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
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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 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxx 00000, and XM
Satellite Radio Inc. ("XM Ra
dio"), having its principal offices at 0000 00xx
Xxxxxx, XX, Xxxxx 00, Xxxxxxxxxx, X.X. 00000.
RECITALS
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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
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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
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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
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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
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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.
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
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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
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---
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
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10. Breach or Default. XM Radio and Clear Channel shall each indemnify,
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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
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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
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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
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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
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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
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14. Power and Authority; No Breach. Each of the parties represents and
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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
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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
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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
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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
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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
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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
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19. Independent Contractor, No Agents; Relationship; No-Third Party
----------------------------------------------------------------
Be
neficiaries. Each party is an independent contractor in performing the
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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.
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20. Notices. All notices and other communications from either party to
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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
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XM
Satellite Radio, Inc.
0000 00xx Xxxxxx, XX, Xxxxx 00
Xxxxxxxxxx, XX 00000
Attn: President & CEO
Fax: 000-000-0000
cc: General Counsel
Clear Channel
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Clear Channel Communication Inc.
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxx, CFO
Fax: (000) 000-0000
cc: Senior Vice President, Corporate Development
21. Severability. Nothing contained in this Agreement shall be construed
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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
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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
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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.
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APPLICABLE LAW; DISPUTE RESOLUTION
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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
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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
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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
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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
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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.
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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/ Xxxx Xxxxxx
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Xxxx Xxxxxx
Its: President & CEO
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Clear Channel Communications
By: /s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
Its: Senior Vice President Corporate
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Development
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