Document:

exv10w1

Exhibit 10.1

SERVICES AGREEMENT

     This SERVICES AGREEMENT (the “Agreement”), dated as of September 16, 2008 (the
“Effective Date”), is entered into by and between CSS Studios, LLC, a New York limited
liability company (“Company”), and Ascent Media Group, LLC, a Delaware limited liability
company (“Provider”).

     WHEREAS Company and its wholly owned subsidiaries, Sound One Corporation and POP Sound, Inc.,
are engaged primarily in the business of providing (i) sound supervision, sound design and sound
editorial services to create, and supervise the creation of, sound for feature films, television
content, commercials, movie trailers, and other entertainment products, (ii) music composition,
supervision, editing, scoring, recording and related services, (iii) mixing and re-recording
services, including the editing and combining of sound effects, dialogue and music, and
(iv) maintenance of and access to Company’s sound effects and music libraries (collectively, the
“Company Business”);

     WHEREAS, prior to the restructuring (“DHC Restructuring”) of Discovery Holding
Company, a Delaware corporation (“DHC”), pursuant to the Reorganization Agreement dated
June 4, 2008 (the “Reorganization Agreement”), among DHC, Discovery Communications, Inc., a
Delaware corporation and wholly-owned subsidiary of DHC (“New Discovery Holdco”), Company,
Provider and Ascent Media Corporation, a newly-formed Delaware corporation and wholly-owned
subsidiary of DHC (“Spinco”), Provider was an indirect wholly-owned subsidiary of DHC and
Company was a wholly-owned subsidiary of Provider;

     WHEREAS, in connection with the DHC Restructuring, (i) the ownership of Company was
restructured such that DHC retained its indirect ownership interests in Company but Company was no
longer a direct, wholly-owned subsidiary of Provider, (ii) the ownership of Provider was
restructured such that Provider became the wholly-owned subsidiary of Spinco and (iii) DHC
distributed pro rata to its stockholders all of the issued and outstanding capital stock of Spinco,
as a result of which distribution Spinco became an independent, publicly traded company (the
“AMG Spinoff”);

     WHEREAS Company and Provider have determined that it is in their mutual interests for Company
to obtain services from Provider in connection with the Company Business and for Company to
compensate Provider for the performance of such services; and

     WHEREAS the parties desire to set forth in this Agreement the services to be performed by
Provider to Company and the basis upon which Provider will be compensated by Company.

     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

 

 

ARTICLE I

ENGAGEMENT AND SERVICES

     Section 1.1 Engagement. Company hereby engages Provider to provide to Company the Services in connection with the
Company Business, and Provider hereby accepts such engagement, on the terms and subject to the
conditions set forth in this Agreement.

     Section 1.2 Services. Subject to Section 3.2 hereof, Provider will provide Company
with respect to the Company Business services of the types described below, or the functional
equivalent thereof:

          (a) the finance and accounting services described in Schedule 1.2(a) hereto;

          (b) the human resources services described in Schedule 1.2(b) hereto;

          (c) the information technology services described in Schedule 1.2(c) hereto;

          (d) the payroll services described in Schedule 1.2(d) hereto; and

          (e) the real estate management services described in Schedule 1.2(e) hereto;

(all or any services provided by Provider to Company hereunder, collectively, the
“Services”).

     Section 1.3 Books and Records; Reporting. Provider will maintain books and
records regarding provision of the Services to Company pursuant to this Agreement in accordance
with Provider’s standard business practices. Upon Company’s reasonable request, Provider will give
Company and its duly authorized representatives, agents, and attorneys reasonable access to such
books and records (or to true copies thereof), during Provider’s regular business hours after
reasonable advance notice; provided, however, that Provider shall be entitled to
limit or restrict such access to the extent that, upon advice of Provider’s counsel, such
limitation or restriction is necessary to comply with applicable law, regulation, order or
agreement, or to prevent the loss of attorney-client privilege. Provider shall provide to Company
from time to time during the Term the information and data regarding the Services provided by
Provider to Company hereunder that Provider provided to or on behalf of the Company Business in the
ordinary course prior to the Effective Date, and such additional information regarding the Services
as Company shall reasonably request. Provider will maintain commercially reasonable accounting
records and backup documentation relating to the Services performed hereunder during the Term and
for a period of at least two years following the Term (the “Retention Period”) and Provider
shall retain such accounting records and make them available to Company’s auditors during the
Retention Period during Provider’s regular business hours after reasonable advance notice. In
addition, each of Provider and Company agrees to use its reasonable good faith efforts to cooperate
with and assist the other party hereto from time to time during the Term and during the Retention
Period to provide on a timely basis any information requested by the requesting party that the
other party has in its possession that is needed by the requesting party in order to comply with
the regulations and filing requirements of the United States Securities and Exchange Commission and
any other applicable state or federal governmental authorities.

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     Section 1.4 Company Data. Company shall own all right, title, and interest in and to all databases, employee information,
customer lists, research data, other Company Confidential Information and other information
compiled by Provider in the exercise of its obligations under this Agreement, in each case to the
extent specifically arising out of or relating to Company, its employees and the Company Business
(the “Company Data”). Provider shall maintain and secure the Company Data in a manner that
is substantially equivalent, in all material respects, to the manner in which Provider maintained
and secured analogous information for the Company Business in the ordinary course prior to the
Effective Date. Upon Company’s request and the expiration or termination of this Agreement,
Provider shall furnish the Company Data to Company in a commercially reasonable timeframe in the
format in which Provider maintained such Company Data during the Term and via a reasonable means of
transmission specified by Company; provided that any out-of-pocket costs incurred by
Provider in connection therewith shall be borne by Company. Prior to incurring any such
out-of-pocket costs, Provider shall provide Company with notice and a good faith estimate of the
amount thereof, to the extent commercially reasonable. Provider may retain archival copies of
Company Data, provided that Provider shall use commercially reasonable efforts to safeguard any
personally identifiable information, in accordance with and for the terms provided by applicable
law and regulation, and shall comply with its obligations with respect thereto pursuant to Section
7.15.

     Section 1.5 Purchase of Goods and Services Pursuant to Provider’s Agreements with
Vendors. At Company’s request, Provider will use commercially reasonable efforts to permit
Company and its Subsidiaries to license software and to purchase connectivity and other goods and
services for use in the Company Business during the Term pursuant to Provider’s existing agreements
with third-party vendors, including using commercially reasonable efforts to obtain any and all
necessary third-party consents, waivers and amendments under Provider’s vendor agreements and
licenses, to the extent Company and its Subsidiaries utilized such arrangements prior to the DHC
Restructuring, and pursuant to such other arrangements with third-party vendors as Provider and
Company shall mutually agree. Provider shall give Company commercially reasonable prior notice of
any material vendor agreements that are expiring or coming up for renewal and shall endeavor in
good faith to include Company in the negotiation process regarding any such contract renewals.
Provider and Company will negotiate in good faith to enter into any sublicenses, containing
customary terms and conditions, necessary or appropriate to implement the provisions of this
Section 1.5, and the execution and delivery of any such sublicenses, and receipt of any and all
necessary third-party consents, waivers or amendments under Provider’s vendor agreements and
licenses, shall be a condition precedent to Provider’s obligations under this Section 1.5. Upon
any termination of this Agreement, and earlier at the reasonable request of Company (including in
connection with any renewal by Provider of the relevant contract between Provider and its vendor),
Provider will cooperate with Company in good faith and use commercially reasonable efforts to
assist Company in entering into its own purchase agreements and/or other arrangements with the
vendors referred to in this Section 1.5, at Company’s expense, to the extent Company wishes to do
so.

     Section 1.6 Cash Management Advances. During the Term, Provider shall from time to time provide Company with cash advances as
reasonably required by Company to meet its current payroll and to pay third-party vendors for goods
and services used in the Company Business in the ordinary course of business; provided,
however, that the aggregate outstanding amount of all advances made by Provider to Company,
or on its behalf, shall not at any time

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exceed $1,500,000. Any and all amounts advanced by
Provider to Company, or on its behalf, under this Agreement shall be unconditional obligations of
Company and its Subsidiaries, and shall be due and payable in full on the one-year anniversary of
the Effective Date (or, if that is not a business day, the immediately following business day),
with interest from the date advanced until paid at the prime rate from time to time published in
The Wall Street Journal, calculated in accordance with the average daily balance method.
Cash advances by Provider shall be deposited into a cash management account managed by Provider
pursuant to this Agreement (the “Cash Management Account”). The Cash Management Account
shall be owned by Company from and after the Effective Date but will be pledged to and under the
control of Provider during the Term, as collateral security for all obligations of Company to
Provider under this Agreement, the Reorganization Agreement or otherwise. Provider shall have the
right, but not the obligation, to sweep cash from the Cash Management Account at any time and from
time to time that Company has a balance payable to Provider. Upon Provider’s request, Company
shall enter into and deliver such security agreements, account control agreements, bank instruction
letters, signature cards, financing statements and/or other instruments and agreements as Provider
shall reasonably deem necessary to effect the provisions of this Section 1.6.

ARTICLE II

COMPENSATION

     Section 2.1 Services Fee. In consideration for the Services listed on Schedule 1.2
and Provider’s obligation to make such Services available hereunder during the one year period
beginning on the Effective Date, Company shall pay Provider a fee (the “Services Fee”) of
One Million United States Dollars ($1,000,000). The Services Fee shall be payable quarterly in
advance, and shall be non-refundable.

     Section 2.2 Cost Reimbursement. In addition to the Services Fee payable pursuant
to Section 2.1, Company shall also reimburse Provider (without markup) for all out-of-pocket costs
reasonably incurred by Provider in connection with the Services, including: postage and delivery
charges; duplicating charges; filing fees; travel, meals and entertainment related to such
Services; and the fees and disbursements of any outside legal counsel, accountants, independent
fiduciaries, payroll services, financial institutions; employee communications consultants and
other third-party service providers. Provider shall obtain prior approval from Company for any
individual expenditure or series of related expenditures incurred by Provider, unless, in the
business judgment of Provider, it would not be practicable to seek such prior approval, in which
case Provider shall give Company prompt written notice of any expense so incurred, together with
the reason that obtaining prior approval was impracticable. For the avoidance of doubt, Provider’s
failure to give advance
notice of, or obtain Company’s prior approval for, any expense shall not be deemed a breach of this
Agreement and shall not release Company from its obligation to reimburse Provider for any
reasonable and appropriate expenses. During the Terms, Provider shall use commercially reasonable
efforts to advise Company regarding any out-of-pocket expenses expected to be incurred under this
Agreement and Provider and Company shall cooperate with one another to minimize such expenses,
including transitioning such expenses to Company to the extent practicable.

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     Section 2.3 Payment Procedures.

          (a) Company will pay the Services Fee to Provider, by wire or intrabank transfer of funds or
in such other manner specified by Provider to Company, in four installments of $250,000 each, due
and payable on the Effective Date and on the same day in each of the third, sixth and ninth months
thereafter (or if that is not business day, the immediately following business day).

          (b) Any amounts required to be reimbursed by Company to Provider pursuant to Section 2.2 will
be paid by Company to Provider within 30 days after receipt by Company of any invoice therefor, by
wire or intrabank transfer of funds or in such other manner as specified by Provider to Company.
Provider will invoice Company monthly for reimbursable expenses incurred by Provider on behalf of
Company during the preceding calendar month; provided, however, that Provider may
separately invoice Company at any time for any single reimbursable expense incurred by Provider on
behalf of Company, with Company’s prior approval, in an amount equal to or greater than $25,000.
Any invoice or statement pursuant to this Section 2.3(b) will be accompanied by supporting
documentation in reasonable detail with respect to the actual costs or expenses incurred by
Provider for which Provider is entitled to reimbursement.

          (c) Any payments not made when due under this Section 2.3 (or Section 1.6) will bear interest
at the rate of 1.5% per month on the outstanding amount from and including the due date to but
excluding the date paid, provided that Provider has given Company ten days written notice of any
such overdue payment prior to the assessment of any such interest charges.

ARTICLE III

TERM

     Section 3.1 Term Generally. The term of this Agreement shall be one year,
commencing on the Effective Date, unless earlier terminated in accordance with Section 3.3 (the
“Term”).

