants that the batteries to be furnished
hereunder shall be free from Defects.  In the event any Satellite is required to
be placed in storage prior to its Launch, Contractor shall, upon removal of such
Satellite from storage, (i) test the batteries to ensure the batteries are free
from Defects, other than Defects waived in writing by Customer, and conform to
the applicable specifications and requirements set forth in Exhibit A (Satellite
Performance Specifications) and (ii) certify to Customer that the Batteries are
so conforming.  This warranty shall begin on the date of cell activation and run
for a period of two (2) years or until Launch of the Satellite, whichever occurs
earlier.

     (f)  Services.
          --------

     Contractor represents and warrants it will perform the Work in accordance
with the highest professional standards of the commercial aerospace and
satellite communications industry practice for work similar in type, scope, and
complexity to the Work.

     (g)  Title.
          -----

     Contractor represents and warrants it shall provide good and salable in
commerce title free and clear of any liens and encumbrances of any kind, at the
time title passes to Customer pursuant to Article 9 (Title and Risk of Loss).

     (h)  Intellectual Property.
          ---------------------

     Contractor represents and warrants that (i) it is either the owner of, or
authorized to use and incorporate, any Intellectual Property utilized or
incorporated in any Deliverable Item or the manufacture of any Deliverable Item;
(ii) Customer shall not be required to pay any license fees or royalties apart
from those included in the Contract Price for use of any Intellectual Property
utilized or incorporated in any D
eliverable Item or the manufacture of any
Deliverable Item; and (iii) neither the Work nor any Intellectual Property
(other than Customer's Intellectual Property) utilized or incorporated in any
Deliverable Item or the manufacture of any Deliverable Item shall infringe any
Intellectual Property Right of any third party, provided that Contractor makes
no representations as to infringement with respect to (x) any software or item
that is used or

                                      71

combined with any other software or item or modified by an entity other than
Contractor or Subcontractor when the infringement would have not occurred but
for such combination, use, or modification, unless such combination, use or
modification was identified in Exhibit A (Technical Specifications), and (y) any
software or item made according to the written requests, instructions or
specifications of Customer to the extent the infringement arises from compliance
with such written requests, instructions or specifications. As of EDC,
Contractor is not aware of any claim or potential claim to the contrary by any
third party. This warranty shall begin upon Final Acceptance of the Work
embodying the subject Intellectual Property and continue for the operating li
fe
of the Satellites and Long-Lead Items, and any optional Satellites which may be
provided hereunder.

     (i)  Code.
          ----

     Contractor represents and warrants that (i) it shall use commercially
reasonable efforts to ensure that no viruses or similar items are coded or
introduced into the Work;  (ii) it shall not introduce into the Work any code
that would have the effect of disabling or otherwise shutting down all or any
portion of the Work; (iii)  it shall not develop, or seek to gain access to the
Work through, any special programming devices or methods, including trapdoors or
backdoors, to bypass any Customer security measures protecting the Work; and
(iv) the operation of the Work shall not be affected by the change of date on or
after January 1, 2000.  This warranty shall begin upon Final Acceptance of the
Work embodying the code at issue and continue for the operating life of the
Satellites and Ground Spare Satellite, and any optional Satellites which may be
provided hereunder.


    (j)  Remedies.
          --------

          (1)  Notwithstanding anything to the contrary herein, Customer shall
               have the right at any time during the period of the warranties
               set forth in this Article 18.3 (Warranties for Deliverable Items)
               to require that any Work not conforming in any material respect
               to this Contract be promptly corrected or replaced (at
               Contractor's option and expense) with conforming Work, subject to
               paragraph (g) of Article 8.2 (Shipment Readiness Review) and
               paragraph (e) of Article 8.3 (Flight Readiness Review). If
               Contractor fails or is unable to correct or replace such
               defective Work within a reasonable period after notification from
               Customer, Customer may then require Contractor to repay such
               portion of the Contract Price as is equitable under the
               circumstances in lieu of repairing or replacin
g such defective
               Work.

          (2)  During the operational lifetime of the Satellites, Contractor
               shall provide the following for software delivered under this
               Contract: with respect to software for ground equipment delivered
               hereunder, Contractor shall correct errors, including modifying
               code and making operational modifications, in such software as
               required for the Satellites to operate in accordance with Exhibit
               A (Spacecraft Performance Specifications) for the operating life
               of the Satellites; and with respect to flight firmware and
               software, Contractor shall, to the extent feasible, correct such
               firmware

                                      72

               and software as required for the Satellites to operate
               in accordance with Exhibit A (Spacecraft Performance
               Specifications) for the operational lifetime of the Satellites.
               During the operational lifetime of the Satellites, Contractor
               shall, in a timely manner, provide access to engineering,
               software and operations support personnel, including and/or
               involving Contractor's Subcontractors and vendors, where
               feasible, for the purpose of resolving errors, problems, or
               issues relating to the ground equipment, software, data, and
               operations products to be Delivered pursuant to this Contract.

          (3)  In the
event Contractor, for whatever reason, fails to perform
               its obligations under paragraph (2) above, with respect to any
               flight or ground software delivered under this Contract, which
               software Contractor either owns or has rights in, Contractor
               agrees to provide Customer access to the source code and related
               documentation for such software so as to enable Customer to
               perform tasks contemplated by paragraph (2) above. With respect
               to other software (that is, software that Contractor does not own
               or have rights in), Contractor shall use its reasonable best
               efforts to provide Customer with similar access to source code
               and related documentation for such software. Contractor shall
               ensure that all of Contractor's source code for the flight
               firmware and software and ground software is appropriately
               maintained, stored, ca
talogued, and archived as necessary to
               maintain such source code to object code integrity.

     (k)  SUBJECT TO ARTICLE 21.1 (CONTRACTOR INTELLECTUAL PROPERTY
INDEMNIFICATION), THE WARRANTIES SET FORTH IN THIS ARTICLE 18.3 (WARRANTIES FOR
DELIVERABLE ITEMS) ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY, AND THE REMEDY
PROVIDED IN PARAGRAPH (j) ABOVE AND ARTICLE 12 (IN-ORBIT PERFORMANCE INCENTIVE
PAYMENTS) ARE THE SOLE REMEDY FOR FAILURE BY CONTRACTOR TO COMPLY WITH
PARAGRAPHS (a) THROUGH (f), (h) AND (i) ABOVE AND TO FURNISH THE ITEMS REQUIRED
TO BE FURNISHED ABOVE FREE FROM MATERIAL DEFECTS IN MATERIAL OR WORKMANSHIP. ALL
OTHER WARRANTIES OR CONDITIONS IMPLIED BY ANY STATUTORY ENACTMENT OR RULE OF LAW
WHATSOEVER ARE EXPRESSLY EXCLUDED AND DISCLAIMED.

                                      73

19.  CUSTOMER'S REPRESENTATIONS, WARRANTIES AND COVENANTS

     19.1  Organization; Good Standing and Qualification.

     Customer represents and warrants that:

     (a) it is duly organized, validly existing and in good standing under the
Laws of the State of Delaware;

     (b) it has all requisite power and authority to own and operate its
material properties and assets and to carry on its respective business as now
conducted in all material respects; and

     (c) it is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect.

     19.2  Authorization.

     Customer represents and warrants that:

     (a) it has all requisite corporate power and authorit
y to enter into this
Contract and to carry out the transactions contemplated by this Contract;

     (b) the execution, delivery, and performance of this Contract and the
consummation of the transactions contemplated by this Contract have been duly
authorized by the requisite corporate action of Customer and do not conflict
with any other agreement or obligation to which it is a party or which binds its
assets; and

     (c) this Contract is a valid and binding obligation of Customer,
enforceable in accordance with its terms, except Customer makes no
representation or warranty as to the enforceability of remedies due to
applicable bankruptcy, insolvency, moratorium, reorganization, or similar laws
relating to or affecting the enforcement of creditor's rights or by reason of
general principles of equity. Notwithstanding the foregoing, in the event of
Customer's bankruptcy, insolvency, moratorium, reorganization, or equity
proceeding, Customer shall use its best efforts to have this Contract confirmed
acco
rding to its terms.

     19.3  Capitalization and Subsidiaries.

     As of the Effective Date of Contract, Customer does not presently own or
control, directly or indirectly, any interest in any other corporation,
partnership, association or other business entity or have any subsidiaries,
except those listed on Schedule 19.3 attached hereto.

     19.4  Litigation.

     As of the Effective Date of Contract, except as provided on Schedule 19.4
attached hereto, there are no actions, suits, or proceedings or investigations
Pending, or, to the knowledge of Customer, threatened against Customer in an
amount that would be considered material such that Customer would be required to
disclose if it were subject to the Securities and Exchange Act of 1934, as
amended.  In addition, Customer does not currently intend to initiate such an
action.

                                      74

     19.5  Title to Properties and Assets.

     Customer owns its material properties and assets, other than leased
properties, free and clear of all liens, charges, and encumbrances, except for
(i) such encumbrances and liens that arise in the ordinary course of business
and do not materially impair Customer's ownership or use of such property or
assets, (ii) liens created by this Contract, and (iii) liens listed on Schedule
19.5 attached hereto.

     19.6  Financial Statements.

     Customer has delivered to Contractor the unaudited consolidated statements
of operations, changes in shareholders' equity and cash flows for 1997 (the
"Financial Statements") as set forth in Schedule 19.6.  The Financial Statements
have been prepared in accordance with GAA
P consistently applied and present
fairly in all material respects the consolidated financial condition, cash flow,
results of operations and changes in stockholders equity of Customer and its
subsidiaries for such periods.  Except as disclosed in Schedule 19.6 attached
hereto, from January 1, 1998 to the Effective Date of Contract, there has not
been (a) any material adverse change to the financial condition of Customer or
any of its subsidiaries, or (b) any damage, destruction, or loss, whether or not
covered by insurance, which has had a Material Adverse Effect.  Except as
disclosed in the Financial Statements or in Schedule 19.6, as of the Effective
Date of Contract Customer is not a guarantor or indemnitor of any material
indebtedness of any other person, firm or corporation.

     19.7  Certain Actions.

     Except as set forth on Schedule 19.7 attached hereto, from January 1, 1998
to the Effective Date of Contract, Customer has not incurred any indebtedness of
Five Hundred Thousand Dollars ($500,
000) or more, or sold, exchanged, or
otherwise disposed of any of its material assets or rights.

     19.8  Undisclosed Liabilities.

     As of the Effective Date of Contract, except as set forth on Schedule 19.8
or on any other Schedule attached hereto, Customer is not subject to any
liabilities of any nature, whether absolute, contingent, or otherwise (whether
or not required to be accrued or disclosed under the accounting disclosure
standards applicable to Customer or under the Securities and Exchange Act of
1934, as amended) that have had or can reasonably be expected to have a Material
Adverse Effect, except to the extent set forth or provided in the Financial
Statements.  Except as set forth in Schedule 19.8 or any other Schedule hereto,
all debts, liabilities, and obligations incurred by Customer, after the date of
the Financial Statements, were incurred in the ordinary course of business and
are in amounts less than Five Hundred Thousand Dollars ($500,000).


  75

     19.9  Compliance with Other Instruments.

     As of the Effective Date of Contract, Customer is not in violation of its
Certificate of Incorporation or its By-Laws, or, to the knowledge of Customer,
in material default of any instrument, judgment, order, writ, decree, oral or
written contract, or other agreement to which it is a party or by which it is
bound or of any provision of federal, state, or local law, statute, rule, or
regulation applicable to Customer as of the Effective Date of Contract where
such violation or default will have a Material Adverse Effect.  The execution,
delivery, and performance of this Contract and the consummation of the
transactions contemplated hereby will not (i) result in any such violation or be
in conflict with the
 Certificate of Incorporation or the By-Laws of Customer,
(ii) be in conflict with any instrument, judgment, order, writ, or decree, (iii)
be in conflict with any contract or other agreement or be an event that results
in the creation of any lien, charge, or encumbrance upon any material asset of
Customer other than as provided in this Contract, where such conflict or
creation would have a Material Adverse Effect, or (iv) cause Customer to violate
any federal, state, or local law, statute, rule, or regulation.

     19.10  Customer's Financial Strength.

     Contractor and Customer acknowledge and agree that Contractor, in entering
into this Contract, is relying on the separate existence and financial strength
of Customer alone and not of any Affiliate of Customer.

     19.11  Cross-Defaults.

     (a) Customer represents and warrants that, as of the Effective Date of
Contract, it is not a party to any Financing Agreements that contain a provision
that a default by any third party in such third party's
 obligations will be a
default under any of Customer's Financing Agreements where enforcement of such
provision is likely to have a material adverse effect on the ability of Customer
to make any payment required by this Contract or have a material adverse effect
on the security held by Contractor under this Contract.

     (b) Customer represents and warrants that, as of EDC, its assets do not
secure the liabilities of any person or entity other than Customer.

     (c) Customer agrees that it shall not agree to a provision in any agreement
that a default by any third party's obligations will be a default under any of
Customer's Financing Agreements or grant a security interest in its assets to
secure the obligations of any other parties.

     (d) Contractor shall have the power and authority to file financing
statements of public record giving third parties notice of the representations
and warranties of this Article 19.11 (Cross Defaults).

     19.12  Code.

     Customer represents and warrants that
 (i) it shall use commercially
reasonable efforts to ensure that no viruses or similar items are coded or
introduced into the code it provides Contractor; and (ii) it shall not introduce
into any such provided code any code that would have

                                      76

the effect of disabling or otherwise shutting down all or any portion of the
Work. This warranty shall begin upon Final Acceptance of the Work embodying the
code at issue and continue for the operating life of the Satellites and the
Long-Lead Items.

     19.13  Intellectual Property.

     Customer represents and warrants that (i) it is either the owner of, or
authorized to use and incorporate, any Intellectual Property provided by
Customer (or others on behalf of Customer); (ii) Customer shall not require
Contractor to pay any license fees or royalties for the use of any Intellectual
Property of Customer; and (iii) Customer's Intellectual Property and/or any
modifications of Contractor's Intellectual Property by Customer (or any other
entity, other than
 Contractor or its Subcontractors, acting on behalf of
Customer) shall not infringe any Intellectual Property Right of any third party.
Customer is not aware of any claim to the contrary by any third party.  This
warranty shall begin on the Effective Date of Contract and continue for the
operating life of the Satellites and the Long-Lead Items.

     19.14  Other Contracts.

     Customer represents and warrants that, as of EDC, it has not entered into
an agreement to purchase goods and services similar to the goods and services to
be provided by Contractor hereunder.

     19.15  Non-Misleading Statements.

     As of EDC, this Contract (including the representations and warranties in
this Article 19 (Customer's Representations and Warranties) and the related
schedules) does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements, in light of the
circumstances under which they were made, not misleading.

     19.16  Control of Customer.


 Customer represents and warrants that Customer is not under the Control of
Contractor.

     19.17  Customer Financial Covenant.

     Customer covenants that it will provide Contractor with financial
information as follows:  until the time Customer becomes a public company,
monthly reports on Customer's anticipated available cash for the following
twelve (12) months; thereafter, quarterly status reports (concurrent with
quarterly filings required by the SEC) setting forth Customer's funding to date,
monthly funding plans through the Delivery Date for the second Satellite,
including identification of Customer's principal funding sources and Customer's
anticipated ability to pay its obligations under this Contract as they become
due. Customer shall provide additional information reasonably related to
Customer's anticipated ability to pay its obligations under this Contract as
they become due, as may be reasonably requested by Contractor.

                                      77

20.  INTELLECTUAL PROPERTY RIGHTS

     20.1  Ownership of IP and IP Rights.

     (a) Subject to the licenses set forth in Article 20.2 (License Rights), all
Background and Foreground Intellectual Property made, developed, or created by
Customer (or by others, other than Contractor or any Subcontractor, acting on
behalf of Customer), and all Intellectual Property Rights therein, shall be the
sole and exclusive property of Customer. The Parties agree the Statement of Work
and Spacecraft Performance Specifications are the Intellectual Property of
Customer.

     (b) Subject to the licenses set forth in Article 20.2 (License Rights), all
Background Intellectual Property and Foreground Intellectual Property made,
developed or created by Contractor (or its Sub
contractors), and all Intellectual
Property Rights therein, shall be the sole and exclusive property of Contractor.

     20.2  License Rights.

     (a) Subject to the terms and conditions stated herein, Contractor grants to
Customer a fully paid-up, irrevocable, perpetual, worldwide, nonexclusive right
and license to use and have used, for the sole and exclusive purpose of
operating and/or maintaining any Deliverable Item, all Background Intellectual
Property and Foreground Intellectual Property, including, to the extent
necessary for the limited purpose of this license, those associated Intellectual
Property Rights therein, owned by Contractor (and/or its Subcontractors);
provided, however, such license shall only be revocable in the case of
termination in accordance with paragraph (a)(1) or paragraph (a)(2) of Article
32.3 (Termination for Customer's Default) for Customer's failure to make
payment, but only with respect to those Deliverable Items not paid for.

     (b) Subject to the terms and condi
tions stated herein, Customer grants to
Contractor a fully paid-up, irrevocable, perpetual, worldwide, non-exclusive
right and license to use and have used for the sole and exclusive purpose of
performing under this Contract, all Background Intellectual Property and
Foreground Intellectual Property, including, to the extent necessary for the
limited purpose of this license, those associated Intellectual Property Rights
therein, owned by Customer (or others acting on behalf of Customer).

     (c) All object code, source code, and documentation Delivered ("Delivered
Software") shall be protected as the Confidential Information of Contractor or
its licensor or Subcontractor pursuant to Article 22 (Confidential Information).
Delivered Software may only be used pursuant to the license granted in paragraph
(a) above on the computer hardware Delivered as a Deliverable Item or successors
or back-ups to such hardware. Customer may reproduce the delivered software for
purposes of safe keeping (archives) or back-u
p, provided all copyright notices
and proprietary markings are reproduced.

     (d) The license described in paragraph (a) above shall be transferable to
the Financing Entities and, subject to Contractor's prior written approval, any
other entity.

                                      78

     (e) Contractor shall, unless otherwise authorized or directed in writing by
Customer, use reasonable best efforts to include in each Subcontract hereunder a
license rights clause pursuant to which each Subcontractor will grant to
Customer license rights in Intellectual Property developed by such Subcontractor
and associated Intellectual Property Rights to the same extent as the license
rights granted by Contractor in this Article 20.2 (License Rights).

     20.3  Joint Program Inventions.

     (a) Notwithstanding anything to the contrary herein, the following shall
apply to Program Inventions conceived jointly by one or more Associates of each
Party:

          (1)  each Party shall have an equal, undivided one-half interest in
               and t
o such joint Program Inventions, as well as in and to patent
               applications and patents thereon in all countries.

          (2)  Contractor shall have the first right of election to file patent
               applications in any country, and Customer shall have a second
               right of election. Each Party in turn shall make its election at
               the earliest practicable time, and shall notify the other Party
               of its decision.

          (3)  The expenses for preparing, filing, and securing each joint
               Program Invention patent application, and for issuance of the
               respective patent shall be borne by the Party that prepares and
               files the application. The other Party shall furnish the filing
               Party with all documents or other assistance that may be
               necessary for the filing and prosecution of each application.
               Where such joint Program Invention application for a patent is

          filed by either Party in a country that requires the payment of
               taxes, annuities, maintenance fees or other charges on a pending
               application or on an issued patent, the Party that files the
               application shall, prior to filing, request the other Party to
               indicate whether it will agree to pay one-half of such taxes,
               annuities, maintenance fees, or other changes. If within sixty
               (60) Calendar Days of receiving such request, the non-filing
               Party fails to assume in writing the obligation to pay its
               proportionate share of such taxes, annuities, maintenance fees,
               or other charges, or if either Party subsequently fails to
               continue such payments within sixty (60) Calendar Days of demand,
               it shall forthwith relinquish to the other Party, providing that
               said other Party continues such payments, its interest in such

 application and patent and the Program Invention disclosed
               therein, subject, however, to retention of an irrevocable, fully
               paid-up, non-exclusive, non-assignable license in favor of the
               relinquishing Party, its parent, and any subsidiary thereof to
               make, use, lease, and sell apparatus and/or methods under said
               application and patent.

     (b) Each owner of a jointly-owned patent application or patent resulting
therefrom shall, provided that it shall have fulfilled its obligation, if any,
to pay its share of taxes, annuities, maintenance fees, and other charges on
such pending application or patent, have the right to grant non-exclusive
licenses thereunder and to retain any consideration that it may receive

                                      79

therefor without obligation to account therefor to the other Party. In
connection therewith, each of the Parties hereby consents to the granting of
such non-exclusive licenses by the other Party and also agrees not to assert any
claim with respect to the licensed application or patent against any licensee of
the Party thereunder during the term of any such license.

     20.4  Survival of Intellectual Property Rights.

     The provisions of this Article 20 (Intellectual Property Rights) shall
survive the termination or expiration of this Contract, except as expressly set
forth in Article 20.2(a) above.

                                      80

21.  INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION

     21.1  Contractor Intellectual Property Indemnification.

     (a) Subject to paragraph (a) of Article 21.2 (Customer's Intellectual
Property Indemnification) and the limitations set forth in paragraph (h) of
Article 18.3 (Warranties for Deliverable Items), Contractor shall indemnify,
defend, and hold harmless Customer from any and all Losses arising from, in
connection with, or based on any allegations made by third parties (including
Subcontractors of Contractor) that Customer's use of the Work, or any part
thereof infringes any third-party Intellectual Property Right, unless such
infringement would not have occurred but for Contractor following the written
requests, instructions, or specificat
ions of Customer.

     (b) If the use of the Work or any part thereof is enjoined, Contractor
shall, at its option and expense, either procure for Customer the right to use
the Work or infringing part thereof, as the case may be, or substitute an
equivalent product reasonably acceptable to Customer, or modify the Work or
infringing part thereof to render them non-infringing without affecting their
utility or functionality. If Contractor determines that none of these
alternatives is reasonably available or feasible, Contractor shall meet with
Customer to address the matter and reach an equitable solution reasonably
acceptable to Customer.

     (c) Nothing in this Contract shall be construed as requiring Contractor to
defend a suit or pay damages or costs if either (i) the infringement claim or
judgment is based upon the use of any goods or services furnished in combination
with other goods or services not provided by Contractor, unless such combination
was identified in Exhibit A (Spacecraft Performance
 Specifications); (ii) the
infringement claim is based on the goods or services being used in other than
their specific operating environment as defined in Exhibit B (SOW); or (iii) the
infringement claim is based on Customer's modification of the Work or part
thereof in a manner not intended or reasonably foreseeable by Contractor.

     (d) Contractor's obligations under this Article 21.1 (Contractor
Intellectual Property Indemnification) shall be subject to Article 24.4
(Indemnification Procedures).

     21.2  Customer Intellectual Property Indemnification.

     (a) Customer shall indemnify, defend, and hold harmless Contractor from any
and all Losses arising from, in connection with, or based on any allegations
made by third parties that the Work or any Deliverable Item or any part thereof
infringes any third-party Intellectual Property Right to the extent such
infringement is based on (i) any Intellectual Property provided by Customer (or
by others, other than Contractor or its Subcontractors, act
ing on behalf of
Customer); or (ii) any modification by Customer (or any entity, other than
Contractor or its Subcontractors, acting on behalf of Customer) of the Work or
any part thereof; or (iii) any written requests, specifications or instructions
provided by Customer to the extent the infringement arises from compliance with
such written requests, instructions or specifications.

     (b) Customer's obligations under this Article 21.2 (Customer Intellectual
Property Indemnification) shall be subject to Article 24.4 (Indemnification
Procedures).

                                      81

     21.3  Total Liability.

     (a) In no event shall either Party's aggregate liability to the other Party
for intellectual property indemnification, defense, or any subsequent award of
damages in connection with one or multiple claims exceed Thirty Million Dollars
($30,000,000).

     (b) Neither Party shall be liable to the other Party for lost revenues,
profits or other indirect, incidental, special, or consequential damages arising
from any intellectual property infringement claims, except to the extent that
such damages are caused by a Party's willful or intentional acts.

                                      82

22.  CONFIDENTIAL INFORMATION

     22.1  Confidentiality Obligations.

     (a) Any Confidential Information shall be maintained in strict confidence
by the Receiving Party. Except as provided in this Article 22 (Confidential
Information), the Receiving Party shall not use, or disclose in any manner to
any third party, Confidential Information without the prior express written
consent of the Furnishing Party. The obligation of confidentiality shall not be
limited in time except to the extent that the Receiving Party can establish one
of the exceptions set forth in Article 22.2 (Exceptions) below by clear and
convincing evidence.

     (b) Access to and use of Confidential Information shall be restricted to
those employees and persons within the Receiving
Party's organization (including
its Consultants, attorneys, Subcontractors, shareholders, and representatives),
with a need to use such Confidential Information to perform services
specifically requested by one Party of the other, to fulfill the purposes of
this Contract. The Receiving Party's Consultants or Subcontractors may be
included within the meaning of "persons within the Receiving Party's
organization," provided that such persons have executed a non-disclosure or
confidentiality agreement no less stringent that this Article 22 (Confidential
Information). With respect to Contractor, access may be extended to certain
employees of Hughes Electronics Corporation, Hughes Communications, Inc., and
Hughes Space and Communications Company for the purposes stated herein. In
addition, all information provided is to be subject to the provisions of
paragraph (c) below.

     (c) The Parties shall use the Confidential Information solely for the
purpose of developing, constructing, financing, Launching, and o
perating
Contractor-built Satellites for Customer's satellite digital audio radio
service.

     22.2  Exceptions.

     The obligations set forth in Article 22.1 (Confidentiality Obligations)
shall not apply to information that is:

     (a) Already known to or otherwise in the possession of the Receiving Party
at the time of receipt from the Furnishing Party and that was not so known or
received in violation of any confidentiality; or

     (b) Publicly available or otherwise in the public domain prior to
disclosure by the Receiving Party or becomes publicly available or otherwise in
the public domain after receipt by the Receiving Party without breach of this
Contract; or

     (c) Rightfully obtained by the Receiving Party from any third party without
restriction and without breach of any confidentiality obligation by such third
party; or

     (d) Developed by the Receiving Party independent of any disclosure
hereunder, as evidenced by written records; or

                                      83

     (e) Disclosed pursuant to the order of a court or administrative body of
competent jurisdiction or a government agency or required to be released
pursuant to Law or regulation, provided that the Receiving Party shall notify
the Furnishing Party prior to such disclosure and shall cooperate with the
Furnishing Party in the event the Furnishing Party elects to legally contest,
request confidential treatment, or otherwise avoid such disclosure.

     22.3  No License.

     Except as expressly provided in this Contract, nothing in this Contract
shall be construed as granting the Receiving Party whether by implication,
estoppel, or otherwise, any license or any right to use any Confidential
Information received from the Furnishing Party, or use any patent,
 trademark, or
copyright now or hereafter owned or controlled by the Furnishing Party.

     22.4  Return of Confidential Information.

     All Confidential Information disclosed pursuant to this Contract is
considered loaned for use solely in connection with this Contract.  All
Confidential Information in tangible form of expression which has been disclosed
to or thereafter created, whether by copy or reproduction, by the Receiving
Party shall be and remain the property of the Furnishing Party.  All such
Confidential Information and any and all copies and reproductions thereof shall,
within fifteen (15) Calendar Days of written request by the Furnishing Party, be
either promptly returned to the Furnishing Party or destroyed at the Furnishing
Party's direction.  In the event of such requested destruction, the Receiving
Party shall provide to the Furnishing Party written certification of compliance
therewith within fifteen (15) Calendar Days of such written request.

     22.5  Inconsistent Legends.


  This Article 22 (Confidential Information) shall control in lieu of and
notwithstanding any proprietary or restrictive legend or statements inconsistent
with this Article that may be printed on or associated with any particular
information disclosed pursuant to this Contract.

     22.6  Survival of Confidentiality Obligations.

     The provisions of this Article 22 (Confidential Information) shall survive
the termination or expiration of this Contract for a period of four (4) years
following the date of termination or expiration of this Contract.

                                      84

******  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.

23.  NON-COMPETITION OBLIGATION

     (a) Except with respect to WorldSpace, Inc. or WorldSpace International
Network, Inc. or Affiliates thereof, or with respect to DirecTV, Contractor
shall refrain, for a period of [*****] from EDC, from the following:

          (1)  directly or indirectly owning an equity interest of five percent
               (5%) or more in an entity that develops or operates a Similar
               Satellite System and/or operating a Similar Satellite Service in
               any Customer Coverage Area; and/or

          (2)  p
roviding a payload subsystem meant to be incorporated in a
               Similar Satellite System within the Customer Coverage Area.
               However, this shall not be construed to restrict Contractor from
               selling or providing goods at the equipment level and related
               services to any third party.

     (b)  In the event Customer exercises its options under Article 30 (Options)
to purchase the Ground Spare Satellite and/or 4th and 5th Optional Satellite(s)
the Parties shall negotiate in good faith an extension to the definition of
"Customer Coverage Area" to account for the area covered by the Ground Spare
Satellite and/or such 4th and 5th Optional Satellite(s).

                                      85

24.  INDEMNIFICATION

     24.1  Contractor's Indemnification.

     (a) Subject to the indemnification procedures set forth in Article 24.4
(Indemnification Procedures), Contractor shall indemnify, defend, and hold
harmless Customer and its Affiliates and their respective Associates from any
and all Losses arising from, in connection with, or based on any allegations
made by third parties (including Consultants and agents of Customer, Contractor,
or any Subcontractor but not any employee, officer, or director of Customer)
regarding any of the following:

          (1)  injury to persons (including sickness or death) or damage to real
               or tangible personal property, resulting from any act or
               omission, negligent or otherwise, of
 Contractor or its
               Subcontractors in the performance of the Work;

          (2)  any claims arising out of or related to occurrences Contractor is
               required to insure against pursuant to Article 25 (Insurance), to
               the extent of the amount of the insurance required under such
               Article; or

          (3)  Contractor's breach of its obligations under this Contract.

     (b) Subject to the indemnification procedures set forth in Article 24.4
(Indemnification Procedures), Contractor shall indemnify, defend, and hold
harmless Customer as set forth in Article 18.3 (Warranties on Deliverable
Items), Article 21.1 (Contractor Intellectual Property Indemnification), this
Article 24.1(Contractor's Indemnification), Article 26 (Limitations of
Liability), Article 24.3 (Cross Indemnification for Inter-Party Waiver of
Liability), and as may be required pursuant to Article 33 (Inter-Party Waiver of
Liability).

     24.2  Customer's Indemnification.

     (a) Su
bject to the indemnification procedures set forth in Article 24.4
(Indemnification Procedures), Customer shall indemnify, defend, and hold
harmless Contractor and its Affiliates and their respective Associates from any
and all Losses arising from, in connection with, or based on any allegations
made by third parties (including Consultants and agents of Contractor, any
Subcontractor, or Customer but not any employee, officer, or director of
Contractor) regarding any of the following:

          (1)  injury to persons (including sickness or death) or damage to real
               or tangible personal property, resulting from any act or
               omission, negligent or otherwise, of Customer and its
               Consultants;

          (2)  any claims arising out of or related to occurrences Customer is
               required to insure against pursuant to Article 25 (Insurance), to
               the extent of the amount of the insurance required under such
               Article; or

          (3)
 Customer's breach of its obligations under this Contract.

                                      86

     (b) Subject to the indemnification procedures set forth in Article 24.4
(Indemnification Procedures), Customer shall indemnify Contractor as set forth
in Article 21.2 (Customer Intellectual Property Indemnification), this Article
24.2 (Customer's Indemnification), Article 24.3 (Cross Indemnification for
Inter-Party Waiver of Liability), Article 33 (Inter-Party Waiver of Liability)
as may be required.

