MASTER SEPARATION AND DISTRIBUTION AGREEMENT BETWEEN CLEAR CHANNEL COMMUNICATIONS, INC. AND CCE SPINCO, INC. Dated ______ __, 2005
Exhibit 2.1
BETWEEN
CLEAR CHANNEL COMMUNICATIONS, INC.
AND
Dated ______ __, 2005
TABLE OF CONTENTS
Page | ||||||
ARTICLE I DEFINITIONS | 2 | |||||
1.1 |
Certain Definitions | 2 | ||||
1.2 |
Other Terms | 7 | ||||
ARTICLE II THE CONTRIBUTION | 9 | |||||
2.1 |
Transfer of Entertainment Assets; Assumption of Entertainment Liabilities | 9 | ||||
2.2 |
Entertainment Assets | 10 | ||||
2.3 |
Entertainment Liabilities | 11 | ||||
2.4 |
Termination of Agreements | 12 | ||||
2.5 |
Governmental Approvals and Consents; Delayed Transfer Assets and Liabilities | 13 | ||||
2.6 |
Novation of Assumed Entertainment Liabilities | 15 | ||||
2.7 |
Novation of Liabilities other than Entertainment Liabilities | 15 | ||||
2.8 |
Transfers of Assets and Assumption of Liabilities | 16 | ||||
2.9 |
Transfer of Excluded Assets by Entertainment; Assumption of Excluded Liabilities by CCU | 17 | ||||
2.10 |
DISCLAIMER OF REPRESENTATIONS AND WARRANTIES | 18 | ||||
ARTICLE III CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION | 19 | |||||
3.1 |
Time and Place of Distribution | 19 | ||||
3.2 |
Pre-Distribution Transactions | 19 | ||||
3.3 |
Related Transactions | 20 | ||||
3.4 |
Certificate of Incorporation, Bylaws and Rights Plan | 20 | ||||
ARTICLE IV THE DISTRIBUTION | 20 | |||||
4.1 |
Sole Discretion of CCU | 20 | ||||
4.2 |
The Distribution | 21 | ||||
4.3 |
Actions in Connection with the Distribution | 21 | ||||
4.4 |
Conditions to Distribution | 22 | ||||
4.5 |
Fractional Shares | 23 | ||||
ARTICLE V FINANCIAL AND OTHER COVENANTS | 24 | |||||
5.1 |
Auditors and Audits; Annual Statements and Accounting | 24 | ||||
5.2 |
Agreement for Exchange of Information; Archives | 25 | ||||
5.3 |
Ownership of Information | 26 |
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TABLE OF CONTENTS
(continued)
(continued)
Page | ||||||
5.4 |
Compensation for Providing Information | 26 | ||||
5.5 |
Record Retention | 27 | ||||
5.6 |
Liability | 27 | ||||
5.7 |
Other Agreements Providing for Exchange of Information | 27 | ||||
5.8 |
Production of Witnesses; Records; Cooperation | 27 | ||||
5.9 |
Privilege | 29 | ||||
ARTICLE VI RELEASE; INDEMNIFICATION | 29 | |||||
6.1 |
Release of Pre-Distribution Claims | 29 | ||||
6.2 |
General Indemnification by Entertainment | 31 | ||||
6.3 |
General Indemnification by CCU | 32 | ||||
6.4 |
Contribution | 33 | ||||
6.5 |
Indemnification Obligations Net of Insurance Proceeds and Other Amounts on an After-Tax Basis | 34 | ||||
6.6 |
Procedures for Indemnification of Third Party Claims | 34 | ||||
6.7 |
Additional Matters | 35 | ||||
6.8 |
Remedies Cumulative; Limitations of Liability | 36 | ||||
6.9 |
Survival of Indemnities | 37 | ||||
ARTICLE VII OTHER AGREEMENTS | 37 | |||||
7.1 |
Further Assurances | 37 | ||||
7.2 |
Confidentiality | 38 | ||||
7.3 |
Litigation | 40 | ||||
7.4 |
Insurance Matters | 41 | ||||
7.5 |
Allocation of Costs and Expenses | 43 | ||||
7.6 |
Tax Matters | 43 | ||||
7.7 |
Trademarks and Trade Names | 43 | ||||
ARTICLE VIII DISPUTE RESOLUTION | 44 | |||||
8.1 |
General Provisions | 44 | ||||
8.2 |
Consideration by Senior Executives | 45 | ||||
8.3 |
Mediation | 45 | ||||
8.4 |
Arbitration | 45 |
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TABLE OF CONTENTS
(continued)
(continued)
Page | ||||||
ARTICLE IX MISCELLANEOUS | 46 | |||||
9.1 |
Corporate Power; Fiduciary Duty | 46 | ||||
9.2 |
Governing Law | 47 | ||||
9.3 |
Survival of Covenants | 47 | ||||
9.4 |
Force Majeure | 47 | ||||
9.5 |
Notices | 47 | ||||
9.6 |
Severability | 48 | ||||
9.7 |
Entire Agreement | 48 | ||||
9.8 |
Assignment; No Third-Party Beneficiaries | 48 | ||||
9.9 |
Public Announcements | 49 | ||||
9.10 |
Amendment | 49 | ||||
9.11 |
Rules of Construction | 49 | ||||
9.12 |
Counterparts | 49 | ||||
9.13 |
Termination | 49 |
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EXHIBITS
A
|
Form of Transition Services Agreement | |
B
|
Form of Tax Matters Agreement | |
C
|
Form of Employee Matters Agreement | |
D
|
Form of Trademark and Copyright License Agreement | |
E
|
Form of Amended and Restated Certificate of Incorporation | |
F
|
Form of Amended and Restated Bylaws | |
G
|
Form of Rights Agreement |
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SCHEDULES
Schedule 1.1(a)
|
Supply and Vendor Contracts | |
Schedule 1.1(d)
|
Entertainment Contracts | |
Schedule 2.1(b)
|
Delayed Transfer Assets | |
Schedule 2.2(a)(i)
|
Entertainment Assets | |
Schedule 2.2(b)(i)
|
Excluded Assets | |
Schedule 2.2(b)(ii)
|
Excluded Contracts | |
Schedule 2.3(a)(i)
|
Entertainment Liabilities | |
Schedule 2.3(b)(iii)
|
Excluded Liabilities | |
Schedule 2.4(b)(ii)
|
Continuing Agreements | |
Schedule 3.5
|
Board Nominees | |
Schedule 4.3(e)
|
Remaining Shared Employees | |
Schedule 6.2
|
Statements in Prospectus Provided by CCU | |
Schedule 7.3(a)
|
Assumed Actions | |
Schedule 7.3(b)
|
Transferred Actions | |
Schedule 8.1
|
Transaction Documents — Dispute Resolution |
-v-
This MASTER SEPARATION AND DISTRIBUTION AGREEMENT, dated [___], 2005 (this
“Agreement”), is made between Clear Channel Communications, Inc., a Texas corporation
(“CCU”), and CCE Spinco, Inc., a Delaware corporation and as of the date hereof, a
wholly-owned subsidiary of CCU (“Entertainment”). Certain capitalized terms used in this
Agreement are defined in Section 1.1 and the definitions of the other capitalized terms
used in this Agreement are cross-referenced in Section 1.2.
