Amended And Restated Director Designation Agreement

EXHIBIT 10.42


AMENDED AND RESTATED DIRECTOR DESIGNATION AGREEMENT


This Amended and Restated Director Designation Agreement, dated as of February 1, 2003 (this " 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"); AEA XM Investors I LLC, AEA XM Investors II LLC, AEA XM Investors IA LLC and AEA XM Investors IIA LLC, each a limited liability company organized under the laws of the State of Delaware (individually or collectively " AEA XM"); Clear Channel Investments, Inc., a corporation duly organized under the laws of the State of Nevada (" Clear Channel" );; Hughes Electronics Corporation, corporation duly organized under the laws of Delaware (" Hughes"); American Honda Motor Co., Inc., a corporation duly organized under the laws of the State of California (" Honda"); and Madison Dearborn Capital Partners III, L.P. (" Madison Capital"), Madison Dearborn Special Equity III, L.P. (" Madison Equity"), and 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"). AEA XM, Clear Channel, Honda, Hughes and Madison are collectively referred to herein as the " Investors ." The Company and the Investors are collectively referred to herein as the " Parties ." Columbia XM Radio Partners, LLC, a limited liability company duly organized under the laws of the Commonwealth of Virginia (" Columbia Radio Partners"), Columbia XM Satellite Partners III, LLC, a limited liability company duly organized under the laws of the Commonwealth of Virginia (" Columbia Satellite Partners"), Columbia Capital Equity Partners III (QP), L.P. (" Columbia Equity Partners III") and Columbia Capital Equity Partners II (QP), L.P. (" Columbia Equity Partners II"), each a limited partnership duly organized under the laws of the State of Delaware, who were parties to the January 2003 Agreement (as defined below), are becoming parties hereto solely for the purposes of agreeing to the amendment and restatement of the January 2003 Agreement by this Agreement and terminating their respective rights and obligations hereunder. Upon effectiveness of this Agreement, each of Columbia Radio Partners, Columbia Satellite Partners, Columbia Equity Partners II and Columbia Equity Partners III shall cease to be a party to this Agreement and all of its respective rights and obligations hereunder shall be terminated.


WITNESSETH


WHEREAS, the Company, the Investors, Columbia Radio Partners, Columbia Satellite Partners, Columbia Equity Partners II and Columbia Equity Partners III are parties to a Director Designation Agreement, dated January 28, 2003 (the " January 2003 Agreement"), that relates to the designation of the Company's directors; and


WHEREAS, the Company and each of the Investors believe it to be in the best interests of the Company and the mutual best interests of each of the Investors to continue to have certain agreements with respect to the designation of directors 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

Section 1.1 Definitions .


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 Section 2.1, a member of a limited liability company or a partner of a partnership shall be deemed an Affiliate of said company or partnership.


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.


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.


Capital Stock : means any and all securities, 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 issued by the Company or its Subsidiaries, and 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 the Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock and the 10% Senior Secured Discount Convertible Notes due 2009 of the Company and its wholly owned subsidiary XM Satellite Radio Inc. (the " New Notes").


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.


Common Stock : means all classes and series of the common stock 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 liquidating dividends after the payment of dividends and distributions of any shares entitled to preference.


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


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issuable upon the conversion, exchange, 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.


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 Convertible Preferred Stock, the Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock and the New Notes.


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


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.


Series B Convertible Preferred Stock : means the Series B Convertible Redeemable Preferred Stock, par value $.01 per share, of the Company having zero (0) votes per share.


Series C Convertible Preferred Stock : means the Series C Convertible Redeemable Preferred Stock, par value $.01 per share, of the Company, having the same voting rights as the Class A Common Stock determined on an as converted basis.


Series C Purchase Agreement : means the Series C Convertible Preferred Stock Purchase Agreement, dated as of July 7, 2000, by and among the Company and the investors named therein.


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.


ARTICLE II. CORPORATE GOVERNANCE; VOTING AGREEMENT

Section 2.1 Board of Directors .


(a) The Board of Directors and the board of directors of XM Satellite Radio Inc. and any other material Subsidiary of the Company (other than the board of any joint venture with Sirius Satellite Radio Inc. so long as the Company's management provides regular reports to the Board of Directors as to the status of any such joint venture) (collectively, the " Boards of Directors") shall consist of at least seven (7) members, of whom:


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(i) one (1) member shall be designated by Clear Channel;


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


(iii) one (1) member shall be the Chairman of the Company;


(iv) two (2) members shall be independent directors of recognized industry expertise and stature both of whom shall be approved by the Investors who hold a majority of the Common Stock Deemed Outstanding that is held by the Investors;


(v) one (1) member shall be designated by AEA XM who shall be appointed to any Audit Committee and Executive Committee (subject to meeting the Nasdaq Stock Market's Audit Committee and Charter requirements); and ...