     24.3  Cross-Indemnification For Inter-Party Waiver of Liability.

     Each Party shall indemnify the other for, and hold it harmless from, any
liability, loss, or damage suffered by the other Party resulting from the
failure of such Party to comply with its obligations, if any, under Article 33
(Inter-Party Waiver of Liability) to waive or to caus
e its contractors and
Subcontractors at any tier (including suppliers of any kind) or any other entity
required by the Launch Agreement to make no claims under this Contract.

     24.4  Indemnification Procedures.

     (a) Promptly after receipt by any entity entitled to indemnification under
this Article 24 (Indemnification) of notice of the commencement or threatened
commencement of any civil, criminal, administrative, or investigative action or
proceeding involving a claim in respect of which the indemnified Party will seek
indemnification pursuant to this Article 24 (Indemnification), the indemnified
party shall notify the indemnifying Party of such claim in writing. Failure to
so notify the indemnifying Party shall not relieve the indemnifying Party of its
obligations under this Contract except to the extent it can demonstrate that it
was prejudiced by such failure. Within fifteen (15) Calendar Days following
receipt of written notice from the indemnified Party relating to any claim, but
no later
than ten (10) Calendar Days before the date on which any response to a
complaint or summons is due, the indemnifying Party shall notify the indemnified
Party in writing if the indemnifying Party elects to assume control of the
defense or settlement of that claim (a "Notice of Election").

     (b) If the indemnifying Party delivers a Notice of Election relating to any
claim within the required notice period, so long as it is actively defending
such claim, the indemnifying Party shall be entitled to have sole control over
the defense and settlement of such claim; provided that (i) the indemnified
Party shall be entitled to participate in the defense of such claim and to
employ counsel at its own expense to assist in the handling of such claim; (ii)
where the indemnified Party is so represented, the indemnifying Party shall keep
the indemnified Party 's counsel informed of each step in the handling of any
such claim; (iii) the indemnified Party shall provide, at the indemnifying Party
's request and expens
e, such assistance and information as is available to the
indemnified Party for the defense and settlement of such claim; and (iv) the
indemnifying Party shall obtain the prior written approval of the indemnified
Party before entering into any settlement of such claim or ceasing to defend
against such claim. After the indemnifying Party has delivered a Notice of
Election relating to any claim in accordance with the preceding paragraph, the
indemnifying Party shall not be liable to the indemnified Party for any legal
expenses incurred by the indemnified Party in connection with the defense of
that claim. In addition, the indemnifying Party shall not be required to
indemnify the indemnified Party for any amount paid or payable by the
indemnified Party in the settlement of any claim for which the indemnifying
Party has delivered a timely Notice of Election if such amount was agreed to
without the prior written consent of the indemnifying Party.

                                      87

     (c) If the indemnifying Party does not deliver a Notice of Election
relating to any claim within the required notice period or fails to actively
defend such claim, the indemnified Party shall have the right to defend and/or
settle the claim in such manner as it may deem appropriate, at the cost and
expense of the indemnifying Party. Provided that the indemnified Party acts in
good faith, it may settle such claim on any terms it considers appropriate under
the circumstances without in any way affecting its right to be indemnified
hereunder. The indemnifying Party shall promptly reimburse the indemnified Party
for all such costs and expenses.

     24.5  Waiver of Subrogation.

     If a Party insures against any loss or damage it may suffer in respect
of
which it is required to indemnify the other Party, its Affiliates and their
respective Associates pursuant to this Article 24 (Indemnification), it shall be
a condition that the insuring Party arrange for the insurer to waive its right
of subrogation against such other Party and such other Party's Affiliates and
their respective Associates.  Each Party shall be entitled to require proof from
time to time that the other Party has complied with its obligations under this
Article 24.5 (Waiver of Subrogation).  In the event a Party does not comply with
such obligations, the indemnities referred to in Articles 24.1 (Contractor's
Indemnification), 24.2 (Customer's Indemnification), and Article 24.3 (Cross
Indemnification for Inter-Party Waiver of Liability), as applicable, shall
extend to any claim that may be made by an insurer pursuant to an alleged right
of subrogation.

     24.6  Survival of Indemnifications.

     The provisions of this Article 24 (Indemnification) shall survive the
termination or exp
iration of this Contract.

                                      88

25.  INSURANCE

     25.1  General Obligations.

     (a) Contractor represents that it has procured and will maintain at all
times, from EDC to the moment of Launch at the Designated Launch Site of each
Launch Vehicle used to Launch each Satellite pursuant to this Contract,
insurance ("Ground Insurance") against all risks and loss or damage to such
Satellites, and to any and all components purchased for and intended to be
integrated into the Satellite, in an amount not less than the greater of (i) the
replacement value of, or (ii) the amounts paid by Customer with respect to, the
Satellite and components. Contractor shall also maintain public liability
insurance, insurance of employees, and comprehensive automobile insurance, all
in amounts adequate for i
ts potential liabilities under this Contract. In
addition, Contractor shall require each of its Subcontractors to provide and
maintain insurance in amounts for their respective potential liabilities. In
addition, Contractor represents that it has procured and will maintain at all
times, from EDC through Final Acceptance, Ground Insurance for all other Work.

     (b) Contractor shall provide a certificate of insurance certified by
Contractor's insurance broker, evidencing such insurance coverage to Customer at
Customer's request.

     (c) Contractor shall require its insurers to waive all rights of
subrogation against Customer. Customer shall be named as an additional insured
under Contractor's third-party liability coverages, and as a loss payee as
Customer's interests may appear with respect to property insurance.

     25.2  Launch Insurance.

     (a) Customer shall be responsible for procuring Launch Insurance for each
Satellite and shall secure a binder for such insurance at least sixty (60)
Calen
dar Days before the applicable Launch Date for such Satellite. Contractor
shall be named as additional insured on such Launch Insurance policy and
Customer shall require its Insurers to waive all rights of subrogation against
Contractor. Contractor shall, at the written request of Customer, provide
Customer with reasonable assistance (such as providing required technical
information) in Customer's efforts to procure Launch Insurance, and support at
Customer's meetings with Insurers, if necessary.

     (b) Without limiting any other Contractor obligations under this Article 25
(Insurance) and in order to comply with insurance requirements, Contractor
shall, as part of the Pre-Eclipse Test Report or Post-Eclipse Test Report,
specify the basis for Partial Loss, Constructive Total Loss or Total Loss, the
definition of which shall have been provided by Customer to Contractor.
Notwithstanding Contractor's specifying such basis, Customer shall make the
final determination of whether a Partial Loss, Constructiv
e Total Loss or Total
Loss has occurred.

     (c) Such notices of loss shall comply with the provisions of Article 34.7
(Notices), and the foregoing specified time for the provision of notice may be
shortened in compliance with the respective requirements of such Insurers.

                                      89

     25.3  Preparation of Claims.

     (a) Each Party shall provide to the other Party any information that may
reasonably be required to prepare and present an insurance claim at the other
Party's written request.

     (b) The Parties warrant and covenant that they will not withhold from each
other any material information either has or will have concerning anomalies,
failures, or non-conformances with or deviations from the requirements of this
Contract, from EDC through Final Acceptance in respect of any of the Satellites.

     (c) Upon written request of a Party, the other Party will respond or permit
the first Party to respond to any insurers in relation to all specific and
reasonable questions relating to design, test, quality control, launch, and

orbital information. In addition, in the event of a Launch Insurance claim,
Contractor will permit and assist Customer to:

          (1)  conduct review sessions with a competent representative selected
               by the insurers to discuss any continued issue relating to such
               occurrence, including information conveyed to either Party; and

          (2)  use its best efforts to secure the insurers' access to all
               information used in or resulting from any investigation or review
               of the cause or effects of such occurrence; and

          (3)  make available for inspection and copying all information
               necessary to establish the basis of such claim.

                                      90

26.  LIMITATIONS OF LIABILITY

     (a) Contractor makes no warranty or agreement, express or implied, to or
for the benefit of any person or entity other than Customer concerning the
performance of the Satellites or any other matters relating to the Work.

     (b) THE PARTIES TO THIS CONTRACT EXPRESSLY RECOGNIZE THAT COMMERCIAL SPACE
VENTURES INVOLVE SUBSTANTIAL RISKS AND RECOGNIZE THE COMMERCIAL NEED TO DEFINE,
APPORTION, AND LIMIT CONTRACTUALLY ALL THE RISKS ASSOCIATED WITH THIS COMMERCIAL
SPACE VENTURE. THE PAYMENTS AND OTHER REMEDIES EXPRESSLY SET FORTH IN THIS
CONTRACT FULLY REFLECT THE PARTIES' NEGOTIATIONS, INTENTIONS, AND BARGAINED-FOR
ALLOCATION OF THE RISKS ASSOCIATED WITH COMMERCIAL SPACE VENTURES.

     (c) THE WARRANTY OBLIGATIONS OF CONTRAC
TOR AND THE REMEDIES AGAINST
CONTRACTOR THEREFOR THAT ARE EXPRESSLY SET FORTH OR REFERENCED IN ARTICLE 18
(CONTRACTOR'S REPRESENTATIONS, COVENANTS, AND WARRANTIES) ARE EXCLUSIVE AND ARE
IN SUBSTITUTION OF ANY OTHER WARRANTIES, EXPRESS OR IMPLIED (INCLUDING ANY
STATUTORY WARRANTIES SUCH AS IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE), WHICH ARE EXPRESSLY DISCLAIMED.

     (d) CUSTOMER'S SOLE AND EXCLUSIVE REMEDIES, AND CONTRACTOR'S SOLE
OBLIGATIONS FOR (I) ANY BREACH OF THIS CONTRACT, INCLUDING DELAY OR DEFAULT;
AND/OR (II) ANY DEFECT, NON-CONFORMANCE OR DEFICIENCY IN ANY WORK UNDER THIS
CONTRACT OR IN ANY INFORMATION, INSTRUCTIONS, SERVICES, OR OTHER CLAIMS
WHATSOEVER ARISING OUT OF OR RELATING TO THIS CONTRACT AND/OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER DENOMINATED AS CONTRACT, TORT, EQUITABLE,
STATUTORY, OR ANY OTHER TYPE OF CLAIM) ARE LIMITED TO THOSE SET FORTH IN
ARTICLES 0 (LIQUIDATED DAMAGES FOR LATE DELIVERY), 12 (IN-ORBIT PERFORMANCE
INCENTIVE PAYMENTS), 18
 (CONTRACTOR'S REPRESENTATIONS, COVENANTS, AND
WARRANTIES), 21 (INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION), 24
(INDEMNIFICATION), 25 (INSURANCE), AND 32 (TERMINATION) HEREOF AND ANY OTHER
REMEDIES SPECIFICALLY SET FORTH IN THIS CONTRACT; AND ALL OTHER REMEDIES OR
RECOURSE AGAINST CONTRACTOR OF ANY KIND ARE EXPRESSLY DISCLAIMED AND FOREVER
WAIVED BY CUSTOMER.

     (e) CONTRACTOR SHALL NOT, UNDER ANY CIRCUMSTANCES, UNDER ANY WARRANTY
(EXPRESS, IMPLIED, OR STATUTORY) OR UNDER ANY THEORY OF LIABILITY (INCLUDING
NEGLIGENCE, TORT, STRICT LIABILITY, CONTRACT, OR OTHER LEGAL OR EQUITABLE
THEORY) HAVE ANY LIABILITY TO CUSTOMER OR CUSTOMER'S CUSTOMERS FOR ANY SPECIAL,
CONSEQUENTIAL, AND/OR INCIDENTAL DAMAGES, WHETHER OR NOT FORESEEABLE, INCLUDING
LOST REVENUES OR PROFITS, COST OF CAPITAL, OR ANY OTHER FORM OF ECONOMIC

                                      91

LOSS RESULTING FROM ANY BREACH OF THIS CONTRACT OR WITH RESPECT TO ANY DEFECT,
NON-CONFORMANCE, OR DEFICIENCY IN ANY INFORMATION, INSTRUCTIONS, SERVICES, OR
OTHER THINGS PROVIDED PURSUANT TO THIS CONTRACT.

     (f) THE TOTAL LIABILITY OF CONTRACTOR WITH RESPECT TO ALL CLAIMS OF ANY
KIND, INCLUDING WITHOUT LIMITATION LIQUIDATED DAMAGES, WHETHER AS A RESULT OF
BREACH OF CONTRACT, WARRANTY, STRICT LIABILITY OR OTHERWISE, AND WHETHER ARISING
BEFORE OR AFTER DELIVERY OF ANY DELIVERABLE ITEM, FOR ANY LOSS ARISING FROM OR
RELATING TO THIS CONTRACT, OR FROM THE PERFORMANCE OR BREACH THEREOF, SHALL NOT
EXCEED, EXCEPT AS OTHERWISE SET FORTH IN THIS CONTRACT, THE CONTRACT PRICE.
NOTWITHSTANDING THE FOREGOING, THE LIMITATIONS OF LIABILITY SET FORTH IN THIS
CONTRACT S
HALL NOT APPLY TO CONTRACTOR, ITS AFFILIATES, ASSOCIATES, AND
SUBCONTRACTORS TO THE EXTENT A CLAIM OF ANY KIND RELATED TO OR ARISING OUT OF
THIS CONTRACT IS COVERED BY INSURANCE MAINTAINED BY CONTRACTOR, ITS AFFILIATES,
ASSOCIATES OR SUBCONTRACTORS.

     (g) The limitations of liability set forth herein shall also apply to all
Affiliates, Associates, and Subcontractors of Contractor to the same extent as
set forth herein with respect to Contractor.

     (h) Each Party shall have a duty to mitigate damages for which the other
Party is responsible.

                                      92

27.  DISPUTE RESOLUTION

     Any dispute, claim, or controversy ("Dispute") between the Parties arising
out of or relating to this Contract, including but not limited to any Dispute
with respect to the interpretation, performance, termination, or breach of this
Contract or any provision thereof shall be resolved as provided in this
Article 27 (Dispute Resolution), provided, however, that (i) disputes as to
payments pursuant to Article 5.3 (Disputed Amounts) concerning whether a
Milestone has been reached and payments therefor have been earned by Contractor,
shall be resolved in accordance with the provisions of Article 5.3 (Disputed
Amounts) and Article 27.2 (Arbitration) and (ii) disputes as to the performance
of a Launched Satellite pursuant to Article
 12.4 (Disputed Performance) shall be
resolved in accordance with the provisions of Article 12.4 (Disputed
Performance) and Article 27.2 (Arbitration). All other Disputes concerning
Milestones shall be resolved in accordance with this Article 27 (Dispute
Resolution).

     27.1  Informal Dispute Resolution.

     Subject to the provisions of Article 27.3 (Litigation), prior to or
concurrent with the initiation of formal dispute resolution procedures, the
Parties shall first attempt to resolve their Dispute informally, in a timely and
cost-effective manner, as follows:

     (a)  If, during the course of the Work, a Party believes it has a Dispute
with the other Party, the disputing Party shall give written notice thereof,
which notice will describe the Dispute and may recommend corrective action to be
taken by the other Party. The Contractor Program Manager shall promptly consult
with the Customer Program Manager in an effort to reach an agreement to resolve
the Dispute.

     (b)  In the event agreement
 cannot be reached within ten (10) Calendar Days
of receipt of written notice, either Party may request the Dispute be escalated,
and the respective positions of the Parties shall be forwarded to an executive
level higher than that under paragraph (a) above for resolution of the Dispute.

     (c)  In the event agreement cannot be reached under paragraphs (a) or (b)
above within a total of twenty (20) Calendar Days after receipt of the written
notice described in paragraph (a) above, either Party may request the Dispute be
escalated, and the respective positions of the Parties shall be forwarded to the
Chief Executive Officer (CEO) of each Party, and such executives shall meet
during such time to resolve the Dispute.

     (d)  In the event agreement cannot be reached under paragraphs (a), (b) or
(c) above within a total of thirty (30) Calendar Days after receipt of the
written notice described in paragraph (a) above, either Party may proceed with
arbitration in accordance with Article 27.2 (Arbitration)
.

     27.2  Arbitration.

     Subject to the provisions of Article 27.3 (Litigation), any Dispute not
resolved under Article 27.1 (Informal Dispute Resolution) (except Intellectual
Property Disputes ), Article 5.3

                                      93

(Disputed Amounts), or Article 12.4 (Disputed Performance) shall be resolved by
mandatory and binding arbitration in accordance with the provisions of this
Article 27.2 (Arbitration).

     (a)  The arbitration shall be conducted by a tribunal of three (3)
arbitrators (the "Tribunal"), each of whom shall have at least ten (10) years
experience in the aerospace and/or satellite telecommunications industry. Within
thirty (30) Calendar Days after the commencement of the arbitration, each Party
shall appoint one arbitrator, and those two arbitrators shall together appoint
the third neutral arbitrator.

     (b)  Any controversy or claim arising out of this Contract, including any
Dispute, shall be determined by binding arbitration in accordance with the
Arbitr
ation Rules of JAMS/Endispute (the "JAMS Arbitration Rules") then in
effect, except to the extent modified by this Article 27 (Dispute Resolution).

     (c)  The Parties shall be permitted to take discovery, if and as needed, by
deposition upon oral examination, requests for production of documents and
things, and requests for entry upon land for inspection and other purposes, as
those discovery methods are described and defined in the Federal Rules of Civil
Procedure; provided, however, that any limitations in the Federal Rules on the
number, timing, or sequence of such discovery requests shall not apply. The
scope of permissible discovery shall generally be as described in the Federal
Rules of Civil Procedure, Rule 26(b)(1), but the Parties shall use their best
efforts to focus and limit their discovery in accordance with the nature of the
dispute and the need for expedited resolution. The arbitral tribunal may expand
or limit the scope of permissible discovery and establish the time period within
whi
ch discovery responses must be served.

     (d)  Time is of the essence in the initiation and completion of the
arbitration. The arbitral hearing shall be commenced and conducted
expeditiously. Unless the Tribunal orders otherwise, the dispute should be
submitted to the Tribunal for decision within six (6) months after the
commencement of the arbitration, and the final award shall be rendered within
one (1) month thereafter. The Parties and the Tribunal shall use their best
efforts to comply with this schedule, and the Tribunal may impose any remedy it
deems just for any Party's effort to unnecessarily delay, complicate, or hinder
the proceedings.

     (e)  The arbitration shall be held in Washington, D.C., USA, and shall be
conducted in the English language.

     (f)  Any arbitration proceeding held pursuant to this Article 27 (Dispute
Resolution) shall be governed by the JAMS Rules and the United States
Arbitration Act, 9 U.S.C. (S)(S) 1 et seq. Judgment upon the award rendered by

                 -------
the Tribunal may be entered in any court having jurisdiction thereof. The
Tribunal shall apply the law of the State of New York, including the Uniform
Commercial Code (where and if applicable) as adopted by the State of New York.

     (g)  Pending a decision by the Tribunal, each Party shall, unless directed
otherwise by the other Party in writing, fulfill all its obligations under this
Contract, including the obligation to take all steps necessary during the
pendency of the arbitration to ensure the Work will be Delivered within the time
stipulated or within such extended time as may be allowed under this Contract,
provided Customer shall continue to make payments therefore in accordance with
this

                                      94

Contract (including the dispute resolution provisions hereof), and further
provided that, if Customer fails to make such payments, Contractor may stop
Work.

     (h)  The Tribunal's award may grant any remedy or relief that the Tribunal
deems just and equitable and within the scope of this Contract, including
specific performance or other equitable relief. Notwithstanding the foregoing,
the Tribunal shall have no power or authority to amend or disregard any
provision of this Article 27 (Dispute Resolution) or any other provision of this
Contract. The Tribunal also shall have no power or authority to award punitive
or exemplary damages to any Party.

     (i)  The non-prevailing Party, as determined by the Tribunal, shall pay the
costs of the arbitration.
In the event of an arbitration involving multiple
claims with different Parties prevailing on each claim, the Tribunal shall
apportion the costs of the arbitration (which shall not include Excluded Costs)
between or among the Parties in such manner as it deems reasonable, taking into
account the circumstances of the case, the nature of the claims, and the result
of the arbitration.

     (j)  The Tribunal shall award pre-award interest on any sums due (excluding
damages) determined by the Tribunal to be owing from one Party to the other
under this Contract. Any award shall also provide that interest shall continue
to accrue after the date of the award until the amount awarded is paid in full.
Interest shall be calculated at the rate set forth in Article 34.10 (Calculation
of Interest) for each day from forty-five (45) Calendar Days following the date
of loss or the date the arbitration was commenced, whichever is earlier, until
the date full payment is made.

     (k)  Each Party shall bear the costs of
its own legal representation,
witnesses produced by such Party, document production, and other discovery
expenses.

     27.3  Litigation.

     (a)  Notwithstanding the provisions of Article 27.2 (Arbitration) above, if
the Dispute requires that immediate equitable relief or relief in aid of
arbitration be obtained, either Party shall have the right to bring suit solely
to obtain preliminary or temporary injunctive relief, including specific
performance, solely for Intellectual Property issues. However, the Parties
contractually agree that Customer shall not seek specific performance where
Contractor has not been paid in accordance with the provisions of this Contract.
Requests for permanent injunctive relief shall be arbitrated pursuant to
Article 27.2 (Arbitration).

          (1)  Any such suit shall be brought in a court of competent
               jurisdiction in the State of New York, provided, however, the
               exclusive venue for any action brought in a New York state court

     shall be the Supreme Court for New York County, and the Parties
               hereby waive any objection to that venue. The Parties hereby
               irrevocably consent to personal jurisdiction in the state and
               federal courts in the State of New York concerning any Dispute
               between the Parties. If, for any reason, the state and federal
               courts of New York do not have or refuse to exercise jurisdiction
               over the Dispute, then litigation as permitted herein may be
               brought in any court of competent

                                      95

               jurisdiction in the State of Delaware, provided, however, the
               exclusive venue for any action brought in a Delaware state court
               shall be the Superior Court of New Castle County, and the Parties
               hereby waive any objection to that venue and the Parties hereby
               irrevocably consent to personal jurisdiction in the state and
               federal courts in the State of Delaware concerning any dispute
               between the Parties. If, for any reason, the state and federal
               courts of Delaware do not have or refuse to exercise jurisdiction
               over the Dispute, then litigation as permitted herein may be
               brought in any court of competent jurisdicti
on in the United
               States of America, or, if there is no such court, in any other
               nation.

          (2)  In the event a Party files a lawsuit pursuant to this Article
               27.3 (Litigation), the prevailing party shall be entitled to an
               award of its costs and fees, including reasonable attorney's
               fees, incurred with respect to the lawsuit. The defendant in such
               litigation shall be regarded as the prevailing party if either
               the court denies the equitable relief sought on the merits or the
               court otherwise decides that equitable relief is not warranted or
               the matter should be resolved by arbitration.

     (b)  In the event an entity or person not subject to the provisions of this
Article 27 (Dispute Resolution) commences any litigation or proceeding against
any Party hereto in which the other Party hereto is an indispensable party, the
Party against which the litigation or proceed
ing is brought may join or attempt
to join the other Party in such litigation or proceeding notwithstanding the
provisions of Article 27.2 (Arbitration). For purposes of this provision, the
other Party is an indispensable party in the lawsuit or proceeding if (i) in its
absence complete relief could not be accorded among those already a party to the
lawsuit or proceeding; (ii) its absence may as a practical matter impair or
impede its ability to protect its interests relating to the subject of the
lawsuit or proceeding; or (iii) its absence may leave the Party against which
the litigation or proceeding is brought subject to a substantial risk of
incurring double, multiple, or otherwise inconsistent obligations by reason of
the interest of the other Party relating to the subject of the lawsuit or
proceeding.

     (c)  Nothing in this Contract precludes a Party prevailing on any claim,
whether in arbitration or litigation, from initiating litigation in any
appropriate forum to enter or enforce a judgment
based on the Tribunal's or
court's award on that claim.



                                      96

28.  LAUNCH SERVICES

     (a)  Baseline Launch Vehicle.
     ---  ------------------------

     The baseline Launch Vehicle for the first and second Satellites to be
Delivered pursuant to this Contract shall be the Sea Launch Launch Vehicle.

     (b)  Alternate Launch Vehicles.
     ---  -------------------------

     In the event that there will be a delay in the schedule of either the first
or second Sea Launch Launch Vehicle, which delay will exceed six (6) months
beyond the last day of the applicable Launch Period, Customer may exercise any
one of the following options for alternate Launch Services subject to the
following conditions:

          (1)  Option 1

               (i)    Customer may select an alternate Launch Vehicle(s) from

            Contractor's then existing inventory of, H-IIA, or Long
                      March 3B Launch Vehicles, that, as of the date Customer
                      exercises the option, have not been sold or otherwise
                      assigned to other customers of Contractor, or to
                      Contractor's own satellite programs (for example, DirecTV,
                      Spaceway, PanAmSat).

               (ii)   The price for alternate Launch Vehicles shall be the same
                      as the price for the baseline Sea Launch Launch Vehicles.

               (iii)  If Customer exercises this option, the payment plan in
                      Exhibit G (Payment Plan and Termination Liability Amounts)
                      shall be amended in accordance with Contractor's payment
                      obligations in Contractor's various agreements with the
                      Launch Agencies providing the alternate Launch Vehicles,
                      and to provide that Cust
omer shall make such amended
                      payment(s) relating to the alternate Launch Vehicle(s) to
                      Contractor at least thirty (30) Calendar Days in advance
                      of Contractor's respective payment due date for such
                      payment to such Launch Agency(ies). The Parties
                      acknowledge and agree that any deferred or post-Launch
                      payment terms pursuant to this Contract apply only to the
                      baseline Launch Vehicles. Accordingly, and depending upon
                      which alternate Launch Vehicle(s) is/are selected and when
                      such selection is made, Customer may be obligated to make
                      a substantial lump sum payment in order to bring current
                      any retroactive Contractor progress or milestone payment
                      obligation related to the alternative Launch Vehicle(s).

                                      97

               ******  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.

               (iv)   If Customer exercises this option, Customer shall pay
                      Contractor an additional sum of [*****] as consideration
                      for Customer's selection of an alternate Launch Vehicle
                      for each baseline Launch Vehicle. Such payment shall be
                      made concurrent with the exercise of this option. Upon
                      such payment, Customer shall have no further termination
                      or other lia
bility with respect to the specific Sea Launch
                      Launch Vehicle abandoned by Customer. Notwithstanding the
                      foregoing, in the event Customer terminates an alternate
                      Launch Vehicle after Customer has exercised its option to
                      select such alternate Launch Vehicle in accordance with
                      this Article 28 (Launch Services), Customer's termination
                      liabilities related to Launch Services, as defined herein
                      and in Exhibit G (Payment Plan and Termination Liability
                      Amounts), shall be applicable to the alternate Launch
                      Vehicle.

               (v)    Customer's option to select an alternate Launch Agency may
                      be exercised by Customer at any time up to the last day of
                      the [*****] prior to the [*****] or to the [*****], as
                      applicable. However, the Parties recognize that

                      Contractor's inventory of Launch Vehicles will likely
                      diminish as the respective Launch Periods approach,
                      thereby reducing Customer's selection opportunities for
                      alternate Launch Vehicles if such option is exercised
                      later in the option period described herein.

          (2)  Option 2

               (i)    Customer may select an alternate Launch Vehicle from other
                      than Contractor's inventory of Launch Vehicles.

               (ii)   If Customer exercises this option, Customer shall pay
                      Contractor an additional sum of [*****] as consideration
                      for Customer's selection of an alternate Launch Vehicle
                      outside of Contractor's inventory. This Option 2 Election
                      Payment shall be made concurrent with the exercise of this
                      option. In addition, the termination liability schedu
le
                      for the abandoned Sea Launch vehicle shall be as follows:
                      [*****] as of March 23, 1998, increasing linearly on a
                      daily basis to [*****] after March 23, 1998 until Launch

                                      98

               ******  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.

                      minus Three (3) Months (L-3), and [*****] after L-3.
                      Customer shall pay Contractor the full termination
                      liability amount within thirty (30) Calendar Days after
                      this Option 2 is exercised (less any payments previously
                      made); or if Customer has previously made launch vehicle
                      payments exceeding the termination liability amount,
                      Customer's terminati
on liability under this paragraph (ii)
                      shall be offset and Contractor shall refund Customer
                      launch vehicle payments made exceeding the termination
                      liability amount within thirty (30) Calendar Days of
                      Customer's exercise of this Option 3. Upon payment of any
                      amount due under this paragraph (ii), or in the event no
                      amount is due under this paragraph (ii), upon exercise of
                      this Option 2, Customer shall have no further termination
                      or other liability with respect to the specific Sea Launch
                      abandoned by Customer.

               (iii)  If Contractor sells the abandoned Sea Launch launch
                      vehicle within [*****] after exercise of this Option
                      2, Contractor shall pay Customer the amount recovered by
                      Contractor up to the maximum of the termination liability

                      amount paid by Customer pursuant to paragraph (ii), less
                      Contractor's reasonable costs (including, but not limited
                      to, re-programming costs, inventory carrying charges and
                      unrecoverable costs) incurred in selling the abandoned
                      launch vehicle.

               (iv)   Customer may only exercise this option with respect to one
                      Sea Launch and may not exercise Option 3 below if this
                      option is exercised.

          (3)  Option 3

               (i)    Customer may select an alternate Launch Vehicle from other
                      than Contractor's inventory of Launch Vehicles.

               (ii)   If Customer exercises this option, Customer shall pay
                      Contractor an additional sum [*****] as consideration for
                      Customer's selection of an alternate Launch Vehicle
                      outside of Contractor's inventory
 concurrent with the
                      exercise of this option. Notwithstanding the foregoing, if
                      Customer has previously made launch vehicle payments
                      exceeding the Option 3 Election Payment, Customer's Option
                      3 Election Payment shall be offset and Contractor

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                      shall refund Customer payments made exceeding the Option 3
                      Election Payment within thirty (30) Calendar Days of
                      Customer's exercise of this Option 3. Upon payment of any
                      amount due under this paragraph (ii), or in the event no
                      amount is due under this paragraph (ii), upon exercise of
                      this Option 3, Customer shall have no further termination
                      or other liability with respect to the specific Sea Launch

                    abandoned by Customer.

               (iii)  Customer may only exercise this option with respect to one
                      Sea Launch and may not exercise Option 2 above if this
                      option is exercised.

     (c)  In the event Customer exercises any of the options set forth in
paragraph (b) above, to select a Launch Vehicle other than the baseline Sea
Launch, the Parties will amend (i) the definitions of the terms "Intentional
Ignition" and "Launch" to conform to the definitions of such terms set forth in
the respective Launch Agreement for such alternate Launch Vehicle, as
appropriate, and (ii) Article 33 (Inter-Party Waiver of Liability) so as to
conform to the relevant requirements of the country or countries having
jurisdiction over the Launch. In addition, in the event Customer exercises
either Option 2 or Option 3 set forth in paragraph (b) above, (i) the Parties
shall negotiate in good faith whether delivery of the relevant Satellite shall
be an in-orbit
or on-ground delivery under this Contract and in the event the
Parties determine it shall be an on-ground delivery, the Parties shall amend
those portions of this Contract related to such determination (e.g. transfer of
title and risk of loss, delivery schedule, acceptance, liquidated damages and
termination liability) as appropriate to reflect an on-ground delivery of the
relevant Satellite, (ii) Contractor shall perform, without charge (except to the
extent included in the Contract Price), Launch Campaign, Mission Support and
LEOP Services for any launch services substituted by Customer for the Launch
Services terminated hereunder, provided, however, Customer shall pay Contractor
for those extra costs incurred by Contractor as a result of providing Launch
Campaign, Mission Support and LEOP Services to a location other than one
contemplated hereunder, (iii) Customer shall pay Contractor for those extra
costs incurred by Contractor as a result of shipping the applicable Satellite to
a launch site other t
han one contemplated hereunder, and (iv) if requested by
Customer, Contractor shall perform launch management services for the
substituted launch services at a price mutually agreed by the Parties.