W I T N E S S E T H:
WHEREAS, the board of directors of CCU has determined that it is appropriate and desirable for
CCU to separate the Entertainment Group from CCU;
WHEREAS, in connection with the separation of the Entertainment Group from CCU, (a) CCU
desires to contribute, assign or otherwise transfer, and to cause certain of its Subsidiaries to
contribute, assign or otherwise transfer, to Entertainment and certain of Entertainment’s
Subsidiaries, certain Assets and Liabilities associated with the Entertainment Business, including
the stock or other equity interests of certain of CCU’s Subsidiaries dedicated to the Entertainment
Business, and (b) Entertainment desires to contribute, assign or otherwise transfer, and to cause
certain of its Subsidiaries to contribute, assign or otherwise transfer, to CCU and certain of
CCU’s Subsidiaries, certain Assets and Liabilities that are not associated with the Entertainment
Business (collectively, the “Contribution”);
WHEREAS, after the Contribution, CCU intends to divest all of its ownership interest in
Entertainment through a distribution of outstanding shares of Entertainment Common Stock to the
holders of common stock of CCU, without any consideration being paid by the CCU shareholders,
pursuant to the terms and subject to the conditions of this Agreement (the “Distribution”);
WHEREAS, CCU has filed with the SEC a registration statement on Form 10 pursuant to the
Exchange Act in connection with the Distribution (the “Form 10”);
WHEREAS, in connection with and prior to the Distribution, CCU will contribute to the capital
of the member of the Entertainment Group that is a wholly-owned
subsidiary of CCU on the date hereof (the “Capital Contribution”) $[___] million of the approximately $[___]
billion of intercompany indebtedness owed by such member of the Entertainment Group to CCU (the “Intercompany
Debt”);
WHEREAS, in connection with and prior to
the Distribution and following
the Capital Contribution, a member of the Entertainment Group will
issue (a) Series A voting
redeemable preferred stock to third-party investors for aggregate net cash proceeds of no less than
$20 million (the “Series A Preferred Stock
Issuance”), and (b) Series B non-voting
redeemable preferred stock to CCU in part consideration for CCU’s contribution of common stock of a
Subsidiary to such member of the Entertainment Group (the “Series B Preferred Stock
Issuance”) and immediately thereafter, CCU will sell such Series B non-voting preferred stock
to
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a third-party investor for aggregate net cash proceeds of no less than $20 million (the
“Series B Preferred Stock Sale”);
WHEREAS, in connection with and prior to or concurrently with the Distribution
and following the Capital Contribution, a member of the Entertainment
Group will enter into a senior secured revolving and term loan credit
facility of up to $[ ] million in the
aggregate (the “Credit Facility”);
WHEREAS, in connection with and prior to or concurrently with the Distribution, with
borrowings under the Credit Facility and the net cash proceeds of the Series A Preferred Stock
Issuance, the Entertainment Group will pay to CCU the remaining balance of the Intercompany Debt;
WHEREAS, it is appropriate and desirable to set forth the principal corporate transactions
required to effect the Contribution, the Distribution and certain other agreements that will,
following the consummation of the Distribution, govern certain matters relating to the relationship
of CCU, Entertainment and their respective Groups; and
WHEREAS, the terms and conditions set forth herein have not resulted from arms length
negotiations between the parties because of the context of CCU’s and Entertainment’s parent
-Subsidiary relationship, and accordingly, such terms and conditions may be in some respects less
favorable to Entertainment than those it could obtain from unaffiliated third parties.
NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
DEFINITIONS
1.1 Certain Definitions.
For purposes of this Agreement, the following terms shall have the meanings specified in this
Section 1.1:
“Action” means any demand, action, claim, dispute, suit, countersuit, arbitration,
inquiry, proceeding or investigation by or before any federal, state, local, foreign or
international Governmental Authority or any arbitration or mediation tribunal.
“Affiliate” (and, with a correlative meaning, “affiliated”) means, with
respect to any Person, any direct or indirect Subsidiary of such Person, and any other Person that
directly, or through one or more intermediaries, controls or is controlled by or is under common
control with such first Person; provided, however, that from and after the
Distribution Date, no member of the Entertainment Group shall be deemed an Affiliate of any member
of the CCU Group for purposes of this Agreement and the Transaction Documents and no member of the
CCU Group shall be deemed an Affiliate of any member of the Entertainment Group for purposes of
this Agreement and the Transaction Documents. As used in this definition, “control”
(including with correlative meanings, “controlled by” and “under common control
with”) means possession, directly or indirectly, of power to direct or cause the direction of
management or policies, or the power to appoint and remove a majority of directors (whether through
ownership of securities or partnership or other ownership interests, by contract or otherwise), of
a Person.
