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
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THIS AGREEMENT, made as of the 7th day of July, 1999, is by and between
TCM, LLC, having its principal offices at 000 X. Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, XX 00000, and XM Satellite Radio Inc. ("XM Radio"), having its
principal offices at 0000 00xx
Xxxxxx, XX, Xxxxx 00, Xxxxxxxxxx, X.X. 00000.
RECITALS
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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
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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,
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however, that for the term of this Agreement and any renewal,
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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
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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,
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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
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4. Breach or Default. XM Radio and TCM, LLC shall each indemnify, defend
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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,
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"Loss and Expense"), arising out of the breach of or default under any term,
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warranty, covenant, representation or other provision contained herein.
5. Indemnification Procedures. Each party seeking indemnity hereunder
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(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
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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
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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
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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 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
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8. 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 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
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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
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the compliance with all such laws (including, without limitation, consumer
disclosure and privacy laws).
TERMINATION
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10. Term. This Agreement shall remain in effect for as long as (a) the
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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
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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
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
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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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13. Independent Contractor, No Agents; Relationship; No-Third Party
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Beneficiaries. 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.
14. 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,
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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
TCM, LLC
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TCM, LLC
000 X. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Chairman
Fax: 000-000-0000
cc: [General Counsel]
cc: Xxxxx X. Xxxxxxx, Managing Director
Columbia Capital L.L.C.
000 X. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
cc:
Xxxxx X. Xxxxx, Xx.
Madison Dearborn Partners, Inc.
Three First Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Fax: 000-000-0000
15. Severability. Nothing contained in this Agreement shall be construed to
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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
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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
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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
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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
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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
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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
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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.
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EFFECTIVE TIME
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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.
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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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TCM, LLC
By: Telcom Ventures, L.L.C., its Manager
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
Its: President
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