AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT

Exhibit 10.1

AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT

THIS AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT (this “Amendment”) by and among XM Satellite Radio Holdings Inc., XM Satellite Radio Inc. (collectively with XM Satellite Radio Holdings Inc., “XM”), and Nathaniel A. Davis (“EMPLOYEE”), is made as of August 10, 2007.

WHEREAS, XM and EMPLOYEE are parties to that certain Employment Agreement dated as of July 20, 2006, as amended by Amendment Number 1 thereto, dated as of April 4, 2007 (the “Agreement”);

WHEREAS, EMPLOYEE has been appointed as President and Interim Chief Executive Officer of XM, effective as of August 10, 2007;

WHEREAS, XM and EMPLOYEE wish to further amend the Agreement as set forth below in light of such appointment;

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

(a) As President and Interim Chief Executive Officer of XM, EMPLOYEE shall have duties and responsibilities as are consistent with such position, and shall report to the Board of Directors of XM and the Board Chairman. While acting as President and Interim Chief Executive Officer, EMPLOYEE shall also serve as a director of XM.

For services rendered by EMPLOYEE pursuant to this Agreement, XM agrees to pay EMPLOYEE a base salary (“Base Salary”) of Six Hundred Fifty Thousand Dollars ($650,000) effective as of August 10, 2007 through the remainder of the term of this Agreement, with any increases in Base Salary to be determined by the Board of Directors or Compensation Committee of XM in its sole discretion. Base Salary shall be payable in accordance with XM’s then-prevailing executive payroll practices. The term “Base Salary” as used herein shall include any adjustments thereto made from time to time as permitted by this Article 3.1.

With respect to each calendar year during the term of this Agreement, EMPLOYEE will be eligible to receive such bonuses (the “Discretionary Bonus”) as may be authorized and declared by the XM Board of Directors or Compensation Committee based upon EMPLOYEE’s yearly performance and XM’s attainment of corporate objectives as compared to criteria to be set by the XM Board of Directors or Compensation Committee prior to the beginning of each calendar year. EMPLOYEE’s target annual Discretionary Bonus for each calendar year during the term of this Agreement commencing in 2007 shall equal 100% of EMPLOYEE’s Base Salary for achievement of the personal and corporate objectives set for EMPLOYEE by the Board of Directors or Compensation Committee of XM with respect to the year. The Discretionary Bonus shall be paid to EMPLOYEE no earlier than the January 1 and no later than the March 15 following the calendar year in which the Discretionary Bonus is earned by EMPLOYEE.

4.2. Death. If EMPLOYEE dies while still an employee of XM, XM shall provide the benefits and payments set forth in this Article 4.2 on EMPLOYEE’s behalf, as set forth below:

(a) XM shall pay an amount equal to three months of EMPLOYEE’s then current Base Salary and his pro-rated Discretionary Bonus (based on the percentage of Base Salary awarded to EMPLOYEE as a Discretionary Bonus in the prior year), and shall continue to make all applicable benefits available, to EMPLOYEE’s Beneficiaries (as defined herein) or heirs, in accordance with XM’s then-prevailing executive payroll practices, through the end of the third calendar month following EMPLOYEE’s death. XM shall pay the Base Salary and the pro-rated Discretionary Bonus in one lump sum cash payment and shall commence providing the aforementioned continuation of benefits within thirty (30) days of EMPLOYEE’s death; provided, that XM has received proof, in the manner and form required by XM’s Board of Directors, of EMPLOYEE’s death. In addition, XM shall continue any health, medical, dental, or similar benefits which members of EMPLOYEE’s family were receiving immediately prior to EMPLOYEE’s death, for a period of one year following the initial three month benefit continuation period, or pay such family members ratably over such period an amount equal to their cost for obtaining equivalent coverage. For purposes of this Agreement, the term “Beneficiary” or “Beneficiaries” means the person or persons designated by EMPLOYEE as being entitled to receive the benefits payable under this Agreement following EMPLOYEE’s death in accordance with the most current designation form on file with XM; such designation shall be made in the manner and form required by XM. If, at the time of EMPLOYEE’s death, no Beneficiary has been designated, the payment of benefits under this Agreement shall be paid to EMPLOYEE’s estate and benefits shall continue to be provided, to the extent due under the terms of this Agreement, only to those individuals who were receiving such benefits at the time of EMPLOYEE’s death.

(c) If X