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“Assets” means, with respect to any Person, the assets, properties and rights
(including goodwill) of such Person, wherever located (including in the possession of vendors or
other third parties or elsewhere), whether real, personal or mixed, tangible, intangible or
contingent, in each case whether or not recorded or reflected or required to be recorded or
reflected on the books and records or financial statements of such Person, including the following:
(a) all interests in any capital stock, equity interests or capital or profit interests of any
Subsidiary or any other Person, all bonds, notes, debentures or other securities issued by any
Subsidiary or any other Person, all loans, advances or other extensions of credit or capital
contributions to any Subsidiary or any other Person and all other investments in securities of any
Person;
(b) all apparatus, computers and other electronic data processing equipment, fixtures,
machinery, equipment, furniture, office equipment, automobiles, trucks, vessels, motor vehicles and
other transportation equipment and other tangible personal property;
(c) all interests in real property of whatever nature, including easements, whether as owner,
mortgagee or holder of a Security Interest in real property, lessor, sublessor, lessee, sublessee
or otherwise;
(d) all accounting and other books, records and files whether in paper, microfilm, microfiche,
computer tape or disc, magnetic tape or any other form;
(e) all license agreements, leases of personal property, open purchase orders for supplies,
parts or services and other contracts, agreements or commitments;
(f) all deposits, letters of credit and performance and surety bonds;
(g) all written technical information, data, specifications, research and development
information, engineering drawings, operating and maintenance manuals, and materials and analyses
prepared by consultants and other third parties;
(h) all domestic and foreign intangible personal property, patents, copyrights, trade names,
trademarks, service marks and registrations and applications for any of the foregoing, mask works,
trade secrets, inventions, designs, ideas, improvements, works of authorship, recordings, other
proprietary and confidential information and licenses from third Persons granting the right to use
any of the foregoing;
(i) all computer applications, programs and other software, including operating software,
network software firmware, middleware, design software, design tools, systems documentation and
instructions;
(j) all cost information, sales and pricing data, customer prospect lists, supplier records,
customer and supplier lists, customer and vendor data, correspondence and lists, product
literature, artwork, design, formulations and specifications, quality records and reports and other
books, records, studies, surveys, reports, plans and documents;
(k) all prepaid expenses, trade accounts and other accounts and notes receivables;
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(l) all rights under contracts or agreements, all claims or rights against any Person arising
from the ownership of any Asset, all rights in connection with any bids or offers and all claims,
choses in action or similar rights, whether accrued or contingent;
(m) all rights under insurance policies and all rights in the nature of insurance,
indemnification or contribution;
(n) all licenses, permits, approvals and authorizations which have been issued by any
Governmental Authority;
(o) cash or cash equivalents, bank accounts, lock boxes and other deposit arrangements; and
(p) interest rate, currency, commodity or other swap, collar, cap or other hedging or similar
agreements or arrangements.
“CCU Common Stock” means the issued and outstanding common stock of CCU, $0.10 par
value per share.
“CCU Group” means CCU and each Person (other than a member of the Entertainment Group)
that is an Affiliate of CCU immediately following the Distribution.
“Code” means the Internal Revenue Code of 1986, as amended.
“Consent” means any consent, waiver or approval from, or notification requirement to,
any third parties.
“Delayed Transfer Assets” means any Entertainment Assets that are expressly provided
in this Agreement or any Transaction Document to be transferred after the Contribution.
“Delayed Transfer Liabilities” means any Entertainment Liabilities that are expressly
provided in this Agreement or any Transaction Document to be assumed after the Contribution.
“Effective Date” means [___], 2005, or with respect to any specific
Entertainment Asset or Entertainment Liability, the effective date otherwise specified in the
applicable CCU Transfer Document.
“Entertainment Balance Sheet” means Entertainment’s unaudited Pro Forma Combined
Statement of Financial Position as of June 30, 2005 included in the Form 10.
“Entertainment Business” means the current businesses of the Entertainment Group,
including the business of promoting and producing, and operating venues for, live entertainment
events, including music concerts, theatrical performances and specialized motor sports, as
described in the Form 10.
“Entertainment Common Stock” means the common stock, $0.01 par value per share, of
Entertainment, with the rights, terms and privileges set forth in the Charter.
-4-
“Entertainment Contracts” means the following contracts and agreements to which CCU or
any of its Subsidiaries is a party or by which CCU or any of its Subsidiaries or any of their
respective Assets is bound, whether or not in writing, except for any such contract or agreement
that is contemplated to be retained by CCU or any member of the CCU Group pursuant to any provision
of this Agreement or any Transaction Document:
(a) any supply or vendor contracts or agreements listed or described on Schedule
1.1(a) (and the applicable licenses, leases, addendums and similar arrangements thereunder);
(b) any contract or agreement entered into in the name of, or expressly on behalf of, any
division, business unit or member of the Entertainment Group;
(c) any contract or agreement, including any joint venture agreement, that is used exclusively
or held for use exclusively in the Entertainment Business;
(d) the contracts, agreements and other documents listed or described on Schedule
1.1(d) (and the applicable licenses, leases, addendums and similar arrangements thereunder;
(e) any guarantee, indemnity, representation, warranty or other Liability of any member of the
Entertainment Group or the CCU Group in respect of (i) any other Entertainment Contract, (ii) any
Entertainment Asset or Entertainment Liability or (iii) the Entertainment Business; and
(f) any contract or agreement that is otherwise expressly contemplated pursuant to this
Agreement or any of the Transaction Documents to be assigned to Entertainment or any member of the
Entertainment Group in connection with the Contribution.
“Entertainment Group” means Entertainment and each Person (other than a member of the
CCU Group) that is an Affiliate of Entertainment immediately following the Distribution;
provided that any Delayed Transfer Asset that is transferred to Entertainment at
any time following the Distribution shall, to the extent applicable, and from and after the
Distribution, be considered part of the Entertainment Group for all purposes of this Agreement.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC thereunder, all as the same shall be in effect at the time that
reference is made thereto.
“Force Majeure” means, with respect to a party, an event beyond the control of such
party (or any Person acting on its behalf), which by its nature could not have been foreseen by
such party (or such Person), or, if it could have been foreseen, was unavoidable, and includes,
without limitation, acts of God, storms, floods, riots, fires, sabotage, civil commotion or civil
unrest, interference by civil or military authorities, acts of war (declared or undeclared) or
armed hostilities or other national or international calamity or one or more acts of terrorism or
failure of energy sources or distribution facilities.
“GAAP” means United States generally accepted accounting principles.
-5-
“Governmental Approvals” means any notice, report or other filing to be made with, or
any consent, registration, approval, permit or authorization to be obtained from, any Governmental
Authority.
