Assignment and Use Agreement - XM Radio Inc. and XM Satellite Radio Inc.
AMENDED AND RESTATED ASSIGNMENT AND USE AGREEMENT
THIS AMENDED AND RESTATED ASSIGNMENT AND USE AGREEMENT (this
"Agreement"), dated as of January 28, 2003, is between XM Radio Inc., a Delaware
corporation, ("Licensee"), and XM Satellite Radio Inc., a Delaware corporation
("Operating Company").
WHEREAS, Operating Company was issued authorizations by the Federal
Communications Commission (the "FCC") necessary for the legal transmission of
satellite digital radio ("SDARS") signals (the "Licenses") as set forth on Annex
A;
WHEREAS, the FCC approved the assignment of the Licenses from
Operating Company to Licensee on September 15, 1999;
WHEREAS, Operating Company and Licensee previously entered into an
Assignment and Use Agreement, dated as of November 12, 1999 (the "Original
Agreement"), whereby Licensee granted to Operating Company the right to operate
an SDARS system (the "System") subject to the terms of the Original Agreement
and in consideration thereof Operating Company assigned the Licenses to
Licensee;
WHEREAS, Operating Company and Licensee desire that the Original
Agreement continue as modified to, among other things, limit Operating Company's
use of the Licenses to the term specified herein and to add certain protections
for the benefit of Licensee, and for the Operating Company to grant to Licensee
as additional consideration the rights specified in paragraph 4 below.
NOW, THEREFORE, IN CONSIDERATION of the mutual promises and covenants
contained in the Original Agreement and herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Operating Company, on the terms and conditions set forth herein,
has the right to use the Licenses during the Term (as defined below), subject to
the terms of this Agreement. Operating Company shall oversee day-to-day
operations of the System, including, but not limited to, providing managerial,
accounting, engineering, marketing and other staffing; operating and maintaining
the business of the System; and assuring compliance (with Licensee's
supervision) with FCC requirements. Operating Company shall do all things
necessary in connection with the maintenance of the business of the System and
shall make recommendations to Licensee regarding the hiring and supervision of
such employees as are necessary to the fulfillment of its responsibilities
hereunder. It is understood that all expenses and capital costs incurred in
operating the System and the business of the System shall be borne by and paid
by Operating Company,
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except for such expenses of Licensee as set forth in Section 3 hereof, and all
revenues collected in operating the System shall be retained by Operating
Company. Operating Company shall not be entitled to any compensation from
Licensee for services rendered hereunder.
2. Operating Company and Licensee desire that this Agreement, the
obligations performed hereunder and operation of the System be in full
compliance with (i) the terms and conditions of the Licenses; (ii) all
applicable rules, regulations and policies of the FCC; (iii) the Communications
Act of 1934, as amended (the "Act"), 47 U.S.C.ss.151, et. seq., and (iv) any
other applicable federal, state and local law or regulation (collectively,
"Applicable Law").
3. Notwithstanding anything to the contrary in this Agreement,
Licensee shall have full authority, control and power over the Licenses and the
System during the Term. Licensee shall be responsible for the filing of all
applications, reports, correspondence and other documentation with the FCC
relating to the acquisition, use, maintenance or renewal of the Licenses;
provided, that Operating Company shall cooperate with such filings and provide
upon Licensee's reasonable request any information that will enable Licensee to
prepare any records and reports required by the FCC and local, state or other
federal government authorities. To the extent deemed advisable by FCC counsel to
Licensee, Licensee shall retain at least one employee to ensure that operation
of the System and the conduct under this Agreement comply with Applicable Law.
Licensee shall bear and pay the compensation and expenses of such employee(s) of
Licensee, provided that upon documentation of Licensee's reasonable and
necessary out-of-pocket expenses to comply with this Agreement, Operating
Company shall reimburse Licensee for such expenses within fifteen (15) business
days of receipt of such documentation. Licensee's employees and agents shall at
all times be afforded access to the System in order to ensure compliance with
Applicable Law.
4. Licensee shall have the right to use the Operating Company's
trademarks and the broadcast studios of the System with the prior consent of
Operating Company, which consent shall not be unreasonably withheld.