     (d)  If a Satellite Launched on a Sea Launch Launch Vehicle is declared a
failure for any reason, within the first three hundred sixty-five (365) Calendar
Days after such failed Launch, Customer shall be entitled to a replacement
Launch on another Sea Launch Launch Vehicle for an identical satellite, [*****].
The scheduling of such replacement Launch shall have priority over other
Launches on the Sea Launch Launch Manifest, except for scientific missions which
are time sensitive in nature.

     (e)  In the event a Launch fails to occur on or before the last day of the
applicable Launch Period, Contractor shall be liable to Customer for liquidated
damages for the late

                                      100

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delivery of Launch Services in the aggregate total amount of [*****] for each
Launch Vehicle, such liquidated damages to accrue at the daily rate of [*****],
commencing upon the first (1st) Calendar Day following the last day of the
Launch Period, and continuing for a maximum Launch Services damages period of
sixty (60) Calendar Days.   Notwithstanding the foregoing, the Launch Services
liquidated damages shall not affect any liquidated damages which may accrue for
late Delivery of any Satellite.   For the purpose of determining these Launch
Services liq
uidated damages as provided in this Article 28 (Launch Services), in
no event shall delay attributable to a Launch Agency be deemed an Excusable
Delay.


                                      101

29.  CUSTOMER'S RESPONSIBILITIES

     (a)  In addition to Customer's responsibilities identified in this
Contract, Customer shall also discharge those responsibilities, at no cost to
Contractor or to Subcontractors, as set forth in Exhibit B (Statement of Work)
and below.

     (b)  Customer will provide beneficial access to Contractor and its
Affiliates and Subcontractors at each Satellite Control Center, on a timely
basis, as necessary to permit Contractor to perform its obligations with respect
to such Satellite Control Centers and related services.

     (c)  In addition to, and without limiting the generality of, the foregoing,
Customer will be responsible for the following:

          (1)  providing all civil works utilities and environmental contro
ls
               associated with any Satellite Control Center; and

          (2)  obtaining Launch Insurance prior to Launch. Customer shall
               provide Contractor a certificate of such insurance coverage at
               Contractor's request.

     (d)  Customer shall provide written notification to Contractor as early as
practicable as to the identity and nationality of its employees and
Consultant(s) for whom access to Contractor's and Subcontractors' facilities are
required, and subsequent changes thereto, if any. It is recognized that certain
United States Government approvals may be required before such employees and
Consultant(s) have access to Work pursuant to the provisions of Article 6
(Access to Work).

     (e)  Customer is responsible for obtaining the necessary Specified Orbital
Locations, frequency spectrum allocations and other approvals and licenses to
operate its DARS Satellite Program.

     (f)  Reserved.

     (g)  Failure of Customer to discharge the responsibilities s
pecified in
this Article 29 (Customer's Responsibilities) may result in an equitable
adjustment to the Delivery Schedule, Delivery Dates, and/or Contract Price as
specified in paragraph (a) of Article 11.2 (Equitable Adjustments).

     (h)  Customer will make available, for Contractor's use, certain test
equipment and Customer facilities, as set forth in the Exhibit D (Test Plan
Requirements), as Contractor performs the In-Orbit Tests.

     (i)  Upon mutual agreement, Customer will make available to Contractor
Customer's facilities for use by Contractor during LEOP, as well as provide
technical support to Contractor during LEOP as a primary TT&C site in support
of LEOP.

                                      102

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with the Securities and Exchange Commission.  Confidential treatment has been
requested with respect to the omitted portions.

30.  OPTIONS

     30.1  Options Granted.

     Contractor hereby grants to Customer the options set forth in this
Article 30 (Options) to be exercised at Customer's sole discretion.

     30.2  Option to Delay Frequency Specification Beyond Two (2) Months.

     (a)  Customer shall select six (6) potential telemetry downlink
frequencies, as specified in Exhibit A (Spacecraft Performance Specifications),
within the first two (2) months following EDC for subsequent down-selection to
two (2) final telemetry downlink frequencies. If Customer makes a final
selection of the two (2) telemetry downlink frequencies within the first two (2)
months following EDC, there shall be no adjustment to the Contract Price.
However, should Customer fail to make such final selection of two (2) telemetry
downlink frequencies within the two (2) months following EDC, then Customer may
make the final selection of the two (2) telemetry downlink frequencies up to the
last day of the sixth (6th) month following EDC, provided that Customer shall
pay to Contractor an increase in the Contract Price of [*****] upon notification
by Customer to Contractor of Customer's final selection.

     (b)  In the event Customer fails to make such final selection of the
telemetry downlink frequencies provided in paragraph (a) above on or before the
last day of the sixth (6th) month after EDC, the Contract Price for such
Frequency Specification shall be adjusted in accordance with Article 14.1
(Changes Requested by Customer).

     30.3  Ground Spare Satellite.

     Contractor agrees to provide C
ustomer, at Customer's option, one Ground
Spare Satellite, to be delivered on-ground, of a design functionally identical
to Satellites to be delivered in-orbit under this Contract.  Such Ground Spare
Satellite shall be used as a replacement, spare, or additional satellite, as the
case may be, in the event of a failed Launch of any Satellite or to accommodate
Customer's satellite system growth or replenishment.  The Contract Price
includes Long-Lead Items and Activities to be procured or performed by
Contractor in order to permit delivery of such Ground Spare Satellite, if
ordered, on the expedited schedule set forth below in paragraph (b).

     (a)  Option Period.
          -------------

     Customer may order completion of the Ground Spare Satellite at any time
from ARP through the last day of the [*****] ("Option Period"). On or before the
date Customer orders completion of the Ground Spare Satellite, Customer shall
specify the orbital location for the Ground Spare Satellite; however, in the
event
Customer also exercises Customer's option to purchase the additional set
of reflectors pursuant to Article 30.7

                                      103

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with the Securities and Exchange Commission.  Confidential treatment has been
requested with respect to the omitted portions.

(Reflectors for Ground Spare Satellite), Customer's notification to Contractor
of the orbital location for such Ground Spare Satellite may be delayed until six
(6) months prior to the Available for Shipment date of such Ground Spare
Satellite. Contractor shall be responsible for storage costs of all Long-Lead
Items from EDC through the last day of the [*****]. In the event of an
Excusable Delay in accordance with Article 11 (Excusable Delay) or a Contractor
unexcused delay, the Option Period shall be extended day-for-day for the period
of such delay.


  (b)  Delivery.
          --------

     In the event Customer orders completion of the Ground Spare Satellite on or
before the last day of the twelfth (12/th/) month following ARP, the Ground
Spare Satellite shall be Available for Shipment to its designated Launch site no
later than four (4) months following the date upon which the second Satellite is
Available for Shipment. Subject to the provisions of paragraph (c) of Article
11.2 (Equitable Adjustments), in the event Customer orders completion of the
Ground Spare Satellite on or after the first day of the thirteenth (13/th/)
month following ARP through the last day of the [*****], the Ground Spare
Satellite shall be Available for Shipment to the launch site within twelve (12)
months following the date of such order, or four (4) months following the date
upon which the second Satellite is Available for Shipment, whichever is later.

     (c)  Price.
          -----
          (1)  The price for completion of the Ground Spare Satellite, including

             documentation, taxes, and ground insurance, but not including the
               price of Long-Lead Activities and Items, is [*****] if the
               Ground Spare Satellite is ordered from EDC through September 22,
               2000. When an order is placed by Customer on or after September
               23, 2000 through the last day of the [*****], the price stated
               above shall be increased at a rate of [*****] per quarter for
               each quarter on or after September 23, 2000 until the date of
               placement by Customer of such order. For example, if the order
               for the Ground Spare Satellite is placed on May 15, 2001,
               Customer shall pay the price stated above, plus escalation
               computed for two calendar quarters. The price for the Ground
               Spare Satellite, together with any applicable price escalation
               described in the preceding sentence, shall apply to an order
               place
d by Customer for the Ground Spare Satellite through the
               last day of the [*****].

          (2)  Where the Delivery of either Satellite is delayed beyond its
               originally scheduled Delivery Date, and such delay is not an
               Excusable Delay, incurrence of price escalation described in the
               preceding paragraph shall be delayed on a day-for-day basis equal
               to the non-Excusable Delay period. Where the Delivery of either
               Satellite is delayed beyond its original scheduled Delivery Date
               (whether such delay is due to Excusable Delay or Contractor
               unexcused delay), the Option Period for ordering completion of
               the Ground Spare Satellite shall also be extended on a day-

                                      104

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          separately with the Securities and Exchange Commission.  Confidential
          treatment has been requested with respect to the omitted portions.

          for-day basis.  For example,  if the first Satellite is Delivered one
          hundred and twenty (120) Calendar Days after its originally scheduled
          Delivery Date for non-Excusable Delay reasons, the first date at which
          a price escalation shall apply shall be January 21, 2001 and shall
          continue through one hundred and twenty (120) Calendar Days following
          the last day of the [*****].

     (d)  Payment and Deferred Financing.
          -------------------------------

  (1)  The price for the Ground Spare Satellite will be paid in
               accordance with the payment plan attached hereto as Exhibit G-2
               (Ground Spare Satellite Payment Plan and Termination Liability
               Amounts).

          (2)  If Customer orders the Ground Spare Satellite, Contractor shall
               provide [*****] of deferred financing payable in quarterly
               installments of interest only, over five (5) years from the
               satisfactory completion of the Ground Spare Satellite (no earlier
               than ARP plus twenty-four (24) months), with the principal of
               such amount to be paid at the end of such five (5) year period.
               In such event, Contractor shall retain title to, and store (in
               accordance with Article 14.4 (Storage)), the Ground Spare
               Satellite prior to Launch or other disposition by Customer and
               repayment of principal by Customer. In the event of a Launch
or
               other disposition of the Ground Spare Satellite by Customer,
               Customer shall either repay the outstanding principal balance
               prior to Launch Readiness Review, or provide alternative security
               reasonably acceptable to Contractor.

          (3)  Such quarterly installments of interest shall be calculated at a
               rate equal to [*****] compounded annually, computed beginning on
               the date that the Ground Spare Satellite is Available for
               Shipment to its designated Launch site, and continuing for five
               (5) years or until repayment of the outstanding principal.

     (e)  Failure to Order Ground Spare Satellite.
          ---------------------------------------

     Where Customer makes the  payments for the Long-Lead Activities and Items
for the Ground Spare Satellite, but fails to order completion of the Ground
Spare Satellite within the Option Period, as may be adjusted in accordance with
this
 Contract, the option for the Ground Spare Satellite shall no longer be
effective and Contractor shall sell the Long-Lead Items and pay the sale
proceeds, less Contractor's reasonable selling expense, to Customer.

     (f)  Contract Adjustments.
          --------------------

     Contractor shall furnish the Ground Spare Satellite in accordance with the
provisions of the documents constituting this Contract.   Except as otherwise
required by the terms and


                                      105

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conditions of this Article 30 (Options), the contract Terms and Conditions for
the Ground Spare Satellite will be identical to the Terms and Conditions of this
Contract; provided, however, (i) liquidated damages for late delivery of the
Ground Spare Satellite shall be [*****] (if the Ground Spare Satellite is used
as a replacement satellite), or [*****] (if the Ground Spare Satellite is used
as an additional satellite); (ii) where the Ground Spare Satellite is ordered as
a replacement satellite, such terms shall not include additional in-orbit
performance incentive payments (other than the rolled-over incentives provided
in Article 12.3 (Calculation and Earning of Incentive Amounts)), (iii) such
terms shall include no other deferred payments, other than specified in this
Article 30.3 (Ground Spare Satellite), unless mutually agreed by the Parties,
and (iv) any other adjustments necessary to reflect an on-ground delivery of the
Ground Spare Satellite, unless Customer also orders an option Launch Vehicle
pursuant to Article 30.8 (Optional Launch Vehicles) below. Where the Ground
Spare Satellite is ordered as an additional satellite (instead of a replacement
satellite), in-orbit performance incentive payments shall be [*****].

     30.4  Launch Campaign and LEOP Services for Ground Spare Satellite and/or
           4th and 5th Optional Satellites.

     Contractor agrees to provide Customer, at Customer's request, Launch
Campaign and LEOP services for the Ground Spare Satellite and/or the 4th and 5th
Optional Satellites, if either or both of these options are exercised by
Customer.  In the event Customer elects the High Power Option in accordance
with Article 30.6 (High Power Option), this option for Launch Campaign and LEOP
services shall continue to apply without any change.

     (a)  Option Period.
          -------------

     Customer may order Launch Campaign  and/or LEOP services for the Ground
Spare Satellite and the 4th and 5th Optional Satellites at any time prior to
[*****] before the scheduled Launch Date for the applicable Ground Spare
Satellite and/or 4th and 5th Optional Satellites.

     (b)  Price.
          -----

     The price for Launch Campaign and LEOP services for each of the Ground
Spare Satellite and 4th and 5th Optional Satellites, including taxes and
documentation, is [*****], for each such Satellite ordered by Customer from EDC
through September 22, 2000.  Beginning on September 23, 2000, , the price will
escalate at the rate of [*****] per quarter for each quarter after September 23,
2000, until the date the order is placed.  The price and the price escalation
described in the preceding sentence, shall apply to orders placed for the Ground
Spare Satellite and the 4th and 5th Optional Satellites through the last day of
the [*****] following ARP.

     (c)  Payment.
          -------

                                      106

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has been requested with respect to the omitted portions.

The price for Launch Campaign and LEOP services, as such price may be escalated
in accordance with paragraph (b) above, for each the Ground Spare Satellite and
the 4th and 5th Optional Satellites shall be paid as follows:

          (1)  Fifty percent (50%) of such price at the time Customer places an
               order with Contractor for completion of the Ground Spare
               Satellite or places an order for the purchase of either or both
               of the 4th and 5th Optional Satellites, as applicable; and

          (2)  Fifty percent (50%) of such price on Final Acceptance of the
               Ground Spare Satellite or the 4th and 5th Optional Satellites, as
               applicable.

     30.5  4th and 5th Optional Satellites.

     Contractor agrees to provide Customer with options to purchase up to two
(2) additional satellites ("4th and 5th Optional Satellites") to be delivered
on-ground, and of a design functionally identical to the Satellites.

     (a)  Option Period.
          --------------

     Customer may exercise this option to order either or both of the 4th and
5th Optional Satellites at any time through the last day of the [*****]
following ARP.   In the event of an Excusable Delay in accordance with Article
11 (Excusable Delay) or a Contractor unexcused delay, the Option Period shall be
extended day-for-day for the period of such delay.

     (b)  Delivery.
          ---------

     Contractor shall perform the work in connection with the 4th and 5th
Optional Satellites, if one or both are ordered, so the 4th and 5th Optional
Satellites are Available for Shipment within twenty-four (24) months after
order, or four (4) months after the Ground Spare Satellite is Available for
Shipment, if applicable, whichever is later.  In the event that the 4th and 5th
Optional Satellites are ordered concurrently, delivery of the 5th Optional
Satellite shall be no earlier than four (4) months following Delivery of the 4th
Optional Satellite.

     (c)  Price.
          ------

     The price for the 4th and 5th Optional Satellites is [*****] for each such
Optional Satellite. When an order is placed by Customer during the period
beginning on September 23, 2000 through the last day of the [*****] following
ARP, the price stated above shall be increased at a rate of [*****] per
quarter for each quarter during such period

                                      107

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requested with respect to the omitted portions.

until the date of placement by Customer of such order. For example, if Customer
places an order for an optional Satellite on May 15, 2001, Customer shall pay
the price stated above, plus escalation computed for two calendar quarters. The
price for each of the 4th and 5th Optional Satellites includes design,
manufacture, testing, taxes, and ground insurance for each such ****** 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 omit
ted portions.



Optional Satellite, up to and including Shipment Readiness Review.

     (d)  Payment.
          --------

     The price for the 4th and 5th Optional Satellites shall be paid in
accordance with the payment plan set forth in Exhibit G-3 (4th and 5th Optional
Satellite Payment Plan and Termination Liability Amounts).  In the event
Customer exercises the option to purchase a 4th and/or 5th Optional Satellite,
the applicable Milestone Payment Plan(s) therefor shall be mutually agreed by
the Parties at such time as the option to purchase the 4th and/or 5th Optional
Satellite is exercised.

     (e)  Contract Adjustments.
          --------------------

     Contractor shall furnish the 4th and 5th Optional Satellites in accordance
with the provisions of the documents constituting this Contract.  Except as
otherwise required by the terms and conditions of this Article 30.5  (4th and
5th Optional Satellites), the contract terms and conditions for such Optional
Satellite(s) will be identical t
o the Terms and Conditions of this Contract,
except that (i) liquidated damages for late delivery  shall be [*****] for each
such Optional Satellite, and (ii) the in-orbit performance incentive payments
shall be [*****] for each such Optional Satellite, and (iii) such terms shall
include no other deferred payments unless mutually agreed by the Parties.

     30.6  [RESERVED]

     30.7  Reflectors for the Ground Spare Satellite.

     Contractor shall provide Customer, at Customer's request, an additional
flight ship set of two (2) reflectors for the Ground Spare Satellite, if
ordered, as more fully described in Exhibit A (Spacecraft Performance
Specifications).  The price for such additional set of reflectors shall be
[*****].  Customer shall exercise this option concurrently with any exercise by
Customer of the Ground Spare Satellite option.   The price for such additional
set of reflectors shall be paid as follows:  (i) [*****] upon placement of order
by Customer, and (ii) [*****] upon completion of t
he manufacturing for such
reflectors.

     30.8  Optional Launch Vehicles.

     Subject to availability and in accordance with these Terms and Conditions,
except as expressly modified by this Article 30 (Options), Contractor grants
Customer an option to purchase an additional Sea Launch Launch Vehicle and
related services for the Launch of the Ground Spare Satellite or any other
Optional Spacecraft which may be purchased by Customer from Contractor pursuant
to this Contract, in accordance with the following Table 30.8.


                                      108

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requested with respect to the omitted portions.

                                  Table 30.8
              Optional Launch Vehicle - Option Periods and Prices

------------------------------------------------------------------------------
If ordered from:                                                     Price:
------------------------------------------------------------------------------
1.  EDC through March 22, 1999                                       [*****]
------------------------------------------------------------------------------
2.  March 23, 1999 through March 22, 2001
            [*****]
------------------------------------------------------------------------------

     30.9  Contract Adjustments.

     Should Customer exercise any or all of the  options described in this
Article 30 (Options), the Parties shall execute Amendment(s) as soon as is
reasonably possible after option exercise to incorporate the schedule
adjustments, price adjustments, payment schedule adjustments, and changes to the
Exhibits and other Terms and Conditions as made necessary by such exercise.
Except as otherwise provided in this Article 30 (Options), the terms of this
Contract shall apply to any such options.

     31.  FAILURE TO MAKE ADEQUATE PROGRESS


     If, at any time prior to Delivery of a Deliverable Item (but not
thereafter), Contractor has failed to make adequate progress toward the
completion of such Deliverable Item, including where such failure is due to the
Deliverable Item or any component thereof being damaged or destroyed where such
damage or destruction does not constitut
e an Excusable Delay, such that
Contractor, due to causes related to such Deliverable Item, will not be able to
Deliver the Deliverable Item by the applicable Delivery Date (as such date may
have been modified in accordance with this Contract) for such Deliverable Item,
then Customer shall be entitled to deliver to Contractor a Demand for correction
of the failure to make adequate progress.  Such Demand shall state full details
of the failure.  Within ten (10) Calendar Days after receipt of the Demand, or
such longer time as the Parties may agree, Contractor shall submit to Customer a
Correction Plan (in the level of detail feasible within that timeframe) for
achieving Delivery not later than the one hundred fiftieth (150th) Calendar Day
following the originally scheduled Delivery Date.  If such Correction Plan does
not reasonably correct or offset the effect of the failure so as to demonstrate
that Delivery of the Deliverable Item affected thereby can be achieved within
one hundred fifty (150) Calendar
Days after the originally scheduled Delivery
Date, Customer may reject the Correction Plan, and Contractor shall revise the
Correction Plan so as to demonstrate that Delivery for the Deliverable Item
affected thereby can be achieved within one hundred fifty (150) Calendar Days
after the originally scheduled Delivery Date. Nothing herein shall be construed
to release Contractor from its obligation to make Liquidated Damages payments as
applicable in accordance with Article 10 (Liquidated Damages for Late Delivery).

                                      109

32.  TERMINATION
     32.1  Termination for Customer's Convenience.

     (a)  Customer may, upon written notice to Contractor, at any time terminate
the Work, in whole or in part, in accordance with the terms set forth below, and
Contractor shall immediately cease Work in the manner and to the extent
specified below. Notwithstanding the foregoing, in no event shall there be a
termination for convenience by Customer under this Article 32.1 (Termination for
Customer's Convenience) (i) with respect to any Satellite that has been
Launched, whether or not such Launch is successful and (ii) with respect only to
either or both Launch Vehicles, unless Customer has made the Major Calendar
Payment with respect to such Launch Vehicle or Launch Vehicles, as applicabl
e.

     (b)  In the event of partial termination of the Work in accordance with
this Article 32.1 (Termination for Customer's Convenience), Customer's notice of
termination will specify the portion of the Work terminated, and the remaining
provisions of this Article 32.1 (Termination for Customer's Convenience) shall
apply to such terminated portion. All other portions of the Work shall continue
unaffected.

     (c)  Upon receipt of a notice of termination, as provided in (a) above,
Contractor shall take the following actions:

          (1)  stop Work under this Contract on the date and to the extent
               specified in the notice of termination, except those services
               that are specifically intended to be provided in connection with
               a termination of this Contract;

          (2)  withhold delivery of any of the items to be supplied hereunder
               until Contractor has received full payment under this Article
               32.1 (Termination for Customer's
Convenience);

          (3)  place no further orders or subcontracts for materials, services,
               or facilities to the extent they relate to the performance of the
               Work terminated;

          (4)  terminate orders and Subcontracts to the extent they relate to
               the performance of the Work terminated;

          (5)  settle all outstanding liabilities and all claims arising out of
               such termination of orders and Subcontracts for materials,
               services, or facilities; and

          (6)  take such action as may be reasonably necessary, or as Customer
               may direct, for the protection and preservation of the property
               related to this Contract that is in the possession of Contractor
               or any Subcontractor and in which Customer has or may acquire an
               interest.

     (d) In the event of termination under this Article 32.1 (Termination for
Customer's Convenience) and provided the termination is
 not due to Contractor's
default under Article 32.2

                                      110

(Termination for Contractor's Default), Contractor shall be entitled to payment
of an amount equal to the Termination Liability Amount specified in Exhibit G
(Payment Plan and Termination Liability Amounts), and interest on any other
payment not made when required to be made hereunder, less the sum of all amounts
received by Contractor in cash or cash equivalent under this Contract. In no
event shall the amounts payable pursuant to this Article 32.1 (Termination for
Customer's Convenience) exceed the Contract Price. In the event of a termination
of this Contract in part, as permitted by the terms of this Contract, the
Parties shall negotiate an equitable termination liability amount to be paid to
Contractor for that portion of the Work so terminated.


 (e) Contractor shall submit an invoice to Customer in accordance with
paragraph (d) above within sixty (60) Calendar Days after the termination date,
which invoice shall specify the amount due to Contractor from Customer pursuant
to this Article 32.1 (Termination for Customer's Convenience). By notice in
writing received by Contractor no later than fifteen (15) Calendar Days after
receipt of Contractor's invoice pursuant to this Article 32.1 (Termination for
Customer's Convenience), Customer may dispute the amount of interest specified
in said invoice. In the event Customer does not so notify Contractor that it
disputes the interest in Contractor's invoice within fifteen (15) Calendar Days
after receipt thereof, Customer shall be deemed to have accepted such invoice.
Contractor shall be entitled to payment by Customer of undisputed amounts in
such invoice within fifteen (15) Calendar Days after Customer's receipt of the
invoice, and with respect to disputed interest amounts, ten (10) Calendar Days
after
 the resolution of such dispute. Payment of such amount by any Financing
Entity on behalf of Customer shall relieve Customer from its obligation to make
such payment.

     (f)  Payment of the amount payable by Customer to Contractor pursuant to
paragraph (d) above shall constitute a total discharge of Customer's liabilities
to Contractor for termination pursuant to this Article 32.1 (Termination for
Customer's Convenience).

     (g)  Upon completion of all payments in accordance with this Article 32.1
(Termination for Customer's Convenience), Customer may require Contractor to
transfer to Customer in the manner and to the extent directed by Customer, title
to and possession of any items comprising all or any part of the Work terminated
(including all Work-in-progress, parts and materials, and all inventories and
associated warranties), and Contractor shall, upon direction of Customer,
protect and preserve property at Customer's expense in the possession of
Contractor or its Subcontractors in which Cust
omer has an interest and shall
facilitate access to and possession by Customer of items comprising all or part
of the Work terminated. Alternatively, Customer may request Contractor to make a
reasonable, good faith effort to sell such items and to remit any sales proceeds
to Customer less a deduction for costs of disposition reasonably incurred by
Contractor for such efforts. To the extent Contractor's compliance with this
paragraph (g) requires governmental approvals and Contractor cannot, with the
exercise of commercially reasonable efforts, procure such approvals, Contractor
shall be excused from performing its obligations under this paragraph (g).

     (h) If in Contractor's judgment it is feasible for Contractor to utilize
any items of terminated Work, it shall submit to Customer an offer to acquire
such items. If such offer is accepted, Contractor's termination invoice shall be
credited with the agreed acquisition price.

                                      111

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     separately with the Securities and Exchange Commission.  Confidential
     treatment has been requested with respect to the omitted portions.

     32.2  Termination For Contractor's Default.

     (a) Customer may terminate this Contract, in whole or in part, upon service
of written notice of default to Contractor at any time after the occurrence of
any of the following:

          (1)  Subject to any schedule adjustments pursuant to Article 11
               (Excusable Delay), Contractor fails to meet the following program
               Milestone events:

               (i)   Conduct Spacecraft Preliminary Design Review (PDR) by
                     [*****];

              (
ii)   Conduct Spacecraft Critical Design Review (CDR) by [*****];

             (iii)   Mate Bus and Payload Module for the first Satellite by
                     [*****];

              (iv)   first Spacecraft Available for Shipment to Launch site by
                     [*****];

               (v)   Mate Bus and Payload Module for the second Satellite by
                     [*****]; or

              (vi)   second Spacecraft Available for Shipment to Launch site by
                     [*****].

          (2)  A Satellite has not been Delivered on or before the applicable
               Delivery Date (as may be extended in accordance with this
               Contract) and all applicable liquidated damages for late delivery
               that may accrue to Customer's benefit for the late delivery of
               said Satellite have been exhausted in accordance with Article 10
               (Liquidated Damages for Late Delivery);

          (3)  If, with respect to the first Satellite, at [**
***], the Launch
               Agency has failed to establish the Launch Slot to begin no later
               than [*****], or if, with respect to the second Satellite, at
               [*****], the Launch Agency has failed to establish the Launch
               Slot to begin no later than [*****];

          (4)  Contractor commences a voluntary proceeding concerning itself
               under any applicable bankruptcy, insolvency, reorganization,
               adjustment of debt, relief of debtors, or similar law
               ("Insolvency Law"); or any involuntary proceeding commences
               against Contractor under an Insolvency Law and

                                      112

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               filed separately with the Securities and Exchange Commission.
               Confidential treatment has been requested with respect to the
               omitted portions.

          the petition has not been dismissed within ninety (90) Calendar Days
          after commencement of the proceeding; or a receiver or custodian is
          appointed for or takes charge of all or a substantial portion of the
          property of Contractor and such custodian or receiver has not been
          dismissed or discharged within sixty (60) Calendar Days; or Contractor
          has taken action toward the winding-up, dissolution, or liquidation of
          Contractor or its
 business; or Contractor has been adjudicated
          insolvent or bankrupt or an order for relief or any other order
          approving a case or proceeding under any Insolvency Law has been
          entered; or Contractor has made a general assignment for the benefit
          of creditors or becomes unable to pay its debts generally as they
          become due. Should Contractor become a debtor in any bankruptcy
          proceeding, Contractor shall move to assume or reject this Contract
          within forty-five (45) Calendar Days after the entry of any order for
          relief; or

          (5)  Contractor has purported to assign or transfer this Contract in
               violation of the provisions of Article 34.1 (Assignment) and
               Contractor fails to cure such unauthorized purported assignment
               or transfer within thirty (30) Calendar Days after receiving
               written notice from Customer of the unauthorized purported
               assignment or tr
ansfer.

     (b) In the event Customer terminates this Contract pursuant to paragraph
(a), Customer shall be entitled to, subject to paragraph (d) below, refund of
all payments previously made to Contractor in cash under this Contract and
payment of any liquidated damages for delay levied pursuant to Article 10
(Liquidated Damages for Late Delivery) and, as damages, direct reasonable re-
procurement costs in excess of the Contract Price, such re-procurement costs to
be actually incurred and invoiced to Contractor in reasonable detail and not to
exceed [*****]; provided, however, if Customer terminates this Contract pursuant
to paragraph (a)(2) above for late delivery and such late delivery is caused by
unexcused delay under Article 10.3 (Termination for Unexcused Delay) on which
liquidated damages have been levied, Customer shall not be entitled to such re-
procurement costs.

     (c) Upon Contractor's completion of all payments under paragraph (b) above,
Contractor shall be entitled to retain title to
 any and all Work, Work-in-
progress, parts or other material, inventories and any associated warranties,
and any subcontracted items Contractor has specifically produced, acquired, or
entered into in accordance with this Contract. Until Contractor has paid to
Customer the payments required under paragraph (b) above, Customer shall have an
interest in the Work, subject to Article 5.7 (Security Interest).

     (d) Customer shall submit an invoice to Contractor for the amounts payable
under paragraph (b) no later than one (1) year after the termination date. The
amounts payable by Contractor under paragraph (b) above shall be verified at
Contractor's request and expense by an internationally recognized firm of
accountants appointed by Contractor for that purpose subject to approval of
Customer. Contractor's right to verification shall be without prejudice to the

                                      113

rights of either Party under Article 27 (Dispute Resolution). The report issued
by the accountants may be used by either Party during any arbitration
proceedings, but the report shall not be binding on the arbitral tribunal. By
notice in writing received by Customer no later than sixty (60) Calendar Days
after receipt of Customer's invoice pursuant to paragraph (b), Contractor may
dispute the amount of said invoice. In the event Contractor does not so notify
Customer that it disputes Customer's invoice, Contractor shall be deemed to have
accepted said invoice. Customer shall be entitled to payment of such amount
within fifteen (15) Calendar Days after Contractor's receipt of such invoice or,
in the event of dispute, ten (10) Calendar Days after the resolut
ion of such
dispute.

     (e) Notwithstanding any other provision of this Article 32 (Termination), a
termination for Contractor's default shall not relieve the Parties of their
obligations with respect to any Launched Satellite and there will be no right of
termination for default with respect to a Launched Satellite.

     (f) In the event Customer terminates this Contract as provided in paragraph
(a), Contractor, if requested in writing by Customer, shall assign to Customer
or its designee, such Subcontracts as requested by Customer, to the extent
permitted by such Subcontracts.

     (g) If, after termination of this Contract under the provisions of
paragraph (a), it is determined by arbitration, pursuant to Article 27 (Dispute
Resolution), or admitted in writing by Customer, that Contractor was not in
default under the provisions of paragraph (a), or that any delay giving rise to
the default was excusable under the provisions of Article 11 (Excusable Delay),
such termination shall be considered a T
ermination for Convenience by Customer
and the provisions of Article 32.1 (Termination for Customer's Convenience)
shall apply.

     (h) Contractor's compliance with this Article 32.2 (Termination for
Contractor's Default) shall constitute Customer's sole and exclusive remedy in
the event of a termination for Contractor's default.