“Governmental Authority” means any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government, including any
governmental authority, agency, department, board, commission or instrumentality, whether federal,
state, local or foreign (or any political subdivision thereof), and any tribunal, court or
arbitrator(s) of competent jurisdiction.
“Group” means the CCU Group or the Entertainment Group, as the context requires.
“Information” means information, whether or not patentable or copyrightable, in
written, oral, electronic or other tangible or intangible form, stored in any medium, including
studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts,
know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes,
samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other
software, marketing plans, customer names, communications by or to attorneys (including
attorney-client privileged communications), memoranda and other materials prepared by attorneys or
under their direction (including attorney work product), and other technical, financial, employee
or business information or data.
“Insurance Proceeds” means those monies: (a) received by an insured from an insurance
carrier; (b) paid by an insurance carrier on behalf of the insured; or (c) received (including by
way of setoff) from any third party in the nature of insurance, contribution or indemnification in
respect of any Liability; in any such case net of any applicable premium adjustments (including
reserves and retrospectively rated premium adjustments) and net of any costs or expenses incurred
in the collection thereof.
“IP Application” means any application for the registration, acquisition or perfection
of intellectual property rights, including patent applications, copyright applications and
trademark applications.
“Law” means any federal, state, local or foreign law (including common law), statute,
code, ordinance, rule, regulation or other requirement enacted, promulgated, issued or entered by a
Governmental Authority.
“Liabilities” means any debt, loss, damage, adverse claim, liability or obligation of
any Person (whether direct or indirect, known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due, and whether
in contract, tort, strict liability or otherwise), and including all costs and expenses relating
thereto.
“NYSE” means the New York Stock Exchange, Inc.
“Person” means any individual, corporation, partnership, limited liability company,
firm, joint venture, association, joint-stock company, trust, unincorporated organization,
Governmental Authority or other entity.
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“Record Date” means the close of business on the date determined by CCU’s board of
directors as the record date for determining the shareholders of CCU entitled to receive
Entertainment Common Stock pursuant to the Distribution.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC thereunder, all as the same shall be in effect at the time that reference is
made thereto.
“Security Interest” means any mortgage, security interest, pledge, lien, charge,
claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition,
easement, encroachment, restriction on transfer (other than restrictions on transfer imposed by
federal and/or state securities laws), or other encumbrance of any nature whatsoever.
“Subsidiary” or “subsidiary” means, with respect to any Person, any
corporation, limited liability company, joint venture or partnership of which such Person (a)
beneficially owns, either directly or indirectly, more than fifty percent (50%) of (i) the total
combined voting power of all classes of voting securities of such entity, (ii) the total combined
equity interests, or (iii) the capital or profit interests, in the case of a partnership; or (b)
otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a
majority of the board of directors or similar governing body.
“Tax” means all federal, state, provincial, territorial, municipal, local or foreign
income, profits, franchise, gross receipts, environmental (including taxes under Code Section 59A),
customs, duties, net worth, sales, use, goods and services, withholding, value added, ad valorem,
employment, social security, disability, occupation, pension, real property, personal property
(tangible and intangible), stamp, transfer, conveyance, severance, production, excise, premium,
retaliatory and other taxes, withholdings, duties, levies, imposts, guarantee fund assessments and
other similar charges and assessments (including any and all fines, penalties and additions
attributable to or otherwise imposed on or with respect to any such taxes, charges, fees, levies or
other assessments, and interest thereon) imposed by or on behalf of any Taxing Authority, in each
case whether such Tax arises by Law, contract, agreement or otherwise.
“Taxing Authority” means any Governmental Authority exercising any authority to
impose, regulate, levy, assess or administer the imposition of any Tax.
“Transactions” means, collectively, (a) the Contribution, (b) the Distribution, (c)
the Credit Facility, (d) the Series A Preferred Stock Issuance, (e) the Series B Preferred Stock
Issuance, (f) the Series B Preferred Stock Sale, (g) the repayment by the Entertainment Group of a
portion of the Intercompany Debt, (h) the Capital Contribution, and (i) all other transactions
contemplated by this Agreement or any other Transaction Document.
1.2 Other Terms. For purposes of this Agreement, the following terms have the
meanings set forth in the sections indicated.