     Section 3.2 Certain Services Discontinued. At any time during the Term, upon at
least 30 days’ prior notice by Company to Provider, Company may elect to discontinue obtaining from
Provider some or all of the Services. However, no such election and no discontinuation of Services
following any such election shall result in a reduction of the Services Fee or entitle Company to
any refund hereunder, and the
other terms of this Agreement shall survive any such election or discontinuation of Services in
accordance with their terms.

     Section 3.3 Termination. This Agreement will be terminated in the following
events:

          (a) immediately upon notice (or at any time specified in such notice) by Provider to Company
if a Change in Control occurs with respect to Company;

          (b) immediately upon notice (or at any time specified in such notice) by Company or Provider
if a Bankruptcy Event occurs with respect to the other party hereto; or

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          (c) by either party in the event of a breach of this Agreement by the other party that if
capable of being cured, remains uncured after 20 days written notice to the non-terminating party.

          For purposes of this Section 3.3:

     “Change in Control” means, with respect to Company, if DHC shall at any time cease to
own, directly or indirectly, at least 80% of the value and 80% of the voting power of the
outstanding equity securities or other ownership interests in Company; and

     “Bankruptcy Event” means, with respect to Company or Provider, as the case may be, the
insolvency of such party, any general assignment by such party for the benefit of creditors,
voluntary commencement of any case, proceeding, or other action by such party seeking
reorganization, arrangement, adjustment, liquidation, dissolution, or consolidation of such party’s
debts under any law relating to bankruptcy, insolvency, or reorganization, or relief of debtors, or
seeking appointment of a receiver, trustee, custodian, or other similar official for such party or
for all or any substantial part of its assets, or the involuntary filing against such party (as
applicable) of any such proceeding that is not stayed within 60 days after such filing.

ARTICLE IV

PERSONNEL AND EMPLOYEES

     Section 4.1 Personnel to Provide Services.

          (a) Provider will make available to Company on a non-exclusive basis (except with respect to
the personnel indicated on the attached Schedules as being fully-dedicated to Company in which case
such personnel shall be dedicated exclusively to Company), the appropriate personnel to perform the
Services, as may be reasonably requested by Company to be performed by Provider and as necessary
and appropriate for the proper and efficient administration and operation of the Company Business,
to the same extent and in the same manner as performed in the ordinary course prior to the
Effective Date. Provider will be responsible for hiring, supervising, instructing, disciplining,
discharging, and otherwise
managing such employees, and administering any employee benefit plans applicable to such
employees.

          (b) Company acknowledges that:

          (i) Except as specified in Section 4.1(a) above, the employees of Provider performing
the Services for Company and its Subsidiaries (“Provider Employees”) also will be
performing services for Provider and may be performing services for certain Affiliates of
Provider; and

          (ii) Provider may elect, in its discretion, to utilize independent contractors rather
than employees of Provider to perform the Services from time to time, and such independent
contractors will be included within the definition of Provider Employees under this
Agreement, where applicable.

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     Section 4.2 Provider as Employer. Notwithstanding the Services provided by
Provider Employees to Company, the parties acknowledge that Provider is and will remain the
employer of all Provider Employees who are employees and will be responsible for the employment and
training of all Provider Employees and for the payment of salaries, wages, benefits (including
health insurance, retirement, and other similar benefits, if any) and other compensation applicable
to all Provider Employees. All Provider Employees will be subject to the personnel policies of
Provider and will be entitled to participate in Provider’s employee benefit plans to the same
extent as similarly situated employees of Provider performing services in connection with
Provider’s business. Provider will be responsible for the payment of all federal, state, and local
withholding taxes on the compensation of all Provider Employees and other such employment related
taxes as are required by law. Company will cooperate with Provider to facilitate Provider’s
compliance, and Provider will cooperate with Company to facilitate Company’s compliance, with
applicable federal, state, and local laws, rules, regulations, and ordinances applicable to the
employment of all Provider Employees by Provider and their provision of Services to Company
pursuant to this Agreement.

     Section 4.3 Additional Employee Provisions. Provider will have the right to
terminate the employment of any Provider Employee at any time.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

     Section 5.1 Representations and Warranties of Provider. Provider represents and
warrants to Company as follows:

          (a) Provider is a limited liability company duly organized, validly existing, and in good
standing under the laws of the State of Delaware.

          (b) Provider has the power and authority to enter into this Agreement and to perform its
obligations under this Agreement, including the Services.

          (c) Provider is not subject to any contractual or other legal obligation that materially
interferes with its full, prompt, and complete performance under this Agreement.

          (d) The individual executing this Agreement on behalf of Provider has the authority to do so.

          (e) Provider is in compliance with the laws, rules and regulations applicable to Provider,
except as would not reasonably be expected to have a material adverse effect on Provider, the
Company, or Provider’s ability to perform its obligations hereunder.

          (f) The operations of Provider do not infringe on the intellectual property rights of any
third party, including, without limitation, copyright, patent and trademark rights, except as would
not reasonably be expected to have a material adverse effect on Provider, the Company, or
Provider’s ability to perform its obligations hereunder.

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     Section 5.2 Representations and Warranties of Company. Company represents and
warrants to Provider as follows:

          (a) Company is a limited liability company duly organized, validly existing, and in good
standing under the laws of the State of New York.

          (b) Company has the power and authority to enter into this Agreement and to perform its
obligations under this Agreement.

          (c) Company is not subject to any contractual or other legal obligation that materially
interferes with its full, prompt, and complete performance under this Agreement.

          (d) The individual executing this Agreement on behalf of Company has the authority to do so.

          (e) Company shall perform its obligations under this Agreement in compliance with all
applicable laws, rules and regulations, except as would not reasonably be expected to have a
material adverse effect on Provider, the Company, or Company’s ability to perform its obligations
hereunder.

ARTICLE VI

INDEMNIFICATION

     Section 6.1 Indemnification by Provider. Provider shall indemnify, defend, and
hold harmless Company, DHC, Discovery Communications, Inc., and any Subsidiary of DHC, and each of
their respective officers, directors, employees and agents, and the successors and assigns of any
of them (collectively, the
“Company Indemnitees”), from and against any and all claims, judgments, liabilities,
losses, costs, damages, or expenses, including court costs and reasonable counsel fees and
disbursements (collectively, “Losses”), that any Company Indemnitee may suffer arising out
of, or resulting from, (a) any material breach by Provider of its obligations under this Agreement
or (b) the willful misconduct, fraud or bad faith of Provider in performing its obligations under
this Agreement.

     Section 6.2 Indemnification by Company. Company shall indemnify, defend, and hold
harmless Provider, Spinco, any Subsidiary of Spinco, and each of their respective officers,
directors, employees and agents, and the successors and assigns of any of them (collectively, the
“Provider Indemnitees”), from and against any and all Losses that any Provider Indemnitee
may suffer arising out of, or resulting from, (a) any breach by Company of its obligations under
this Agreement or (b) any acts or omissions of Provider in providing the Provider Employees and
Services to be provided by Provider pursuant to this Agreement (except to the extent such Losses
(i) arise from or relate to any breach by Provider of its obligations under this Agreement, or (ii)
are attributable to the willful misconduct, fraud or bad faith of Provider or such other Provider
Indemnitee seeking indemnification under this Section 6.2).

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     Section 6.3 Indemnification Procedures.

          (a) In connection with any indemnification provided for in this Article 6, the party seeking
indemnification (the “Indemnitee”) will give the party from which indemnification is sought
(the “Indemnitor”) prompt notice whenever it comes to the Indemnitee’s attention that the
Indemnitee has suffered or incurred, or may suffer or incur, any Losses for which it is entitled to
indemnification under this Article 6, and, when known, the facts constituting the basis for such
claim (in reasonable detail). Failure by the Indemnitee to so notify the Indemnitor will not
relieve the Indemnitor of any liability under this Agreement except to the extent that such failure
prejudices the Indemnitor in any material respect.

          (b) After receipt of a notice pursuant to Section 6.3(a), the Indemnitor will be entitled, if
it so elects, to take control of the defense and investigation with respect to any third-party
claim subject to indemnification hereunder and to employ and engage attorneys reasonably
satisfactory to the Indemnitee to handle and defend such claim, at the Indemnitor’s sole cost,
risk, and expense, upon written notice to the Indemnitee of such election, which notice
acknowledges the Indemnitor’s obligation to provide indemnification under this Agreement with
respect to any Losses arising out of or resulting from the claim in question. The Indemnitor will
not settle any third-party claim that is the subject of indemnification without the written consent
of the Indemnitee, which consent will not be unreasonably withheld, delayed or conditioned;
provided, however, that, after reasonable notice, the Indemnitor may settle a claim
without the Indemnitee’s consent if such settlement (i) makes no admission or acknowledgment of
liability or culpability with respect to the Indemnitee, (ii) includes a complete release of (A) if
Indemnitee is a Company Indemnitee, all Company Indemnitees, and (B) if Indemnitee is a Provider
Indemnitee, all Provider Indemnitees, and (iii) does not contain any term or provision to
affirmatively require the Indemnitee to make any payment not covered by indemnification by the
Indemnitor hereunder or to forego or take any action. The Indemnitee will cooperate in all
reasonable respects with the Indemnitor and its attorneys in the investigation, trial, and defense
of any lawsuit or action with respect to such claim and any appeal arising therefrom (including the
filing in the Indemnitee’s name of appropriate cross claims and counterclaims). The Indemnitee
may, at its own cost, participate in any investigation, trial, and defense of such lawsuit or
action controlled by the Indemnitor and any appeal arising therefrom. If there are one or more
legal defenses available to the Indemnitee that conflict with those available to, or that are not
available to, the Indemnitor, the Indemnitee will have the right, at the expense of the Indemnitor,
to engage separate counsel reasonably acceptable to the Indemnitor to participate in the defense of
the lawsuit or action.

          (c) If, after receipt of a notice pursuant to Section 6.3(a), the Indemnitor does not
undertake to defend any such claim, the Indemnitee may, but will have no obligation to, contest any
lawsuit or action with respect to such claim, and the Indemnitor will be bound by the result
obtained with respect thereto by the Indemnitee. The Indemnitee may not settle any lawsuit or
action with respect to which the Indemnitee is entitled to indemnification hereunder without the
consent of the Indemnitor, which consent will not be unreasonably withheld, delayed, or
conditioned.

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     Section 6.4 Limitation on Liability; Exclusive Remedy. In no event will either
party be liable to the other party for any indirect, special, incidental, punitive or consequential
damages with respect to any matter relating to this Agreement.

     Section 6.5 Survival. The terms and conditions of this Article 6 will survive the
termination of this Agreement, regardless of the reason for such termination.

ARTICLE VII

MISCELLANEOUS

     Section 7.1 Defined Terms.

          (a) The following terms will have the following meanings for all purposes of this Agreement:

     “Affiliate” means, with respect to any Person, any other Person controlling,
controlled by, or under common control with such Person, with “control” for such purpose meaning
the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting securities or voting
interests, by contract, or otherwise; provided, however, that, for purposes of this
Agreement, unless otherwise specified, Provider shall not constitute an Affiliate of Company and
Company shall not constitute an Affiliate of Provider.

     “Confidential Information” means any information marked, noticed, or treated as
confidential by a party which such party holds in confidence or that, given the nature of the
information, reasonably should be considered as confidential, including all trade secret,
technical, business, or other information, including customer or client information, however
communicated or disclosed, relating to past, present and future research, development and business
activities.

     “Person” means any natural person, corporation, limited liability company,
partnership, trust, unincorporated organization, association, governmental authority, or other
entity.

     “Subsidiary” when used with respect to any Person, means any other Person of which (x)
in the case of a corporation, at least (A) a majority of the equity and (B) a majority of the
voting interests are owned or controlled, directly or indirectly, by such first Person, by any one
or more of its Subsidiaries, or by such first Person and one or more of its Subsidiaries or (y) in
the case of any Person other than a corporation, such first Person, one or more of its
Subsidiaries, or such first Person and one or more of its Subsidiaries (A) owns a majority of the
equity interests thereof and (B) has the power to elect or direct the election of a majority of the
members of the governing body thereof or otherwise has control over such organization or entity.