5. Neither party shall assign this Agreement or any of its rights or
obligations under this Agreement, and any attempted assignment, sale or transfer
not in compliance with this provision shall be null and void; provided, however,
each party shall have the right to collaterally assign this Agreement for
security purposes and/or to grant a security interest in its rights under this
Agreement to its lenders or bondholders (and each party acknowledges that such a
collateral assignment is likely to occur), and this Agreement may be assigned in
connection with any exercise of remedies pursuant to any such collateral
assignment or grant of security interest, subject to the applicable FCC
regulations, including the prior approval of the FCC if necessary under the
rules, regulations and policies of the FCC then in effect. Nothing herein shall
be interpreted to prevent Operating
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Company from granting a mortgage on or other security interests with respect to
the System (other than the Licenses). This Agreement shall bind and inure to the
benefit of the permitted successors and assigns of the parties.
6. Any failure, delay or interruption in operation of the System due
to acts of God, strikes, or threats thereof, force majeure, or causes beyond the
control of Licensee or Operating Company, shall not constitute a breach of this
Agreement.
7. The term of this Agreement (the "Term") shall begin on the date
hereof (the "Effective Date") and end on the eighth anniversary of the Effective
Date (the "Termination Date"). At any time during the Term, either Operating
Company or Licensee may renew this Agreement for an additional term of up to
eight years by providing written notice to the other party hereto of its intent
to renew this Agreement not less than 180 days prior to the Termination Date.
8. All notices between the parties shall be (i) in writing, (ii)
delivered by personal delivery, or sent by commercial delivery service or by
registered or certified mail, return-receipt requested or sent by telecopy, and
(iii) addressed as follows or to such other party as either party may specify
from time to time.
IF SENT TO OPERATING COMPANY:
XM Satellite Radio Inc.
1500 Eckington Place, N.E.
Washington, DC 20002
Fax: 202-380-4500
Attn: Joseph M. Titlebaum, Esq.
IF SENT TO LICENSEE:
XM Radio Inc.
1500 Eckington Place, N.E.
Washington, DC 20002
Fax: 202-380-4500
Attn: Joseph M. Titlebaum, Esq.
9. This Agreement shall be governed by and construed in
accordance with the laws of the District of Columbia.
10. It is the intent of the parties that operation of the System and
the transactions under this Agreement not constitute a fraudulent transfer or
conveyance for purposes of the federal bankruptcy laws, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or
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state law. To effectuate the foregoing intention, each of Operating Company and
Licensee hereby irrevocably agree that the obligations of the parties hereunder
shall be limited to the extent necessary to ensure that the obligations of the
parties hereto do not constitute a fraudulent transfer or conveyance under
applicable law.
11. Either party may terminate this Agreement 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; provided, however, that
this Agreement will be re-instated, including, if necessary, by entering into a
new agreement in substantially the form hereof, if the defaulting party cures
the default within six months after any such termination.
12. Notwithstanding anything to the contrary in this Agreement,
neither party hereto will take any action pursuant to this Agreement that would
constitute or result in any assignment of the Licenses or any change of control
(whether de jure or de facto) of Licensee or Operating Company or of the System
if such assignment or change of control would require, under then existing law,
the prior approval of the FCC without first obtaining such prior approval of the
FCC.
13. In the event of any order or decree of an administrative agency
or court of competent jurisdiction, including without limitation any material
change or clarification in FCC rules, policies, or precedent, that would cause
this Agreement to be invalid or violate any Applicable Law, and such order or
decree has become effective and has not yet been stayed, or in the event that
any determination is made that this Agreement is in violation of any Applicable
Law, the parties will use their respective best efforts and negotiate in good
faith to modify this Agreement to the minimum extent necessary so as to comply
with such order or decree or Applicable Law without material economic detriment
to either party, and this Agreement, as so modified, shall then continue in full
force and effect.
14. If any provision of this Agreement shall be declared void or
invalid by any governmental authority with jurisdiction thereof, then the
remainder of this Agreement shall remain in full force and effect without the
offending provision, provided that such remainder substantially reflects the
original agreement of the parties. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
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15. This Agreement represents the entire understanding of the parties
hereto with respect to the subject matter hereof and may be amended only by a
writing signed by both parties; provided, however, if this Agreement has been
collaterally assigned to a lender of either party, this Agreement may not be
amended without the consent of such lender.
16. This Agreement amends and restates the Original Agreement
with effect from the Effective Date.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
XM RADIO INC.
By: /s/ Joseph M. Titlebaum
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Name: Joseph M. Titlebaum
Title: Senior Vice President, General
Counsel and Secretary
XM SATELLITE RADIO INC.
By: /s/ Joseph M. Titlebaum
---------------------------------
Name: Joseph M. Titlebaum
Title: Senior Vice President, General
Counsel and Secretary
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ANNEX A
The Licenses