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Term | Section | |
After-Tax Basis |
6.5(c) | |
Agreement |
Preamble | |
Assumed Actions |
7.3(a) | |
Bylaws |
3.4 | |
Capital Contribution |
Recitals | |
CCU |
Preamble | |
CCU Annual Statements |
5.1(b) | |
CCU Auditors |
5.1(b) | |
CCU Confidential Information |
7.2(b) | |
CCU Indemnified Parties |
6.2 | |
CCU Policies |
7.4(b) | |
CCU Transfer Documents |
2.8 | |
Charter |
3.4 | |
Contribution |
Recitals | |
CPR |
8.3 | |
CPR Arbitration Rules |
8.4(a) | |
Credit Facility |
Recitals | |
Dispute |
8.1(a) | |
Distribution |
Recitals | |
Distribution Agent |
4.2 | |
Distribution Date |
3.1 | |
Employee Matters Agreement |
3.2(b)(iii) | |
Entertainment |
Preamble | |
Entertainment Annual Statement |
5.1(b) | |
Entertainment Assets |
2.2(a) | |
Entertainment Auditors |
5.1(a) | |
Entertainment Confidential Information |
7.2(a) | |
Entertainment Indemnified Parties |
6.3 | |
Entertainment Liabilities |
2.3(a) | |
Entertainment Transfer Documents |
2.9(a)(iii) | |
Excluded Assets |
2.2(b) | |
Excluded Liabilities |
2.3(b) | |
Existing Actions |
7.3(c) | |
Form 10 |
Recitals | |
Indemnified Party |
6.5(a) | |
Indemnifying Party |
6.5(a) | |
Indemnity Payment |
6.5(a) | |
Initial Notice |
8.2 | |
Insurance Charges |
7.4(e)(iii) | |
Intellectual Property License Agreement |
3.2(b)(iv) | |
Intercompany Debt |
Recitals | |
Privilege |
5.9 | |
Representatives |
7.2(a) | |
Response |
8.2 | |
Rights Agreement |
3.4 | |
Series A Preferred Stock Issuance |
Recitals |
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Term | Section | |
Series B Preferred Stock Issuance |
Recitals | |
Series B Preferred Stock Sale |
Recitals | |
Shared Employee |
4.3(e) | |
Tax Matters Agreement |
3.2(b)(ii) | |
Third Party Claim |
6.6(a) | |
Trademark License Agreement |
3.2(b)(iv) | |
Transaction Documents |
3.2(b) | |
Transfer Documents |
2.9(a)(iii) | |
Transferred Actions |
7.3(b) | |
Transition Services Agreement |
3.2(b)(i) |
ARTICLE II
THE CONTRIBUTION
THE CONTRIBUTION
2.1 Transfer of Entertainment Assets; Assumption of Entertainment Liabilities.
(a) The Contribution shall be effected in accordance with the terms and conditions of this
Agreement and the other Transfer Documents. On or before the Effective Date:
(i) CCU shall, and shall cause its applicable Subsidiaries to, contribute, assign, transfer,
convey and deliver to Entertainment or certain of its Subsidiaries designated by Entertainment,
and Entertainment or such applicable Subsidiaries shall accept from CCU and its applicable
Subsidiaries, all of CCU’s and such Subsidiaries’ respective rights, titles and interests in and
to all Entertainment Assets, other than the Delayed Transfer Assets, with such contributions,
assignments, transfers and conveyances being subject to the terms and conditions of this Agreement
and any applicable Transfer Documents; and
(ii) Entertainment shall, and shall cause its applicable domestic Subsidiaries to, accept,
assume and agree, on a several and not joint basis, to perform, discharge and fulfill all the
Entertainment Liabilities, other than the Delayed Transfer Liabilities, in accordance with their
respective terms. Entertainment and such Subsidiaries shall be responsible for all Entertainment
Liabilities assumed by it, regardless of when or where such Entertainment Liabilities arose or
arise, or whether the facts on which they are based occurred prior to or subsequent to the
Effective Date, regardless of where or against whom such Entertainment Liabilities are asserted or
determined (including any Entertainment Liabilities arising out of claims made by CCU’s or
Entertainment’s respective directors, officers, employees, agents, Subsidiaries or Affiliates
against any member of the CCU Group or the Entertainment Group) or whether asserted or determined
prior to the date hereof, and, except as set forth in Section 2.3(b)(iv), regardless of
whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or
misrepresentation by any member of the CCU Group or the Entertainment Group, or any of their past
or present respective directors, officers, employees, agents, Subsidiaries or Affiliates. Such
assumption of Entertainment Liabilities shall be subject to the terms and conditions of this
Agreement and any applicable Transfer Documents.
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(b) Each of the parties agrees that the Delayed Transfer Assets will be contributed, assigned,
transferred, conveyed and delivered, and the Delayed Transfer Liabilities will be accepted and
assumed, in accordance with the terms of the applicable Transaction Documents or as otherwise set
forth on Schedule 2.1(b). Notwithstanding the date on which any such Delayed Transfer
Asset is actually contributed, assigned, conveyed and delivered, or the date on which any such
Delayed Transfer Liability is actually accepted and assumed, such contribution, assignment,
transfer, conveyance and delivery of any Delayed Transfer Asset, or the acceptance and assumption
of any Delayed Transfer Liability, shall be deemed to have taken place on, and shall be effective
as of, the Distribution, and the applicable Delayed Transfer Asset or Delayed Transfer Liability
shall be treated for all purposes of this Agreement and the Transaction Documents as an
Entertainment Asset or an Entertainment Liability, as the case may be, from and after the
Distribution.
(c) If at any time or from time to time (whether prior to or after the Effective Date), any
party hereto (or any member of such party’s respective Group) shall receive or otherwise possess
any Asset that is allocated to any other Person pursuant to this Agreement or any Transaction
Document, such party shall promptly transfer, or cause to be transferred, such Asset to the Person
so entitled thereto. Prior to any such transfer, the Person receiving or possessing such Asset
shall hold such Asset in trust for any such other Person.
(d) Entertainment hereby waives compliance by each member of the CCU Group with the
requirements and provisions of the “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may
otherwise be applicable with respect to the transfer or sale of any or all of the Entertainment
Assets to any member of the Entertainment Group.
2.2 Entertainment Assets.
(a) Subject to Section 2.2(b), for purposes of this Agreement, “Entertainment
Assets” shall mean (without duplication):
(i) the Assets listed or described on Schedule 2.2(a)(i) and all other Assets that
are expressly provided by this Agreement or any Transaction Document as Assets to be transferred
by CCU and other members of the CCU Group to Entertainment or another designated member of the
Entertainment Group;
(ii) all Entertainment Contracts;
(iii) all Assets reflected as Assets of Entertainment and its Subsidiaries in the
Entertainment Balance Sheet, other than any dispositions of such Assets subsequent to the date of
the Entertainment Balance Sheet; and
(iv) any and all Assets owned or held immediately prior to the Effective Date by CCU or any
of its Subsidiaries that are used exclusively in the Entertainment Business. The intention of
this clause (iv) is only to rectify any inadvertent omission of transfer or conveyance of
any Asset that, had the parties given specific consideration to such Asset as of the date hereof,
would have otherwise been classified as an Entertainment Asset.
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(b) Notwithstanding the foregoing, the Entertainment Assets shall not in any event include the
Excluded Assets. For purposes of this Agreement, “Excluded Assets” shall mean Assets not
used exclusively in the Entertainment Business, including, without limitation:
(i) the Assets listed or described on Schedule 2.2(b)(i);
(ii) the contracts and agreements listed or described on Schedule 2.2(b)(ii); and
(iii) any and all Assets that are expressly contemplated by this Agreement or any Transaction
Document as either Assets to be retained by CCU or any other member of the CCU Group, or Assets
that are to be transferred by Entertainment or any other member of the Entertainment Group to CCU
or a designated member of the CCU Group.