          (b) The following terms will have the meanings for all purposes of this Agreement set forth in
the Section reference provided next to such term:

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	Definition	 	Section Reference
	Agreement
	 	Preamble
	AMG Spinoff
	 	Recitals
	Bankruptcy Event
	 	3.3
	Cash Management Account
	 	1.6
	Change in Control
	 	3.3
	Company
	 	Preamble
	Company Business
	 	Recitals
	Company Data
	 	1.4
	Company Indemnitees
	 	6.1
	DHC
	 	Recitals
	DHC Restructuring
	 	Recitals
	Effective Date
	 	Preamble
	Indemnitee
	 	6.3(a)
	Indemnitor
	 	6.3(a)
	Look-Back Period
	 	4.3
	Losses
	 	6.1
	Provider
	 	Preamble
	Provider Employees
	 	4.1(b)(i)
	Provider Indemnitees
	 	6.2
	Retention Period
	 	1.3
	Services
	 	1.2
	Services Fee
	 	2.1(a)
	Spinco
	 	Recitals
	Term
	 	3.1

     Section 7.2 Entire Agreement; Severability. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this Agreement and supersedes
all prior written and oral and all contemporaneous oral agreements and understandings with respect
to the subject matter of this Agreement. Each provision of this Agreement will be considered
separable and if for any reason any provision of this Agreement, or the application thereof,
becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable,
the remainder of this Agreement will continue in full force and effect and the application of such
provision to other Persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties hereto further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision that will achieve,
to the extent possible, the economic, business and other purposes of such illegal, void or
unenforceable provision.

     Section 7.3 Notices. All notices, consents, demands, approvals, or other
communications under this Agreement will be made in writing and will be deemed to have been duly
given when delivered in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) or sent by nationally recognized overnight delivery service to the
respective parties as follows:

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	If to Provider:
	 	Ascent Media Group, LLC
	 
	 	520 Broadway, 5th Floor
	 
	 	Santa Monica, CA 90401
	 
	 	Attention:  General Counsel
	 
	 	Telecopy:  (310) 434-7005
	 
	 	 
	If to Company:
	 	CSS Studios, LLC
	 
	 	 
	 
	 	7080 Hollywood Blvd., Suite 1100
	 
	 	Hollywood, CA  90028
	 
	 	Attention:  Bob Rosenthal
	 
	 	Telecopy:  (323) 603-5132
	 
	 	 
	 
	 	with copies sent simultaneously to
	 
	 	 
	 
	 	Discovery Communications, LLC
	 
	 	8045 Kennett Street
	 
	 	Silver Spring, MD 20910
	 
	 	Attn: John K. Honeycutt, Chief Media
	 
	 	Technology Officer
	 
	 	 
	 
	 	and
	 
	 	 
	 
	 	Discovery Communications, LLC
	 
	 	One Discovery Place
	 
	 	Silver Spring, MD 20910
	 
	 	Attn: General Counsel

or to such other address as the party to whom notice is given may have previously furnished to the
other party in writing in the manner set forth above. Any notice or communication delivered in
person will be deemed effective on delivery. Any notice or communication sent by telecopy will be
deemed effective when receipt is confirmed. Any notice or communication sent by registered or
certified mail, return receipt requested, will be deemed effective when received, as evidenced by
the return receipt. Any notice or communication sent by nationally recognized overnight delivery
service will be deemed effective one business day after delivery to such delivery service.

     Section 7.4 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED
THEREIN, WITHOUT REGARD TO ANY OTHERWISE-APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.

     Section 7.5 Rules of Construction. The descriptive headings in this Agreement are
inserted for convenience of reference only and are not intended to be part of or to affect the
meaning or interpretation of this Agreement. Words used in this Agreement, regardless of the
gender and number specifically used, will be construed to include any other gender or any other
number, as the context requires. As used in this Agreement, the word “including” or any

12

 

variation
thereof is not limiting, and the word “or” is not exclusive. Unless modified by the word
“business”, the word “day” means a calendar day. If the last day for giving any notice or taking
any other action is a Saturday, Sunday, or a day on which banks in New York, New York or Los
Angeles, California are permitted or required to close, the time for giving such notice or taking
such action will be extended to the next day that is not such a day (a “business day”).

     Section 7.6 Parties in Interest; No Liability or Obligation of DHC. This Agreement
will be binding on and inure solely to the benefit of each party to this Agreement, and its
successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to
confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of
this Agreement. Without limiting the generality of the foregoing, nothing in this Agreement,
express or implied, is intended to impose upon DHC or any Affiliate of DHC other than Company and
its Subsidiaries any obligation or liability of any nature whatsoever under or by reason of this
Agreement.

     Section 7.7 Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed to be an original, but all of which will constitute one and the same
agreement.

     Section 7.8 Payment of Expenses.
Except as otherwise expressly provided in this Agreement, each of the parties to this Agreement
will bear its own expenses, including the fees of any attorneys and accountants engaged by such
party, in connection with the preparation of this Agreement.

     Section 7.9 No Personal Liability. This Agreement will not create or be deemed to
create any personal liability or obligation on the part of any direct or indirect member, manager,
or shareholder of either party to this Agreement or any officer, director, employee, agent,
representative, or investor of either party, or of any member, manager, or shareholder of either
party to this Agreement.

     Section 7.10 Binding Effect; Assignment.

          (a) This Agreement will inure to the benefit of and be binding on the parties to this
Agreement and their respective legal representatives, successors and permitted assigns.

          (b) Except as expressly contemplated hereby (including by Section 4.1), this Agreement, and
the obligations arising hereunder, may not be assigned by either party to this Agreement without
the prior written consent of the other party, except that, subject to Section 3.3, either party
hereto may assign its rights and delegate its obligations under this Agreement in connection with
the acquisition of substantially all of its assets (by merger, consolidation, operation of law, or
otherwise).

     Section 7.11 Amendment. Any amendment, modification or supplement of or to any
term or condition of this Agreement shall be effective only if in writing and signed by all parties
hereto, and the parties waive the right to amend the provisions of this Section orally.

     Section 7.12 Extension; Waiver. Either party to this Agreement may (a) extend the
time for the performance of any of the obligations or other acts of the other party to this
Agreement,

13

 

or (b) waive compliance by the other party with any of the agreements or conditions
contained herein or any breach thereof. Any agreement on the part of either party to any such
extension or waiver will be valid only if set forth in an instrument in writing signed on behalf of
such party. No consent or waiver, express or implied, by a party of any breach or default by the
other party in the performance of its obligations under this Agreement will be deemed to be a
consent to or waiver of any further or other breach or default by such other party. Failure on the
part of a party to complain of an act, or failure to act, of the other party or to declare the
other party to be in default, irrespective of how long such failure continues, will not constitute
a waiver by such party of its rights under this Agreement.

     Section 7.13 Force Majeure.
Neither party will be liable to the other party with respect to any nonperformance or delay in
performance of its obligations under this Agreement to the extent such failure or delay is due to
any action or claims by any third party, labor dispute, strike or other job action, weather
conditions, act of war or insurrection, domestic or foreign terrorist activity, or any other cause
beyond a party’s reasonable control.

     Section 7.14 Specific Performance. If either party threatens to take any action in
violation of the terms of this Agreement, the other party may apply to any court of competent
jurisdiction for an injunctive order prohibiting such proposed action. Either party may institute
and maintain any action or proceeding against the other party to compel the specific performance of
this Agreement.

     Section 7.15 Confidentiality.

          (a) Except with the prior consent of the disclosing party, each party will:

          (i) limit access to the Confidential Information of the other party disclosed to such
party hereunder to its employees, agents, representatives, and consultants who have a
need-to-know;

          (ii) advise its employees, agents, representatives, and consultants having access to
such Confidential Information of the proprietary nature thereof and of the obligations set
forth in this Agreement; and

          (iii) safeguard such Confidential Information by using a reasonable degree of care to
prevent disclosure of the Confidential Information to third parties, but not less than that
degree of care used by that party in safeguarding its own similar information or material.

          (b) A party’s obligations respecting confidentiality under Section 7.15 will not apply to any
of the Confidential Information of the other party that: (i) was, at the time of disclosure to it,
in the public domain; or (ii) after disclosure to it, is published or otherwise becomes part of the
public domain through no fault of the recipient.; or (iii) was independently developed by it and
such party has evidence to show the same; or (iv) becomes available on a non-confidential basis
from another source, provided that such other source is not bound by a confidentiality agreement
with respect to such information.

14

 

          (c) A party may disclose Confidential Information of the other party (i) as required to comply
with binding orders of any regulatory body having jurisdiction over a party or any of their
respective clients or (ii) as required to be disclosed by reason of legal, accounting, or
regulatory requirements applicable to the recipient, provided that the recipient (x) gives the
disclosing party reasonable notice (to the extent possible and to the extent permitted by law) to
allow the disclosing party to seek a protective order or other appropriate remedy, (y) discloses
only such information as is required, and (z) does not take any action to interfere with the
disclosing party’s efforts to obtain confidential treatment for any Confidential Information
so disclosed

          (d) The provisions of this Section 7.15 will survive for a period of two years after the
termination of this Agreement, regardless of the reason for such termination.

     Section 7.16 Non-Solicitation. From the Effective Date through the second
anniversary thereof, notwithstanding any prior termination of this Agreement:

          (a) Provider will not, directly or indirectly, (i) solicit any individual who was an employee
of Company on or after the Effective Date to leave his or her employment with Company, or (ii)
subject to the last sentence of this Section 7.16, hire any individual who was an employee of
Company on or after the Effective Date without the prior consent of Company, unless and until (A)
Company terminates the employment of such individual or (B) six months after any other expiration
of such individual’s employment with Company; and

          (b) Company will not, directly or indirectly, (i) solicit any individual who was an employee
of Provider on or after the Effective Date to leave his or her employment with Provider or (ii)
subject to the last sentence of this Section 7.16, hire any individual who was an employee of
Provider on or after the Effective Date without the prior consent of Provider, unless and until (A)
Provider terminates the employment of such individual or (B) six months after any other expiration
of such individual’s employment with Provider;

provided, however, that this Section 7.16 shall not prohibit either Provider or
Company from soliciting or hiring any individuals through the placement of general advertisements
of employment opportunities which are not specifically directed at any of the individuals covered
by the foregoing restrictions; and provided further that all references to a party in this
Section 7.16 shall be deemed to include such party’s then Subsidiaries. Anything contained herein
to the contrary notwithstanding, the provisions of Section 7.16(a)(ii) and Section 7.16(b)(ii)
shall not apply to any person within the State of California to the extent that the application of
such provision to such person would be contrary to public policy or otherwise not legally
enforceable without penalty in that state.

     Section 7.17. Transition Efforts. Provider agrees to use its reasonable good faith
efforts to cooperate with and assist Company, at Company’s request and at Company’s sole expense,
from time to time during the Term, in connection with the transition from the performance of the
Services by Provider to the performance of the Services by Company or a third party after the
expiration of this Agreement, or such earlier time as requested by Company, subject to the terms of
this Agreement. The parties agree that if as part of such transition ownership of any system or
systems owned by Provider is to be transferred to Company, then the parties shall negotiate the

15

 

terms and conditions of any such transfer (including the purchase price and any related expenses to
be paid to Provider therefor) and memorialize such transfer(s) under the terms of one or more
separate written agreements to be negotiated and executed by and between the parties. Company and
Provider shall cooperate with one another in good faith during the Term to identify any assets used
in connection with the Services that are owned by Company.

     Section 7.18. Disaster Recovery. In the event of any material disruption in
Provider’s systems used to provide the Services, as a result of material disaster, strike, act of
war or terrorism or other force majeure, Provider shall use commercially reasonable efforts in good
faith to make Provider’s then existing disaster recovery resources, if any, which are in place with
respect to Provider’s systems used to provide the Services (including any redundancy in affected
systems and recovery efforts), available to support the provision of Services on a basis that does
not discriminate between services provided to Company and similar services provided to Provider’s
own business units.

     IN WITNESS WHEREOF, each of the parties has signed this Agreement, or has caused this
Agreement to be signed by its duly authorized officer, as of the date first above written.