     32.3  Termination for Customer's Default.

     (a) Contractor may stop work or terminate this Contract in whole or in part
upon service of written notice of default to Customer at any time after the
occurrence of any of the following:

          (1)  Subject to paragraph (2), if Contractor gives written notice to
               Customer of default in the payment of any amount, including
               Milestone Payments, Major Calendar Payments, and other Calendar
               Payments, when such amount shall have become due and payable; or

          (2)  Customer fails to cause Contractor to be paid any Milestone
               Payment amounts determined to be due a
nd payable under Article
               5.3 (Disputed Amounts) within the time period set forth in
               Article 5.3 (Disputed Amounts); or

          (3)  Customer commences a voluntary proceeding concerning itself under
               any applicable bankruptcy, insolvency, reorganization, adjustment
               of debt,
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               and filed separately with the Securities and Exchange Commission.
               Confidential treatment has been requested with respect to the
               omitted portions.


               relief of debtors or similar law ("Insolvency Law"); or any
               involuntary proceeding commences against Customer under an
               Insolvency Law and the petition has not been dismissed within
               ninety (90) Calendar Days after commencement of the proceeding;
               or a receiver or custodian is appointed for or takes charge of
               all or a substantial portion of the property of Customer and such
               custodian or receiver
has not been dismissed or discharged within
               sixty (60) Calendar Days; or Customer has taken action toward the
               winding-up, dissolution, or liquidation of Customer or its
               business; or Customer has been adjudicated insolvent or bankrupt
               or an order for relief or any other order approving a case or
               proceeding under any Insolvency Law has been entered; or Customer
               has made a general assignment for the benefit of creditors or
               becomes unable to pay its debts generally as they become due.
               Should Customer become a debtor in any bankruptcy proceeding,
               Customer shall move to assume or reject this Contract within
               forty-five (45) Calendar Days after the entry of any order for
               relief; or

          (4)  Customer has purported to assign or transfer this Contract in
               violation of the provisions of Article 34.1 (Assignment) and
               Cu
stomer fails to cure such unauthorized assignment or transfer
               within thirty (30) Calendar Days after receiving written notice
               from Contractor of such unauthorized purported assignment or
               transfer by Customer; or

          (5)  Customer fails to raise [*****] in financing in addition to the
               [*****] required by Article 7(d) for a total minimum of the
               [*****] in financing within one hundred eighty (180) Calendar
               Days after ARP.

     (b) Upon the occurrence of an event of default under paragraph (a) above,
and following the expiration of any applicable cure period, Contractor shall
have the following rights (in addition to termination):

          (1)  Contractor may stop Work immediately under this Contract and all
               obligations of Contractor shall terminate hereunder;

          (2)  Contractor may, at its sole option, terminate its obligations to
               cause a Launch Vehicle to be provided for
 the benefit of
               Customer, without terminating the whole Contract; provided,
               however, if Contractor terminates this Contract in part,
               Contractor may terminate only the Launch Vehicle obligations
               applicable to the portion of this Contract being so terminated
               (by way of example, if Contractor terminates this Contract in
               part with respect to the first Satellite to be delivered, only
               the Launch Vehicle obligations related to the Launch of the first
               Satellite may be terminated);

                                      115

          (3)  Contractor shall be entitled to retain possession and title to
               the Work, and all items thereof, and all payments received prior
               to such termination, unless and until all payments due under the
               Contract as a result of any termination by Contractor have been
               received by Contractor in immediately available funds;

          (4)  Contractor may sell the Work, or items thereof to a person other
               than Customer, provided the proceeds of such sale of such Work
               are applied to off-set any termination liability amounts due to
               Contractor by Customer;

          (5)  Contractor may withhold delivery of any of the items to be
               supplied her
eunder until Contractor has received full payment
               under this Article 32.3 (Termination for Customer's Default);

          (6)  Contractor shall place no further orders or subcontracts for
               materials, services, or facilities to the extent they relate to
               the performance of the Work;

          (7)  Contractor shall terminate orders and Subcontracts to the extent
               they relate to the performance of the Work;

          (8)  Contractor shall settle all outstanding liabilities and all
               claims arising out of such termination of orders and Subcontracts
               for materials, services, or facilities;

          (9)  Contractor shall take such action as may be reasonably necessary
               for the protection and preservation of the property related to
               this Contract that is in the possession of Contractor or any
               Subcontractor and in which Customer has or may acquire an
               interest; and


       (10)  Should Customer become a debtor in any bankruptcy proceeding,
               Customer shall move to assume or reject this Contract within
               forty-five (45) Calendar Days after the entry of any order for
               relief.

     (c) Nothing in this Article 32.3 (Termination for Customer's Default) shall
limit any rights (and associated remedies to enforce these rights) that
Contractor may have in the Work by virtue of its security interest (pursuant to
Article 5.7 (Security Interest)) in the Work and the Ground Spare Satellite, if
elected to be purchased pursuant to Article 30 (Options).

     (d) In the event Contractor terminates this Contract, in whole or in part,
as provided above, Contractor shall be entitled to payment of the amounts
specified in Article 32.1 (Termination for Customer's Convenience).

     (e) Contractor shall submit an invoice to Customer in accordance with
paragraph (d) above within sixty (60) Calendar Days after the termination date,
which invoice sh
all specify the amount due to Contractor from Customer pursuant
to this Article 32.3 (Termination for Customer's Default). By notice in writing
received by Contractor no later than fifteen (15) Calendar Days after receipt of
Contractor's invoice pursuant to this Article 32.3 (Termination for

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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

Customer's Default), Customer may dispute the amount of any interest specified
in said invoice.  In the event Customer does not so notify Contractor that it
disputes the interest in Contractor's invoice within fifteen (15) Calendar Days
after receipt thereof, Customer shall be deemed to have accepted such invoice.
Contractor shall be entitled to payment by Customer of undisputed amounts in
such invoice within fifteen (15) Calendar Days after receipt of the invoice, and
with respect to  disputed interest amounts, ten (10) Calendar Days after
resolution of s
uch dispute.  Payment of such amount by any Financing Entity on
behalf of Customer shall relieve Customer from its obligation to make such
payment.

     (f) Payment of the amount payable by Customer pursuant to paragraph (c)
above shall constitute a total discharge of Customer's liabilities to Contractor
for termination pursuant to this Article 32.3 (Termination for Customer's
Default).

     (g) Upon completion of all payments to Contractor in accordance with this
Article 32.3 (Termination for Customer's Default), Customer may require
Contractor to transfer to Customer in the manner and to the extent directed by
Customer, title to and possession of any items comprising all or any part of the
Work terminated (including all Work-in-progress, parts and materials, all
inventories, and associated warranties), and Contractor shall, upon direction of
Customer, protect and preserve property at Customer's expense in the possession
of Contractor or its Subcontractors in which Customer has an interest and shall
f
acilitate access to and possession by Customer of items comprising all or part
of the Work terminated. Alternatively, Customer may request Contractor to make a
reasonable, good faith effort to sell such items and to remit any sales proceeds
to Customer less a deduction for costs of disposition reasonably incurred by
Contractor for such efforts on terms agreed to by the Parties at that time.

     (h) Except as specified in this Contract, Contractor shall not have the
right to terminate or suspend this Contract.

     32.4  Termination for Excusable Delay.

     (a) Customer may, upon written notice to Contractor, immediately terminate
this Contract, in whole or in part, if and when it becomes reasonably certain
that the aggregate of Excusable Delays (except those Excusable Delays caused
directly by Customer's failure to perform its responsibilities under this
Contract) will exceed four hundred eighty-five (485) Calendar Days.

     (b) In the event of termination under this Article 32.4 (Termination for
Excusable Delay), Customer shall be entitled to, subject to paragraph (c) below,
refund of all payments previously made to Contractor in cash or cash equivalent
under this Contract and payment of any liquidated damages, if any, for delay
levied pursuant to Article 10 (Liquidated Damages for Late Delivery), less
[*****] of all such payments (excluding liquidated damages) (the "Refund
Reduction Amount"), which Refund Reduction Amount shall not exceed a total of
[*****].

                                      117

     (c) Upon completion of all payments to Customer in accordance with this
Article 32.4 (Termination for Excusable Delay), Contractor shall be entitled to
retain title to any and all Work, Work-in-progress, parts or other material,
inventories, and any associated warranties, and any subcontracted items
Contractor has specifically produced, acquired, or entered into in accordance
with this Contract.

     (d) Customer shall submit an invoice to Contractor for the amounts payable
under this Article 32.4 (Termination for Excusable Delay) no later than one (1)
year after the termination date. By notice in writing received by Customer no
later than fifteen (15) Calendar Days after receipt of Customer's invoice
pursuant to this Article 32.4 (Termination for E
xcusable Delay), Contractor may
dispute the amount of said invoice. In the event Contractor does not so notify
Customer that it disputes Customer's invoice, Contractor shall be deemed to have
accepted said invoice. Customer shall be entitled to payment of such amount
within fifteen (15) Calendar Days after Contractor's receipt of such invoice or,
in the event of dispute, ten (10) Calendar Days after the resolution of such
dispute.

     (e) In the event it is determined by arbitration pursuant to Article 27
(Dispute Resolution) or by written agreement of the Parties that Customer
wrongfully terminated this Contract under this Article 32.4 (Termination for
Excusable Delay), such termination shall be considered a Termination for
Convenience by Customer and the provisions of Article 32.1 (Termination for
Customer's Convenience) shall apply.

     32.5  Time of the Essence.


     Time is of the essence in this Contract, including with respect to the
resolution of any disputes between the Parties under this
Article 32
(Termination).

                                      118

33.  INTER-PARTY WAIVER OF LIABILITY

     (a) Prior to commencement of Launch Services, each Party will provide the
other Party with evidence reasonably satisfactory to the other Party that it has
complied with the inter-party waiver of liability and related insurance and
indemnification provisions of any Launch Agreement, including any requirement to
obtain substantially similar waivers and/or indemnifications from other parties
such as entities conducting operations at the launch site, customers,
contractors, subcontractors at any tier, or the United States Government.

     (b) Notwithstanding any other term or provision contained in this Contract,
this Article 33 (Inter-Party Waiver of Liability) shall survive the completion
or termination of this Con
tract in any manner whatsoever.

     (c) The Parties will take such further actions as may be required to
implement the provisions of this Article 33 (Inter-Party Waiver of Liability),
including the execution of such agreements, waivers, and indemnifications as are
customarily used with respect to operations at the launch site and are
consistent with the provisions of this Article 33 (Inter-Party Waiver of
Liability).

     (d) For any Launch subject to the jurisdiction of the United States, the
Launch Agency shall procure and maintain such insurance as required by the
United States Department of Transportation for loss or damage to United States
Government property or for death, bodily injury or property damage or loss to
third parties in connection with the licensed Launch activities provided under
this Contract. For Launches not subject to the jurisdiction of the United
States, the Launch Agency shall procure and maintain such insurance as required
by the government having jurisdiction over such Laun
ch.

     (e) The Launch Agency has executed agreements with various United States
Government agencies for the use of Government-owned property and facilities
relating to the production of launch vehicles and launch operations. Customer
agrees that it will comply with the United States Government's Laws as they
relate to Customer-furnished property and personnel, and those agreements
relating directly to the United States expendable launch vehicle program.
Contractor shall request the Launch Agency to furnish copies of such agreements
to Customer upon Customer's request.

     (f) Contractor shall require the Launch Agency to indemnify, defend and
hold harmless Contractor and Customer from third-party claims for bodily injury,
including death, property damage and losses, arising from or relating to any
Launch Services provided by the Launch Agency.


                                      119

34.  GENERAL

     34.1  Assignment.

     (a) Contractor shall not, without the prior written approval of Customer
and except on such terms and conditions as are determined in writing by
Customer, assign, mortgage, charge, or encumber this Contract or any part
thereof, any of its rights, duties, or obligations hereunder, or the Work to any
person or entity (except to its parent company or a wholly-owned direct or
indirect subsidiary company of Contractor, or any person or entity acquiring all
or substantially all the assets of Contractor (through merger, stock or asset
acquisition, recapitalization, or reorganization) where such merger,
acquisition, recapitalization, or reorganization does not adversely affect
Customer's rights under this Contract); provi
ded, however, Customer shall
provide its approval, if in Customer's reasonable judgment, Customer's rights
under this Contract are not and would not be adversely affected thereby.

     (b) Customer shall not, without the prior written approval of Contractor,
assign, mortgage, charge, or encumber this Contract or any part thereof, or
merge with or into or sell all or substantially all its assets to any other
entity (except to its parent company or a wholly-owned direct or indirect
subsidiary company of Customer, or any person or entity acquiring all or
substantially all the assets of Customer (through merger, stock or asset
acquisition, recapitalization, or reorganization) where such merger,
acquisition, recapitalization, or reorganization does not adversely affect
Contractor's rights under this Contract); provided, however, Contractor shall
provide its approval, if in Contractor's reasonable judgment, Contractor's
rights under this Contract are not and would not be adversely affected thereby.

     (c)
The assigning Party shall reimburse the other Party for all reasonable
expenses incurred by the other Party (and invoiced in reasonable detail) in
obtaining advice from its external financial and legal advisors relating to the
assigning Party's proposed assignment or transfer.

     (d) This Contract shall be binding on the Parties and their successors and
permitted assigns. Assignment of this Contract shall not relieve the assigning
Party of any of its obligations nor confer upon the assigning Party any rights
except as provided in this Contract.

     34.2 Entire Agreement.

     This Contract contains the entire agreement between the Parties regarding
the Work hereunder and supersedes all communications, negotiations, and other
agreements either written or oral, relating to the Work and made prior to EDC,
unless the same are expressly incorporated by reference into this Contract.
Further, this Second Amended and Restated Satellite Purchase Contract supercedes
the Original Satellite Purchase Contract,
as amended, and the First Amended and
Restated Satellite Purchase Contract, and this Second Amended and Restated
Satellite Purchase Contract constitutes the sole agreement between the Parties
as to the Work to be performed hereunder.

                                      120

     34.3 Amendments.

     This Contract, including any and all its Schedules, Attachments, Annexes,
Exhibits and Appendices thereto, may not be modified except by written
instrument of subsequent date signed by an officer of Contractor, or another
person designated in writing by any such officer to sign such an instrument  and
a senior vice president of Customer, or another person designated in writing by
any such Customer senior vice president to sign such an instrument.

     34.4 Waiver of Breach of Contract.

     A waiver of any provision or any breach of a provision of this Contract
shall not be binding upon either Party unless the waiver is in writing, signed
by a duly authorized representative of the Party to be bound, as applicable, and
such waiver shall not affect the rights of the Party not in breach with respect
to any other or future breach.  No course of conduct by a Party shall constitute
a waiver of any provision or any breach of a provision of this Contract unless a
written waiver is executed in accordance with the provisions of this Article
34.4 (Waiver of Breach of Contract).

     34.5 Severability.

     In the event any one or more of the provisions of this Contract shall for
any reason be held to be invalid or unenforceable, the remaining provisions of
this Contract shall be unimpaired and the invalid or unenforceable provision
shall be replaced by a mutually acceptable provision, which, being valid and
enforceable, comes closest to the intention of the Parties underlying the
invalid or unenforceable provision.

     34.6 Applicable Law.

     Except as provided in Article 27 (Dispute Resolution), this Contract and
performance under it shall be governed by, construed and enforced in accordance
with the Laws in force in the State of New York, without regard to conflict of
laws provisions thereof.

     34.7  Notices.

     (a) All notices, requests, demands, and determinations under this Contract,
including any required under Article 34.1 (Assignment), (other than routine
operational communications), shall be in writing and shall be deemed duly given
(i) when delivered by hand, (ii) two (2) Business Days after being given to an
express courier with a reliable system for tracking delivery, and (iii) when
sent by facsimile (confirmed by the specific individual to whom the facsimile is
transmitted) with a copy sent by another means specified in this Article 34.7
(Notices), and addressed as follows:

     Customer: XM Satellite Radio Inc.
               1250 23rd Street, NW, Suite 57
               Washington, DC   20037

               Attention:  Joseph M. Titlebaum, Esq.
               Sr. Vice President, General Counsel and Secretary

                                      121

  Contractor:  Hughes Space and Communications International, Inc.
               Courier:  1920 E. Walnut Street
               El Segundo, CA 90245
               Mail:  P.O. Box 92919
               Los Angeles, CA 90009
               Tel. No.:  310/364-5607
               Fax No.:  310/364-9644

               Attention: Patrice Gray Mitchell
               Director, Commercial/International Business
               Loc. SC, Bldg S41, M/S A374

     (b)  A Party may from time to time change its address or designee for
notification purposes by giving the other Party prior written notice of the
new address or designee and the date upon which it will be effective.

     34.8 Parties Not Agents.

     (a) Contractor, in performing the Work hereunder, is a
cting as an
independent contractor, and Contractor has the sole right and obligation to
supervise, manage, contract, direct, procure, perform, or cause to be performed,
all Work to be performed by Contractor under this Contract.

     (b) None of the provisions of this Contract or of any of its Exhibits,
shall be construed to mean that either Party is appointed or is in any way
authorized to act as an agent of the other Party.

     34.9 Release of Information.

     (a)  From and after the Effective Date of Contract, other than disclosures
required by Law or requirements of NASDAQ, the NYSE or any other national
securities exchange, any publicity, news releases, articles, brochures,
advertisements, prepared speeches, and other information releases regarding the
specific financial details of this Contract or proprietary information of the
other Party regarding the Work performed or to be performed hereunder shall be
mutually agreed upon in writing by Contractor and Customer within a reasonable
time prior
 to the release of such information. This obligation shall not apply
to Customer's statement or publication of Exhibit B (Statement of Work) or
Exhibit A (Spacecraft Performance Specifications) or parts thereof. This
obligation also shall not apply to information that is publicly available from
any Governmental agency or that is or otherwise becomes publicly available
without breach of this Contract. This Article 34.9 (Release of Information) also
shall not apply to internal publications or releases not intended for the public
at large.

     (b)  Prior to any disclosure required by Law or requirements of NASDAQ, the
NYSE, or any other national securities exchange, the Party required to disclose
shall inform the other Party and shall consult with such Party regarding its
views as to which portions of such information it should seek to have treated as
confidential. In addition, prior to filing this Contract with any Governmental
or quasi-Governmental agency, Customer shall advise Contractor of such filing

and, as requested by Contractor, redact such terms that Contractor

                                      122

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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

reasonably determines to be confidential and that could put Contractor at a
competitive disadvantage if publicly disclosed, subject to the requirements
and/or approval of the Government and/or quasi-Governmental agency.

     34.10  Calculation of Interest.

     Except as otherwise specified in this Contract, any interest due to
Contractor under this Contract shall be calculated at the annual rate equal to
the three (3) month London Interbank Offer Rate (LIBOR) for U.S. Dollars
[*****]. Except as otherwise specified in this Contract, any interest due to
C
ustomer under this Contract shall be calculated at the annual rate equal to the
three (3) month LIBOR for U.S. Dollars [*****].

     34.11  Survival.

     The following Articles, and the provisions contained therein, shall be
deemed to survive the termination (for any reason) or expiration of this
Contract, and, accordingly, such Articles shall remain applicable and
enforceable in accordance with their terms:

     (a)  Article 1 (Definitions);

     (b)  Article 9 (Title and Risk of Loss);

     (c)  Article 10 (Liquidated Damages for Late Delivery);

     (d)  Article 11 (Excusable Delay);

     (e)  Article 12 (In-Orbit Performance Incentive Payments);

     (f)  Article 18.3 (Warranties for Deliverable Items);

     (g)  Article 20 (Intellectual Property Rights);

     (h)  Article 21 (Intellectual Property Infringement Indemnification);

     (i)  Article 22 (Confidential Information);

     (j)  Article 23 (Non-Competition Obligation), provided that this Contract
is not terminated for Customer's
convenience, pursuant to Article 32.1
(Termination for Customer's Convenience) or terminated for Customer's default,
pursuant to Article 32.3 (Termination for Customer's Default);

     (k)  Article 24 (Indemnification);

     (l)  Article 26 (Limitation of Liability);


                                      123

     (m)  Article 27 (Dispute Resolution);

     (n)  Article 32 (Termination);

     (o)  Article 33 (Inter-Party Waiver of Liability);

     (p)  Article 34.6 (Applicable Law);

     (q)  Article 34.10 (Calculation of Interest); and

     (r)  Article 34.15 (Covenant of Good Faith).

     34.12 No Third-Party Beneficiaries.

     This Contract is entered into solely between, and may be enforced only by,
Customer and Contractor and their permitted assigns, and this Contract shall not
be deemed to create any rights in third parties, including suppliers and
customers of a Party, or to create any obligations of a Party to any such third
parties.

     34.13  Consents and Approvals.

     Except where expressly provided as being in the sole discretion of a Pa
rty,
where agreement, approval, acceptance, consent, or similar action by either
Party is required under this Contract, such action shall not be unreasonably
delayed or withheld.  An approval or consent given by a Party under this
Contract shall not relieve the other Party from responsibility for complying
with the requirements of this Contract, nor shall it be construed as a waiver of
any rights under this Contract, except as and to the extent otherwise expressly
provided in such approval or consent.

     34.14  Lender Requirements.

     (a) The Parties recognize this Contract may be financed through external
sources. Contractor shall provide to any Financing Entity any program
information or certification that such Financing Entity reasonably requires
(subject to confidentiality agreements governing such program information).

     (b)  Contractor agrees to work cooperatively to negotiate and execute such
documents as may be reasonably required to implement such financing to the
extent such financing
 or document does not adversely affect Contractor's
interests under this Contract.

     (c) Contractor agrees to execute such documents as may be reasonably
required by any Financing Entity, including a contingent assignment of this
Contract to such Financing Entity, under terms reasonably acceptable to
Contractor and to agree to such modifications to this Contract as such Financing
Entity may reasonably require, provided Contractor's interests under this
Contract are not adversely affected.


                                      124

     34.15 Covenant of Good Faith.

     Each Party agrees that, in respective dealings with the other Party under
or in connection with this Contract, it shall act in good faith.

     34.16  Counterparts.

     This Contract may be executed in two (2) or more counterparts, which taken
together constitute one single contract between the Parties.

                                      125

******  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.

35.  OTHER BUSINESS

     (a)  [*****]

     (b)  [*****]

     IN WITNESS WHEREOF, this Contract has been executed on behalf of Customer
by persons authorized to act on Customer's behalf, and has also been executed on
behalf of Contractor by persons authorized to act on Contractor's behalf.

HUGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC.        XM SATELLITE RADIO INC.

By:  /s/ Gregory W. Chapluk                                By:  /s/ John R. Wormington
    ----------------------------------                         ----------------------------------
              (Signature)                                                 (Signature)

Name:  Gregory W. Chapluk                                  Name:  John R. Wormington

Title:  Vice President,                                    Title: Senior Vice President
        Commercial Contracts                                      XM Satellite Radio Inc.

Date:   July 21, 1999                                      Date:  July 21, 1999

126

Attachment A

FORM OF REQUEST FOR PAYMENT

[Date]

XM Satellite Radio Inc.
1250 23rd Street NW, Suite 57
Washington, DC 20037

Attention: Treasurer

RE: Terms and Conditions of the Second Amended and Restated Satellite Purchase Contract for In-Orbit Delivery, dated as of July 21, 1999 (as amended, supplemented or modified from time to time, the "XM Satellite Purchase Contract"), between XM Satellite Radio Inc. ("Customer") and Hughes Space and Communications International, Inc. ("Contractor")

Ladies and Gentlemen:

This Request for
Payment is delivered to XM pursuant to Article 5 (Payment) of the XM Satellite Purchase Contract and constitutes Contractor's request for payment in the amount of $_________ for Milestone Payment No. ________.

Very truly yours,

HUGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC.
By: _____________________
Title: _____________________

A-1

Annex I to Attachment A

Form of Contractor Certificate

Reference: Milestone Payment No. _____

[Date]

XM Satellite Radio Inc.
1250 23rd Street, NW, Suite 57
Washington, DC 20037

Attention: Treasurer

RE: Terms and Conditions of the Second Amended and Restated Satellite Purchase Contract for In-orbit Delivery, dated as of July 21, 1999between XM Satellite Radio Inc. ("Customer") and Hughes Space and Communications International, Inc. ("Contractor") (as amended, supplemented or modified from time to time, the "XM Satellite Purchase Contract")

Ladies and Gentlemen:

This Certificate is d
elivered to you pursuant to Article 5 (Payment) of the Terms and Conditions of the XM Satellite Purchase Contract. Each capitalized term used herein and not otherwise defined shall have the meaning assigned thereto in the Terms and Conditions of the XM Satellite Purchase Contract.

We hereby certify, after due inquiry, that, as of the date hereof:

1. The XM Satellite Purchase Contract is in full force and effect and except as set forth in Schedule I hereto, has not been amended, supplemented or otherwise modified, and attached hereto are true, correct and complete copies of all Amendments to the XM Satellite Purchase Contract or any other modification or amendment to the XM Satellite Purchase Contract not heretofore delivered to the Financing Entity.

2. Except as set forth in Schedule I hereto, we are not aware of any event that has occurred or failed to occur which occurrence or non-occurrence, as the case may be, could reasonably be expected to cause the date of Final Acceptance of any Deliverable Item under the XM Satellite Purchase Contract to occur later than the Delivery Date therefor.

A-I-1


3. Except as set forth in Schedule I hereto, no event or condition exists that permits or requires us to cancel, suspend, or terminate our performance under the XM Satellite Purchase Contract or that could excuse us from liability for non-performance thereunder.

4. Except with respect to amounts that are the subject of a dispute (such amounts and such disputes being described in reasonable detail in Schedule II hereto), all amounts due and owing to us have been paid in full through the date of the immediately preceding Contractor Certificate and are not overdue. To the extent payment to us has been or will be made as specified in this and the immediately preceding Contractor Certificates, there are and wil l be no mechanics' or materialsmen's liens except Permitted Liens (as may be defined in the Financing Agreements) on the Project (as may be defined in the Financing Agreements), the Collateral (as may be defined in the Financing Agreements) or on any other property in respect of the Work which has or will be performed under the Satellite Purchase Contract.

5. a. The amount contained in the Request for Payment delivered to you concurrently herewith in accordance with the terms of Article 5 (Payment) of the Terms and Conditions of the XM Satellite Purchase Contract represents monies owed to us in respect of Milestone Payment No. _____.

b. The amount referred to in paragraph (a) above was computed in accordance with the terms of the XM Satellite Purchase Contract.

c. The Milestone to which Milestone Payment No. ____ relates has been completed in accordance with the XM Satellite Purchase Contract.

Very truly yours,
H
UGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC.
By: _____________________________
Title: _____________________________

A-I-2


SCHEDULE I to

Annex I to Attachment A

List of Exceptions:

Amendments to XM Satellite Purchase Contract:

Exceptions Affecting Final Acceptance Date:

Exceptions Affecting Contractor's Performance:

SI-1


SCHEDULE II to

Annex I to Attachment A

List of Disputes:

SII-1


****** 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.

Attachment B

KEY PERSONNEL AS OF EFFECTIVE DATE OF CONTRACT

[******]                                        [******]

[******]                                        [******]

[******]                                        [******]

[******]                                        [******]

[******]                                        [******]

[******]                                        [******]

[******]                                        [******]

[******]
                [******]

B-1

SCHEDULES

TO

SECOND AMENDED AND RESTATED

SATELLITE PURCHASE CONTRACT

FOR IN-ORBIT DELIVERY

BY and BETWEEN

XM SATELLITE RADIO INC.

and

HUGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC.


Schedule 19.3

Customer has no interest, direct or indirect, in any other entity.


Schedule 19.4

There are no actions, suits, proceedings or investigations pending or, to the knowledge of Customer, threatened against Customer. There is, however, a filing in Customer's Federal Communications Commission (FCC or Commission) licensing docket which takes a position adverse to Customer.

In re American Mobile Radio Corporation, Application for Authority to construct, Launch and Operate Two Satellites in the Satellite Digital Audio Radio Service, File No. 72-SAT-AMEND-97 et seq., Before the Federal Communications Commission.

Application for Review, filed by Primosphere Limited Partnership (Primosphere) on November 17, 1997. This fil ing seeks review by the full
Commission of the International Bureau's Order and Authorization released October 16, 1997 which: 1) authorized AMRC to launch and operate a satellite system in order to provide satellite digital audio radio service; and 2) denied Primosphere's petition to deny AMRC's application.

Customer has no current intention to initiate any such action.


Schedule 19.5

There are no liens on Customer's material property and assets.


Schedule 19.6

AMRC Holdings, Inc.
Unaudited Balance Sheet as of December 31, 1997

Balance Sheet                                   1997
                                             ----------
Cash                                                544
License                                      90,030,889
License - Captialized Interest                1,869,427

Total Assets                                 91,900,860
                                             ==========

Interest Payable - BL & AAL                   2,370,053
Interest Payable - WC                            18,204
Note Payable - BL                            22,500,000
Note Payable - AA
L                           58,388,889
Note Payable - WC                             1,054,190
Note Payable - AMSC                              55,435
                                             ----------

Total Liabilities                            84,386,771

Equity:
Accumulated Deficit                          (1,628,455)
AMSC (80%; 100 shares)
   Common Stock                                      10
   Additional Paid in Capital                 1,642,534
WSI (20%; 25 shares)
   Common Stock                                       3
   Additional Paid in Capital                 7,499,998
                                             ----------

Total Stockholders' Equity                    7,514,089

Total Liabilities & Equity                   91,900,860
                                             ==========

Income Statement - BY PERIOD

Outside Services - WSI                          568,901
Outside Services - Accrued                      390,659
Outside Services
- AMSC                         130,451
Other Operating Expenses - AMSC                  19,614
Interest Expense - BL & AAL                   2,370,053
Interest Expense - WC                            18,204
Interest Amort - License                     (1,869,427)
                                             ----------

Net Loss                                      1,628,455
                                             ==========

BL = Bridge Loan; AAL = Additional Amounts Loan; WC = Working Capital Loan AMSC = American Mobile Satellite Corporation; WSI = WorldSpace Incorporated


Schedule 19.7

AMRC Holdings, Inc.
Unaudited Balance Sheet as of December 31, 1997

                                                                  1997
                                                ---------------------------------------   P & L
Balance Sheet                                     January       February       March**    Total
                                                ---------------------------------------
Cash                                                   544            544          544

License                                         90,030,889     90,030,889   90,030,
889
License - Captialized Interest                   2,438,020      2,951,588    3,520,182
Satellite Construction in Progress                                           5,000,000

Total Assets                                    92,469,453     92,983,021   98,551,615
                                                ======================================

Interest Payable - BL & AAL                      3,132,582      3,821,318    4,600,319
Interest Payable - WC                               25,315         33,368       45,020
Management Fee Payable - WMC                       102,935        205,870      308,805
Note Payable - BL                               22,500,000     22,500,000   22,500,000
Note Payable - AAL                              58,388,889     58,388,889   63,388,889
Note Payable - WC                                1,029,382      1,089,546    1,604,703
Note Payable - AMSC                                 84,158        112,880      141,603

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


Total Liabilities                               85,263,260     86,151,871   92,589,339

Equity:
Accumulated Deficit                             (1,628,455)    (1,628,455)  (1,628,455)
AMSC (80%; 100 shares)
   Common Stock                                         10             10           10
   Additional Paid in Capital                    1,642,534      1,642,534    1,642,534
WSI (20%; 25 shares)
   Common Stock                                          3              3            3
   Additional Paid in Capital                    7,499,998      7,499,998    7,499,998

Current Accumulated Deficit                       (307,897)      (682,939)  (1,551,813)
                                                --------------------------------------

Total Stockholders' Equity
   7,206,192      6,831,150    5,962,276

Total Liabilities & Equity                      92,469,453     92,983,021   98,551,615
                                                ======================================

Income Statement - BY PERIOD
Outside Services - WSI                             (24,808)        51,837      256,411      283,471
Outside Services - WSI (Accrued)                                               233,714      233,714
Management Fees                                    131,658        131,658      131,659      394,974
Travel & Entertaiment                                               8,327       25,000       33,327
Interest Expense - BC & AAL                        762,529        688,736      779,001    2,230,266
Interest Expense - WC                                7,112          8,053       11,653       26,817
Interest Amort - License                          (568,593)      (513,568)    (568,593)  (1,650,755)

                   ---------------------------------------------------
Net Loss                                           307,897        375,042      868,874    1,551,813
                                                ===================================================

**Based on actual amounts as of March 20, 1998 and estimated amounts from March 21, 1998 through March 31, 1998.

BL = Bridge Loan; AAL = Additional Amounts Loan; WC = Working Capital Loan AMSC = American Mobile Satellite Corporation; WSI = WorldSpace Incorporated


Schedule 19.8

Undisclosed Liabilities

Second Amended and Restated Satellite Purchase Contract for In-Orbit Delivery between XM Satellite Radio Inc. and Hughes Space and Communications International, Inc.