2.3 Entertainment Liabilities.
(a) Subject to Section 2.3(b), for purposes of this Agreement, “Entertainment
Liabilities” shall mean (without duplication):
(i) the Liabilities listed or described on Schedule 2.3(a)(i) and all other
Liabilities that are expressly provided by this Agreement or any Transaction Document as
Liabilities to be assumed by Entertainment or any other member of the Entertainment Group, and all
agreements, obligations and Liabilities of Entertainment or any other member of the Entertainment
Group under this Agreement or any of the Transaction Documents;
(ii) all Liabilities, including any employee-related Liabilities relating to, arising out of
or resulting from:
(A) the operation of the Entertainment Business, as conducted at any time before, on or after
the Effective Date (including any Liability relating to, arising out of or resulting from any act
or failure to act by any director, officer, employee, agent or representative (whether or not such
act or failure to act is or was within such Person’s authority));
(B) the operation of any business conducted by any member of the Entertainment Group at any
time after the Effective Date (including any Liability relating to, arising out of or resulting
from any act or failure to act by any director, officer, employee, agent or representative (whether
or not such act or failure to act is or was within such Person’s authority)); or
(C) any Entertainment Assets (including any Entertainment Contracts and any real property and
leasehold interests), in any such case whether arising before, on or after the Effective Date;
(iii) all Liabilities reflected as liabilities or obligations of Entertainment or its
Subsidiaries in the Entertainment Balance Sheet;
(iv) all Liabilities related to Assumed Actions and Existing Actions, as further provided in
Section 7.3;
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(v) all Liabilities related to any and all other Actions initiated on or after the
Distribution Date that arise out of or relate in any material respect to the operation of the
Entertainment Business or the ownership or use of the Entertainment Assets, in any such case
whether such Action arises before, on or after the Distribution Date, including any such Action in
which CCU or any member of the CCU Group is named as a defendant or party subject to any claim or
investigation;
(vi) all Liabilities for any payments to be made by any member of the CCU Group or any member
of the Entertainment Group pursuant to the terms and conditions of purchase agreements relating to
the acquisition of Entertainment Assets, including, without limitation, purchase price installment
payments based on the financial performance of the acquired Entertainment Asset subsequent to the
acquisition; and
(vii) all Liabilities arising out of claims made by CCU’s or Entertainment’s respective
directors, officers, employees, agents, Subsidiaries or Affiliates against any member of the CCU
Group or the Entertainment Group with respect to the Entertainment Business.
(b) Notwithstanding the foregoing, the Entertainment Liabilities shall not in any event
include the Excluded Liabilities. For purposes of this Agreement, “Excluded Liabilities”
shall mean (without duplication):
(i) any and all Liabilities that are expressly contemplated by this Agreement or any
Transaction Document as Liabilities to be retained or assumed by CCU or any other member of the
CCU Group (in each case other than Delayed Transfer Liabilities), and all agreements and
obligations of any member of the CCU Group under this Agreement or any of the Transaction
Documents;
(ii) any and all Liabilities of a member of the CCU Group relating solely to, arising solely
out of or resulting solely from any Excluded Assets;
(iii) the Liabilities listed on Schedule 2.3(b)(iii); and
(iv) any and all liabilities arising from a knowing violation of Law, fraud or
misrepresentation by any member of the CCU Group or any of their respective directors, officers,
employees or agents (other than any individual who at the time of such act was acting in his or
her capacity as a director, officer, employee or agent of any member of the Entertainment Group).
2.4 Termination of Agreements.
(a) Except as set forth in Section 2.4(b), Entertainment and each other member of the
Entertainment Group, on the one hand, and CCU and each other member of the CCU Group, on the other
hand, hereby terminate any and all agreements, arrangements, commitments or understandings, whether
or not in writing, between or among Entertainment or any other member of the Entertainment Group,
on the one hand, and CCU or any other member of the CCU Group, on the other hand, effective as of
the Effective Date. No such terminated agreement, arrangement, commitment or understanding
(including any provision thereof which purports to survive termination) shall be of any further
force or effect after the Effective Date. Each party
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shall, at the reasonable request of any other party, take, or cause to be taken, such other
actions as may be necessary to effect the foregoing.
(b) The provisions of Section 2.4(a) shall not apply to any of the following
agreements, arrangements, commitments or understandings (or to any of the provisions thereof):
(i) this Agreement and the Transaction Documents (and each other agreement or instrument
expressly contemplated by this Agreement or any Transaction Document to be entered into or
continued by either of the parties or any of the members of their respective Groups);
(ii) except to the extent redundant with any provision of or service provided under this
Agreement or any of the Transaction Documents (including any exhibits or schedules thereto), the
agreements, arrangements, commitments and understandings listed or described on Schedule
2.4(b)(ii);
(iii) any agreements, arrangements, commitments or understandings to which any Person other
than the parties and their respective Affiliates is a party (it being understood that to the
extent that the rights and obligations of the parties and the members of their respective Groups
under any such agreements, arrangements, commitments or understandings constitute Entertainment
Assets or Entertainment Liabilities, they shall be assigned pursuant to Section 2.1);
(iv) any accounts or notes payable or accounts or notes receivable between a member of the
CCU Group, on the one hand, and a member of the Entertainment Group, on the other hand, accrued as
of the Effective Date and reflected in the books and records of the parties or otherwise
documented in accordance with past practices;
(v) any agreements, arrangements, commitments or understandings to which any non-wholly-owned
Subsidiary of CCU or Entertainment, as the case may be, is a party; and
(vi) any other agreements, arrangements, commitments or understandings that this Agreement or
any Transaction Document expressly contemplates shall survive the Effective Date.
2.5 Governmental Approvals and Consents; Delayed Transfer Assets and Liabilities.
(a) To the extent that the Contribution requires any Governmental Approvals or Consents, the
parties will use commercially reasonable efforts to obtain such Governmental Approvals and
Consents; provided, however, that neither CCU nor Entertainment shall be obligated
to contribute capital in any form to any entity in order to obtain such Governmental Approvals and
Consents.