	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	CSS STUDIOS, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ William E. Niles
 

	 	 
	 

	 	Name:
	 	William E. Niles	 	 
	 

	 	Title:
	 	Executive Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	PROVIDER:	 	 
	 
	 	 	 	 	 	 
	 	 	ASCENT MEDIA GROUP, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ William E. Niles
 

	 	 
	 

	 	Name:
	 	William E. Niles	 	 
	 

	 	Title:
	 	Executive Vice President	 	 

16

 

SCHEDULE 1.2(a)

Finance and Accounting Services

The finance and accounting services substantially in the same form as provided to Company by
Provider in the ordinary course prior to the Closing Date, and performed in the same timelines by
Provider in the ordinary course prior to the Closing Date, including the following:

     General Accounting:

	 	§	 	All Company transactional accounting activity in accordance with Generally
Accepted Accounting Principles (GAAP)
	 
	 	§	 	G/L file creation to post labor and fringe expense (post labor to Provider JDE
G/L)
	 
	 	§	 	Maintain separate set of books on JDE for the Company and its subsidiaries
	 
	 	§	 	Balance sheet reconciliations for all accounts
	 
	 	§	 	Detailed monthly trial balance

     Credit and Collections:

	 	§	 	Credit Application review and processing
	 
	 	§	 	Customer Management
	 
	 	§	 	Collections
	 
	 	§	 	Allowance for doubtful account analysis
	 
	 	§	 	Cash Applications
	 
	 	§	 	Credit card processing
	 
	 	§	 	Customer Statements and Dunning Letters
	 
	 	§	 	Reporting (Age/ DSO/Cash Receipts/Bad debt write-offs/Metrics)
	 
	 	§	 	Provider will continue using the unique Company brands for invoicing (for
example Soundelux, Todd-AO West, Todd-AO Burbank, Modern Music)
	 
	 	§	 	Communications to customers directing Company payments to new lockbox (Company
Cash Account)

     Accounts Payable:

	 	§	 	Invoice processing and disbursement (Checks/ACH/Wires/Foreign Draft/Swifts)
	 
	 	§	 	Vendor relations
	 
	 	§	 	Escheatment processing
	 
	 	§	 	Garnishments
	 
	 	§	 	Access to A/P support documentation
	 
	 	§	 	1099 reporting and filing
	 
	 	§	 	T&E processing and reimbursement

17

 

     Procurement:

	 	§	 	Maintain/administer procurement card programs
	 
	 	§	 	Manage travel agency relationship and individual traveler issues (until the
Company is transitioned to Discovery’s travel relationships)
	 
	 	§	 	Manage/administer purchasing systems (ProCure, JD Edwards, Corp Express EWAY,
DocuMedia)
	 
	 	§	 	Manage Equipment Support Agreements (e.g., Panasonic)
	 
	 	§	 	Manage office equipment and vehicle leases (assigning to Company where possible)

     Financial Reporting:

	 	 	 	Monthly:

	 	§	 	Detailed support for all transactions between all Company legal entities and
Discovery legal entities (i.e., intercompany transactions)
	 
	 	§	 	Support for all material significant, unusual, and/or non-recurring activities
	 
	 	§	 	Company “Wall” report summarizing Revenue and EBITDA
	 
	 	§	 	Cause of change (COC) templates for Balance Sheet and Income Statement

	 	 	 	Quarterly:

	 	§	 	Submit financial statement and rollforward templates for upload (to be provided
by Discovery)
	 
	 	§	 	U.S. GAAP financial statements including balance sheet, income statement, cash
flow and stockholders’ equity
	 
	 	§	 	Supporting documentation for required footnote and SEC (e.g., MD&A
analysis) disclosures, including but not limited to:

	 	o	 	Derivative financial instruments
	 
	 	o	 	Goodwill and intangible assets
	 
	 	o	 	PP&E
	 
	 	o	 	Debt including capital leases
	 
	 	o	 	Related party transactions
	 
	 	o	 	Summary of rent expense (office and equipment rental)
	 
	 	o	 	Cash paid for taxes (federal income, state income and foreign income)

	 	§	 	Disclosure of all changes in internal control and identification of significant
deficiencies or material weaknesses in the design or operation of internal control
over financial reporting

     Tax Reporting:

	 	 	 	Provide and make available all information (or Provider personnel) requested by New
Discovery Holdco so that New Discovery Holdco may:

	 	§	 	Prepare, file and document tax return filings, including:

	 	o	 	File extensions
	 
	 	o	 	Make payments (estimated and actual)

18

 

	 	o	 	Federal, state and local income tax
	 
	 	o	 	Sales and use tax
	 
	 	o	 	Property tax

	 	§	 	File Annual Reports and local business license filings in states in which
Company does business
	 
	 	§	 	Respond to notices and manage tax audits
	 
	 	§	 	Preparation of provision, including FIN 48 items
	 
	 	§	 	Provide tax inputs to business plan

	 	 	 	For the avoidance of doubt, Provider shall have no obligation to make or prepare any
filings, respond to any notices, or participate in the response to any tax audits, on behalf
of the Company.

     Treasury:

	 	§	 	Establish and maintain a unique Company bank account structure, that provides
for clear separation between Provider and Company cash flows. This would include a
Company Concentration (cash) account mapped to the following ZBA accounts:
Receivables & Lockbox, Merchant (Credit Card), Payables and Payroll.
	 
	 	§	 	Add and maintain authorized Company signatories to all Company accounts (per
Company policy).
	 
	 	§	 	Provide the same cash management services as provided to Company by Provider in
the ordinary course prior to the Closing Date (excluding brokerage services).
	 
	 	§	 	Provide the same check/wire/ACH request and authorizations processes as provided
to Company by Provider in the ordinary course prior to the Closing Date.
	 
	 	§	 	Provider will transfer the Company’s misdirected checks received in Provider’s
lock box to the Company’s cash account.
	 
	 	§	 	The Provider will maintain a high level cash forecast for the Company and
perform a daily bank reconciliation against it.
	 
	 	§	 	Provide the Company with access to the bank’s web portal (CEO) for the purpose
of monitoring the Company’s accounts.
	 
	 	§	 	Provide Account Analysis (monthly bank statement) detailing fees and services
performed on the Company’s accounts.
	 
	 	§	 	Bank will directly bill the Company’s concentration account for monthly bank
fees for services performed (monthly bank statement).
	 
	 	§	 	Company acknowledges and agrees that Provider may act on the Company’s behalf
with respect to establishing and maintaining bank accounts at Wells Fargo with the
Tax Identification Number (“TIN”) of the Company.

     Asset Accounting:

	 	§	 	Company Asset Listing / Asset Rollfoward schedule
	 
	 	§	 	Supporting documentation for Asset additions and disposals
	 
	 	§	 	Depreciation calculations

19

 

SCHEDULE 1.2(b)

Human Resources Services

Limited human resources support services to assist in the transition to the Company’s newly hired
HR administrator, including the following administrative functions:

	 	§	 	HRIS input of all new hires and other HR events
	 
	 	§	 	Update benefit and PTO plans in HRIS as policy changes may require
	 
	 	§	 	Entry of benefit deductions, dependent data, etc into HRIS
	 
	 	§	 	Provide regular feeds to Ultralink and Conexis benefit vendors for Company employees
	 
	 	§	 	Continue to provide access to Benefits Call Center/On Line Enrollment Systems via
intranet portal for Company Employees
	 
	 	§	 	Billing Reconciliation — Reconcile premium statements and invoices for benefits,
vendors, etc.
	 
	 	§	 	Request Ultralink notification to Company HR regarding Disability participants
	 
	 	§	 	Via Ultralink, mail out FMLA paperwork per DOL guidelines
	 
	 	§	 	Create and process export files to and import files from Ultralink
	 
	 	§	 	Assist the Company’s HR person with any information required for Filing forms 5500 and
other legally required filings

20

 

SCHEDULE 1.2(c)

Information Technology Services

The information technology services substantially in the same form as provided to Company by
Provider in the ordinary course prior to the Closing Date, and performed in the same timelines by
Provider in the ordinary course prior to the Closing Date, including the following:

Technical Services Support:

	 	§	 	Helpdesk (Ascent Media Helpdesk) using centralized number and email

	 	ú	 	1st Tier Support

	 	§	 	Printing Issues (Printing supplies and parts, e.g., toner,
paper, cleaning cartridges and replacement parts are not covered under the
Services Fee.)
	 
	 	§	 	User Accounts
	 
	 	§	 	Desktop Support — Hardware (service existing hardware; does not cover
replacement of hardware if needed) and Software (service existing software;
does not cover purchase of additional software)

	 	ú	 	2nd Tier Support (Branched depending on need)

	 	§	 	Network Operations (servers, network issues, Terminal Services);
provided, however, that the following costs are not covered
under the Services Fee:

	 	•	 	The cost of backup media;
	 
	 	•	 	The cost of an account with Iron Mountain or another vaulting
operation for the disposition of backup tapes and subsequent
vaulting of the Company’s backups; and
	 
	 	•	 	The cost to replace hardware.

	 	§	 	Business Systems — Application issues

	 	ú	 	3rd Tier (outsourced — not covered under Services Fee) Vendor Support
 — Support agreements for applications, hardware

	 	§	 	Telco support

	 	ú	 	Localized support
	 
	 	ú	 	Add/Moves/Changes
	 
	 	ú	 	PBX Support (outsourced — not covered under Services Fee)

	 	§	 	Desktop Security

	 	ú	 	Centrally managed, regionally distributed anti-virus

21

 

Business Systems Support: (does not include software development)

	 	§	 	Ultipro — Software as a Service (Outsourced to third party. Subscription fees are
covered under the Service Fee, but any costs for development or programming services or
Forms or Report modifications requested by the Company would be an additional cost and
would not be covered under the Services Fee.)
	 
	 	§	 	JDEdwards/Oracle (back office financial system) (Outsourced to third party. Support
fees are covered under the Service Fee, but any costs for development or programming
services or Forms or non standard Report modifications requested by the Company would be an
additional cost and would not be covered under the Services Fee.)

	 	ú	 	Deployments as scheduled on weekly cycle
	 
	 	ú	 	Standard reporting
	 
	 	ú	 	Account separation

	 	§	 	Xytech (operational system)

	 	ú	 	Work with the Company on support through 3rd tier Vendor support.
(Outsourced to third party. Support/maintenance fees are covered under the Service
Fee, but any costs for development or programming services or Forms or Report
modifications requested by the Company would be an additional cost and would not be
covered under the Services Fee.)
	 
	 	ú	 	NOTE: Working on new master agreement, but likely that agreement will
NOT be signed so will go on Time & Materials in March 2009.

	 	§	 	Microsoft (Outsourced to third party. Support fees are covered under the Service Fee,
but any costs for development, programming services or additional software requested by the
Company would be an additional cost and would not be covered under the Services Fee.)

	 	ú	 	Support of all Microsoft software currently supported by Provider’s EA
Agreements
	 
	 	ú	 	Desktop and Server

Network Operations Support: (does not include network redesign)

	 	§	 	Network connectivity and server support — hardware (service existing hardware; does not
cover replacement of hardware if needed) and support. (If equipment fails and needs
replacement, the Company must purchase the replacement as originally provisioned. Provider
cannot support network equipment it does not standardize upon.)
	 
	 	§	 	Monitoring existing circuits and servers (as monitored in the ordinary course prior to
the Closing Date)
	 
	 	§	 	Add/Moves/Changes
	 
	 	§	 	Network management

22

 

	 	§	 	Management of all existing connectivity except provisioning. (The cost of the actual
connectivity is not covered under the Services Fee.)
	 
	 	§	 	Domain Name Management. (The registration cost of new or renewed domain names is not
covered under the Services Fee.)
	 
	 	§	 	Intranet Portal
	 
	 	§	 	Management of internet access and internet connection. (Does not include the cost of
the internet connection.)

Application Development Support: (does not include new website or application development)

	 	§	 	Website Support: Internal hosting and maintenance of current websites and in-house
applications. (Any costs associated with external website hosting or the cost of
new/reissued SSL certificates are not covered under the Services Fee.)

Note: Any costs listed above as not covered under the Services Fee shall be charged to the Company
pursuant to Section 2.2 of this Agreement.