[Logo of Xm Satellite Radio Inc. Appears Here]


Exhibit A rev C


Spacecraft Performance Specifications

Last Saved: July 15, 1999 1:08 PM

Document Number: XM-TBD-00001

DOCUMENT RELEASE APPROVALS

---------------------------------------------
Approved by                             Date

John R. Wormington
Senior Vice President,
XM Satellite Radio Inc.
---------------------------------------------
Approved by                             Date

Peter S. Lauenstein (Hughes Space and
Communications Company)

Program Manager: XM Spacecraft
---------
------------------------------------


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

[*****]


[Logo of Xm Satellite Radio Inc. Appears Here]


Exhibit B rev A


Statement of Work

Last Saved: July 14, 1999 4:20 PM

Document Number: XM-TBD-00002

DOCUMENT RELEASE APPROVALS

---------------------------------------------
Approved by                             Date

John R. Wormington
Senior Vice President,
XM Satellite Radio Inc.
---------------------------------------------
Approved by                             Date

Peter S. Lauenstein (Hughes Space and
Communications Company)

Program Manager: XM Spacecraft
---------------------------
------------------


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

[*****]


[Logo of Xm Satellite Radio Inc. Appears Here]


Exhibit C Rev A


Product Assurance Plan

---------------------------------------------
Approved by                             Date

John R. Wormington
Senior Vice President,
XM Satellite Radio Inc.
---------------------------------------------
Approved by                             Date

Peter S. Lauenstein (Hughes Space and
Communications Company)

Program Manager: XM Spacecraft
---------------------------------------------


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

[*****]


[Logo of Xm Satellite Radio Inc. Appears Here]


Exhibit D Rev B


Test Plan Requirements

Last Saved: July 14, 1999 4:42 PM

Document Number: XM-TBD-00004

DOCUMENT RELEASE APPROVALS

---------------------------------------------
Approved by                             Date

John R. Wormington
Senior Vice President,
XM Satellite Radio Inc.
---------------------------------------------
Approved by                             Date

Peter S. Lauenstein (Hughes Space and
Communications Company)

Program Manager: XM Spacecraft
----------------------
-----------------------


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

[*****]


[Logo of Xm Satellite Radio Inc. Appears Here]


Exhibit E


XM Satellite Radio Spacecraft
Radiation Environment Specifications

Last Saved: July 14, 1999 4:29 PM

Document Number: XM-TBD-00005

DOCUMENT RELEASE APPROVALS

---------------------------------------------
Approved by                             Date

John R. Wormington
Senior Vice President,
XM Satellite Radio Inc.
---------------------------------------------
Approved by                             Date

Peter S. Lauenstein (Hughes Space and
Communications Company)

Program Manage
r: XM Spacecraft
---------------------------------------------


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

[*****]


[Logo of Xm Satellite Radio Inc. Appears Here]


Exhibit F


Long Lead Activites and Items

CDRL Number B03

---------------------------------------------
Approved by                             Date

John R. Wormington
Senior Vice President,
XM Satellite Radio Inc.
---------------------------------------------
Approved by                             Date

Peter S. Lauenstein (Hughes Space and
Communications Company)

Program Manager: XM Spacecraft
---------------------------------------------



To be provided by Hughes no later than EDC + 4 months in accordance with the Statement of Work (Exhibit B)



[Logo of Xm Satellite Radio Inc. Appears Here]


Exhibit G Rev D


PFM and FM1 Payment Plans and
Termination Liability Schedules

---------------------------------------------
Approved by                             Date

Heinz Stubblefield
Senior Vice President and
Chief Financial Officer,
XM Satellite Radio Inc.
---------------------------------------------
Approved by                             Date

Peter S. Lauenstein (Hughes Space and
Communications Company)

Program Manager: XM Spacecraft
---------------------------------------------


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

[*****]


EXHIBIT 10.8

EXECUTION COPY

***** 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.

DISTRIBUTION AGREEMENT

THIS AGREEMENT, made as of the 7th day of June, 1999, to be effective as of the Effective Date, is by and between OnStar, a division of General Motors Corporation, a
Delaware corporation ("Distributor"), and XM Satellite Radio Inc., a Delaware corporation ("XM").

RECITALS:

A. XM has developed and/or obtained licenses for the technology and intellectual property rights necessary to provide an S-band Satellite Digital Audio Radio Service in the Territory pursuant to a license from the FCC.

B. Distributor provides high-technology value-added services for automobile applications, including GPS systems, emergency call systems, and others.

C. XM desires that Distributor include XM Receivers in GM Vehicles.

D. Distributor desires to install XM Receivers in GM Vehicles and to distribute the XM Service exclusively during the Term.

AGREEMENT:

NOW THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1. DEFINITIONS:

In addition to the terms defined elsewhere in this Agreement, and unless the context otherwise requires, the defined terms set forth below and used in this Agreement shall have the following meanings:

"Agreement" means this Agreement, including Attachment I hereto, which, by this reference, is incorporated in its entirety herein.

"Authorized XM Manufacturer(s)" means a manufacturer(s) licensed from time to time by XM to produce XM Receivers for the OEM vehicle radio market.

"Base Subscription Service" means the combination of music and talk

channels referred to by XM as the basic subscription package; it is currently anticipated that, as


of the Commencement Date, the basic subscription package will be available for a monthly subscription fee of $9.95.

"Commencement Date" means the date on which XM commences commercial operations, which shall not include any test periods that precede the commencement of commercial operations.

"Control" (including the correlative terms "controls," "controlled by," "controlling" and "under common control with") means the power to direct the management and policies of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

"Distributor" ha
s the meaning set forth in the preamble of this Agreement.

"Effective Date" has the meaning set forth in Section 13(k).

"Enabled GM Vehicle" means a GM Vehicle with an XM Receiver installed by or for GM, including, without limitation, by authorized GM dealers through their association with the Service Parts Operations.

     "FCC" means the U.S. Federal Communications Commission (or any successor
      ---
agency).

     "GM" means General Motors Corporation, its subsidiaries and affiliates in
      --

which General Motors Corporation has a controlling interest.

"GM Vehicle" means a vehicle manufactured by or for GM and sold in the
Territory under one of the GM brands.

"GM/XM Subscriber" means a subscriber to the XM Service who subscribes to receive the XM Service on an Enabled GM Vehicle.

"Installation Commission" has the meaning set forth in Section 4(b).

"Model Year" means the twelve-(12) month period from July 1 of the prior year to June 30 of the designated year.

"OEM Commencement Date" means the later of (x) the Commencement Date, or
(y) provided that Distributor has fulfilled its obligations of timely XM Receiver ordering and issuance of specifications under Section 2(b), the date six (6) months following the date on which an Authorized XM Manufacturer initially delivers a Validated XM Receiver to Distributor.

"Party (ies)" means XM and/or Distributor as the con text requires.

- 2 -

"Purchase" means the purchase or lease of a new Enabled GM Vehicle.

"Purchaser(s)" means the individual(s) or entity(ies) purchasing or leasing an Enabled GM Vehicle.

"Regulatory Force Majeure Event" means any action taken by the FCC to require receivers capable of receiving the transmission signal of the XM Service to be interoperable with receivers capable of receiving the transmission signal of CD Radio Inc. (or any successor thereto) such that it shall become impermissible for Distributor to install XM Receivers that are exclusively able to receive the signal of the XM Service.

"SDARS" means S-Band Satellite Digital Audio Radio Service.

"Subscriber Bounty" has the meaning set forth in Section 4(c).

"Term" has the meaning set forth in Section 3(a).

"Territory" means the continental United States (and Alaska and Hawaii, when and if the XM Service is transmitted by XM to such States) and the District of Columbia.

"Validated XM Receiver" means an XM Receiver that conforms to Distributor's manufacturing specifications.

"XM" has the meaning set forth in the preamble of this Agreement.

"XM Receivers" means receivers that are capable of receiving the XM Service

and that are manufactured by Authorized XM Manufacturers and produced for the OEM vehicle radio market.

"XM Service" means the service provided using the XM System.

"XM System" means XM's SDARS transmission system including associated terrestrial transmissions.

2. EXCLUSIVITY OBLIGATIONS:
(a) During the Term, Distributor agrees on behalf of itself and GM (i) to install and market XM Receivers in certain GM Vehicles, and (ii) to distribute the XM Service to the exclusion of any other SDARS. In addition, Distributor agrees that during the Term neither Distributor nor GM will install any radios or receivers in GM Vehicles capable of receiving CD Radio signals as the only SDARS service.

(b) XM agrees that, during the nine (9)-month period commencing July 1, 2001, XM shall only activate for commercial sale XM Receivers in Enabled GM Vehicles to the exclusion of any other vehicle manufacturers (the "Exclusive Period");

- 3 -

provided, however, that if the OEM Commencement Date is delayed such that XM Receivers cannot be installed in GM Vehicles prior to January 1, 2002, then the Exclusive Period shall commence on the later of (i) July 1, 2002, or
(ii) the OEM Commencement Date (the later of the dates referred to in clauses (i) and (ii) hereinafter the "Exclusive Period Start Date") and shall expire six (6) months from the Exclusive Period Start Date unless Distributor, at its option, elects to shorten or eliminate the Exclusive Period. However, if, as of July 1, 2002 (or as of any six (6)-month anniversary of such date thereafter), Distributor, in its reasonable discretion, determines that the Commencement Date
will be delayed by six (6) months beyond such date and there is, at such time, a mobile SDARS provider in the Territory commercially distributing a SDARS in the OEM market, then Distributor, at its option, may be relieved from its exclusivity obligations in Section 2(a). Distributor agrees that except for delays caused by the actions or inaction of XM, Distributor shall order XM Receivers (and issue required manufacturing specifications to the Authorized XM Manufacturer(s)) sufficiently in advance for Distributor to receive, absent bona fide delays caused by Authorized XM Manufacturer(s), Validated XM Receivers no later than January 1, 2001.

(c) XM shall have a non-exclusive right to arrange for the installation of XM Receivers included in OnStar systems in non-GM Vehicles sold for use in the Territory. The Parties shall mutually agree on the compensation to be paid to XM for arranging the sale of such OnStar systems (excluding the XM Service).

3. TERM:

(a) Unless ear lier terminated pursuant to the terms of this Agreement, the "Term" of this Agreement shall commence as of the date hereof and shall expire twelve (12) years from the Commencement Date.

(b) Notwithstanding anything in this Agreement to the contrary, upon the occurrence of certain events, one or both Parties shall have the rights set forth below to trigger a renegotiation of certain terms of, or be excused from certain obligations under, this Agreement as follows:

(i) Distributor-Triggered Renegotiation. Distributor shall be relieved from its exclusivity obligations set forth in Section 2(a) if four (4) years following the Commencement Date, or if across any successive two (2)-year period during the Term thereafter, XM's share of mobile aftermarket SDARS subscribers is less than forty percent (40%) assuming only two (2) mobile aftermarket SDARS providers and less than thirty-three percent
(33%) assuming that there are three (3) mobile aftermarket SDARS providers. XM's share of mobile aftermarket SDARS subscribers shall be based on a mutually agreed upon source and shall be based on the most recent figures available at the time of measurement.

(ii) Installation-Triggered Renegotiation. XM may initially trigger a renegotiation of this Agreement four (4) years following the

- 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.

Commencement Date if the number of Enabled GM Vehicles by that time is less than 1.24 million units and every two (2) years during the Term thereafter, if the number of Enabled GM Vehicles during the prior two
(2) years is inconsistent with the OEM market demand for SDARS radios. Evidence of consistency with OEM market demand shall be based upon the concept that GM SDARS radio penetration in new GM Vehicles (expressed as a percent of new GM Vehicles produced for the U.S. market in a given Model Year or across a measurement period) is consistent with SDARS radio penetration in new vehicles from the balance of non-GM OEMs (expressed as a percent of non-GM new vehicles produced for the U.S. market in a given Model Year or across a measurement period). However, if XM's share of the mobile SDARS aftermarket is below
[*****] percent [*****] across the applicable two (2)-year period, then the percent install target in new GM Vehicles shall be adjusted proportionately in accordance with the following table:

                                  Multiplier (times install
    XM Share of Mobile           target % of new GM Vehicles
    SDARS aftermarket           across the measurement period)
--------------------------------------------------------------------------------
         [*****]                          [*****]
---------------
-----------------------------------------------------------------
         [*****]                          [*****]
--------------------------------------------------------------------------------
         [*****]                          [*****]
--------------------------------------------------------------------------------
         [*****]                          [*****]
--------------------------------------------------------------------------------
         [*****]                          [*****]
--------------------------------------------------------------------------------

(iii) For example, if [*****] percent [*****] of non-GM OEM vehicles were installed with satellite capable radios in a given Model Year and XM's share of the mobile SDARS aftermarket were [*****] percent [*****], then Distributor, for purposes of determining consistency with OEM market demand, would need to install [*****], or
[*****] percent [*****] , of GM Vehicles with XM Receivers. For purposes of this clause (ii), Distributor's new GM Vehicle install requirement shall be deemed to be satisfied if Distributor installs the lesser of (A) the number of Enabled GM Vehicles required by this clause (ii), or (B) 600,000 XM Receivers per year for each of the two
(2) years in the measurement period.

(iv) Automatic Renegotiation.

(A) Upon the occurrence of a Regulatory Force Majeure Event, XM and Distributor agree to renegotiate mutually acceptable

- 5 -

terms in light of the changed landscape arising from such Regulatory Force Majeure Event.

(B) XM may trigger a renegotiation of the terms of this Agreement at any time during the term if Distributor elects to install interoperable radios (i.e., radios capable of receiving both the XM Service and the CD Radio service, or other SDARS signals) in the absence of any regulatory requirement.

(c) Upon at least thirty (30) days' prior notice either Party shall have the right to terminate this Agreement if the other Party has breached any of its material obligations under this Agreement; provided, however, that if such breach is of the type that i s curable, then termination shall not be effective, and the notifying Party shall not exercise any of its other rights at law or in equity, unless the notified Party has failed to cure such material breach fully and to demonstrate to the notifying Party that such material breach has been cured within the thirty (30)-day period following the notice described in this
Section 3(c).

(d) If the FCC revokes XM's SDARS license as a result of the action(s) or inaction(s) of XM, then Distributor, at its option, shall have the right to declare XM in material breach of this Agreement, and such revocation shall not constitute a force majeure event under Section 10.

4. PAYMENTS TO DISTRIBUTOR:

(a) Guaranteed Payments. In consideration of Distributor installing quantities of XM Receivers in GM Vehicles consistent with the market demand throughout the Term and distributing (unless Distributor is otherwise expressly excused from its exc
lusivity obligations in Section 2(a)) only the XM Service during the Term, for each of the calendar years set forth in the following table that this Agreement is in effect, XM agrees to pay to Distributor the amount set forth opposite each pertinent calendar year:

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***** 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.

                                                      Amount Payable
                  Calendar Year:*                    (in thousands):
-------------------------------------------------------------------------------
2001                                                 [*****]
-------------------------------------------------------------------------------
2002                                                 [*****]
-------------------------------------------------------------------
------------
2003                                                 [*****]
-------------------------------------------------------------------------------
2004                                                 [*****]
-------------------------------------------------------------------------------
2005                                                 [$33,533]
-------------------------------------------------------------------------------
2006                                                 [*****]
-------------------------------------------------------------------------------
2007                                                 [*****]
-------------------------------------------------------------------------------
2008                                                 [*****]
-------------------------------------------------------------------------------
2009                                                 [$132,889]
-------------------------------------------------------------------------------

* I
f Distributor is unable (for reasons not attributable to XM's timely commencement of service) to install XM Receivers beginning with Model Year 2002, then the payments set forth in the table above shall be delayed and shall commence in the calendar quarter immediately following the calendar quarter in which Distributor first installs reasonable quantities of XM Receivers in GM Vehicles.

In the event that this Agreement is terminated other than on the last day of a calendar year, then the payment set forth in the table above for such calendar year shall be prorated to reflect the number of days during such calendar year that this Agreement was in effect. The payments set forth in the table above shall be due and payable in four equal installments on or before March 31, June 30, September 30 and December 31 of the pertinent calendar year.

(b) Installation Commission. During the Term, XM agrees to pay Distributor a commission of [*****] for each new Enabled GM Vehicle (the
"Installation Commission"). Distributor shall invoice XM (on a mutually agreed upon form) at the end of each calendar month for Installation Commissions earned during such month. Each invoice shall include the Vehicle Identification Number ("VIN") of each GM Vehicle for which an Installation Commission is

payable, the XM Receiver identification number for each such GM Vehicle and any other information reasonably necessary to compute the Installation Commission. The invoice shall be due and payable within thirty (30) days following receipt by XM. Distributor shall not invoice XM for an Installation Commission until the GM Vehicle for which such Installation Commission is payable has left the GM plant and the authorized GM dealer to which such GM Vehicle has been shipped has been sent a factory-invoice regarding GM Vehicle.

(c) Subscriber Bounty. In addition to the Installation Commission and subject to the fo
llowing sentence, XM agrees, during the Term, to pay Distributor a [*****] commission (the "Subscriber Bounty") for each GM/XM Subscriber who Purchases a new Enabled GM Vehicle and subscribes to the XM Service within twelve (12) months of the initial Purchase of such Enabled GM Vehicle (a "Qualifying GM/XM

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***** 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.

Subscriber"). If a Qualifying GM/XM Subscriber for whom a Subscriber Bounty is payable fails to pay XM at least [*****] for receipt of the Base Subscription Service, then XM shall have the right to credit the difference between the Subscriber Bounty paid and the amount actually received by XM on account of such GM/XM Subscriber to future Subscriber Bounty payments. The Subscriber Bounty shall be paid in two (2) equal installments, the first of which shall be due and payable n
o later than thirty (30) days following the end of the calendar month during which a Qualifying GM/XM Subscriber initially subscribes to the XM Service, and the second of which shall be due and payable no later than thirty
(30) days following the end of the calendar month during which such Qualifying GM/XM Subscriber makes his initial three (3)-month subscriber payment for receipt of the XM Service. In no event shall the Subscriber Bounty be payable more than one time with respect to any one XM Receiver.

(d) Revenue Share. During the Term, Distributor shall receive a percentage of the revenue received by XM from GM/XM Subscribers for the Base Subscription Service (the "Revenue Share"). The percentage shall depend on the number of Enabled GM Vehicles at the time such revenue is received as follows:
   If Number of Enabled
 GM Vehicles is:                 Then Distributor's Revenue Share shall be:
----------------------------------------------------------------------------------------------------------------
   [*****]                                              [*****]
----------------------------------------------------------------------------------------------------------------
   [*****]                                              [*****]
----------------------------------------------------------------------------------------------------------------
   [*****]                                              [*****]
----------------------------------------------------------------------------------------------------------------
   [*****]                                              [*****]
----------------------------------------------------------------------------------------------------------------
   in excess of 8 million                               [*****]
------------------------------------------------
----------------------------------------------------------------

The Revenue Share percentages set forth in the table above shall apply to a Base Subscription Service price between [*****] and $9.95 per month. If, in response to competitive pressures, the Base Subscription Service price falls below [*****] per month, then the Parties shall negotiate in good faith to modify the Revenue Share in an equitable manner to reflect the realities of the market. If XM fundamentally changes its business model (e.g., employs a more aggressive advertising model), and, as a result of such change, the Base Subscription Service price falls below [*****] per month, then the Revenue Share payable to Distributor shall be determined as if the Base Subscription Service price were $9.95 per month. Likewise, if the Base Subscription Service price is more than $9.95 per month, then the Revenue Share shall be determined as if the Base Subscription Service price were $9.95 per month.

The Revenue Share shall
be due and payable no later than thirty (30) days after the end of each calendar month during the Term based upon subscriber revenues collected during such month.

- 8 -

***** 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. ADVERTISING AND PROMOTIONAL COMPONENTS:

(a) Advertising Availability. During each of the calendar years set forth

in the table below that this Agreement is in effect, XM agrees to make available to Distributor a number of advertising spots (the "Spots") on XM channels comprising the XM Service representing the following dollar amounts (expressed in thousands):

Year: 2001 2002 2003 2004 2005 2006 2007 2008 2009
Dollar
Value: [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]

The Spots shall only be used by Distributor to advertise and promote GM products and services. If Distributor does not use all of the Spots made available to Distributor during any calendar year, Distributor may not carry such unused Spots forward into any subsequent calendar year during the Term. Distributor, at its expense, shall create, produce and deliver the Spots to the location(s) specified by XM. The Spots shall not be adverse to, or competitive with, XM's business(es) or require XM to make any payments to a third party or obtain any consents to insert the Spots on the XM Service. Distributor will indemnify the XM Indemnitees as pro
vided herein in connection with Distributor's use of the Spots (including, without limitation, the content thereof), and the Spots cannot be resold by Distributor to a third party. The dollar value of the Spots will be priced based on the then-current CPM rate sheets. Placement of the Spots shall be mutually agreed upon by the Parties.

(b) Co-op Advertising. XM agrees that for each calendar year during the period commencing January 1, 2001, and ending December 31, 2009, XM shall allocate [*****] per year of its annual advertising budget to Distributor to be placed through Distributor's media buying agency for mutually agreed upon co- operative advertising opportunities, provided that such co-op advertising as it pertains to the XM Service is consistent with XM's positioning and branding of the XM Service.

(c) Initial Free Service. Distributor shall use reasonable efforts to have all GM Vehicle Purchasers
of Enabled GM Vehicles subscribe to the XM Service. As an incentive to increase subscriptions to the XM Service by Purchasers of new Enabled GM Vehicles, Distributor is authorized to offer Purchasers of new Enabled GM Vehicles up to [*****] months of free trial service to the Base Subscription Service. If Distributor elects to offer a free trial service to Purchasers of new GM Vehicles, then, within a reasonable period of time following receipt of the report described in Section 7(a), XM will activate the XM Receiver in the new GM Vehicles identified in such report.

(d) XM and Distributor shall mutually agree on the implementation of a marketing plan to attract additional subscribers to the XM Service by targeting

- 9 -

***** 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.

Purchasers of Enabled GM Vehicles who have not subscribed to the XM Service. XM agrees to pay Distributor a Revenue Share for subscribers who initially subscribe to the XM Service after twelve (12) months from the initial Purchase of an Enabled GM Vehicle; in consideration therefor, Distributor agrees to pay a portion of the marketing costs associated with targeting such subscribers, with such portion to be equal to the then-applicable Revenue Share percentage.

6. BANDWIDTH USAGE:

(a) During the Term, XM agrees to a llocate for use by Distributor [*****] of the bandwidth on the XM System for audio and/or data transmissions by Distributor to GM/XM Subscribers. Use of such bandwidth shall be subject to compliance with applicable law, including without limitation, rules and regulations of the FCC ("FCC Rules"). If requested by Distributor and permitted under applicable law, including, without limitation, FCC Rules, XM will make this bandwidth available for transmissions by Distributor to all owners of Enabled GM Vehicles regardless of whether they are GM/XM Subscribers. In such event, Distributor shall provide XM with all information reasonably necessary to activate and/or to deactivate the XM Receivers by Distributor's customers that are not GM/XM Subscribers.

(b) Distributor agrees to give XM at last ninety (90) days' prior notice of its intent to utilize the bandwidth allocated to Distributor hereunder. Such notice shall set forth the amount of bandwidth to be utilized as wel l as the proposed use of such bandwidth. Until actually utilized by Distributor, XM shall be entitled to use the bandwidth allocated to Distributor hereunder.

(c) To the extent Distributor elects to utilize any or all of the bandwidth allocated to it hereunder, Distributor, at its expense, shall deliver to a location in the Territory designated by XM a complete audio signal and/or data transmission, as the case may be, by transmitting such signal and/or data via a mutually acceptable means and in a form that will not require XM to modify the signal and/or data in order to receive or to transmit such signal and/or data over the XM System. XM, at its expense, shall furnish all other facilities necessary for the receipt of Distributor's transmission and for the retransmission of such signals and/or data to subscribers authorized to receive such signals and/or data.

(d) Distributor agrees that the technical quality of each audio signal and/or data transmission transmitted by Distributor to XM sha ll be at least equal to the technical quality of the audio signals and/or data transmissions delivered to XM by any third party distributor of audio services and/or data transmissions, respectively.

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***** 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.

(e) Distributor shall not use the bandwidth allocated to it hereunder to create or transmit music or entertainment radio services that compete with, or otherwise use such bandwidth in a manner that could reasonably be expected to adversely interfere with, the XM business(es). XM shall not use the remainder of the bandwidth to create a service targeting new GM Vehicle Purchasers that packages together the essential features of the current OnStar features as described in Attachment I attached hereto.

(f) Without limiting the provisions of Section
9(c), Distributor shall indemnify and hold harmless the XM Indemnitees from and against any and all Costs arising out of Distributor's use of such bandwidth, including, without limitation, the content of any of Distributor's transmissions via such bandwidth or the sale or marketing of any products or services via such bandwidth.

7. CUSTOMER RELATIONSHIP:

(a) Upon the Purchase of an Enabled GM Vehicle, Distributor shall provide XM with a monthly report (the format and content of which shall be mutually agreed upon) that, at a minimum, shall include the following information with respect to each Enabled GM Vehicle sold during such month: (i) the make, model and VIN of such Enabled GM Vehicle, (ii) the XM Receiver identification number of the XM Receiver installed in such Enabled GM Vehicle, and (iii) the name and address of the Purchaser, and, to the extent available and permitted by applicable law, the telephone number and email address of such Purchaser.

(b) [*****] shall be prepared to handle calls for customer care as it pertains to the XM Service for GM/XM Subscribers who are also OnStar customers; provided, however, that [*****]; it being understood, however, that such reimbursable costs shall not include fixed costs, including, without limitation, overhead.

(c) Distributor agrees that in connection with customer calls relating to the XM Service, its customer service representatives shall handle customer requests, questions and complaints promptly and professionally and with the same level of care with which such representatives handle customer requests, questions and complaints regarding the OnStar service.

(d) [*****], at its expense, shall be responsible for the billing of the XM Service purchased by GM/XM Subscribers.

8. INSTALLATION; TECHNICAL SPECIFICATIONS; TRADEMARKS:

(a) To assist XM with its business planning, Distributor agrees to meet with represent atives from XM on at least a quarterly basis to discuss its projections for

- 11 -

installations of XM Receivers in new GM Vehicles over the following twelve (12) months, including (i) Distributor's forecast as to the number of XM Receivers it plans to install in new GM Vehicles over the following twelve (12) months, (ii) the makes and models in which Distributor is installing or proposing to install XM Receivers, and (iii) the types of packages in which the XM Service may be included. XM acknowledges that nothing contained in this Agreement shall be construed as obligating Distributor to fulfill any of the projections or plans discussed with XM at such meetings, provided that the provisions of Section 3(b)(ii) shall continue to apply. In addition, from June 1, 1999 through May 30, 2000, XM will provide Distributor monthly reports and ho ld quarterly meetings to
inform Distributor fully about XM's progress toward the Commencement Date. From June 1, 2000 through June 30, 2001, XM and Distributor shall hold monthly meetings and include any suppliers, marketing representatives or other necessary parties to facilitate the timely commencement of XM's commercial operations.

(b) Distributor shall purchase XM Receivers for installation only from Authorized XM Manufacturers that meet the reasonable requirements of GM's Worldwide Purchasing Organization. Installation of the XM Receivers shall be in accordance with reasonable requirements and quality assurances provided by the Authorized XM Manufacturers or XM, including, without limitation, positioning of the antenna and antenna shape; provided, however, that such requirements and assurances meet the manufacturing requirements of Distributor.

(c) Distributor acknowledges that XM does not manufacture the XM Receivers and cannot guarantee availability or delivery thereof on any specific date. In addition, Distributor acknowledges that XM shall have no liability for any use, property, ad valorem, value added, stamp or other taxes, charges or withholdings arising out of the XM Receivers or the delivery thereof by Authorized XM Manufacturers to Distributor.

(d) The technical specifications for the XM Receivers will be determined by XM in conjunction with the Authorized XM Manufacturers; provided, however, that XM agrees that its internal technology group will work with Distributor and the Authorized XM Manufacturers of Distributor's choice to consult in the development and testing of XM capable OEM radio/communications systems for GM Vehicles.

(e) Distributor acknowledges that the XM names and marks are the exclusive property of XM and that Distributor has not and will not acquire any proprietary rights therein by reason of this Agreement. Distributor agrees to comply with reasonable branding and trademark usage requirements regarding such names and marks that are imposed by XM from time to time and provided in writing to Distributor.

9. WARRANTIES AND INDEMNITIES:

(a) Each Party represents and warrants to the other that (i) it is duly organized, validly existing and in good standing under the laws of the state under which

- 12 -

it is organized, (ii) it has the power and authority to enter into this Agreement and to perform fully its obligations hereunder; (iii) it is under no contractual or other legal obligation that shall in any way interfere with its full, prompt and complete performance hereunder; (iv) the individual executing this Agreement on its behalf has the authority to do so; and (v) the obligations created by this Agreement, insofar as they purport to be binding on it, constitute legal, valid and binding obligations enforceable in accordance with their terms.

(b) XM IS NOT THE MANUFACTURER OF THE XM RECEIVERS AND XM MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, NATURE OR DESCRIPTION, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHA NTABILITY OR FITNESS OF ANY OF THE XM RECEIVERS FOR ANY PARTICULAR PURPOSE, OR ANY OTHER WARRANTY REGARDING THE DESIGN, CONDITION, CAPABILITY OR PERFORMANCE OF THE XM RECEIVERS, AND XM HEREBY DISCLAIMS THE SAME. XM shall not be responsible for any loss or damage resulting from any defect of or in the XM Receivers, latent or otherwise, or resulting from any failure of the XM Receivers to operate or faulty operation of the XM Receivers, nor for any direct, indirect, consequential, incidental or other similar damage (including lost profits) resulting from the transportation, installation, service, operation or use of the XM Receivers, and shall not be responsible for any such loss or damage resulting from the maintenance or repair of the XM Receivers. Rather, warranty claims relating to XM Receivers installed in GM Vehicles shall be handled by the Authorized XM Manufacturers, in accordance with Distributor's standard practices with suppliers. In addition, XM shall not be responsible for any breach of any Au thorized XM Manufacturer's warranties, indemnities or supply agreements, and no breach thereof shall affect the limitation on liabilities, rights and obligations of the Parties set forth in this Agreement.

(c) XM and Distributor shall each indemnify, defend and forever hold harmless the other, the other's affiliated companies and each of the other's (and the other's affiliated companies') respective present and former officers, shareholders, directors, employees, partners and agents ("Distributor Indemnitees" and "XM Indemnitees," respectively), against and from any and all losses, liabilities, claims, costs, damages and expenses, including, without limitation, fines, forfeitures, attorneys' fees, disbursements and court or administrative costs (collectively, "Costs"), arising out of any breach of any

term of this Agreement or any warranty, covenant or representation contained herein.