(b) If and to the extent that the valid, complete and perfected contribution, transfer or
assignment to the Entertainment Group of any Entertainment Assets or the assumption by the
Entertainment Group of any Entertainment Liabilities would be a violation of applicable Law or
require any Consent or Governmental Approval in connection with the Contribution or the
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Distribution, then, unless the parties mutually shall otherwise determine, the contribution,
transfer or assignment to the Entertainment Group of such Entertainment Assets or the assumption by
the Entertainment Group of such Entertainment Liabilities shall be automatically deemed deferred
and any such purported contribution, transfer, assignment or assumption shall be null and void
until such time as all legal impediments are removed or such Consents or Governmental Approvals
have been obtained. If and when the Consents and Governmental Approvals are obtained, the
contribution, transfer or assignment of the applicable Entertainment Asset or Entertainment
Liability shall be effected in accordance with the terms of this Agreement and/or the applicable
Transfer Document. Any such Liability shall be deemed a Delayed Transfer Liability. Any such
Asset shall be deemed a Delayed Transfer Asset and notwithstanding the foregoing, an Entertainment
Asset for purposes of determining whether any Liability is an Entertainment Liability.
(c) If any contribution, transfer or assignment of any Entertainment Asset intended to be
contributed, transferred or assigned hereunder or any assumption of any Entertainment Liability
intended to be assumed by the Entertainment Group hereunder is not consummated on the Effective
Date for any reason, then, insofar as reasonably possible, (i) the member of the CCU Group
retaining such Entertainment Asset shall thereafter hold such Entertainment Asset for the use and
benefit of the member of the Entertainment Group entitled thereto (at the expense of the member of
the Entertainment Group entitled thereto) and (ii) Entertainment shall, or shall cause the
applicable member of the Entertainment Group to, pay or reimburse the member of the CCU Group
retaining such Entertainment Liability for all amounts paid or incurred in connection with such
Entertainment Liability. In addition, the member of the CCU Group retaining such Entertainment
Asset shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat
such Entertainment Asset in the ordinary course of business in accordance with past practice and
take such other actions as may be reasonably requested by the Entertainment Group member to whom
such Entertainment Asset is to be transferred in order to place such Entertainment Group member in
the same position as if such Entertainment Asset had been transferred as contemplated hereby and so
that all the benefits and burdens relating to such Entertainment Asset, including possession, use,
risk of loss, potential for gain, and dominion, control and command over such Entertainment Asset,
is to inure from and after the Effective Date to the Entertainment Group.
(d) The Person retaining an Entertainment Asset or Entertainment Liability due to the deferral
of the transfer of such Entertainment Asset or the deferral of the assumption of such Entertainment
Liability shall not be obligated, in connection with the foregoing, to expend any money unless the
necessary funds are advanced (or otherwise made available) by the Person entitled to the
Entertainment Asset or the Person intended to be subject to the Entertainment Liability, other than
reasonable out-of-pocket expenses, attorneys’ fees and recording or similar fees, all of which
shall be promptly reimbursed by the Person entitled to such Entertainment Asset or the Person
intended to be subject to the Entertainment Liability.
2.6 Novation of Assumed Entertainment Liabilities.
(a) Each of CCU and Entertainment, at the request of the other, shall use commercially
reasonable efforts to obtain, or to cause to be obtained, any Consent, substitution or amendment
required to novate or assign all obligations under agreements, leases, licenses and
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other obligations or Liabilities of any nature whatsoever that constitute Entertainment
Liabilities, or to obtain in writing the unconditional release of all parties to such arrangements
(other than any member of the Entertainment Group), so that, in any such case, Entertainment and
the other members of the Entertainment Group will be solely responsible for such Entertainment
Liabilities; provided, however, that neither the CCU Group nor the Entertainment
Group shall be obligated to pay any consideration or assume any additional obligation therefor to
any third party from whom any such Consent, substitution or amendment is requested.
(b) If CCU or Entertainment is unable to obtain, or to cause to be obtained, any such required
Consent, release, substitution or amendment, the applicable member of the CCU Group shall continue
to be bound by such agreement, lease, license or other obligation that constitutes an Entertainment
Liability and, unless not permitted by Law or the terms thereof, as agent or subcontractor for such
member of the CCU Group, Entertainment shall, or shall cause a member of the Entertainment Group
to, pay, perform and discharge fully all the obligations or other Liabilities of members of the CCU
Group thereunder that constitute Entertainment Liabilities from and after the Effective Date.
Entertainment shall indemnify each CCU Indemnified Party, and hold each of them harmless against
any Liabilities arising in connection therewith; provided that Entertainment shall
have no obligation to indemnify any CCU Indemnified Party with respect to any matter to the extent
that such CCU Indemnified Party has engaged in any knowing violation of Law, fraud or
misrepresentation in connection therewith. CCU shall, without further consideration, promptly pay
and remit, or cause to be promptly paid or remitted, to Entertainment, all money, rights and other
consideration received by it or any member of the CCU Group in respect of such performance (unless
any such consideration is an Excluded Asset). If and when any such Consent, release, substitution
or amendment shall be obtained or such agreement, lease, license or other rights or obligations
shall otherwise become assignable or able to be novated, CCU shall thereafter assign, or cause to
be assigned, all rights and obligations of any member of the CCU Group thereunder and any other
Entertainment Liabilities thereunder to Entertainment or a designated member of the Entertainment
Group, without payment of further consideration and Entertainment, or a designated member of the
Entertainment Group, shall, without the payment of any further consideration, assume such
Entertainment Liabilities and rights.
2.7 Novation of Liabilities other than Entertainment Liabilities.
(a) Each of CCU and Entertainment, at the request of the other, shall use commercially
reasonable efforts to obtain, or to cause to be obtained, any Consent, substitution or amendment
required to novate or assign all obligations under agreements, leases, licenses and other
obligations or Liabilities for which a member of the CCU Group and a member of the Entertainment
Group are jointly or severally liable and that do not constitute Entertainment Liabilities, or to
obtain in writing the unconditional release of all parties to such arrangements (other than any
member of the CCU Group), so that, in any such case, the members of the CCU Group will be solely
responsible for such Liabilities; provided, however, that neither the CCU Group nor
the Entertainment Group shall be obligated to pay any consideration therefor to any third party
from whom any such Consent, substitution or amendment is requested.