23

 

SCHEDULE 1.2(d)

Payroll Services

The payroll services substantially in the same form as provided to Company by Provider in the
ordinary course prior to the Closing Date, and performed in the same timelines by Provider in the
ordinary course prior to the Closing Date, including the following:

	 	§	 	Time and Attendance Tracking
	 
	 	§	 	Gross to Net calculation
	 
	 	§	 	Direct deposits
	 
	 	§	 	Pay Check Preparation and Distribution (including, without limitation, payment of all
commissions, incentive compensation, profit participation, bonuses, PTO, severance and any
other form of wages payable).
	 
	 	§	 	All required Tax filings (Federal / State / City / local municipalities)
	 
	 	§	 	FUI and SUI deductions and filings
	 
	 	§	 	Payroll reporting
	 
	 	§	 	Relocation payments (Company HR will have to authorize)
	 
	 	§	 	Garnishment Administration and Child Support
	 
	 	§	 	Payroll tax deposits and quarterly/annual returns via MasterTax
	 
	 	§	 	Preparation and distribution of W-2s
	 
	 	§	 	Facilitation of the Company’s response to MPIPHP audits of the Company by the Plans
and/or outside audit firms. (For the avoidance of doubt, Provider shall have no obligation
to manage the response to any such audits.)
	 
	 	§	 	Filing for UI and SIT accounts in the necessary states/locals
	 
	 	§	 	Union personnel: evaluate hours and apply CBA and/or employment agreements to derive
payable hours/dollars. Perform applicable fringe benefits calculations (union vacation,
holiday, hours subject to P&W calculations, days eligible toward other union benefits).
Allocate multiple rates, department codes, job codes as needed.
	 
	 	§	 	Non-Union: perform calculations for exempt and non-exempt employees according to company
Policy and Labor Law, as required.
	 
	 	§	 	Performers: pay freelance voice over talent as per each daily agreement
	 
	 	§	 	Timecard entry and audit
	 
	 	§	 	PTO program tracking
	 
	 	§	 	Perform annual union holiday payout reconciliation
	 
	 	§	 	Weekly contribution reports by business unit to Motion Picture Pension and Health Plans
(“MPIPHP”) for union employees and for affiliated loan out corporations

24

 

	 	§	 	Prepare monthly reports for use in evaluating accruals required for weekly, monthly and
annual minimum compensation employee arrangements
	 
	 	§	 	Quarterly wage reports for the Unions
	 
	 	§	 	401(k) Plan Administration-Weekly Activities

	 	§	 	Creation, auditing and balancing of contribution and census export file from
HRIS to Schwab
	 
	 	§	 	Timely request of wire transfer to Schwab to fund contributions, match, etc
	 
	 	§	 	Maintenance of employee data for contribution changes, suspensions, loan
activity, etc.

25

 

SCHEDULE 1.2(e)

Facilities / Real Estate Management Services

The facilities and real estate management services substantially in the same form as provided to
Company by Provider in the ordinary course prior to the Closing Date, and performed in the same
timelines by Provider in the ordinary course prior to the Closing Date, including the following:

	 	§	 	Security services (badge scanning, facility access and surveillance cameras) for
Southern California locations only
	 
	 	§	 	Inter-office mail delivery for Southern California locations only
	 
	 	§	 	Safety inspection for Sound One — 1619 Broadway, New York. (outsourced — not covered
under Services Fee)
	 
	 	§	 	Safety training, inspections and fire drills for the following properties (outsourced —
not covered under Services Fee):

	 	ú	 	POP Sound — 1252 7th/625 Arizona, Santa Monica
	 
	 	ú	 	1143-1145 Vine, Hollywood (currently vacant, and company lease expires
3/09)
	 
	 	ú	 	Todd-AO — 900 N. Seward, Hollywood
	 
	 	ú	 	Audio located on First and Second Floors of 2901 Alameda, Burbank

	 	§	 	2901 Alameda — Ground Floor receptionist (shared with all occupants of 2901 Alameda)

26exv10w2

Exhibit 10.2

TAX SHARING AGREEMENT

by and among

DISCOVERY HOLDING COMPANY,

DISCOVERY COMMUNICATIONS, INC.,

ASCENT MEDIA CORPORATION,

ASCENT MEDIA GROUP, LLC

and

CSS STUDIOS, LLC

Dated as of September 17, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I DEFINITIONS
	 	 	2	 
	1.01 General
	 	 	2	 
	1.02 Interpretation
	 	 	8	 
	 
	 	 	 	 
	ARTICLE II TAX RETURNS AND TAX PAYMENTS
	 	 	8	 
	2.01 Obligations To File Tax Returns
	 	 	8	 
	2.02 Obligation To Remit Taxes
	 	 	9	 
	2.03 Tax Sharing Obligations And Prior Agreements
	 	 	9	 
	2.04 Amended Returns
	 	 	11	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND COVENANTS
	 	 	12	 
	3.01 Compliance With The Tax Opinion
	 	 	12	 
	3.02 Consistent Treatment
	 	 	12	 
	 
	 	 	 	 
	ARTICLE IV INDEMNITY OBLIGATIONS AND PAYMENTS
	 	 	12	 
	4.01 Indemnity Obligations
	 	 	12	 
	4.02 Notice
	 	 	13	 
	4.03 Timing Of Payments
	 	 	13	 
	4.04 Treatment Of Payments
	 	 	14	 
	 
	 	 	 	 
	ARTICLE V TAX CONTESTS AND THIRD-PARTY CLAIMS
	 	 	14	 
	5.01 Notice of Tax Contests
	 	 	14	 
	5.02 Control Of Tax Contests By DHC
	 	 	14	 
	5.03 Control Of Tax Contests By Spinco
	 	 	15	 
	5.04 Third-Party Claims
	 	 	15	 
	 
	 	 	 	 
	ARTICLE VI COOPERATION
	 	 	15	 
	 
	 	 	 	 
	ARTICLE VII RETENTION OF RECORDS; ACCESS; CONFIDENTIALITY
	 	 	15	 
	7.01 Retention of Records; Access
	 	 	15	 
	7.02 Confidentiality
	 	 	16	 
	 
	 	 	 	 
	ARTICLE VIII DISPUTE RESOLUTION
	 	 	16	 
	 
	 	 	 	 
	ARTICLE IX MISCELLANEOUS PROVISIONS
	 	 	17	 
	9.01 Governing Law
	 	 	17	 
	9.02 Application To Present And Future Subsidiaries
	 	 	17	 
	9.03 Binding Effect; Benefit; Successors
	 	 	17	 
	9.04 Further Assurances
	 	 	17	 
	9.05 Survival; Termination
	 	 	17	 
	9.06 Reorganization Agreement
	 	 	18	 

 

 

TAX SHARING AGREEMENT

     THIS TAX SHARING AGREEMENT (this “Agreement”) is entered into by and among DISCOVERY
HOLDING COMPANY, a Delaware corporation (“DHC”), DISCOVERY COMMUNICATIONS, INC., a Delaware
corporation (“New DHC”), ASCENT MEDIA CORPORATION, a Delaware corporation
(“Spinco”), ASCENT MEDIA GROUP, LLC, a Delaware limited liability company (“AMG”),
and CSS STUDIOS, LLC, a New York limited liability company (the “Audio Company”, and
together with DHC, New DHC, Spinco, and AMG, the “Parties”). Capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings ascribed to such terms in the
Reorganization Agreement, dated as of June 4, 2008, as amended as of September 16, 2008, by and
among the Parties (the “Reorganization Agreement”).

RECITALS

     WHEREAS, DHC is the common parent corporation of the DHC Affiliated Group; and

     WHEREAS, Spinco is a newly-formed, wholly-owned Subsidiary of DHC; and

     WHEREAS, DHC will effect the DHC restructuring transactions described in the Reorganization
Agreement and/or the Tax Opinion for the purpose of aggregating the Spinco Business and Assets in
the Spinco Group, and separating the Audio Business therefrom, prior to the Distribution
(collectively, the “Restructuring”); and

     WHEREAS, on the Distribution Date, DHC will distribute all of the issued and outstanding
common stock of Spinco to the holders of record on the record date for the Distribution of
Discovery Holding Company Series A Common Stock (“DHC Series A Common Stock”) and Discovery
Holding Company Series B Common Stock (“DHC Series B Common Stock” and, together with the
DHC Series A Common Stock, the “DHC Common Stock”) (the “Distribution”); and

     WHEREAS, the Parties intend that the Distribution will qualify as a tax-free transaction under
Sections 368(a) and 355 of the Internal Revenue Code of 1986, as amended (the “Code”) (or
any corresponding provision of any successor statute), and that as a result of such transaction,
the Spinco Entities will cease to be members of the DHC Affiliated Group for federal income Tax
purposes; and

     WHEREAS, the Parties desire to provide for and agree upon the allocation between the Parties
of liabilities for Taxes arising prior to, as a result of, and subsequent to the Distribution, and
to provide for and agree upon other matters relating to Taxes.

 

 

     NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth
below, the Parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     1.01 General. As used in this Agreement, the following terms shall have the following meanings:

     “Agreement” shall have the meaning set forth in the Preamble to this Agreement.

     “AMG” shall have the meaning set forth in the Preamble to this Agreement.

     “Audio Business” shall have the meaning set forth in the Reorganization Agreement.

     “Audio Company” shall have the meaning set forth in the Preamble to this Agreement.

     “Business Day” shall mean any day that is not a Saturday, a Sunday or any other day on
which banks are required or authorized by law to be closed in New York, New York.

     “CFO” shall have the meaning set forth in Article VIII.

     “Claim” shall have the meaning set forth in Section 4.02.

     “Code” shall have the meaning set forth in the Recitals.

     “DHC” shall have the meaning set forth in the Preamble to this Agreement.

     “DHC/ANPP Transaction Agreement” shall mean the Transaction Agreement dated as of June
4, 2008, as amended as of September 12, 2008, among DHC, New DHC, DHC Merger Sub, Inc.,
Advance/Newhouse Programming Partnership, and with respect to Section 5.14 thereof only, Advance
Publications, Inc., and Newhouse Broadcasting Corporation.

2

 

     “DHC Affiliated Group” shall mean an affiliated group of corporations within the
meaning of Section 1504(a) of the Code, of which DHC or New DHC is the common parent corporation,
that files consolidated federal income Tax Returns.

     “DHC Common Stock” shall have the meaning set forth in the Recitals.

     “DHC Filed Tax Return” shall have the meaning set forth in Section 2.01(a).

     “DHC Group” shall mean (i) DHC, (ii) each of its Subsidiaries, other than Discovery
Communications Holding, LLC, a Delaware limited liability company (“Discovery”), and each
of Discovery’s Subsidiaries, in each case, as determined immediately after the Distribution, and
(iii) Persons that become Subsidiaries of DHC thereafter. For the avoidance of doubt, immediately
following the Distribution, the DHC Group shall include New DHC and shall not include any of the
Spinco Entities.

     “DHC Series A Common Stock” shall have the meaning set forth in the Recitals.

     “DHC Series B Common Stock” shall have the meaning set forth in the Recitals.

     “DHC Taxes” shall have the meaning set forth in Section 2.03(a).

     “Dispute” shall have the meaning set forth in Article VIII.

     “Distribution” shall have the meaning set forth in the Recitals.

     “Distribution Date” shall have the meaning set forth in the Reorganization Agreement.

     “Final Determination” shall mean a determination within the meaning of Section 1313 of
the Code or any similar provision of state or local Tax law.

     “Governmental Entity” shall mean any nation or government, any state, municipality or
other political subdivision thereof and any entity, body, agency, commission, department, board,
bureau or court, whether domestic, foreign or multinational, exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government and any official
thereof.

     “Group” shall mean the DHC Group or the Spinco Group, as the context requires.