(d) XM Indemnification.

(i) If any Distributor Indemnitee is charged with infringement of a third party's intellectual property rights, including patent, trademark, copyright, industrial design right, or other proprietary right, or misuse or misappropriation of trade secret rights, as a result of the installation, use, sale, offer for sale or import of XM Receivers in or for use in GM Vehicles, and if such alleged infringement arises in any way from an aspect or

- 13 -

function of the XM Receiver that meets a requirement or specification of XM for receipt of the XM Service by the XM Receiver, XM will, at no expense to Distributor: (i) defend, hold harmless and indemnify the Distributor Indemnitees against any Costs relating to such charge or claim, including, but not limited to, Costs for past infringement; and (ii) to the extent appropriate, either, (A) procure for Distributor the right to continue the installation, use, sale, offer for sale or import of XM Receivers in GM Vehicles, or (B) procure for Distributor the availability of XM Receivers with a modified design such that XM Receivers no longer infringe, provided that such modification can be done without substanti ally impairing its
functionality or performance.

(ii) With respect to claims arising under this Section 9(d), Distributor will promptly notify XM in writing of any claim of infringement or indemnification and will provide XM with the authority, information and assistance necessary to defend or settle such claim; provided, however, that Distributor will have the right to participate in such defense and to approve any proposed settlement in advance. Distributor will have the right to take over from XM the defense of a claim at any time, provided that Distributor releases XM in writing from any further obligation of defense or indemnification in connection with such claim unless otherwise mutually agreed.

(iii) The obligations of XM and Distributor under this Section 9(d) will survive termination of this Agreement with respect to XM Receivers installed in GM Vehicles.

(e) A Party claiming indemnity under this Section 9 m ust give the indemnifying party prompt notice of any claim, and the indemnifying party shall have the right to assume the full defense of any claims to which its indemnity applies. The indemnified party, at the indemnifying party's cost, will cooperate fully with the indemnifying party in such defense of any such claim. If the indemnified party compromises or settles any such claim without the prior written consent of the indemnifying party, then the indemnifying party shall be released from its indemnity obligations with respect to the claim so settled.

(f) The representations, warranties and indemnities contained in this
Section 9 shall continue throughout the Term and the indemnities shall survive the termination of this Agreement, regardless of the reason for such termination.

10. FORCE MAJEURE:

Neither XM nor Distributor shall have any rights against the other Party for the non-operation of facilities, the non-furnishing of the XM Service, or its inability
to perform its terms and obligations under this Agreement if such non-operation, non-furnishing or inability is due to an act of God or other cause beyond such Party's

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reasonable control, including, but not limited to, the occurrence of a Regulatory Force Majeure Event.

11. NOTICES:

Any notice or report given under this Agreement shall be in writing, shall be sent postage prepaid by certified mail, return receipt requested, or by hand delivery, or by Federal Express or similar overnight delivery service, or by facsimile transmission, to the other Party, at the following address (unless either Party at any time or times designates another address for itself by notifying the other Party by certified mail, in which case all notices to such Party thereafter shall be given at its most recently so designated address):

To XM: XM Satellite Radio Inc.

1

250 23rd Street, N.W., Suite 57
Washington, D.C. 20037 Facsimile Number: (202) 969-7110 Attention: President & CEO cc: General Counsel

To Distributor: OnStar
888 West Big Beaver, Suite 200 Troy, MI 48084 Facsimile Number: (248) 269-1549 Attention: Executive Director, Product Planning and Alliances cc: General Counsel

Notice or report given by hand delivery shall be deemed received on delivery. Notice or report given by mail shall be deemed received on the earlier to occur of actual receipt or on the fifth day following mailing if sent in accordance with the notice requirements of this Section 11. Notice or report given by Federal Express or similar overnight delivery service shall be deemed received on the nex
t business day following delivery of the notice or report to such service with instructions for overnight delivery. Notice or report given by facsimile transmission shall be deemed received when there is personal confirmation of receipt by the person to whom such notice or report is sent.

12. CONFIDENTIALITY:

Neither XM nor Distributor shall disclose (whether orally or in writing, or by press release or otherwise) to any third party any information with respect to the terms and provisions of this Agreement or any information contained in any data or report required or delivered hereunder or any materials related thereto, except (a) disclosure as may be required by law, regulation, court or government agency of

- 15 -

competent jurisdiction (redacted to the greatest extent possible); (b) disclosure to each Party's respective officers, directors, employees and attorneys, in their capacity as such; provided, however, that the disclosing Party agrees to be responsible for any breach of the provisions of this Section 12 by such officers, directors, employees or attorneys; (c) disclosure by XM in connection with its bona fide financing activities, (d) disclosure by XM of the provisions relating to XM's exclusive obligations to Distributor to other automobile manufacturers, (e) in the event that XM becomes subject to the information reporting requirements of the Securities Exchange Act of 1934, as amended, this Agreement may be made publicly available by XM to investors in ac
cordance with the rules and regulations of the Securities and Exchange Commission; (f) disclosure in the form of a public statement or press release approved by the other Party hereto in advance of such statement or release; (g) general marketing information releases describing the nature of this Agreement in general terms; and (h) as mutually agreed upon, in writing, by XM and Distributor in advance of such disclosure. This confidentiality provision shall survive the termination of this Agreement.

13. MISCELLANEOUS:

(a) Assignment; Binding Effect; Reorganization. This Agreement shall be binding on the respective transferees and successors of the Parties hereto, except that neither this Agreement nor either Party's rights or obligations hereunder shall be assigned or transferred by either Party without the prior written consent of the other Party (which consent shall not be unreasonably withheld); provided, however, no consent is necessary in the event of an assignment to a successor entity resulting from a merger, acquisition or consolidation by either Party or assignment to an entity under common control, controlled by or in control of either Party.

(b) Regulated Entity. It is understood by the Parties that the business of XM is regulated by the FCC and that nothing set forth in this Agreement shall be construed (i) to require XM to act in a manner inconsistent with FCC Rules, or the informal interpretations thereof communicated from time to time by the FCC staff, or (ii) to prevent XM from taking positions on issues relating to its FCC license or other rules and regulations applicable to XM, or the appropriate interpretation thereof.

(c) Entire Agreement; Amendments; Waivers; Cumulative Remedies. This Agreement contains the entire understanding of the Parties here to and supersedes
and abrogates all contemporaneous and prior understandings of the Parties, whether written or oral, relating to the subject matter hereof. This Agreement may not be modified except in a writing executed by both Parties hereto. Any waiver of any provision of this Agreement must be in writing and signed by the Party whose rights are being waived. No waiver of any breach of any provision hereof shall be or be deemed to be a waiver of any preceding or subsequent breach of the same or any other provision of this Agreement. The failure of Distributor or XM to enforce or seek enforcement of the terms of this Agreement following any breach shall not be construed as a waiver of such

- 16 -

breach. All remedies, whether at law, in equity or pursuant to this Agreement shall be cumulative.

(d) Governing Law. This Agreement and all matters or issues collateral thereto shall be governed by the laws of the State of New York, without regard to its choice of law rules.

(e) Relationship. Neither Party shall be, or hold itself out as, the agent of the other or as joint venturers under this Agreement.

(f) Severability. The invalidity under applicable law of any provision of this Agreement shall not affect the validity of any other provision of this Agreement, and in the event that any provision hereof is determined to be invalid or otherwise ill
egal, this Agreement shall remain effective and shall be construed in accordance with its terms as if the invalid or illegal provision were not contained herein.

(g) No Inference Against Author. XM and Distributor each acknowledge that this Agreement was fully negotiated by the Parties and, therefore, no provision of this Agreement shall be interpreted against any Party because such Party or its legal representative drafted such provision.

(h) No Third Party Beneficiaries. The provisions of this Agreement are for the exclusive benefit of the Parties hereto and their permitted assigns, and no third party shall be a beneficiary of, or have any rights by virtue of, this Agreement.

(i) Headings. The titles and headings of the sections in this Agreement are for convenience only and shall not in any way affect the interpretation of this Agreement. Any reference in this Ag reement to a "Section" or "Attachment" shall, unless the context expressly requires otherwise, be a reference to a "Section" in, or an "Attachment" to, this Agreement.

(j) Non-Recourse. Notwithstanding anything contained in this Agreement to the contrary, it is expressly understood and agreed by the Parties hereto that each and every representation, warranty, covenant, undertaking and agreement made in this Agreement was not made or intended to be made as a personal representation, undertaking, warranty, covenant, or agreement on the part of any individual, and any recourse, whether in common law, in equity, by statute or otherwise, against any individual is hereby forever waived and released.

(k) Effective Date. This Agreement shall be effective upon the closing

of that certain Exchange Agreement between XM Satellite Radio Holdings Inc., American Mobile Satellite Corporation, and WorldSpace, Inc., dated as of June ___, 1999, in accordance with the terms and conditions contained therein (the "Effective Date").

- 17 -

The Parties hereto have executed this Agreement as of the date first above written.

                                            ONSTAR, a division of
XM SATELLITE RADIO INC.:                    General Motors Corporation:

By: /s/ Hugh Panero                         By: /s/ Frederick H. Cooke
   ----------------------------------          -------------------------------

Title: President and CEO                    Title: Executive Director
      -------------------------------             ----------------------------
                                     - 18 -


ATTACHMENT I

to Distribution Agreement between

XM Satellite Radio Inc.

and

OnStar, a division of General Motors Corporation

See Attached.

- 19 -

EXHIBIT 10.9

***** 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.

OPERATIONAL ASSISTANCE AGREEMENT

THIS AGREEMENT, made as of the 7th day of June, 1999, is by and between DIRECTV, Inc. ("DIRECTV"), having its principal offices at 2230 E. Imperial Hwy., El Segundo, CA 90245, and XM Satellite Radio Inc. ("XM Radio"), having its principal off
ices at 1250 23rd Street, NW, Suite 57, Washington, D.C. 20037.

RECITALS

WHEREAS, DIRECTV is a leading digital satellite broadcaster and service operator in the United States;

WHEREAS, XM Radio has developed and/or obtained licenses for the technology and intellectual property rights necessary to provide S-band Satellite Digital Audio Radio Service ("SDARS") in the Territory pursuant to a license from the FCC;

WHEREAS, concurrently with entering into this Agreement, DIRECTV intends to make a capital investment in XM Radio (the "Original Investment") pursuant to the terms of that certain Investment Agreement (the "Investment Agreement"), dated as of the same date as this Agreement, among XM Radio, DIRECTV and American Mobile Satellite Corporation ("AMSC"); and

WHEREAS, in connection with entering into the Investment Agreement, the Parties desire to establish a strategic business relationship between the m that
will allow both Parties to benefit from the operational arrangements described in this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein, the parties, intending to be legally bound, hereby agree as follows:

COMMITMENTS

The following COMMITMENTS are not assignable to third parties:

1. XM Radio shall make available to DIRECTV 204.8 kbps of SDARS transmission capacity ("bandwidth") for programming (e.g., talk, music, special events, etc.) reasonably acceptable to XM Radio and provided by DIRECTV. XM Radio shall make such bandwidth available to DIRECTV at the same time as or before it is made available to any other commercial programmer on terms (either


***** 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.

through revenue sharing or on a unit cost basis) no less favorable than those of other similar commercial programmers who provide programming similar to such programming provided by DIRECTV in terms of subject matter, style, content and quality; provided, however, that for the term of this Agreement and any renewal, extension or amendment hereof, each person making a capital investment in XM Radio pursuant to the Investment Agreement, including DIRECTV, shall be entitled t
o terms no less attractive than a [*****] of revenues (net of agency commissions, sales expenses and license fees where applicable) for content provided by such person to XM Radio. In connection with offering or accepting such terms, neither party shall take into account any of the terms of, or arrangements under, that certain Distribution Agreement by and between XM Radio and OnStar, a division of General Motors Corporation to be signed concurrently with entering into this agreement or other future OEM agreements with major automobile manufacturers. DIRECTV may at its option use all or only a portion of such bandwidth.

(a) Use of such bandwidth shall be subject to compliance with applicable law, including without limitation, rules and regulations of the FCC ("FCC Rules"). If requested by DIRECTV and permitted under FCC rules, XM will make the programming provided by DIRECTV available to all XM customers.

(b) DIRECTV agrees to us e reasonable efforts to give XM at least ninety (90) days' prior notice, but in no case will give less than sixty (60) days prior notice of its intent to utilize any bandwidth allocated to DIRECTV hereunder. Such notice shall set forth the amount of bandwidth to be utilized as well as the proposed use of such bandwidth. Until actually utilized by DIRECTV, XM shall be entitled to use the bandwidth allocated to DIRECTV hereunder.

(c) To the extent DIRECTV elects to utilize any or all of the bandwidth allocated to it hereunder, DIRECTV, at its expense, shall deliver to a location in the continental United States designated by XM a complete audio signal and/or data transmission, as the case may be, by transmitting such signal and/or data via a mutually acceptable means and in a form that is not encrypted or digitally compressed and that will not require XM to modify the sign al and/or data in order to receive or to transmit such signal and/or data over the XM System. XM, at its expense, shall furnish all other facilities necessary for the receipt of DIRECTV's transmission and for the retransmission of such signals and/or data to subscribers authorized to receive such signals and/or data.

2

***** 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.

(d) DIRECTV agrees that the technical quality of each audio signal and/or data transmission transmitted by DIRECTV to XM shall meet the minimum technology standards established by XM and provided to other similar third party program providers.

(e) DIRECTV shall not use the bandwidth allocated to it hereunder in a manner that could reasonably be expected to adversely interfere with the XM business(es) or cause XM to be in breach of its existing obligations to oth er third-party content providers.

(f) DIRECTV shall indemnify and hold harmless XM Indemnitees from and against any and all Loss and Expense (as defined below) arising out of the content of any of DIRECTV's transmissions via such bandwidth or the sale or marketing by DIRECTV of any products or services via such bandwidth.

2. Within thirty (30) days of the execution of this Agreement, a Technology Advisory Committee (the "Committee") will be formed by XM. The Committee will have no more than five (5) members (or such other number as may be mutually agreed for efficient management of XM technology programs) and at least one DIRECTV representative will serve as a member of the Committee. Appropriate protections will be included to ensure that the recommendations of the Committee and of the DIRECTV representative(s) are accorded significant weight by XM Radio's Board of Directors. The Committee will direct the analysis and selection of appropri ate billing, customer service and conditional access systems for XM, as well as the overall systems integration effort.

3. Within thirty (30) days of the execution of this Agreement, a Technical Services Agreement between DIRECTV and XM will be executed pursuant to which, among other things, at DIRECTV'S option, up to the equivalent of five full time DIRECTV technical personnel or technical personnel designated by DIRECTV will assist with implementation of customer service, billing and conditional access capabilities at XM Radio, as well as the overall systems integration effort. XM Radio will make every reasonable effort to accommodate the needs of such technical personnel in performing their duties under this Technical Services Agreement, including providing such technical personnel with the same access to technology and facilities and with office space, telephone and computer access and, administrative services reasonably comparable to that which would be provided to employees of XM Radio wit h similar skills and experience. XM Radio will reimburse DIRECTV on a [*****] under this Technical Services Agreement.

4. To the extent made available by DIRECTV to XM on competitive terms and conditions, XM will as soon as practicable use DIRECTV's billing, customer service and conditional access architecture if technically feasible.

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5. XM Radio will grant DIRECTV access as soon as practicable to XM Radio advertising at the lowest available commercial rates (without taking into account any of the terms of or arrangements under the GM Distribution Agreement or other OEM agreements with major automobile manufacturers). In addition, DIRECTV will as soon as practicable receive access to XM Radio customer lists for direct mail solicitation for the DIRECTV service at no cost for the first 5 years following the commencement of XM Radio's commercial operations and thereafter on commercially reasonable terms. DIRECTV shall not resell such customer lists and shall not use the customer lists for direct mail solicitations or other purposes that could reasonably be expected to compete with o r adversely interfere with the XM business(es) (it being acknowledged by each party that the audio service component of the DIRECTV service does not compete with or adversely interfere with the XM business(es)).

6. XM Radio agrees that, for the term of this Agreement and any mutually agreed extensions of such term, it will not (a) invest in equity securities (or securities convertible into (i) equity securities or (ii) other securities convertible into equity securities) of any present or future competitor of DIRECTV in the DBS business, such as (a "DBS Competitor"), or (b) enter into marketing, distribution, customer list usage or other similar arrangements with any DBS Competitor or any affiliate of any DBS Competitor. DIRECTV agrees that, for the term of this Agreement and any mutually agreed extensions of such term, it will not (a) invest in equity securities (or securities convertible into (i) equity securities or (ii) other securities convertible into equity securities) of any present or fu ture competitor of XM Radio in the SDARS business (an "SDARS Competitor"), or (b) enter into marketing, distribution, customer list usage or other similar arrangements with any SDARS Competitor.

7. XM will make good faith efforts to negotiate DBS broadcast rights for DIRECTV as part of its ongoing programming negotiations. To the extent such DBS broadcast rights are acquired, DIRECTV will be the exclusive DBS distributor under reasonably competitive terms and conditions for any and all related programming; to the extent, after notice to XM, DIRECTV elects not to distribute such programming, XM will be relieved of the programming exclusivity obligations with respect to the programming DIRECTV has elected not to distribute. DIRECTV will continue to have rights to distribute such programming on a non-exclusive basis.

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8. DIRECTV will make good faith efforts to jointly represent XM in obtaining distribution of XM service through DIRECTV's existing retail distribution network.

9. XM Radio hereby grants to General Motors Corporation (and its affiliates, including but not limited to Hughes Electronics Corporation, DIRECTV and their affiliates) a royalty-free, non-transferable, non-exclusive license to use, sell, manufacture and have manufactured, all technology developed by XM Radio (including patents and patent applications and other related intellectual property) ("XM Technology"), exclusive of technology owned by others; provided, however, that the foregoing rights to use, sell, m anufacture and have manufactured may be used worldwide for any purpose other than any application related to any Digital Audio Radio Service.

DESIRED ARRANGEMENTS

The following DESIRED ARRANGEMENTS are subject to further good faith negotiation:

10. An agency agreement to allow DIRECTV to market XM Radio services to DIRECTV subscribers with commercially reasonable Authorized Sales Agent compensation.

11. Jointly determined advertising barter arrangements to provide access to unused advertising slots (avails) on each other party's satellite distribution systems .

12. Technology cooperation between XM Radio, DIRECTV and DIRECTV's consumer electronic manufacturers to:

(a) Include DIRECTV manufacturers in XM Radio's portfolio of authorized manufacturers as permitted by e xisting agreements.

(b) Integrate XM Radio capability into DIRECTV set-top boxes and systems.

INDEMNIFICATION AND LIMITATION OF LIABILITY

13. Breach or Default. XM Radio and DIRECTV shall each indemnify, defend and forever hold harmless the other and the other's affiliated companies and each of the others (and the other's affiliated companies) respective present and former officers, shareholders, directors, employees, partners and agents (such persons, "the Indemnitees", from and against any and all losses, liabilities, claims, costs, damages, expenses, including without limitation, fines, forfeitures, attorneys fees, disbursements and court and/or administrative costs (collectively,

5

"Loss and Expense"), arising out of the breach of or default under any term, warranty, covenant, representation or other provision contained herein.

14. Indemnification Procedures. Each party seeking indemnity hereunder (the "Indemnified Party") shall give prompt written notice to the other party (the "Indemnifying Party") of any circumstances which may give rise to any Loss or Expense as soon as the Indemnified Party knows of such circumstances; provided, however, that the failure to give such notice shall not relieve the Indemnifying Party of its obligation to indemnify the Indemnified Party the Indemnifying Party shall, at its own cost and expense and using counsel
acceptable to the Indemnified Party, contest and assume responsibility for the defense of such litigation, provided that the Indemnified Party may, at the Indemnifying Party's own cost and expense, participate in the defense of any such claim, action or suit. The Indemnifying Party shall have the right to control the defense and any settlement of such claim, action or suit. The Indemnifying Party shall pay all expenses and satisfy all judgments, including reasonable attorneys' fees and litigation expenses, which may be incurred by or rendered against the Indemnified Party in connection therewith.

The indemnification obligations of the parties under the foregoing provisions shall survive the expiration or termination of this Agreement.

15. Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INCIDENTAL OR C
ONSEQUENTIAL DAMAGES OF THE OTHER PARTY OR ANY THIRD PARTY,

WHETHER FORESEEABLE OR NOT AND REGARDLESS OF THE FORM, LEGAL, THEORY OR BASIS OF RECOVERY OF ANY SUCH CLAIM. IN NO EVENT SHALL ANY PROJECTIONS OR FORECASTS BY EITHER PARTY BE BINDING AS COMMITMENTS OR, IN ANY WAY, PROMISES BY SUCH PARTY, AND ANY FAILURE BY EITHER PARTY TO ACHIEVE ANY MINIMUM NUMBER OF SUBSCRIBERS SHALL NOT CONSTITUTE A BREACH OR OTHER CAUSE OF ACTION OR ENTITLE THE OTHER PARTY TO REMEDIES EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT.

CONFIDENTIALITY

16. Each of the parties agrees that, except with respect to certain other persons acknowledging receipt and review of this Agreement, such party and its employees will maintain in confidence all of the information provided to it by the other party which the receiving party knows or reasonably should know is confidential information of the other party (including all of the written data, summarie s, reports, other proprietary information, trade secrets and information of all kinds, acquired, devised or developed in any manner from the other party's personnel or files or pursuant to this Agreement) (the "Confidential Information"), and such party will not use the Confidential Information of the other party, except as required for performance of this Agreement and will not reveal the same to

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any persons not employed by the other party except: (i) (a) at the written direction of the other party; (b) to the extent necessary to comply with the law (including required filings with the Securities and Exchange Commission) or the valid order of a court of competent jurisdiction or in connection with any arbitration proceeding, in which event the disclosing party shall so notify the other party as promptly as practicable (and, if possible, prior to making any disclosure) and shall seek confidential treatment of such information; (c) as part of its normal reporting or review procedure to any of its affiliates, its auditors and its attorneys, if such affiliates, auditors and attorneys agree to be bound by the provisions of this Section; (d) in order to enforce any of its
rights pursuant to this Agreement; and (e) to potential investors, insurers and financing entities, if any such person agrees to be bound by the provisions of this Section; or (ii) (a) if, prior to the time of disclosure to the recipient, the Confidential Information is in the public domain, or is otherwise validly known to the recipient, as evidenced by written record or (b) if, after disclosure to the recipient the Confidential Information becomes part of the public domain by written publication through no fault of the recipient. The parties further agree to maintain any oral information which would be Confidential Information if reduced to writing as confidential in accordance with standard industry practice (subject to the foregoing exceptions for Confidential Information). Each party agrees to use the same degree of care to protect the other party's Confidential Information as it uses with its own proprietary information, but in no event with less than reasonable care. Immediately
upon the written request of the party providing the other party with Confidential Information (which request the providing party may make, as a specific or general request, in its sole discretion at any time up to one year after the termination or expiration of this Agreement), the receiving party shall provide to the providing party (or destroy if the providing party so requests) all requested Confidential Information provided by the providing party.

ADDITIONAL REPRESENTATIONS AND WARRANTIES

17. Power and Authority; No Breach. Each of the parties represents and warrants that all corporate action on the part of its officers, directors and shareholders necessary for the authorization of this Agreement has been completed and that each party has full power and authority to enter into this Agreement and perform its obligations hereunder and th at its execution of this
Agreement and performance of its obligations hereunder does not and will not violate any law or result in a breach of or default under the terms of any contract or agreement by which such party is bound. The enforcement and enjoyment by either party of its rights and benefits hereunder do not and will not violate, and are not and will not be subject to restraint or curtailment under, the terms of any contract or agreement by which the other party is bound.

18. Compliance With Law. Each party is in compliance with all applicable governmental statutes, laws, rules, regulations, ordinances, codes, directives, and orders (whether federal, state municipal or otherwise) arising out of or relating to its obligations under this Agreement and is solely responsible for

7

the compliance with all such laws (including, without limitation, consumer disclosure and privacy laws).

TERMINATION

19. Term. This Agreement shall remain in effect for as long as (a)

DIRECTV holds common stock of XM Radio or securities convertible into either (x) common stock of XM Radio or (y) other securities convertible into common stock of XM Radio in such amounts as would provide DIRECTV with holdings in excess of five (5) percent of the fully diluted ownership of XM Radio or (b) DIRECTV continues to hold the full amount of its Original Investment in XM Radio (whether or not converted into
shares of Class A Preferred Stock or Class A Common Stock).

20. Termination for Material Default. Either party may terminate this Agreement immediately in the event that the other party materially defaults in the performance or observance of any material covenant, agreement or condition set forth in this Agreement, which default remains uncured for a period of thirty (30) days from the date that the notifying party provides notice to the defaulting party.

21. Termination for Insolvency. Either party may in its sole discretion terminate this Agreement effective immediately upon giving notice to the other party (i) upon the institution by or against the other party of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement of its debts and such proceeding is not dismissed within sixty (60) days of i
ts being filed; (ii) upon the other party making an assignment for the benefit of creditors; or (iii) upon the other party's dissolution or liquidation.

MISCELLANEOUS PROVISIONS

22. Independent Contractor, No Agents; Relationship; No-Third Party
Beneficiaries. Each party is an independent contractor in performing the services described in this Agreement. Except as otherwise expressly provided in this Agreement, no party (nor any of its officers, directors, agents or employees) shall act or hold itself out as an agent of the other party hereto. The parties do not intend this Agreement or the relationship hereunder to constitute a joint venture or partnership. The provisions of this Agreement are for the benefit only of the Partie
s hereto, and no third party may seek to enforce, or benefit from, these provisions.

23. Notices. All notices and other communications from either party to the other hereunder shall be in writing and shall be deemed received upon actual receipt when personally delivered, upon acknowledgment of receipt if sent by facsimile, or upon the expiration of the third business day after being deposited in the United States mails, postage prepaid, certified or registered mail, addressed to the other party at a location specified in writing by such Party. Until notice in accordance with this Section is given to the contrary, the addresses,

8

phone numbers and facsimile number for purposes of giving notice are as follows:

XM Radio

XM Satellite Radio, Inc.
1250 23rd Street, NW, Suite 57 Washington, DC 20037

Attn:    President & CEO
Fax:     202-969-7096
cc:      General Counsel

DIRECTV

DIRECTV, Inc.
2230 East Imperial Highway
El Segundo, CA 90245

Attn:    Senior Vice President, New Ventures
Fax:     (310) 964-4106
cc:      Senior Vice President, Business Affairs
          and General Counsel

24. Severability. Nothing contained in this Agreement shall be construed

to require commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any law, such law shall prevail; provided, however, that in such event, the affected provisions of this Agreement shall be modified to the minimum extent necessary to permit compliance with such law and all other provisions shall continue in full force and effect.

25. Survival of Provisions. The rights and obligations pursuant to Sections 13, 14, 15, 16, 26 and 27 of this Agreement shall survive any expiration or termination of this Agreement. In addition, any obligations which expressly or by their nature are to continue after termination, cancellation or expiration of this Agreement shall survive and remain in effect. All other rights and obligations of DIRECTV and XM Radio under this Agr eement shall cease
upon termination.

APPLICABLE LAW; DISPUTE RESOLUTION

26. This Agreement, and the rights and obligations of the parties hereunder, are subject to all applicable federal, state and local laws, rules and regulations (including without limitation, the Communications Act of 1934, as amended, and the rules and regulations of the FCC) and shall be construed in accordance with and shall be governed by the laws of the State of New York, without giving effect to the principles of conflict of laws thereof.

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27. In case of any controversy or claim arising out of or related to this Agreement, the parties agree to meet to resolve such dispute in good faith. Should such a resolution not be reached, the parties further agree that the matter shall be settled by arbitration administered by JAMS/Endispute (or such other alternative dispute resolution service provider as may be mutually agreed upon by the parties) in accordance with such entity's expedited arbitration rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitration shall be conducted in Washington, D.C. unless another location is agreed upon by the parties.

MODIFICATION

28. No amendment of or modification to this Agreement shall be valid unless made in writing and signed by the authorized representative(s) of the parties. As to XM, the authorized representatives means both (a) XM's President or any Vice President and (b) its General Counsel.

HEADINGS

29. The headings and numbering of paragraphs in this Agreement are for convenience only and shall not be construed to define or limit any of the terms herein or affect the meaning or interpretation hereof.

ENTIRE AGREEMENT

30. This Agreement, including all appendices hereto, constitutes the entire agreement between the parties hereto and supersedes all prior oral or written agreements, representations, statements, negotiations, understandings, proposals, and undertakings with respect to the subject matter hereof. All appendices hereto are expressly incorporated herein by reference and made a material part of this Agreement.

EFFECTIVE TIME

31. This agreement shall be effective upon the closing under that certain Exchange Agreement dated as of June 7, 1999 between American Mobile Satellite Corporation, WorldSpace, Inc. and XM Satellite Radio Holdings, Inc.

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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written.

XM SATELLITE RADIO INC.

By:  /s/ Hugh Panero
     ----------------------------
     Hugh Panero

Its: President & CEO

DIRECTV

By:  /s/ Steven Cox
     ----------------------------
     Steven Cox

Its: Senior Vice President of New

Ventures

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EXHIBIT 10.10

**** 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.

OPERATIONAL ASSISTANCE AGREEMENT

THIS AGREEMENT, made as of the 7th day of June, 1999, is by and between Clear Channel Communications Inc. ("Clear Channel"), having its principal offices at 200 Concord Plaza, Suite 600, San Antonio, Texas 90245, and XM Satellite Radio Inc. ("XM Ra
dio"), having its principal offices at 1250 23rd Street, NW, Suite 57, Washington, D.C. 20037.

RECITALS

WHEREAS, Clear Channel is a leader in the "out-of-home" advertising segment with significant radio station and outdoor advertising holdings.

WHEREAS, XM Radio has developed and/or obtained licenses for the technology and intellectual property rights necessary to provide S-band Satellite Digital Audio Radio Service ("SDARS") in the Territory pursuant to a license from the FCC;

WHEREAS, concurrently with entering into this Agreement, Clear Channel intends to make a capital investment in XM Radio (the "Original Investment") pursuant to the terms of that certain Investment Agreement (the "Investment Agreement"), dated as of the same date as this Agreement, among XM Radio, Clear Channel and American Mobile Satellite Corporation ("AMSC"); and

WHEREAS, in connection with entering into the Investment Agree ment, the
Parties desire to establish a strategic business relationship between them that will allow both Parties to benefit from the operational arrangements described in this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein, the parties, intending to be legally bound, hereby agree as follows:

COMMITMENTS

The following COMMITMENTS are not assignable to third parties:

1. XM Radio shall make available to Clear Channel 409.6 kbps of SDARS transmission capacity ("bandwidth") for programming (e.g., talk, music, special events or other services, etc.) reasonably acceptable to XM Radio and provided by Clear Channel. XM Radio shall make such bandwidth available to Clear Channel at the same


***** 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.

time as or before it is made available to any other commercial programmer on terms (either through revenue sharing or on a unit cost basis) no less favorable than those of other similar commercial programmers who provide programming similar to such programming provided by Clear Channel in terms of subject matter, style, content and quality; provided, however, that for the term of this Agreement

and any renewal, extension or amendment hereof, each person making a capital investment in XM Radio pursuant to the Investment Agreement, including Clear Channel, shall be entitled to terms no less attractive than a [*****] of revenues (net of agency commissions, sales expenses and license fees where applicable) for content provided by such person to XM Radio In connection with offering or accepting such terms, neither party shall take into account any of the terms of, or arrangements under, that certain Distribution Agreement by and between XM Radio and OnStar, a division of General Motors Corporation to be signed concurrently with entering into this agreement or other future OEM agreements with major automobile manufacturers. Clear Channel may at its option use all or only a portion of such bandwidth.