3

 

     “Indemnifiable Losses” shall mean any and all damages, losses, deficiencies,
liabilities, obligations, penalties, judgments, settlements, claims, payments, fines, interest,
costs and expenses (including, without limitation, the costs and expenses of any and all actions
and demands, assessments, judgments, settlements and compromises relating thereto and the
reasonable costs and expenses of attorneys’, accountants’, consultants’ and other professionals’
fees and expenses incurred in the investigation or defense thereof or the enforcement of rights
hereunder), including direct and consequential damages. For the avoidance of doubt, the Parties
agree that any and all amounts required to be paid by any member of the DHC Group to any ANPP
Indemnified Parties (as such term is defined in the DHC/ANPP Transaction Agreement) pursuant to the
indemnification provisions in Article IX of the DHC/ANPP Transaction Agreement, as a result of any
matter for which the DHC Group is entitled to indemnification by the Spinco Group pursuant to this
Agreement, shall constitute direct damages incurred by such DHC Group member for all purposes of
this Agreement.

     “Indemnified Party” shall have the meaning set forth in Section 4.02.

     “Indemnifying Party” shall have the meaning set forth in Section 4.02.

     “LMC Tax Sharing Agreement” shall mean the Tax Sharing Agreement dated as of July 20,
2005, as amended, between Liberty Media Corporation, a Delaware corporation, and DHC, and any
entities which became parties thereto pursuant to Section 10.8 thereof.

     “LMC TSA Liabilities” shall mean any obligation or liability to make any payment to
LMC or any LMC Indemnitee (as defined in the LMC Tax Sharing Agreement) or to any Governmental
Entity pursuant to the terms of the LMC Tax Sharing Agreement.

     “New DHC” shall have the meaning set forth in the Preamble to this Agreement.

     “Parties” shall have the meaning set forth in the Preamble to this Agreement.

     “Payment Period” shall have the meaning set forth in Section 4.03.

     “Person” shall have the meaning set forth in the Reorganization Agreement.

     “Post-Distribution Period” shall mean any Taxable Period beginning after the
Distribution Date and, in the case of any Straddle Period, that part of the Taxable Period that
begins on the day following the Distribution Date.

4

 

     “Pre-Distribution Period” shall mean any Taxable Period that ends on or before the
Distribution Date and, in the case of any Straddle Period, that part of the Taxable Period through
and including the Distribution Date.

     “Reorganization” shall have the meaning set forth in the Recitals.

     “Reorganization Agreement” shall have the meaning set forth in the Preamble to this
Agreement.

     “Restructuring” shall have the meaning set forth in the Recitals.

     “Spinco” shall have the meaning set forth in the Preamble to this Agreement.

     “Spinco Business and Assets” shall mean the assets and businesses owned or operated by
the Spinco Entities on the Distribution Date.

     “Spinco Common Stock” shall have the meaning set forth in the Reorganization
Agreement.

     “Spinco Entities” shall have the meaning set forth in the Reorganization Agreement.

     “Spinco External Distribution Tax Liability” shall mean any Taxes arising as a result
of the Distribution, except to the extent such Taxes arise as a result of any breach on or after
the Distribution Date of any representation, warranty, covenant or other obligation contained in
the Tax Materials or this Agreement by DHC or any member of the DHC Group or any shareholder of
DHC.

     “Spinco Filed Tax Return” shall have the meaning set forth in Section 2.01(b).

     “Spinco Group” shall mean Spinco, all Persons that are Subsidiaries of Spinco
immediately after the Distribution, and Persons that become Subsidiaries of Spinco thereafter.

     “Spinco Restructuring Tax Liability” shall mean any Taxes arising as a result of the
Restructuring, except to the extent such Taxes arise as a result of any action undertaken after the
Distribution Date by DHC, any member of the DHC Group or any shareholder of DHC.

5

 

     “Spinco Tax Asset” shall mean any Tax Asset of the DHC Affiliated Group or any member
of the DHC Group (including any adjustment to any such Tax Asset) that has accrued for Tax purposes
but has not been utilized during a Pre-Distribution Period, determined as of the Distribution Date
in accordance with the principles of Section 2.03(c).

     “Spinco Tax Benefit Amount” shall mean, as of any date, the aggregate amount (without
duplication) of any Tax Benefits realized on or before such date by the DHC Affiliated Group or any
member of the DHC Group as a result of the utilization of a Spinco Tax Asset in any
Post-Distribution Period.

     “Spinco Taxes” shall have the meaning set forth in Section 2.03(b).

     “Straddle Period” shall mean any Taxable Period that begins on or before and ends
after the Distribution Date.

     “Straddle Tax Return” shall mean any Tax Return for a Straddle Period.

     “Subsidiary” shall have the meaning set forth in the Reorganization Agreement.

     “Tax” or “Taxes” shall mean (i) all taxes, charges, fees, duties, levies,
imposts, rates or other assessments or governmental charges of any kind imposed by any federal,
state, local or foreign Governmental Entity, including, without limitation, whether disputed or not
and including any interest, penalties, charges or additions attributable thereto, income, gross
receipts, employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, custom duties, property, sales, use, license, capital stock, transfer, franchise,
registration, payroll, withholding, social security, unemployment, disability, value added,
alternative or add-on minimum or other taxes and unclaimed property assessments, (ii) liability for
the payment of any amount of the type described in clause (i) above arising as a result of being
(or having been) a member of any group or being (or having been) included or required to be
included in any Tax Return related thereto, and (iii) liability for the payment of any amount of
the type described in clauses (i) or (ii) above as a result of any express or implied obligation to
indemnify or otherwise assume or succeed to the liability of any other Person.

     “Tax Advisor” shall have the meaning set forth in Article VIII.

     “Tax Asset” shall mean any net operating loss, net capital loss, investment tax
credit, foreign tax credit, research and experimentation credit, charitable deduction, credit
related to alternative minimum tax, or any other loss, credit, deduction or Tax attribute which
could reduce any Tax.

6

 

     “Tax Benefit” shall mean the sum of the amounts by which the Tax liability of a
corporation or affiliated group (within the meaning of Section 1504(a) of the Code) or other
relevant group of corporations to the appropriate Governmental Entity for any Taxable Period is
actually reduced (including by deduction, entitlement to refund, credit or otherwise) plus any
interest received from such Governmental Entity relating to such Tax liability.

     “Tax Certificates” shall mean certificates of officers of DHC and Spinco, dated as of
September 17, 2008, provided to Skadden, Arps, Slate, Meagher & Flom LLP in connection with the Tax
Opinion.

     “Tax Contest” shall have the meaning set forth in Section 5.01.

     “Tax Information Packages” shall mean any information required in order to prepare and
file any DHC Filed Tax Return.

     “Tax Item” shall mean, with respect to any Tax, any item of income, gain, loss,
deduction or credit, or other attribute that may have the effect of increasing or decreasing any
Tax.

     “Tax Materials” shall have the meaning set forth in Section 3.01(a).

     “Tax Opinion” shall mean the written opinion of Skadden, Arps, Slate, Meagher & Flom
LLP, dated as of September 17, 2008, regarding certain U.S. federal income tax consequences of
certain transactions effected as part of the Reorganization and the Distribution.

     “Tax Return” shall mean any return, report, certificate, form or similar statement or
document (including any related supporting information or schedule attached thereto and any
information return, claim for refund or declaration of estimated Tax), or any amendment to any of
the foregoing, supplied to or filed with, or required to be supplied to or filed with, a
Governmental Entity, or any bill for or notice related to ad valorem or other similar Taxes
received from a Governmental Entity, in each case, in connection with the determination, assessment
or collection of any Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax.

     “Taxable Period” shall mean, with respect to any Tax, the year, or shorter period, if
applicable, with respect to which the Tax is incurred as provided under applicable Tax law.

     “Third-Party Claim” shall mean any claim, investigation action, suit or proceeding
made or commenced by a third party for which the Indemnifying Party may be liable under this
Agreement, other than a Tax Contest.

7

 

     “Treasury Regulations” shall mean the regulations promulgated from time to time under
the Code as in effect for the relevant Taxable Period.

     1.02
Interpretation(a) . For all purposes of this Agreement: (i) the terms defined in this
Agreement include the plural as well as the singular; (ii) all references in this Agreement to
“Preamble”, “Recitals”, “Articles”, “Sections” and other subdivisions are to the designated
Preamble, Recitals, Articles, Sections and other subdivisions of the body of this Agreement; (iii)
pronouns of either gender or neuter include, as appropriate, the other pronoun forms; (iv) the
words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement
as a whole and not to any particular Article, Section or other subdivision; (v) “or” is not
exclusive; (vi) “including” shall be deemed to be followed by “but not limited to”; and (vii) any
definition of or reference to any statute shall be construed as referring also to any rules and
regulations promulgated thereunder.

ARTICLE II

TAX RETURNS AND TAX PAYMENTS

     2.01 Obligations To File Tax Returns.

          (a) The DHC Group shall have the sole and exclusive responsibility for the preparation and
filing of each Tax Return filed or required to be filed after the Distribution Date that includes
any member of the DHC Group (each, a “DHC Filed Tax Return”). Upon DHC’s request, Spinco
shall prepare and deliver to DHC in a manner consistent with past practices pro forma Tax Returns
and Tax Information Packages with respect to each member of the Spinco Group or portion of the
Spinco Business and Assets required to be included in, or reflected on, a DHC Filed Tax Return no
later than ninety (90) days before the due date for the filing of the relevant Tax Return. DHC
shall provide to Spinco no later than thirty (30) days in advance of the due date for the filing
thereof, and Spinco shall have a reasonable opportunity to review and comment on, any such DHC
Filed Tax Return (or the relevant portion thereof) to the extent that Spinco is responsible for any
portion of the Taxes reported on such DHC Filed Tax Return. Each member of the Spinco Group hereby
irrevocably authorizes and designates DHC as its agent for the purpose of taking any and all
actions necessary or incidental to the filing of any such DHC Filed Tax Returns and, except as
otherwise provided herein, for the purpose of making payments to, or collecting refunds from, any
Governmental Entity in respect of a DHC Filed Tax Return. Except as otherwise provided herein, DHC
shall have the exclusive right to file, prosecute, compromise or settle any claim for, or refund
of, Taxes in respect of a DHC Filed Tax Return and to determine whether any refunds of Taxes to
which the DHC Group may be entitled shall be received by way of refund or credit against the Tax
liability of the DHC Group. For purposes of this Section 2.01, validly filed extensions of time to
file tax returns should be treated as extending the date such returns are required to be filed.

          (b) The Spinco Group shall have the sole and exclusive responsibility for the preparation and
filing of each Tax Return that is required to be filed after the Distribution Date that includes
any member of the Spinco Group or the Spinco Business and Assets that is not

8

 

a DHC Filed Tax Return (each, a “Spinco Filed Tax Return”); provided,
however, that, except as otherwise required by law, (x) all Spinco Filed Tax Returns shall
be prepared on a basis that is consistent with the Tax Opinion with respect to the Restructuring
transactions and the Distribution addressed therein and consistent with DHC’s past Tax accounting
practices and reporting positions to the extent relevant to the Spinco Business and Assets, and (y)
Spinco shall provide to DHC no later than thirty (30) days in advance of the due date for the
filing thereof (giving effect to any validly filed extensions thereto), and DHC shall have a
reasonable opportunity to review and comment on, any such Spinco Filed Tax Return (or the relevant
portion thereof) to the extent that DHC is responsible for any portion of the Taxes reported on
such Spinco Filed Tax Return.

     2.02 Obligation To Remit Taxes. The DHC Group and the Spinco Group shall each remit or cause to
be remitted to the applicable Governmental Entity in a timely manner any Taxes due in respect of
any Tax Return that such Group is required to file (or, in the case of a Tax for which no Tax
Return is required to be filed, which is otherwise payable by such Group or a member of such Group
to any Governmental Entity). In the case of any DHC Filed Tax Return or Spinco Filed Tax Return,
for which the Group not required to file such Tax Return is obligated under this Agreement to pay
all or a portion of the Taxes reported as due on such Tax Return, the Group filing such Tax Return
shall notify the other Group, in writing, of its obligation to pay such Taxes and the Group
receiving such notice shall pay such amount to the Group filing such Tax Return in accordance with
the notice and payment provisions contained in Article IV.

     2.03 Tax Sharing Obligations And Prior Agreements.

          (a) DHC Responsibility. DHC and the members of the DHC Group shall be responsible for the
payment of (and shall be entitled to any refund of, whether received in cash or applied against
future Tax obligations): (i) all Taxes attributable to any member of the DHC Group for any
Post-Distribution Period (other than Taxes arising as a result of the Distribution or the
Restructuring), (ii) Taxes arising as a result of the Distribution to the extent such Taxes arise
as a result of any breach on or after the Distribution Date of any representation, warranty,
covenant or other obligation contained in the Tax Materials or this Agreement by DHC or any member
of the DHC Group or any shareholder of DHC, and (iii) Taxes arising as a result of the
Restructuring to the extent such Taxes arise as a result of any action undertaken after the
Distribution Date by DHC, any member of the DHC Group or any shareholder of DHC (all or any of such
Taxes, collectively, the “DHC Taxes”).

          (b) Spinco Responsibility. Subject to Section 4.01(b), Spinco and the members of the Spinco
Group shall be responsible for the payment of (and shall be entitled to any refund of, whether
received in cash or applied against future Tax obligations, except as otherwise provided in Section
2.03(e)): (i) all Taxes attributable to any member of the DHC Group for any Pre-Distribution Period
(other than Taxes arising as a result of the Distribution or the Restructuring), (ii) all Taxes
attributable to any member of the Spinco Group or the operation or ownership of the Spinco Business
and Assets for any Pre-Distribution Period or Post-Distribution Period, (iii) the Spinco External
Distribution Tax Liability, and (iv) the Spinco Restructuring Tax Liability (all or any of such
Taxes, collectively, the “Spinco Taxes”).

9

 

          (c) Allocation of Taxes. For purposes of Section 2.01, this Section 2.03 and the determination
of a Spinco Tax Asset, in the case of any Straddle Period or Straddle Tax Return, Tax Items shall
be allocated between the portion of the Straddle Period that is a Pre-Distribution Period and the
portion of the Straddle Period that is a Post-Distribution Period based on an actual or
hypothetical closing of the books method at the close of the Distribution Date, as if the
Distribution Date were the end of the Taxable Period; provided, that any Tax Items not
susceptible to such allocation shall be apportioned pro rata on the basis of elapsed days during
the relevant portion of the Taxable Period. No election shall be made under Treasury Regulations
Section 1.1502-76(b)(2)(ii)(D) (relating to ratable allocation of a year’s items). Notwithstanding
the foregoing or Treasury Regulations Section 1.1502-76(b)(1)(ii)(B), in determining the allocation
of Tax Items between Pre-Distribution Periods and Post-Distribution Periods, any Tax Items relating
to the Distribution or the Restructuring shall be treated as extraordinary items described in
Treasury Regulations Section 1.1502-76(b)(2)(ii)(C) and shall be allocated to a Pre-Distribution
Period, and any Taxes related to such Tax Items shall be treated under Treasury Regulations Section
1.1502-76(b)(2)(iv) as relating to such extraordinary item and shall be allocated to a
Pre-Distribution Period.

          (d) Deposits. If, prior to the Distribution, a deposit is made with respect to any Tax for
which any member of the Spinco Group is responsible under this Agreement, such deposit shall be
assigned to the Spinco Group and the Spinco Group shall only be liable for the amount of such Tax
ultimately due in excess of the applicable deposit. Refunds of such deposits shall be remitted to,
and any credits with respect to Taxes attributable to such deposits shall be for the benefit of,
the Spinco Group.

          (e) Refunds; Carrybacks.

          (i) Except as provided in Section 2.03(e)(ii), if, with respect to any Spinco
Taxes, the DHC Group receives a refund of Taxes or other Tax Benefit from a
Governmental Entity, DHC shall remit to Spinco within fifteen (15) days of the
receipt of such refund or the actual realization of such Tax Benefit, the amount of
such refund or Tax Benefit. Any payment required to be made under this Section
2.03(e) shall be paid net of any Tax liability of any member of the DHC Group
resulting from the receipt of such refund or the realization of such Tax Benefit.

          (ii) Any refund of Taxes or other Tax Benefit arising or resulting from the
carryback of any Tax Asset of the DHC Group that is not a Spinco Tax Asset from a
Post-Distribution Period to a Pre-Distribution Period shall be for the account of
the DHC Group, and no member of the DHC Group shall have any obligation to
compensate or make a payment to any member of the Spinco Group with respect thereto.

          (f) Spinco Tax Asset.

          (i) Except as set forth in Section 4.01(b), any refund or other Tax Benefit
obtained in any Post-Distribution Period as a result of or pursuant to the
utilization of a Spinco Tax Asset shall be for the account of the

10

 

DHC Group, and no member of the DHC Group shall have any obligation to
compensate or make a payment to any member of the Spinco Group with respect thereto.

          (ii) For the avoidance of doubt, Spinco makes no representation under this
Agreement as to the amount, if any, of a Spinco Tax Asset, or the amount, if any, of
the Spinco Tax Benefit Amount.

          (g) LMC TSA Liabilities. Notwithstanding any other provision in this Section 2.03, DHC shall be
liable for, and shall indemnify and hold harmless each member of the Spinco Group from and against,
any LMC TSA Liabilities.

          (h) Prior Agreements. Except as set forth in this Agreement and in consideration of the mutual
indemnities and other obligations of this Agreement, any and all prior Tax sharing or allocation
agreements or practices between any member of the DHC Group and any member of the Spinco Group
shall be terminated as of the Distribution Date, and no member of the DHC Group or the Spinco Group
shall have any continuing rights or obligations thereunder.

     2.04 Amended Returns.

          (a) Spinco Amended Returns. Spinco shall not, and shall not permit any member of the Spinco
Group, to file any amended Tax Return that includes any member of the DHC Group or any of the
assets or operations of the Audio Business or that includes any Tax for which DHC is responsible
under this Agreement without the consent of DHC, not to be unreasonably withheld. DHC shall provide
a response to a request for such consent from Spinco within seven (7) Business Days following the
receipt of such request. Receipt of consent by Spinco or a member of the Spinco Group from DHC
under the provisions of this Section 2.04(a) shall not limit or modify Spinco’s continuing
indemnification obligation under Section 4.01(b).

          (b) DHC Amended Returns. DHC shall not, and shall not permit any member of the DHC Group, to
file any amended Tax Return that includes any member of the Spinco Group or any of the Spinco
Business and Assets or that includes any Tax for which Spinco is responsible under this Agreement
without the consent of Spinco, not to be unreasonably withheld. Spinco shall provide a response to
a request for such consent from DHC within seven (7) Business Days following the receipt of such
request. Receipt of consent by DHC or a member of the DHC Group from Spinco under the provisions of
this Section 2.04(b) shall not limit or modify DHC’s continuing indemnification obligation under
Section 4.01(a).

11

 

ARTICLE III

REPRESENTATIONS AND COVENANTS

     3.01 Compliance With The Tax Opinion.

          (a) DHC (on behalf of itself and all other members of the DHC Group) hereby represents and
warrants (and shall be deemed to represent and warrant on and as of the Distribution Date) that (i)
it has examined (A) the Tax Opinion, (B) the Tax Certificates, and (C) any other materials
delivered or deliverable in connection with the rendering of the Tax Opinion, as such materials, if
any, are identified or deliverable in connection with the rendering of the Tax Opinion or the Tax
Certificates (the materials referenced in (A), (B) and (C) are collectively referred to herein as
the “Tax Materials”), and (ii) the facts presented and representations made therein, to the
extent descriptive of or otherwise relating to DHC or any member of the DHC Group or the Audio
Business, were true, correct and complete in all material respects at the time presented or
represented and from such time until and including the date hereof. DHC (on behalf of itself and
all other members of the DHC Group) hereby confirms and agrees to comply with any and all covenants
and agreements in the Tax Materials applicable to DHC or any member of the DHC Group or the Audio
Business.

          (b) Spinco (on behalf of itself and all other members of the Spinco Group) hereby represents
and warrants (and shall be deemed to represent and warrant on and as of the Distribution Date) that
(i) it has examined the Tax Materials and (ii) the facts presented and representations made
therein, to the extent descriptive of or otherwise relating to Spinco or any member of the Spinco
Group or the Spinco Business and Assets, were true, correct and complete in all material respects
at the time presented or represented and from such time until and including the date hereof. Spinco
(on behalf of itself and all other members of the Spinco Group) hereby confirms and agrees to
comply with any and all covenants and agreements in the Tax Materials applicable to Spinco or any
member of the Spinco Group or the Spinco Business and Assets.

     3.02 Consistent Treatment. Unless and until there has been a Final Determination to the
contrary, each Party agrees not to take any position on any Tax Return, in connection with any Tax
Contest or otherwise that is inconsistent with (a) the allocation of Taxes and any Tax Items
(including, without limitation, any Spinco Tax Asset) between the DHC Group and the Spinco Group as
set forth in this Agreement, (b) the Tax Opinion, or (c) the Tax treatment of any transaction
described in the Reorganization Agreement.

ARTICLE IV

INDEMNITY OBLIGATIONS AND PAYMENTS

     4.01 Indemnity Obligations.

          (a) DHC Indemnity. The DHC Group shall indemnify and hold harmless Spinco and any
member of the Spinco Group from and against, and will reimburse Spinco for (i) all DHC Taxes and
(ii) all Taxes and Indemnifiable Losses arising out of, based upon or relating or attributable to
any breach on or after the Distribution Date of any representation, warranty, covenant or
obligation contained in the Tax Materials or this Agreement by DHC or any member of the DHC Group
or any shareholder of DHC.

12

 

          (b) Spinco Indemnity.

          (i) The Spinco Group shall indemnify and hold harmless DHC and any member of
the DHC Group from and against, and will reimburse DHC for (i) all Spinco Taxes and
(ii) all Taxes and Indemnifiable Losses arising out of, based upon or relating or
attributable to any inaccuracy in or breach on or after the Distribution Date of any
representation, warranty, covenant or obligation contained in the Tax Materials or
this Agreement by Spinco or any member of the Spinco Group or any shareholder of
Spinco after the Distribution.

          (ii) Notwithstanding anything herein to the contrary, no indemnification by the
Spinco Group under this Section 4.01(b), and no obligation of the Spinco Group
pursuant to Section 2.03(b), will be due and payable unless and until the sum of the
aggregate amount of all Spinco Taxes and the aggregate amount of all other Taxes and
Indemnifiable Losses for which DHC or any member of the DHC Group would otherwise be
entitled to indemnification or reimbursement pursuant to Section 4.01(b)(i) exceeds
the Spinco Tax Benefit Amount as then in effect, whereupon the Spinco Group will be
obligated to pay to DHC or any member of the DHC Group only those Spinco Taxes and
other Taxes and Indemnifiable Losses that exceed the Spinco Tax Benefit Amount.

          (iii) In the event that the Spinco Group makes any indemnification payments
under this Section 4.01(b) and the Spinco Tax Benefit Amount is subsequently
increased (as a result of the utilization of a Spinco Tax Asset), DHC shall repay to
Spinco the amount of such increase, but only to the extent of any such
indemnification payments previously made by the Spinco Group.

     4.02 Notice. A Party making a claim for indemnification under this Agreement (the
“Indemnified Party”) shall provide the Party from whom such indemnification is sought (the
“Indemnifying Party”) with written notice of such claim describing such claim in reasonable
detail and accompanied by reasonable documentation supporting such claim (the “Claim”) no
later than twenty (20) Business Days after the Indemnified Party (i) files a Tax Return reporting
Taxes due which are subject to reimbursement or (ii) receives written notice from any Governmental
Entity with respect to Taxes that may be subject to indemnification under this Agreement;
provided, however, that in the event that timely notice is not provided, the
Indemnifying Party shall be relieved of its obligation to indemnify the Indemnified Party only to
the extent that such delay results in actual increased costs or actual prejudice.