(a) Use of such bandwidth shall be subject t
o compliance with applicable law, including without limitation, rules and regulations of the FCC ("FCC Rules"). If requested by Clear Channel and permitted under FCC rules, XM will make the programming provided by Clear Channel available to all XM customers.

(b) Clear Channel agrees to use reasonable efforts to give XM at least ninety (90) days prior notice, but in no case will give less than sixty (60) days prior notice of its intent to utilize any bandwidth allocated to Clear Channel hereunder. Such notice shall set forth the amount of bandwidth to be utilized as well as the proposed use of such bandwidth. Until actually utilized by Clear Channel, XM shall be entitled to use the bandwidth allocated to Clear Channel hereunder.

(c) To the extent Clear Channel elects to utilize any or all of the bandwidth allocated to it hereunder, Clear Channel, at its

expense, shall deliver to a location in the continental United States designated by XM a complete audio signal and/or data transmission, as the case may be, by transmitting such signal and/or data via a mutually acceptable means and in a form that is not encrypted or

2

digitally compressed and that will not require XM to modify the signal and/or data in order to receive or to transmit such signal and/or data over the XM System. XM, at its expense, shall furnish all other facilities necessary for the receipt of Clear Channel's transmission and for the retransmission of such signals and/or data to subscribers authorized to receive such signals and/or data.

(b) Clear Channel agrees that the technical quality of each audio signal and/or data transmission transmitted by Clear Channel to XM shall meet the minimum technology standards established by XM and provided to other similar third party program providers.

(c) Clear Channel shall not use the bandwidth allocated to it hereunder in a manner that could reasonably be expected to adversely interfere with the XM business(es) or cause XM to be in breach of its existing obligations to other third-party content providers.

(d) Clear Channel agrees that the technical quality of each audio signal and/or data transmission transmitted by Clear Channel to XM shall meet the minimum technology standards established by XM and provided to other similar third party program providers.

(e) Clear Channel shall not use the bandwidth allocated to it hereunder in a manner that could reasonably be expected to adversely interfere with the XM business(es) or cause XM to be in breach of its existing obligations to other third-party content providers.

(f) Clear Channel shall indemnify and hold harmless XM Indemnit ees from and against any and all Loss and Expense (as defined below) arising out of the content of any of Clear Channel's transmissions via such bandwidth or the sale or marketing by Clear Channel of any products or services via such bandwidth.

2. Within thirty (30) days of the execution of this Agreement, a Technology Advisory Committee (the "Committee") will be formed by XM. The Committee will have no more than five (5) members (or such other number as may be mutually agreed for efficient management of XM technology programs) and at least one Clear Channel representative will serve as a member of the Committee. Appropriate protections will be included to ensure that the recommendations of the Committee and of the Clear Channel representative(s) are accorded significant weight by XM Radio's Board of Directors. The Committee will direct the analysis and selection of appropriate billing, customer service and conditional access systems for XM, as well as the overall s ystems integration effort.

3. XM Radio will grant Clear Channel access as soon as practicable to XM Radio advertising at the lowest available commercial rates (without taking into account any of the terms of or arrangements under the GM Distribution Agreement

3

***** 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.

or other OEM agreements with major automobile manufacturers). In addition, Clear Channel will as soon as practicable receive access to XM Radio customer lists for direct mail solicitation for the Clear Channel service at no cost for the first 5 years following the commencement of XM Radio's commercial operations and thereafter on commercially reasonable terms. Clear Channel shall not resell such customer lists and shall not use the customer lists for direct mail solicitations or other purposes that could r easonably be expected to compete
with or adversely interfere with the XM business(es)

4. Clear Channel will make good faith efforts to grant XM Radio access to Clear Channel advertising at the lowest available commercial rates (except for rates governed under political advertising guidelines).

5. XM Radio hereby grants to Clear Channel a royalty-free, non- transferable, non-exclusive license to use, sell, manufacture and have manufactured, all technology developed by XM Radio (including patents and patent applications and other related intellectual property) ("XM Technology"), exclusive of technology owned by others; provided, however, that the foregoing rights to use, sell, manufacture and have manufactured may be used worldwide for any purpose other than any application related to any Digital Audio Radio Service.

DESIRED ARRANGEMENTS

The following DESIRED ARRANGEMENTS are subject to further good faith negotiation:

6. Jointly determine advertising barter arrangements between the companies to provide access to unused advertising slots (avails) and outdoor billboards.

7. [*****]

8. Explore the use of Clear Channel advertising sales force and expertise to sell XM inventory based on competitive agency/compensation terms and conditions.

9. [*****]

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INDEMNIFICATION AND LIMITATION OF LIABILITY

10. Breach or Default. XM Radio and Clear Channel shall each indemnify, defend and forever hold harmless the other and the other's affiliated companies and each of the others (and the other's affiliated companies) respective present and former officers, shareholders, directors, employees, partners and agents (such persons, "the Indemnitees", from and against any and all losses, liabilities, claims, costs, damages, expenses, including without limitation, fines, forfeitures, attorneys fees, disbursements and cou rt and/or
administrative costs (collectively, "Loss and Expense"), arising out of the

breach of or default under any term, warranty, covenant, representation or other provision contained herein.

11. Indemnification Procedures. Each party seeking indemnity hereunder (the "Indemnified Party") shall give prompt written notice to the other party (the "Indemnifying Party") of any circumstances which may give rise to any Loss or Expense as soon as the Indemnified Party knows of such circumstances; provided, however, that the failure to give such notice shall not relieve the Indemnifying Party of its obligation to indemnify the Indemnified Party the Indemnifying Party shall, at its own cost and expense and using counsel acceptable to the Indemnified Party, contest and assume responsibility for the defense of such litigation, provided that the Indemnifi ed Party may, at the
Indemnifying Party's own cost and expense, participate in the defense of any such claim, action or suit. The Indemnifying Party shall have the right to control the defense and any settlement of such claim, action or suit. The Indemnifying Party shall pay all expenses and satisfy all judgments, including reasonable attorneys' fees and litigation expenses, which may be incurred by or rendered against the Indemnified Party in connection therewith.

The indemnification obligations of the parties under the foregoing provisions shall survive the expiration or termination of this Agreement.

12. Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES OF THE OTHER PARTY OR ANY THIRD PARTY, WHETHER FORESEEABLE OR NOT AND REGARDLESS OF THE FORM, LEGAL, THEORY OR BASIS OF RECOVERY OF
ANY SUCH CLAIM. IN NO EVENT SHALL ANY PROJECTIONS OR FORECASTS BY EITHER PARTY BE BINDING AS COMMITMENTS OR, IN ANY WAY, PROMISES BY SUCH PARTY, AND ANY FAILURE BY EITHER PARTY TO ACHIEVE ANY MINIMUM NUMBER OF SUBSCRIBERS SHALL NOT CONSTITUTE A BREACH OR OTHER CAUSE OF ACTION OR ENTITLE THE OTHER PARTY TO REMEDIES EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT.

CONFIDENTIALITY

13. Each of the parties agrees that, except with respect to certain other persons acknowledging receipt and review of this Agreement, such party and its

5

employees will maintain in confidence all of the information provided to it by the other party which the receiving party knows or reasonably should know is confidential information of the other party (including all of the written data, summaries, reports, other proprietary information, trade secrets and information of all kinds, acquired, devised or developed in any manner from the other party's personnel or files or pursuant to this Agreement) (the "Confidential Information"), and such party will not use the Confidential Information of the other party, except as required for performance of this Agreeme nt and will not
reveal the same to any persons not employed by the other party except: (i) (a) at the written direction of the other party; (b) to the extent necessary to comply with the law (including required filings with the Securities and Exchange Commission) or the valid order of a court of competent jurisdiction or in connection with any arbitration proceeding, in which event the disclosing party shall so notify the other party as promptly as practicable (and, if possible, prior to making any disclosure) and shall seek confidential treatment of such information; (c) as part of its normal reporting or review procedure to any of its affiliates, its auditors and its attorneys, if such affiliates, auditors and attorneys agree to be bound by the provisions of this Section; (d) in order to enforce any of its rights pursuant to this Agreement; and (e) to potential investors, insurers and financing entities, if any such person agrees to be bound by the provisions of this Section; or (ii) (a) if, prior to the time of
disclosure to the recipient, the Confidential Information is in the public domain, or is otherwise validly known to the recipient, (b) if, after disclosure to the recipient the Confidential Information becomes part of the public domain through no fault of the recipient. The parties further agree to maintain any oral information which would be Confidential Information if reduced to writing as confidential in accordance with standard industry practice (subject to the foregoing exceptions for Confidential Information). Each party agrees to use the same degree of care to protect the other party's Confidential Information as it uses with its own proprietary information, but in no event with less than reasonable care. Immediately upon the written request of the party providing the other party with Confidential Information (which request the providing party may make, as a specific or general request, in its sole discretion at any time up to one year after the termination or expiration of this Agr eement), the
receiving party shall provide to the providing party (or destroy if the providing party so requests) all requested Confidential Information provided by the providing party.

ADDITIONAL REPRESENTATIONS AND WARRANTIES

14. Power and Authority; No Breach. Each of the parties represents and warrants that all corporate action on the part of its officers, directors and shareholders necessary for the authorization of this Agreement has been completed and that each party has full power and authority to enter into this Agreement and perform its obligations hereunder and that its execution of this Agreement and performance of its obligations hereunder does not and will not violate any law or result in a breach of or default under the terms of any contract or agreement by which such party is bound. The enforcement and enjoyment by either p
arty of its rights and benefits hereunder do not and will

6

not violate, and are not and will not be subject to restraint or curtailment under, the terms of any contract or agreement by which the other party is bound.

15. Compliance With Law. Each party is in compliance with all applicable governmental statutes, laws, rules, regulations, ordinances, codes, directives, and orders (whether federal, state municipal or otherwise) arising out of or relating to its obligations under this Agreement and is solely responsible for the compliance with all such laws (including, without limitation, consumer disclosure and privacy laws).

TERMINATION

16. Term. This Ag reement shall remain in effect for as long as (a) Clear

Channel holds common stock of XM Radio or securities convertible into either
(x) common stock of XM Radio or (y) other securities convertible into common stock of XM Radio in such amounts as would provide Clear Channel with holdings in excess of five (5) percent of the fully diluted ownership of XM Radio or (b) Clear Channel continues to hold the full amount of its Original Investment in XM Radio (whether or not converted into shares of Class A Preferred Stock or Class A Common Stock).

17. Termination for Material Default. Either party may terminate this Agreement immediately in the event that the other party materially defaults in the performance or observance of any material covenant, agreement or condition set forth in this Agreement, which default remains uncured for a period of thir
ty (30) days from the date that the notifying party provides notice to the defaulting party.

18. Termination for Insolvency. Either party may in its sole discretion terminate this Agreement effective immediately upon giving notice to the other party (i) upon the institution by or against the other party of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement of its debts and such proceeding is not dismissed within sixty (60) days of its being filed; (ii) upon the other party making an assignment for the benefit of creditors; or (iii) upon the other party's dissolution or liquidation.

MISCELLANEOUS PROVISIONS

19. Independent Contractor, No Agents; Relationship; No-Third Party
Be
neficiaries. Each party is an independent contractor in performing the services described in this Agreement. Except as otherwise expressly provided in this Agreement, no party (nor any of its officers, directors, agents or employees) shall act or hold itself out as an agent of the other party hereto. The parties do not intend this Agreement or the relationship hereunder to constitute a joint venture or partnership. The provisions of this Agreement are for the benefit only of the Parties hereto, and no third party may seek to enforce, or benefit from, these provisions.

7

20. Notices. All notices and other communications from either party to the other hereunder shall be in writing and shall be deemed received upon actual receipt when personally delivered, upon acknowledgment of receipt if sent by facsimile, or upon the expiration of the third business day after being deposited in the United States mails, postage prepaid, certified or registered mail, addressed to the other party at a location specified in writing by such Party. Until notice in accordance with this Section is given to the contrary, the addresses, phone numbers and facsimile number for purposes of giving notice are as follows:

XM Radio

XM

Satellite Radio, Inc.
1250 23rd Street, NW, Suite 57 Washington, DC 20037
Attn: President & CEO
Fax: 202-969-7096
cc: General Counsel

Clear Channel

Clear Channel Communication Inc. 200 Concord Plaza, Suite 600 San Antonio, Texas 90245 Attn: Randall Mays, CFO Fax: (210) 822-2828
cc: Senior Vice President, Corporate Development

21. Severability. Nothing contained in this Agreement shall be construed to require commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any law, such law shall prevail; provided, however, that in such event, the affected provisions of this

Agreement shall be modified to the minimum extent necessary to permit compliance with such law and all other provisions shall continue in full force and effect.

22. Survival of Provisions. The rights and obligations pursuant to Sections 10, 11, 12, 13, 23 and 24 of this Agreement shall survive any expiration or termination of this Agreement. In addition, any obligations which expressly or by their nature are to continue after termination, cancellation or expiration of this Agreement shall survive and remain in effect. All other rights and obligations of Clear Channel and XM Radio under this Agreement shall cease upon termination.

8

APPLICABLE LAW; DISPUTE RESOLUTION

23. This Agreement, and the rights and obligations of the parties hereunder, are subject to all applicable federal, state and local laws, rules and regulations (including without limitation, the Communications Act of 1934, as amended, and the rules and regulations of the FCC) and shall be construed in accordance with and shall be governed by the laws of the State of New York, without giving effect to the principles of conflict of laws thereof.

24. In case of any controversy or claim arising out of or related to this Agreement, the parties agree to meet to resolve such dispute in good faith. Should such a resolution not be reached, the parties further agree that the matter shall be settled by arbitration administered by JAMS/Endispute (or such other alternative dispute resolution service provider as may be mutually agreed upon by the parties) in accordance with such entity's expedited arbitration rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitration shall be conducted in Washington, D.C. unless another location is agreed upon by the parties.

MODIFICATION

25. No amendment of or modification to this Agreement shall be valid unless made in writing and signed by the authorized representative(s) of the parties. As to XM, the authorized representatives means both (a) XM's President or any Vice President and (b) its General Counsel.

HEADINGS

26. The headings and numbering of paragraphs in this Agreement are for convenience only and shall not be construed to define or limit any of the terms herein or affect the meaning or interpretation hereof.

ENTIRE AGREEMENT

27. This Agreement, including all appendices hereto, constitutes the entire agreement between the parties hereto and supersedes all prior oral or written agreements, representations, statements, negotiations, understandings, proposals, and undertakings with respect to the subject matter hereof. All appendices hereto are expressly incorporated herein by reference and made a material part of this Agreement.

EFFECTIVE TIME

28. This agreement shall be effective upon the closing under that certain Exchange Agreement dated as of June 7, 1999 between American Mobile Satellite Corporation, WorldSpace, Inc. and XM Satellite Radio Holdings, Inc.

9

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written.

XM SATELLITE RADIO INC.

By:  /s/ Hugh Panero
     --------------------------------
     Hugh Panero

Its: President & CEO

Clear Channel Communications

By:  /s/ Mark Hubbard
     --------------------------------
     Mark Hubbard

Its: Senior Vice President Corporate

Development

10

EXHIBIT 10.11

*** 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.

OPERATIONAL ASSISTANCE AGREEMENT

THIS AGREEMENT, made as of the 7th day of July, 1999, is by and between TCM, LLC, having its principal offices at 211 N. Union Street, Suite 300, Alexandria, VA 22314, and XM Satellite Radio Inc. ("XM Radio"), having its principal offices at 1250 23rd
Street, NW, Suite 57, Washington, D.C. 20037.

RECITALS

WHEREAS, TCM, LLC is part of an investment group comprised of affiliates of Columbia Capital Corporation, Telcom Ventures L.L.C. and Madison Dearborn Partners ("the Investor Group");

WHEREAS, XM Radio has developed and/or obtained licenses for the technology and intellectual property rights necessary to provide S-band Satellite Digital Audio Radio Service ("SDARS") in the Territory pursuant to a license from the FCC;

WHEREAS, concurrently with entering into this Agreement, the Investor Group intends to make a capital investment in XM Radio (the "Original Investment") pursuant to the terms of that certain Investment Agreement (the "Investment Agreement"), dated as of the same date as this Agreement, among XM Radio, American Mobile Satellite Corporation ("AMSC") and the investors named therein; and

WHEREAS, in connection with entering into the Inves tment Agreement, the
Parties desire to establish a strategic business relationship between them that will allow both Parties to benefit from the operational arrangements described in this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein, the parties, intending to be legally bound, hereby agree as follows:

COMMITMENTS

The following COMMITMENTS are not assignable to third parties:

1. XM Radio shall make available to TCM, LLC 64 kbps of SDARS transmission capacity ("bandwidth") to develop differentiated programming reasonably acceptable to XM Radio and provided by TCM, LLC. XM Radio shall make such bandwidth available to TCM, LLC at the same time as or before it is


****** 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.

made available to any other commercial programmer on terms (either through revenue sharing or on a unit cost basis) no less favorable than those of other similar commercial programmers who provide programming similar to such programming provided by TCM, LLC in terms of subject matter, style, content and quality; provided, however, that for the term of this Agreement and any renewal, e
xtension or amendment hereof, each person making a capital investment in XM Radio pursuant to the Investment Agreement, including the Investor Group, shall be entitled to terms no less attractive than a
[*****] of revenues (net of agency commissions, sales expenses and license fees where applicable) for content provided by such person to XM Radio. In connection with offering or accepting such terms, neither party shall take into account any of the terms of, or arrangements under, that certain Distribution Agreement by and between XM Radio and OnStar, a division of General Motors Corporation to be signed concurrently with entering into this agreement or other future OEM agreements with major automobile manufacturers. TCM, LLC may at its option use all or only a portion of such bandwidth.

(a) Use of such bandwidth shall be subject to compliance with applicable law, includ ing without limitation, rules and regulations of the FCC ("FCC Rules"). If requested by TCM, LLC and permitted under FCC rules, XM will make the programming provided by TCM, LLC available to all XM customers.

(a) TCM, LLC agrees to use reasonable efforts to give XM at least ninety (90) days' prior notice, but in no case will give less than sixty (60) days prior notice of its intent to utilize any bandwidth allocated to TCM, LLC hereunder. Such notice shall set forth the amount of bandwidth to be utilized as well as the proposed use of such bandwidth. Until actually utilized by TCM, LLC, XM shall be entitled to use the bandwidth allocated to TCM, LLC hereunder.

(c) To the extent TCM, LLC elects to utilize any or all of the bandwidth allocated to it hereunder, TCM, LLC, at its expense, shall deliver to a location in the continental United States designated by XM a complete audio signal and/or data transmission, as th e case may be, by transmitting such signal and/or data via a mutually acceptable means and in a form that is not encrypted or digitally compressed and that will not require XM to modify the signal and/or data in order to receive or to transmit such signal and/or data over the XM System. XM, at its expense, shall furnish all other facilities necessary for the receipt of TCM, LLC's transmission and

2

for the retransmission of such signals and/or data to subscribers authorized to receive such signals and/or data.

(b) TCM, LLC agrees that the technical quality of each audio signal and/or data transmission transmitted by TCM, LLC to XM shall meet the minimum technology standards established by XM and provided to other similar third party program providers.

(c) TCM, LLC shall not use the bandwidth allocated to it hereunder in a manner that could reasonably be expected to adversely interfere with the XM business(es) or cause XM to be in breach of its existing obligations to other third-party content providers.

(d) TCM, LLC shall indemnify and hold harmless XM Indemnitees from and against any and all Loss and Expense (as defined below) arising out of the content of any of TCM, LLC's transmissions via such bandwidth or the sale or marketing by TCM, LLC of any products or services via such bandwidth.

2. Within thirty (30) days of the execution of this Agreement, a Technology Advisory Committee (the "Committee") will be formed by XM. The Committee will have no more than five (5) members (or such other number as may be mutually agreed for efficient management of XM technology programs) and at least one Investor Group representative will serve as a member of the Committee. Appropriate protections will be included to ensure that the recommendations of the Committee and of the Investor Group representative(s) are accorded significant weight by XM Radio's Board of Directors. The Committee will direct the analysis and selection of appropriate billing, customer service and conditional access systems for XM, as well as the overall systems integration effort.

3. XM Radio hereby grants to TCM, LLC a royalty-free, non -transferable, non-exclusive license to use, sell, manufacture and have manufactured, all technology developed by XM Radio (including patents and patent applications and other related intellectual property) ("XM Technology"), exclusive of technology owned by others; provided, however, that the foregoing rights to use, sell, manufacture and have manufactured may be used worldwide for any purpose other than any application related to any Digital Audio Radio Service.

INDEMNIFICATION AND LIMITATION OF LIABILITY

4. Breach or Default. XM Radio and TCM, LLC shall each indemnify, defend and forever hold harmless the other and the other's affiliated companies and each of the others (and the other's affiliated companies) respective pr esent and
former officers, shareholders, directors, employees, partners and agents (such persons, "the Indemnitees", from and against any and all losses, liabilities, claims, costs, damages, expenses, including without limitation, fines, forfeitures, attorneys fees, disbursements and court and/or administrative costs (collectively,

3

"Loss and Expense"), arising out of the breach of or default under any term, warranty, covenant, representation or other provision contained herein.

5. Indemnification Procedures. Each party seeking indemnity hereunder (the "Indemnified Party") shall give prompt written notice to the other party (the "Indemnifying Party") of any circumstances which may give rise to any Loss or Expense as soon as the Indemnified Party knows of such circumstances; provided, however, that the failure to give such notice shall not relieve the Indemnifying Party of its obligation to indemnify the Indemnified Party the Indemnifying Party shall, at its own cost and expense and using counsel
acceptable to the Indemnified Party, contest and assume responsibility for the defense of such litigation, provided that the Indemnified Party may, at the Indemnifying Party's own cost and expense, participate in the defense of any such claim, action or suit. The Indemnifying Party shall have the right to control the defense and any settlement of such claim, action or suit. The Indemnifying Party shall pay all expenses and satisfy all judgments, including reasonable attorneys' fees and litigation expenses, which may be incurred by or rendered against the Indemnified Party in connection therewith.

The indemnification obligations of the parties under the foregoing provisions shall survive the expiration or termination of this Agreement.

6. Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INCIDENTAL OR CONSEQU
ENTIAL DAMAGES OF THE OTHER PARTY OR ANY THIRD PARTY,

WHETHER FORESEEABLE OR NOT AND REGARDLESS OF THE FORM, LEGAL, THEORY OR BASIS OF RECOVERY OF ANY SUCH CLAIM. IN NO EVENT SHALL ANY PROJECTIONS OR FORECASTS BY EITHER PARTY BE BINDING AS COMMITMENTS OR, IN ANY WAY, PROMISES BY SUCH PARTY, AND ANY FAILURE BY EITHER PARTY TO ACHIEVE ANY MINIMUM NUMBER OF SUBSCRIBERS SHALL NOT CONSTITUTE A BREACH OR OTHER CAUSE OF ACTION OR ENTITLE THE OTHER PARTY TO REMEDIES EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT.

CONFIDENTIALITY

7. Each of the parties agrees that, except with respect to certain other persons acknowledging receipt and review of this Agreement, such party and its employees will maintain in confidence all of the information provided to it by the other party which the receiving party knows or reasonably should know is confidential information of the other party (including all of the written data, summaries, repo rts, other proprietary information, trade secrets and information of all kinds, acquired, devised or developed in any manner from the other party's personnel or files or pursuant to this Agreement) (the "Confidential Information"), and such party will not use the Confidential Information of the other party, except as required for performance of this Agreement and will not reveal the same to

4

any persons not employed by the other party except: (i) (a) at the written direction of the other party; (b) to the extent necessary to comply with the law (including required filings with the Securities and Exchange Commission) or the valid order of a court of competent jurisdiction or in connection with any arbitration proceeding, in which event the disclosing party shall so notify the other party as promptly as practicable (and, if possible, prior to making any disclosure) and shall seek confidential treatment of such information; (c) as part of its normal reporting or review procedure to any of its affiliates, its auditors and its attorneys, if such affiliates, auditors and attorneys agree to be bound by the provisions of this Section; (d) in order to enforce any of its
rights pursuant to this Agreement; and (e) to potential investors, insurers and financing entities, if any such person agrees to be bound by the provisions of this Section; or (ii) (a) if, prior to the time of disclosure to the recipient, the Confidential Information is in the public domain, or is otherwise validly known to the recipient, as evidenced by written record or (b) if, after disclosure to the recipient the Confidential Information becomes part of the public domain by written publication through no fault of the recipient. The parties further agree to maintain any oral information which would be Confidential Information if reduced to writing as confidential in accordance with standard industry practice (subject to the foregoing exceptions for Confidential Information). Each party agrees to use the same degree of care to protect the other party's Confidential Information as it uses with its own proprietary information, but in no event with less than reasonable care. Immediately
upon the written request of the party providing the other party with Confidential Information (which request the providing party may make, as a specific or general request, in its sole discretion at any time up to one year after the termination or expiration of this Agreement), the receiving party shall provide to the providing party (or destroy if the providing party so requests) all requested Confidential Information provided by the providing party.

ADDITIONAL REPRESENTATIONS AND WARRANTIES

8. Power and Authority; No Breach. Each of the parties represents and warrants that all corporate action on the part of its officers, directors and shareholders necessary for the authorization of this Agreement has been completed and that each party has full power and authority to enter into this Agreement and perform its obligations hereunder and that its execution of this
Agreement and performance of its obligations hereunder does not and will not violate any law or result in a breach of or default under the terms of any contract or agreement by which such party is bound. The enforcement and enjoyment by either party of its rights and benefits hereunder do not and will not violate, and are not and will not be subject to restraint or curtailment under, the terms of any contract or agreement by which the other party is bound.

9. Compliance with Law. Each party is in compliance with all applicable governmental statutes, laws, rules, regulations, ordinances, codes, directives, and orders (whether federal, state municipal or otherwise) arising out of or relating to its obligations under this Agreement and is solely responsible for

5

the compliance with all such laws (including, without limitation, consumer disclosure and privacy laws).

TERMINATION

10. Term. This Agreement shall remain in effect for as long as (a) the

Investor Group holds common stock of XM Radio or securities convertible into either (x) common stock of XM Radio or (y) other securities convertible into common stock of XM Radio in such amounts as would provide the Investor Group with holdings in excess of five (5) percent of the fully diluted ownership of XM Radio or (b) the Investor Group continues to hold the full amount of its Original Investment in XM
Radio (whether or not converted into shares of Class A Preferred Stock or Class A Common Stock).

11. Termination for Material Default. Either party may terminate this Agreement immediately in the event that the other party materially defaults in the performance or observance of any material covenant, agreement or condition set forth in this Agreement, which default remains uncured for a period of thirty (30) days from the date that the notifying party provides notice to the defaulting party.

12. Termination for Insolvency. Either party may in its sole discretion terminate this Agreement effective immediately upon giving notice to the other party (i) upon the institution by or against the other party of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement of its debts and such proceeding is not dismissed within sixty (60)
days of its being filed; (ii) upon the other party making an assignment for the benefit of creditors; or (iii) upon the other party's dissolution or liquidation.

MISCELLANEOUS PROVISIONS

13. Independent Contractor, No Agents; Relationship; No-Third Party
Beneficiaries. Each party is an independent contractor in performing the services described in this Agreement. Except as otherwise expressly provided in this Agreement, no party (nor any of its officers, directors, agents or employees) shall act or hold itself out as an agent of the other party hereto. The parties do not intend this Agreement or the relationship hereunder to constitute a joint venture or partnership. The provisions of this Agreement are for the
benefit only of the Parties hereto, and no third party may seek to enforce, or benefit from, these provisions.

14. Notices. All notices and other communications from either party to the other hereunder shall be in writing and shall be deemed received upon actual receipt when personally delivered, upon acknowledgment of receipt if sent by facsimile, or upon the expiration of the third business day after being deposited in the United States mails, postage prepaid, certified or registered mail, addressed to the other party at a location specified in writing by such Party. Until notice in accordance with this Section is given to the contrary, the addresses,

6

phone numbers and facsimile number for purposes of giving notice are as follows:

XM Radio

XM Satellite Radio, Inc.
1250 23rd Street, NW, Suite 57 Washington, DC 20037
Attn: President & CEO
Fax: 202-969-7096
cc: General Counsel

TCM, LLC
TCM, LLC
211 N. Union Street, Suite 300
Alexandria, VA 22314

Attn: Chairman
Fax: 703-706-3837
cc: [General Counsel]

cc: James B. Fleming, Managing Director Columbia Capital L.L.C.

201 N. Union Street, Suite 300
Alexandria, VA 22314

Fax: 703-519-5870

cc:
James N. Perry, Jr.

Madison Dearborn Partners, Inc.

Three First National Plaza, Suite 3800 Chicago, IL 60602
Fax: 312-895-1221

15. Severability. Nothing contained in this Agreement shall be construed to require commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any law, such law shall prevail; provided, however, that in such event, the affected provisions of this Agreement shall be modified to the minimum extent necessary to permit compliance with such law and all other provisions shall continue in full force and effect.

16. Survival of Provisions. The rights and obligations pursuant to Sections 4, 5, 6, 7, 17 and 18 of this Agreement shall survive any expiration or termination of this Agreement. In addition, any obligations which expressly or by their nature ar
e to continue after termination, cancellation or expiration of this

7

Agreement shall survive and remain in effect. All other rights and obligations of TCM, LLC and XM Radio under this Agreement shall cease upon termination.

APPLICABLE LAW; DISPUTE RESOLUTION

17. This Agreement, and the rights and obligations of the parties hereunder, are subject to all applicable federal, state and local laws, rules and regulations (including without limitation, the Communications Act of 1934, as amended, and the rules and regulations of the FCC) and shall be construed in accordance with and shall be governed by the laws of the State of New York, without giving effect to the principles of conflict of laws thereof.

18. In case of any controversy or claim arising out of or related to this Agreement, the parties agree to meet to resolve such dispute in good faith. Should such a resolution not be reached, the parties further agree that the matter shall be settled by arbitration administered by JAMS/Endispute (or such other alternative dispute resolution service provider as may be mutually agreed upon by the parties) in accordance with such entity's expedited arbitration rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitration shall be conducted in Washington, D.C. unless another location is agreed upon by the parties.

MODIFICATION

19. No amendment of or modification to this Agreement shall be valid unless made in writing and signed by the authorized representative(s) of the parties. As to XM, the authorized representatives means both (a) XM's President o r any Vice President and (b) its General Counsel.

HEADINGS

20. The headings and numbering of paragraphs in this Agreement are for convenience only and shall not be construed to define or limit any of the terms herein or affect the meaning or interpretation hereof.

ENTIRE AGREEMENT

21. This Agreement, including all appendices hereto, constitutes the entire agreement between the parties hereto and supersedes all prior oral or written agreements, representations, statements, negotiations, understandings, proposals, and undertakings with respect to the subject matter hereof. All appendices hereto are expressly incorporated herein by reference and made a material part of this Agreement.

8

EFFECTIVE TIME

22. This agreement shall be effective upon the closing under that certain Exchange Agreement dated as of June 7, 1999 between American Mobile Satellite Corporation, WorldSpace, Inc. and XM Satellite Radio Holdings, Inc.

9

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written.

XM SATELLITE RADIO INC.

By: /s/ Hugh Panero
   --------------------------------------
        Hugh Panero

Its: President & CEO

TCM, LLC
By: Telcom Ventures, L.L.C., its Manager

By: /s/ Rahul Prakash
   --------------------------------------
        Rahul Prakash

Its: President

10

EXHIBIT 10.17

INDEMNIFICATION AGREEMENT

This Agreement, dated as of ______ __, ____, is made by and between XM Satellite Radio Holdings Inc., a Delaware corporation, on its own behalf and on behalf of its subsidiaries including XM Satellite Radio Inc., a Delaware corporation, (together, the "Company"), and the undersigned director or officer of any entity comprising the Company (the "Indemnitee").