     4.03 Timing Of Payments. The Indemnifying Party shall pay the amount of any Claim to the
Indemnified Party within ten (10) Business Days after receipt of the Claim, provided that, if such
Claim is still subject to the outcome of any Tax Contest, then payment shall not be due until ten
(10) Business Days after such Claim either is resolved through a Final Determination, or prior to a
Final Determination, if the Indemnified Party and the Indemnifying Party agree on the
indemnification obligation under this Agreement with respect to such Claim. All indemnification
payments due under this Agreement shall be made by wire transfer of immediately available funds to
a bank account of the Indemnified Party. Any payment that is not

13

 

made within the period prescribed in this Agreement or, if no period is prescribed, within ten (10)
Business Days after demand for payment is made (the “Payment Period”) shall be subject to
interest at a rate per annum equal to the annualized six month LIBOR rate plus seventy-five basis
points (or the maximum legal rate, whichever is lower). Unless the Parties otherwise agree, the
annualized six month LIBOR rate used shall be the per annum rate for deposits in U.S. dollars for a
six-month period that appears on Bridge’s Telerate Service display at page 3750 (or such other page
as may replace such page) as of 11:00 A.M. London time on the last day of the Payment Period. Such
interest will be payable at the same time as the payment to which it relates and shall be
calculated on the basis of a year of 365 days and the actual number of days for which due.

     4.04 Treatment Of Payments. For all Tax purposes and to the extent permitted by applicable Tax
law, the Parties shall treat any payment made pursuant to this Agreement as a capital contribution
or a distribution, as the case may be, occurring immediately prior to the Distribution. If any such
payment (or portion thereof) causes, directly or indirectly, an increase in the Tax liability of
the recipient (or any of the members of its Group) under one or more applicable Tax laws, after
taking into account the Tax treatment of the item or event giving rise to such payment, the payor’s
payment obligation (or portion thereof) under this Agreement shall be grossed-up to take into
account the additional Taxes owed by the recipient (or any of the members of its Group);
provided, however, that the payor shall not be required to gross-up any such
payment obligation in the event, and to the extent, the increase in the Tax liability of the
recipient (or any member of its Group) caused by such payment is attributable to any breach on or
after the Distribution Date of a representation, covenant or obligation of the recipient (or any
member of its Group) contained in the Tax Materials or this Agreement.

ARTICLE V

TAX CONTESTS AND THIRD-PARTY CLAIMS

     5.01 Notice of Tax Contests. The Indemnified Party shall promptly notify the Indemnifying Party
in writing upon receipt by the Indemnified Party or any member of its group of a written
communication from any Governmental Entity with respect to any pending or threatened audit, claim,
dispute, suit, action, proposed assessment or other proceeding (a “Tax Contest”) concerning
any Taxes for which the Indemnifying Party may be liable under this Agreement.

     5.02 Control Of Tax Contests By DHC. DHC shall have the sole responsibility and control over the
handling of any Tax Contest, including the exclusive right to communicate with agents of the
Governmental Entity and to control, resolve, settle or agree to any deficiency, claim or adjustment
proposed, asserted or assessed in connection with or as a result of any such Tax Contest, involving
any DHC Filed Tax Return; provided, however, that DHC shall not resolve, settle or
agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or
as a result of any such Tax Contest that affects the liability of Spinco or a member of the Spinco
Group under this Agreement without the consent of Spinco, not to be unreasonably withheld. Spinco
shall provide a response to a request for such consent from DHC within seven (7) Business Days
following the receipt of such request. Subject to DHC’s rights

14

 

under this Section 5.02, upon request by Spinco, Spinco shall, at its own expense, be allowed to
participate in the handling of any such Tax Contest with respect to any item that may affect the
liability of Spinco (or any member of the Spinco Group) under this Agreement; provided,
however, that such rights shall be limited to the extent that DHC’s right to control or
otherwise participate in the relevant Tax Contest are limited pursuant to the LMC Tax Sharing
Agreement.

     5.03 Control Of Tax Contests By Spinco. Spinco shall have the full responsibility and control
over the handling of any Tax Contest, including the exclusive right to communicate with agents of
the Governmental Entity and to control, resolve, settle or agree to any deficiency, claim or
adjustment proposed, asserted or assessed in connection with or as a result of any such Tax
Contest, involving any Spinco Filed Tax Return; provided, however, that Spinco’s
right to control or otherwise participate in a Tax Contest involving a Spinco Filed Tax Return
shall be limited to the extent that DHC’s right to control or otherwise participate in the relevant
Tax Contest are limited pursuant to the LMC Tax Sharing Agreement; provided,
further, that Spinco shall not resolve, settle or agree to any deficiency, claim or
adjustment proposed, asserted or assessed in connection with or as a result of any such Tax Contest
that affects the liability of DHC or a member of the DHC Group under this Agreement without the
consent of DHC, not to be unreasonably withheld. DHC shall provide a response to a request for such
consent from Spinco within seven (7) Business Days following the receipt of such request. Subject
to Spinco’s rights under this Section 5.03, upon request by DHC, DHC shall, at its own expense, be
allowed to participate in the handling of any such Tax Contest with respect to any item that may
affect the liability of DHC or any member of the DHC Group, as the case may be, under this
Agreement.

     5.04 Third-Party Claims. To the extent not inconsistent with any specific term of this
Agreement, the procedures set forth in Section 5.1 of the Reorganization Agreement shall apply in
relevant part to any Third-Party Claim.

ARTICLE VI

COOPERATION

     Except as otherwise provided herein, each Party shall fully cooperate, and shall cause all
members of such Party’s Group to fully cooperate, with the other Parties in connection with the
preparation and filing of any Tax Return or the conduct of any Tax Contest (including, where
appropriate or necessary, providing a power of attorney) concerning any issues or any other matter
contemplated under this Agreement. Each Party shall make its employees and facilities available on
a mutually convenient basis to facilitate such cooperation.

ARTICLE VII

RETENTION OF RECORDS; ACCESS; CONFIDENTIALITY

     7.01 Retention of Records; Access.

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          (a) For so long as the contents thereof may become material in the administration of any
matter under applicable Tax law, but in any event until the later of (x) the expiration of any
applicable statutes of limitation and (y) seven (7) years after the Distribution Date, the Parties
shall (i) retain records, documents, accounting data and other information (including computer
data) necessary for the preparation and filing of all Tax Returns in respect of Taxes of any member
of either the DHC Group or the Spinco Group for any Pre-Distribution Period or any
Post-Distribution Period or for any Tax Contests relating to such Tax Returns, and (ii) give to the
other Parties reasonable access to such records, documents, accounting data and other information
(including computer data), or relevant portion thereof, and to its personnel and premises, for the
purpose of the review or audit of such Tax Returns to the extent relevant to an obligation or
liability of a Party under this Agreement or for purposes of the preparation or filing of any such
Tax Return, the conduct of any Tax Contest or any other matter reasonably and in good faith related
to the Tax affairs of the requesting Party.

          (b) At any time after the Distribution Date that the DHC Group proposes to destroy such
materials or information, it shall first notify the Spinco Group in writing and the Spinco Group
shall be entitled to receive such materials or information proposed to be destroyed that relate to
any member of the Spinco Group or the Spinco Assets and Business for any Pre-Distribution Period.
At any time after the Distribution Date that the Spinco Group proposes to destroy such materials or
information, it shall first notify the DHC Group in writing and the DHC Group shall be entitled to
receive such materials or information proposed to be destroyed.

     7.02 Confidentiality. Each Party shall hold and cause its directors, officers, employees,
advisors and consultants to hold in strict confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of its counsel, by other requirements of law, all
information (other than any such information relating solely to the business or affairs of such
Party) concerning the other Party hereto furnished to it by such other Party or its representatives
pursuant to this Agreement (except to the extent that such information can be shown to have been
(x) in the public domain through no fault of such Party, (y) later lawfully acquired from other
sources not known to be under the duty of confidentiality by the Party to which it was furnished,
or (z) independently developed), and each Party shall not release or disclose such information to
any other Person, except its directors, officers, employees, auditors, attorneys, financial
advisors, bankers and other consultants who shall be advised of and agree to be bound by the
provisions of this Section 7.02. Each Party shall be deemed to have satisfied its obligations to
hold confidential information concerning or supplied by the other Party if it exercises the same
care as it takes to preserve confidentiality for its own similar information.

ARTICLE VIII

DISPUTE RESOLUTION

     In the event of any disagreement arising under this Agreement, including any dispute in
connection with a claim by a third party (a “Dispute”), the Parties shall promptly

16

 

notify the chief financial officer of each of DHC and Spinco (each, a “CFO” and,
together, the “CFOs”) of such Dispute, who together shall attempt in good faith to resolve
such Dispute. If such Dispute is not resolved within seven (7) Business Days following the date on
which the CFOs receive notification, the Parties to such Dispute shall jointly retain an
independent, nationally recognized law or accounting firm (the “Tax Advisor”) to act as an
arbitrator in order to resolve the Dispute. The Tax Advisor’s determination as to any Dispute shall
be made in accordance with the terms of this Agreement and shall be final and binding on the
Parties and not subject to collateral attack for any reason (other than manifest error). All fees
and expenses of the Tax Advisor shall be shared equally by each of the Parties to the Dispute.

ARTICLE IX

MISCELLANEOUS PROVISIONS

     9.01 Governing Law. THIS AGREEMENT AND THE LEGAL RELATIONS AMONG THE PARTIES HERETO SHALL BE
GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE
OF COLORADO APPLICABLE TO CONTRACTS MADE AND PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
CHOICE OR CONFLICT OF LAWS PROVISIONS OR RULES THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
OTHER JURISDICTION.

     9.02 Application To Present And Future Subsidiaries. This Agreement is being entered into by DHC
and Spinco on behalf of themselves and the members of their respective Groups. This Agreement shall
constitute a direct obligation of each such entity and shall be deemed to have been readopted and
affirmed on behalf of any entity that becomes a Subsidiary of DHC or Spinco in the future.

     9.03 Binding Effect; Benefit; Successors. This Agreement shall inure to the benefit of and be
binding upon the Parties hereto and their respective successors (including, but not limited to, any
successor of DHC or Spinco succeeding to the Tax attributes of such Party under Section 381 of the
Code), to the same extent as if such successor had been an original party hereto.

     9.04 Further Assurances. Subject to the provisions hereof, the Parties hereto shall make,
execute, acknowledge and deliver such other instruments and documents, and take all such other
actions, as may be reasonably required in order to effectuate the purposes of this Agreement and to
consummate the transactions contemplated hereby.

     9.05 Survival; Termination. Notwithstanding any other provision of this Agreement to the
contrary, all representations, warranties, covenants and obligations contained in this Agreement
shall survive for the term of this Agreement, notwithstanding any investigation by the Parties or
the consummation of the Distribution, the transactions contemplated by the DHC/ANPP Transaction
Agreement or any other transaction contemplated hereby. This Agreement shall terminate at such time
as all obligations and liabilities of the Parties have been satisfied. The obligations and
liabilities of the Parties arising under this Agreement shall continue

17

 

in full force and effect until all such obligations have been met and such liabilities have been
paid in full, whether by expiration of time, operation of law, or otherwise.

     9.06 Reorganization Agreement. To the extent not inconsistent with any specific term of this
Agreement, the provisions of the Reorganization Agreement shall apply in relevant part to this
Agreement, including 4.1(b) Authorization and Validity of Agreement; 5.3 Specific Performance; 8.2
No Third-Party Rights; 8.3 Notices; 8.4 Complete Agreement; 8.5 Amendment, Modification or Waiver;
8.8 Severability; 8.9 Headings.

*          *          *

REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

18

 

     IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the day and
year first above written.

	 	 	 	 	 
	 	DISCOVERY HOLDING COMPANY

 	 
	 	By:  	/s/ Charles Y. Tanabe
 	 
	 	 	Name:  	Charles Y. Tanabe 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	DISCOVERY COMMUNICATIONS, INC.

 	 
	 	By:  	/s/ Charles Y. Tanabe
 	 
	 	 	Name:  	Charles Y. Tanabe 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	ASCENT MEDIA CORPORATION

 	 
	 	By:  	/s/ William E. Niles
 	 
	 	 	Name:  	William E. Niles 	 
	 	 	Title:  	Executive Vice President & Secretary 	 
	 
	 	ASCENT MEDIA GROUP, LLC

 	 
	 	By:  	/s/ William E. Niles
 	 
	 	 	Name:  	William E. Niles 	 
	 	 	Title:  	Executive Vice President & Secretary 	 
	 
	 	CSS STUDIOS, LLC

 	 
	 	By:  	/s/ William E. Niles
 	 
	 	 	Name:  	William E. Niles 	 
	 	 	Title:  	Executive Vice President & Secretary

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