W I T N E S S E T H:

WHEREAS, the Indemnitee is currently serving as a director or officer of one or more of the entities comprising the Company, and the Company wishes the
Indemnitee to continue in such a capacity;

WHEREAS, the Indemnitee is willing, under certain conditions, to continue serving as a director or officer of the applicable entity(ies) comprising the Company;

WHEREAS, in order to induce the Indemnitee to continue to serve as a director or officer of the Company and in consideration of his continued service, the Company wishes to indemnify the Indemnitee against the risks associated with the Indemnitee's service to the Company to the full extent permitted by applicable law;

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

1. Indemnification.

(a) The Company hereby indemnifies Indemnitee and holds him harmless with respect to any Expenses, actually and reasonably incurred by him in connection with any action, suit or proceeding (whether civil, criminal, administrative or investigative) threatened or brought against Indemnitee , or in which Indemnitee is or would be a witness or other participant, by reason of the fact that he is or was a director or officer of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including without limitation any subsidiary of the Company, to the fullest extent now or hereafter permitted by applicable law. With regard to any such matter, it shall be presumed that Indemnitee was acting in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, that the Indemnitee had no reasonable cause to believe that his conduct was unlawful, unless a judicial finding is made to the contrary that is not reversed on appeal. Termination of any proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent, shall not, of


itself, create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed

-1-

to the best interests of the Company, or, with respect to any criminal action or proceeding, that the Indemnitee had reasonable cause to believe that his conduct was unlawful.

(b) The Company agrees to pay all Expenses incurred by Indemnitee in participating in or preparing to participate in an action, suit or proceeding (whether civil, criminal, administrative, or investigative) in advance of the final disposition of such action, suit or proceeding upon request of the Indemnitee that the Company pay such Expenses. Indemnitee hereby pledges to repay to the Company any such Expenses theretofore paid by the Company to the extent that it is ultimately determined that such Expenses were not reasonable or that Indemnitee was not acting in compliance with the standards enumerated in Paragraph (a) above.

(c) As used in this Agreement, the term "Expenses" shall include, without limitation: damages, judgments, fines, penalties and settlements in connection with a threatened or actual action, suit or proceeding; all reasonable attorneys fees at both trial and appellate levels, retainers, court costs, costs of attachment or similar bonds, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in an action, suit or proceeding; and any expenses of establishing a right to indemnification under this Agreement.

(d) If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

(e) In the event that any action or proceeding is instituted by Indemnitee to enforce or interpret Indemnitee's right to indemnification or contribution or advancement of Expenses hereunder, such Indemnitee shall be entitled to be paid all Expenses incurred by the Indemnitee with respect to such action or proceeding, unless the court determines that the material assertions made by the Indemnitee as a basis for such action or proceeding were not made in good faith or were frivolous. In any event, where Indemnitee is successful in a court claim against the Company for indemnification, contribution, or advancement of Expenses, the Company shall pay to Indemnitee all Expenses incurred in obtaining court ordered relief.

(f) In the event of payment of a claim to indemnification under this Agreement, the Company shall be subrogated to the extent of such payment to all

-2-

of the rights of recovery of the Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.

(g) The indemnification, contribution and advancement of Expenses provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may be entitled under the Certificate of Incorporation or the Bylaws of the Company, applicable law, insurance policies, any agreement, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. However, Indemnitee shall reimburse the Company for amounts paid to him pursuant to such other rights to the extent such payments duplicate any payments received pursuant to this Agreement.

(h) Neither the Company on the one hand nor Indemnitee on the other hand may settle or compromise any claim covered by the indemnification set forth herein without the prior written consent of the other party, provided that consent to such settlement or compromise shall not be unreasonably withheld by either party.

(i) If any action or proceeding shall be brought or asserted against Indemnitee in respect of which indemnification may be sought hereunder, Indemnitee shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to Indemnitee and the payment of all Expenses. Indemnitee shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of Indemnitee unless (i) the Company agrees to pay such fees and expenses, (ii) the Company shall have failed promptly to assume the defense of such action or proceeding and employ counsel satisfactory to Indemnitee in any such action or proceeding, or (iii) the named parties to any such action or proceeding include both Indemnitee and the Company or any affiliate of the Company and Indemnitee has been advised by counsel that there may be one or more legal defenses available to him which are different from or additional to those available to the Company, in which case, if Indemnitee notifies the Company in writing that he elects to employ separate counsel at the expense of the Company, the Company shall not have the right to assume the defense of such action or proceeding on behalf of Indemnitee and shall pay all Expenses incurred by Indemnitee in such defense.

2. Contribution. As stated above, it is the intention of the Company that the indemnification provided herein be to the fullest extent now or hereafter permitted by law. If the indemnification provided for under this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of

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indemnifying Indemnitee, shall contribute to the Expenses actually and reasonably incurred by Indemnitee in connection with any action, suit or proceeding (whether civil, criminal, administrative, or investigative) threatened or brought against Indemnitee, or in which Indemnitee is or would be a witness or other participant, by reason of the fact that he is or was a director or officer of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including without limitation any subsidiary of the Company. Contribution by the Company shall be in such proportion as is deemed fair and reasonable in light of all of the circumstances of such action, suit or proceeding by the Company's Board of Directors or by the court before such action, suit or proceeding was brought, in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) or transaction(s) giving rise to such action, suit or proceeding, and/or (ii) the relative fault of the Company (and its other directors, officers, employees and agents) and Indemnitee in connection with such event(s) or transaction(s).

3. Applicable Law. This Agreement shall be governed by the laws of the State of Delaware, without regard to principles of conflicts of laws thereof.

4. Severability. In the event that any provision of this Agreement is determined by a court to require the Company to do or to fail to do any act which is in violation of applicable law, such provision shall be limited or modified in its application to the minimum extent necessary to avoid a violation of law, and, as so limited or modified, such provision and the balance of this Agreement shall be enforceable in accordance with their terms to the fullest extent permitted by law.

5. Notices. All notices or other communications that are required or permitted hereunder shall be in writing and sufficient if delivered personally or sent by standard U.S. mail, overnight delivery, telegram, telex or by facsimile transmission. Notice to the Company shall be given at its principal office and shall be directed to the General Counsel (or such other address as the Company shall designate in writing to the Indemnitee). Any notice hereunder shall be deemed delivered when actually received.

6. Miscellaneous. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, or arrangements between them relating thereto, other than those agreements, understandings or arrangements referred to above in
Section 1(g), and in the event of any conflict between this Agreement and any other such agreement, understanding or arrangement referred to in Section 1(g), the provisions of this Agreement shall control. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, executors, heirs and assigns. This Agreement may be executed in any

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number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document. Any term or provision of this Agreement may be waived in writing at any time by the party or parties that are entitled to the benefits thereof and any term or provision of this Agreement may be amended or supplemented at any time by a written instrument signed by each party hereto.

IN WITNESS WHEREOF, the undersigned have executed this Indemnification Agreement as of the date and year first written above.

XM SATELLITE RADIO HOLDINGS INC.

By:____________________________
Name:__________________________
Title:_________________________

INDEMNITEE.

By:____________________________
Name:__________________________
Title:_________________________

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Exhibit 10.18

XM SATELLITE RADIO HOLDINGS INC.

1998 SHARES AWARD PLAN


Effective as of June 1, 1998


XM Satellite Radio Holdings Inc. 1998 Shares Award Plan

INTRODUCTION

XM Satellite Radio Holdings Inc., a Delaware corporation (hereinafter referred to as the "Corporation"), hereby establishes an incentive compensation plan to be known as the "XM 1998 Shares Award Plan" (hereinafter referred to as the "Plan"), as set forth in this document. The Plan permits the grant of Incentive Stock Options, Non-Qualified Stock Options, Phantom Stock Awards, Stock Appreciation Rights, Restricted Stock Awards and Other Stock-Based Awards. Subject to the terms of the Plan, the Plan shall become effective on June 1, 1998.

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

DEFINITIONS

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

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

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

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

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

(e) "Change of Control" shall have the meaning set forth in Section 11(d) hereof.

(f) "Code" shall mean the Internal Revenue Code of 1986, as amended, and

the rules and regulations thereunder.

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

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

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

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

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

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

(m) "Fair Market Value" of the Corporation's Common Shares on a Trading Day shall mean the last reported sale price for Common Shares or, in case no such reported sale takes place on such Trading Day, the average of the closing bid and asked prices for the Common Shares for such Trading Day, in either case on the principal national securities exchange on which the Common Shares are listed or admitted to trading, or if the Common Shares are not listed or admitted to trading on any national securities exchange but are traded in the over-the- counter market, the closing sale price of the Common Shares or, if no sale is publicly reported, the average of the closing bid and asked quotations for the Common Shares, as reported by the National Association of Securities Dealers Automated Quotation System ("NASDAQ") or any comparable system or, if the Common Shares are not listed on NASDAQ or a comparable system, the average of the bid and asked prices of the Common Shares or, if no sale is publicly reported, the average of the closing bid and asked prices, as furnished by two members of the National Association of Securities Dealers, Inc., who

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make a market in the Common Shares selected from time to time by the Corporation for that purpose. In addition, for purposes of this definition, a "Trading Day" shall mean, if the Common Shares are listed on any national securities exchange, a business day during which such exchange was open for trading and at least one trade of Common Shares was effected on such exchange on such business day, or, if the Common Shares are not listed on any national securities exchange but are traded in the over-the-counter market, a business day during which the over-the- counter market was open for trading and at least one "broker-dealer" quoted both a bid and asked price for the Common Shares (if a broker-dealer quoted only a bid or only an asked price for such day, such day will not be a Trading Day). In the event the Corporation's Common Shares are not publicly traded, the Fair Market Value of such Common Shares shall be determined by the Committee in good faith and in its sole discretion.

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

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

(p) "Non-Employee Director" shall mean a member of the Board of Directors who is not a full-time employee of the Corporation.

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

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

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

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(t) "Other Stock-Based Award" shall mean any right granted under Section 9 of the Plan.

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

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

(w) "Plan" shall mean this XM 1998 Shares Award Plan as the same shall be

amended, revised or terminated from time to time.

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

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

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

(aa) "Share" shall mean a share of the common stock of the Corporation, or such other securities of the Corporation as may be designated by the Committee from time to time.

(bb) "Stock Appreciation Right" shall mean any right granted under Section 6 of the Plan.

SECTION 1 ADMINISTRATION

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

SECTION 2 SHARES AVAILABLE

Subject to the adjustments provided in Section 7 of the Plan, the aggregate number of Shares with respect to which Awards may be granted under the Plan shall

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be twenty-five (25) shares. The Shares underlying Awards shall be counted against the limitation set forth in the immediately preceding sentence and may be reused to the extent that the related Award to any individual is settled in cash, expires, is terminated unexercised, or is forfeited without the delivery of Shares. Shares granted to satisfy Awards under the Plan may be authorized and unissued shares, issued Shares held in the Corporation's treasury or Shares acquired on the open market. The maximum number of Shares with respect to which Awards may be granted under the Plan to any individual in any calendar year shall be equal to five (5) Shares.

SECTION 3 ELIGIBILITY

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

SECTION 4 AUTHORITY OF COMMITTEE

The Plan shall be administered by, or under the direction of, the Committee, which shall administer the Plan so as to comply at all times with applicable law, and shall otherwise have the sole and exclusive authority to interpret the Plan and to make all determinations specified in or permitted by the Plan or deemed necessary or desirable for its administration or for the conduct of the Committee's business. Subject to the provisions of Section 12 hereof, all interpretations and determinations of the Committee may be made on an individual or group basis and shall be final, conclusive and binding on all persons. Subject to the express provisions of the Plan, the Committee shall have authority, in its discretion, to determine, without limitation, the persons to whom Awards shall be granted, the times when Awards shall be granted, the number of Shares subject to any Awards, the terms of Awards, any other restrictions, including any vesting requirements, and the other provisions thereof (which need not be identical with respect to each Award). In addition, the authority of the Committee shall include, without limitation, the following with respect to an Award of an Option:

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

(b) Procedures for Exercise of Option. The establishment of procedures for a Participant (i) to exercise an Option by payment of cash or (ii) with the consent of the Committee, (A) to have withheld from the total number of Shares to be acquired upon the exercise of an Option that number of shares having a Fair Market Value, which, together with such cash as will be paid in respect of fractional shares, shall equal the

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

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

SECTION 5 SHARE OPTIONS

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

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

(c) Term. Subject to the provisions of the Plan, the term of any Option

granted hereunder shall be not more than 10 years from the date of grant.

(d) Exercisability. Except as provided in Section 5(e) hereof, each Option shall be exercisable in whole or in installments, and at such time(s), and subject to the fulfillment of any conditions on, and to any limitations on, exercisability as may be determined by the Committee at the time of the grant of such Options. The right to purchase Shares shall be cumulative so that when the right to purchase any Shares

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has accrued such Shares or any part thereof may be purchased at any time thereafter until the expiration or termination of the Option. Notwithstanding the above, no Option shall be exercisable by a Participant until he or she has fully repaid any and all loans made to him or her by the Corporation (or by any parent or subsidiary of the Corporation); provided, however, that a repayment (whether in the form of cash or Shares) made contemporaneously with an exercise of an Option granted hereunder (including a repayment in the form of withholding on Shares to be received upon the exercise of such Option) shall be considered to have occurred prior to such Option exercise.

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

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

SECTION 6 STOCK APPRECIATION RIGHTS

(a) Grant. Subject to the provisions of the Plan, the Committee shall have sole and complete discretion and authority to determine the eligible persons to whom Stock Appreciation Rights shall be granted, the number of Shares to be covered by each Stock Appreciation Right Award, the grant price thereof and the conditions and limitations applicable to the exercise thereof. Stock Appreciation Rights may be granted in tandem with another Award, in addition to another Award or freestanding and unrelated to another Award. Stock Appreciation Rights granted in tandem with or in addition to an Award may be granted either at the same time as the Award or at a later

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time. Stock Appreciation Rights shall not be exercisable earlier than six months after grant and shall have a grant price as determined by the Committee on the date of grant.

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

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

SECTION 7 RESTRICTED STOCK

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

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

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such Shares of Restricted Stock, the Corporation shall deliver such certificates to the Participant or the Participant's legal representative.

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

SECTION 8 PHANTOM SHARES

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

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

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

SECTION 9 OTHER STOCK-BASED AWARDS

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

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SECTION 10 TERMINATION OF SERVICES

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

(a) Non-Qualified Stock Options and Stock Appreciation Rights.

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

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

(b) Incentive Stock Options.

(i) Except as otherwise determined by the Committee at the time of grant, if the Participant's employment with the Corporation terminates for any reason, the Participant shall have the right to exercise any Incentive Stock Option and any related Stock Appreciation Right during the 90 days after such termination of employment to the extent it was exercisable at the date of such termination, but in no event later than the date the Option would have expired had it not been for the termination of such employment. If the Participant does not exercise such Option or related Stock Appreciation Right to the full extent permitted by the preceding sentence, the remaining exercisable portion of such Option automatically will be deemed a Non- Qualified Stock Option (except to the extent otherwise provided by
Section 421 or Section 422 of the Code), and such Option and any related Stock Appreciation Right will be exercisable during the period set forth in Section 10(a) of the Plan, provided that in the event that employment terminates because of death or the Participant dies in such 90-day period, the option will continue to be an Incentive Stock Option to the extent provided by Section 421 or Section 422 of the Code,

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or any successor provisions, and any regulations promulgated thereunder. Notwithstanding the forgoing, if a Participant's employment is terminated by the Corporation or by any Affiliate for Good Cause or as otherwise set forth in the Award Agreement, then the Participant shall immediately forfeit his or her rights to exercise any and all of outstanding Options or Stock Appreciation Rights theretofore granted to him or her.

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

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

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

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

(a) Recapitalization, Etc. In the event there is any change in the common shares of the Corporation by reason of any stock dividend, stock split, adoption of stock rights plans, split-ups, split-offs, spin-offs, liquidations, combination or exchanges of shares, recapitalizations, mergers, consolidations or reorganizations of or by the corporation or any distribution to common stockholders other than ordinary cash dividends, there shall be substituted for or added to each Share theretofore appropriated or thereafter subject, or which may become subject, to any Award, the number and kind of shares or other

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securities into which each outstanding Share shall be so changed or for which each such Share shall be exchanged, or to which each such Share be entitled, as the case may be, and the per share price thereof also shall be appropriately adjusted.

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

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

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Award may be exercised by the Participant in full beginning on the date two weeks before such Change of Control. If the Participant receives an Equivalent Award in connection with a Change of Control, and the Optionee's employment with the Corporation or an Affiliate is terminated within one year following the Change of Control by reason of involuntary termination, the Equivalent Award may be exercised in full beginning on the date of such termination if and for such period as the Committee, in its sole discretion, shall determine.

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

SECTION 12 MISCELLANEOUS PROVISIONS

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

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(b) Investment Representation. With respect to Shares received pursuant to the exercise of an Option, the Committee may require, as a condition of receiving such securities, that the Participant furnish to the Corporation such written representations and information as the Committee deems appropriate to permit the Corporation, in light of the existence or nonexistence of an effective registration statement under the Securities Act, to deliver such securities in compliance with the provisions of the Securities Act.

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

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

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

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

(g) Other Incentive Plans. The adoption of the Plan does not preclude the adoption by appropriate means of any other incentive plan for employees.

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

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

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

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

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

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

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

(n) Nonguarantee of Employment or Consulting Relationship. Nothing contained in the Plan shall be construed as a contract of employment (or as a consulting contract) between the Corporation (or any Affiliate) and any Employee

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

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

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

SECTION 13 AMENDMENT OR TERMINATION OF PLAN

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

SECTION 14 TERM OF PLAN

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

SECTION 15 EFFECTIVE DATE

The Plan shall become effective as of June 1, 1998, the date as of which it was approved by the Board of Directors.

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EXHIBIT 10.19

OPTION NO.

OPTIONEE:

DATE OF GRANT:

OPTION PRICE:

COVERED SHARES: ______ shares of the common stock of XM

XM SATELLITE RADIO HOLDINGS INC.
1998 SHARE AWARD PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT

1. Definitions. Terms defined in the Plan and not otherwise defined in this Agreement are used in this Agreement as defined in the Plan. In this Agreement, except where the context otherwise indicates, the following definitions apply:

A. "A
greement" means this Non-Qualified Stock Option Agreement.

B. "XM" means XM Satellite Radio Holdings Inc., a Delaware corporation.

C. "Committee" means the committee appointed by the XM Board of Directors to administer the Plan.

D. "Covered Shares" means the Shares subject to the Option.

E. "Date of Exercise" means the date on which XM receives notice of the exercise, in whole or in part, of the option pursuant to Section 5.A. of this Agreement.

F. "Date of Expiration" means, subject to the provisions of Section 3.C and D of this Agreement, ten (10) years after the Date of Grant.

G. "Date of Grant" means the date set forth as the "Date of Grant" on page 1 of this Agreement.

H. "In-Orbit Acceptance of XM's Second Satellite" shall mean that the second satellite determined by XM to be a "Satisfactorily Operating Satellite" as defined in Section 1.1(sss) of the "Satellite Purchase Contract for In-Orbit Delivery by and between American Mobile Radio Corporation [XM Sat ellite Radio Inc.] and Hughes Space and Communication International, Inc." dated as of March 20, 1998, as may be amended from time to time.

I. "Option" means the non-qualified stock option granted to the Optionee in Section 2 of this Agreement.

J. "Option Period" means the period beginning on the Date of Grant and terminating on the Date of Expiration.

K. "Option Price" means the dollar amount per Share set forth as the Option Price on page 1 of this Agreement.

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L. "Optionee" means the person identified as the "Optionee" on page 1 of this Agreement.

M. "Plan" means the XM 1998 Shares Award Plan, as the same may be amended from time to time.

N. "Public Offering" has the meaning set forth in Section 6.B of this Agreement.

O. "Securities Act" means the Securities Act of 1933, as amended.

P. "Shares" means shares of common stock of XM.

2. Grant of Option. Pursuant to the Plan and subject to the terms of this Agreement, XM grants to the Optionee the Option to purchase from XM that number of Shares identified as the "Covered Shares" on page 1 of this Agreement, exercisable at the Option Price, effective on the Date of Grant.

3. Terms of the Option.

A. Type of Option. The Option is intended to be a non-qualified stock option and is not an incentive stock option within the meaning of Section 422 of the Code.

B. Vesting and Exercise. The Option may be exercised during the Option Period, subject to the limitation that the Option shall vest in three (3) equal annual installments such that:

(a) no portion of the Covered Shares may be exercised during the first year following the Date of Grant;

(b) during the second year following the Date of Grant, the Option may be exercised to a maximum of 33 1/3 % of the Covered Shares;

(c) during the third year following the Date of Grant, the Option may be exercised to a cumulative maximum of 66 2/3% of the Covered Shares;

(d) thereafter the Option with respect to the Covered Shares may be exercised in full.

C. Termination of employment: If the Optionee's employment terminates during the Option Period, the Option may be exercised for the following periods after such termination: zero (0) months in the case of a termination for Good Cause; three (3) months in the case of a voluntary termination; six (6) months following an involuntary termination, or twelve (12) months in the case of death, disability, retirement or voluntary or involuntary termination after a Change of Control. Upon the Optionee's termination of employment, the Option shall be exercisable only to the extent that it was vested and exercisable as of the date of the Optionee's termination, except that in the case of the Optionee's death or involuntary termination within one year of a Change of Control, the Option shall vest immediately in full and shall be fully exercisable by the Optionee or the Optionee's authorized representative or by his or her properly appointed attorney-in-fact, guardian, trustee, or conservator, as the case may be.

D. Nontransferability. The Option is not transferable by the Optionee other than (i) by will or by the laws of descent and distribution, or (ii) pursuant to a qualified domestic relations order as defined in Section 414(p) of the Code or Title I of the Employee Retirement Income Security Act or the rules thereunder, and is exercisable, during the Optionee's lifetime, only by the Optionee or, in the case of the Optionee's legal disability, by the Optionee's legal representative except as provided in paragraph C of this Section 3.

4. Capital Adjustments. The number of Covered Shares and the Option Price shall be subject to such adjustment, if any, in accordance with Section 11(a) of the Plan.

5. Method of Exercise.

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A. Notice. The Option shall be exercised, in whole or in part, by the delivery to XM of written notice of such exercise, in such form as the Committee may from time to time prescribe, accompanied by:

(a) full payment in cash or readily available funds or in Shares in the amount of the Option Price with respect to that portion of the Option being exercised or pursuant to a cashless exercise program to be established by the Committee in accordance with Section 4(b) of the Plan; and

(b) any amount that must be withheld by XM for Federal, State, and/or local tax purposes, payable either in cash or in Shares, including through withholding of Shares upon exercise; and

(c) such representations and documents as the corporation, in its absolute discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other Federal or State securities laws or regulations. XM may, in its absolute discretion, also take whatever additional actions it deems appropriate to effect such compliance, including, without limitation placing legends on share certificates and issuing stop-transfer orders to transfer agents and registrars; and

(d) if the Option or portion thereof shall be exercised pursuant to this provisions of Section 3.C of this Agreement by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option or portion thereof.

Until the Committee notifies the Optionee to the contrary, the form attached to this Agreement as Exhibit A shall be used to exercise the Option.

B. Effect. The exercise, in whole or in part, of the Option shall cause a reduction in the number of Covered Shares equal to the number of Shares with respect to which the Option is exercised.

6. Restriction on Exercise and Upon Disposition of Shares of Common Stock

Issued Upon Exercise.

A. Limitation on Exercise: Notwithstanding any other provision of this Agreement, the Optionee agrees, for himself or herself and his or her successors, that XM shall not be required to honor the exercise of the Option if XM does not have in effect a registration statement under the Securities Act relating to the offer of Shares to the Optionee under the Plan, if XM reasonably determines that the exercise of such Option would violate the Securities Act. The Optionee further agrees, for himself or herself and his or her successors, that upon the issuance of any Shares upon the exercise of the Option, he or she will, upon the request of the XM, agree in writing that he or she is acquiring the Shares for investment only and not with a view to resale, and that he or she will not sell, pledge or otherwise dispose of such shares so issued, unless and until (a) XM is furnished with an opinion of counsel satisfactory to XM to the effect that registration of such shares pursuant to the Securities Act is not required by that Act and the rules and regulations thereunder; (b) the staff of the Securities and Exchange Commission has issued a "no-action" letter with respect to such disposition; or (c) such registration or notification as is, in the opinion of counsel for the corporation, required for the lawful disposition of such shares has been filed by XM and has become effective; provided, however, that XM is not obligated hereby to file any such registration or notification.

B. Limitation on Sale: If XM has not completed an offering to the public (a "Public Offering") of its shares of common stock (or such class of shares into which such common stock has been converted), the Optionee agrees not to sell, pledge, or dispose of any Shares issued upon exercise of the Option, except to XM as provided in paragraph C of this Section 6. If at any time XM does complete a Public Offering, it will cause the shares issuable upon the exercise of the Option to be registered under the Securities Act if required to permit the public sale of such Shares by the Optionee.

C. Repurchase by XM: In the event that XM has not completed a Public Offering by the date the first anniversary of the In-Orbit Acceptance of XM's Second Satellite occurs, but in no event later than December 31, 2001, XM will determine and report to Optionee the fair market value as of recent date of a single share of XM's Common Stock as if XM were sold in its entirety in an arm's length transaction involving a willing buyer and a willing seller (the "Value"). Such determination will be made by the Board of Directors in good faith (and may be based, in the Board's discretion, upon a valuation by an appropriate appraiser selected by the Board). XM will cause a new valuation to be made annually thereafter unless prior to such time it has completed a Public Offering,

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and it may, in its sole discretion, undertake to have such valuations made more frequently than yearly intervals. From and after the date that any valuation is made and until it is superseded by a subsequent valuation, XM shall purchase for cash, from the holder of Common Stock issued upon exercise of the Option such number of shares as may be requested by such holder from time to time at a price per share equal to the then-current value, provided, that XM shall not be obligated to so purchase such shares if by the date of such request XM has completed a Public Offering.

D. Legends: The Optionee further agrees that XM may place a legend embodying the foregoing restrictions on the certificates evidencing such shares.

7. Representations and Warranties. Upon exercise of the Option in whole or in part, the Optionee shall represent, warrant and acknowledge the following:

A. The Optionee has made such investigations as the Optionee deems necessary and appropriate of the business and/or financial prospects of XM.

B. The Option is being exercised and the Covered Shares are being acquired for investment for the Optionee's own account and not with the view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act, and the certificate for such stock may be legended to that effect, that such stock is not registered under federal or state securities laws and that the registration exemptions being relied on are the federal and state private or limited offering exemptions and the Optionee has no reason to believe that such exemptions are not applicable to the Optionee.

C. The Optionee acknowledges that XM has made available to the Optionee the opportunity to obtain information to evaluate the merits and risks associated with this Agreement and the transactions contemplated thereby. The Optionee acknowledges that the investment contemplated by the Option involves a high degree of risk, including risks associated with XM's business operations and prospects including competition and the dependence on XM's technology and events beyond XM's control, the limits on transferability of the Option and Covered Shares, and the absence of a public market for the Covered Shares.

8. Rights as Stockholder. The Optionee shall have no rights as a stockholder with respect to any Covered Shares subject to the Option until and unless a certificate or certificates representing such shares are issued to the Optionee pursuant to this Agreement. Except as provided in Section 4 of this Agreement, no adjustment shall be made for dividends or other rights for which the record date is prior to the issuance of such certificate or certificates.

9. Employment. Neither the granting of the Option evidenced by this Agreement nor any term or provision of this Agreement shall constitute or be evidence of any understanding, express or implied, on the part of XM to employ or continue the employment of the Optionee for any period. Whenever reference is made in this Agreement to the employment of the Optionee, it means employment by XM or its Affiliate.

10. Subject to the Plan. The Option evidenced by this Agreement and the exercise of the Option are subject to the terms and conditions of the Plan, which are incorporated herein by reference and made a part hereof, but the terms of the Plan shall not be considered an enlargement of any benefits under this Agreement. In addition, the Option is subject to any rules and regulations promulgated by the Committee.

11. Fractional Shares. Notwithstanding anything contained herein to the contrary, following a Public Offering, Award exercises and issuances involving the issuance of Shares may only be effected in whole (and not fractional) shares.

12. Applicable Law. This Agreement shall be subject to the laws of the State of Delaware, without giving effect to the principles of conflict of laws thereof.

13. Entire Agreement. This Agreement is in lieu of and supersedes all prior agreements, representations, negotiations, or other understandings of the parties with respect to the subject matter hereof. It may not be amended or altered except in a writing signed by the Optionee and the authorized representatives of XM.

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14. Waiver and Severability. A. The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of the same or any other breach by either of the parties to this Agreement, whether prior or subsequent.

B. If any term or provision of this Agreement is determined by a court of competent jurisdiction to be illegal, invalid, or unenforceable, the legality, validity, or enforceability of the remainder of this Agreement shall not thereby be affected, and this Agreement shall be deemed to be amended to the extent necessary to delete such provision.

15. Headings: The Section, paragraph, and subparagraph headings contained in this Agreement are for reference purposes only, and shall not in any way affect the meaning or interpretation of this Agreement.

IN WITNESS WHEREOF, the parties have caused this Non-Qualified Stock Option Agreement to be signed effective as of the Date of Grant.

ATTEST: XM SATELLITE RADIO HOLDINGS INC.

_____________________ By: ________________________________________

Accepted and agreed to as of the Date of Grant:


Optionee


Name

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"EXHIBIT A"

EXERCISE OF OPTION

Chairman, Board of Directors
XM Satellite Radio Holdings Inc.
10802 Parkridge Boulevard
Reston, Virginia 20191-5416

To the Board:

The undersigned, the Optionee under the Non-Qualified Stock Option Agreement identified as Option No. __________, granted pursuant to the XM Satellite Radio Holdings Inc. 1998 Share Award Plan, hereby irrevocably elects to exercise the Option granted in the Agreement to purchase _______ shares of common stock of XM Satellite Radio Holdings Inc. ("XM"), par value $0.10 per share ("Shares"), and herewith makes payment of $__________ in the form of
[cash, Common Stock, cash plus Common Stock, through the exercise of the cashless exercise program] for the shares purchased and $_________ in the form of _________________ [cash, Common Stock, cash plus Common Stock, through the exercise of the cashless exercise program] to cover the Corporation's withholding tax liability in respect of the purchase. (Please complete, and complete separate cashless exercise form as appropriate.)

The Optionee hereby represents, warrants and acknowledges the following:

A. The Optionee has made such investigations as the Optionee feels necessary and appropriate of the business and/or financial prospects of XM.

B. The Shares are being acquired for investment for the Optionee's own account and not with the view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended, and the certificate for such stock may be legended to that effect, that such stock is not registered under federal or state securities laws and that the registration exemptions being relied on are the federal and state private or limited offering exemptions and the Optionee has no reason to believe that such exemptions are not applicable to the Optionee.

C. The Optionee acknowledges that XM has made available to the Optionee the opportunity to obtain information to evaluate the merits and risks associated with this Agreement and the transactions contemplated thereby. The Optionee acknowledges that the investment contemplated by the Option involves a high degree of risk, including risks associated with XM's business operations and prospects including competition and the dependence on XM's technology and events beyond XM's control, the limits on transferability of the Shares, and the absence of a public market for the Shares.

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[Note: Shares of Common Stock being delivered in payment of all or any part of the exercise price must be represented by certificates registered in the name of the Optionee and duly endorsed by the Optionee and by each and every other co- owner in whose name the shares may also be registered.]

Dated: ________________ ____________________________________


(Signature of Optionee)

Date Received by
XM Satellite Radio Holdings Inc.:____________________________

Received by:______________________________


Name
Title

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