(b) If CCU or Entertainment is unable to obtain, or to cause to be obtained, any such required
Consent, release, substitution or amendment, the applicable member of the
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Entertainment Group shall continue to be bound by such agreement, lease, license or other
obligation that does not constitute an Entertainment Liability and, unless not permitted by Law or
the terms thereof, as agent or subcontractor for such member of the Entertainment Group, CCU shall,
or shall cause a member of the CCU Group to, pay, perform and discharge fully all the obligations
or other Liabilities of such member of the Entertainment Group thereunder from and after the
Effective Date. CCU shall indemnify each Entertainment Indemnified Party and hold each of them
harmless against any Liabilities (other than Entertainment Liabilities) arising in connection
therewith; provided that CCU shall have no obligation to indemnify any
Entertainment Indemnified Party with respect to any matter to the extent that such Entertainment
Indemnified Party has engaged in any knowing violation of Law, fraud or misrepresentation in
connection therewith. Entertainment shall, without further consideration, promptly pay and remit,
or cause to be promptly paid or remitted, to CCU or to another member of the CCU Group specified by
CCU, all money, rights and other consideration received by it or any member of the Entertainment
Group in respect of such performance (unless any such consideration is an Entertainment Asset). If
and when any such Consent, release, substitution or amendment shall be obtained or such agreement,
lease, license or other rights or obligations shall otherwise become assignable or able to be
novated, Entertainment shall promptly assign, or cause to be assigned, all rights, obligations and
other Liabilities thereunder of any member of the Entertainment Group to CCU or to another member
of the CCU Group specified by CCU, without payment of any further consideration and CCU, or another
member of the CCU Group, without the payment of any further consideration, shall assume such rights
and Liabilities.
2.8 Transfers of Assets and Assumption of Liabilities.
In furtherance of the contribution, assignment, transfer and conveyance of Entertainment
Assets and the assumption of Entertainment Liabilities, on or before the Effective Date, (a) CCU
shall execute and deliver, and shall cause the other members of the CCU Group to execute and
deliver, such stock powers, merger certificates, bills of sale, certificates of title, assignments
of contracts and other instruments of contribution, transfer, conveyance and assignment as and to
the extent necessary to evidence the contribution, merger, transfer, conveyance and assignment of
all of the CCU Group’s right, title and interest in and to the Entertainment Assets to the
Entertainment Group, and (b) Entertainment shall execute and deliver, and shall cause the other
members of the Entertainment Group to execute and deliver, such assumptions of contracts and other
instruments of assumption as and to the extent necessary to evidence the valid and effective
assumption of the Entertainment Liabilities by the Entertainment Group. All of the foregoing
documents contemplated by this Section 2.8 shall be referred to collectively herein as the
“CCU Transfer Documents.”
2.9 Transfer of Excluded Assets by Entertainment; Assumption of Excluded Liabilities by
CCU.
(a) To the extent any Excluded Asset or Excluded Liability is transferred to a member of the
Entertainment Group in the Contribution or remains owned or held by a member of the Entertainment
Group after the Contribution, from and after the Effective Date:
(i) Entertainment shall, and shall cause the other members of the Entertainment Group to,
promptly contribute, assign, transfer, convey and deliver to CCU, or
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designated CCU Group members, and CCU or such CCU Group members shall accept from
Entertainment and its applicable Group members, all of Entertainment’s and such Group members’
respective rights, titles and interests in and to such Excluded Assets.
(ii) CCU and certain CCU Group members designated by CCU, shall promptly accept, assume and
agree to perform, discharge and fulfill all such Excluded Liabilities in accordance with their
respective terms.
(iii) In furtherance of the assignment, transfer and conveyance of Excluded Assets and the
assumption of Excluded Liabilities: (A) Entertainment shall execute and deliver, and shall cause
its Subsidiaries to execute and deliver, such bills of sale, stock powers, certificates of title,
assignments of contracts and other instruments of transfer, conveyance and assignment as and to
the extent necessary to evidence the transfer, conveyance and assignment of all of Entertainment’s
and its Subsidiaries’ right, title and interest in and to the Excluded Assets to CCU and its
Subsidiaries, and (B) CCU shall execute and deliver such assumptions of contracts and other
instruments of assumption as and to the extent necessary to evidence the valid and effective
assumption of the Excluded Liabilities by CCU. All of the foregoing documents contemplated by
this Section 2.9(a)(iii) shall be referred to collectively herein as the
“Entertainment Transfer Documents” and, together with the CCU Transfer Documents, the
“Transfer Documents.”
(iv) To the extent that the transfer of such Excluded Assets and the assumption of such
Excluded Liabilities requires any Governmental Approvals or Consents, the parties shall use
commercially reasonable efforts to obtain such Governmental Approvals and Consents;
provided, however, that neither CCU nor Entertainment shall be obligated to
contribute capital in any form to any entity in order to obtain such Governmental Approvals and
Consents.
(v) If and to the extent that the valid, complete and perfected transfer or assignment to the
CCU Group of any Excluded Assets or the assumption by the CCU Group of any Excluded Liabilities
would be a violation of applicable Law or require any Consent or Governmental Approval, then,
unless the parties mutually shall otherwise determine, the transfer or assignment to the CCU Group
of such Excluded Assets or the assumption by the CCU Group of such Excluded Liabilities shall be
automatically deemed deferred and any such purported transfer, assignment or assumption shall be
null and void until such time as all legal impediments are removed or such Consents or
Governmental Approvals have been obtained.
(b) If any transfer or assignment of any Excluded Asset intended to be transferred or assigned
hereunder or any assumption of any Excluded Liability intended to be assumed by CCU hereunder is
not consummated on the Effective Date, whether as a result of the failure to obtain any required
Governmental Approvals or Consents or any other reason, then, insofar as reasonably possible, (i)
the member of the Entertainment Group retaining such Excluded Asset shall thereafter hold such
Excluded Asset for the use and benefit of CCU (at CCU’s expense) and (ii) CCU shall, or shall cause
its applicable Group member to, pay or reimburse the member of the Entertainment Group retaining
such Excluded Liability for all amounts paid or incurred in connection with such Excluded
Liability. In addition, the member of the Entertainment Group retaining such Excluded Asset shall,
insofar as reasonably possible and to the extent permitted by
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applicable Law, treat such Excluded Asset in the ordinary course of business in accordance
with past practice and take such other actions as may be reasonably requested by CCU in order to
place CCU in the same position as if such Excluded Asset had been transferred as contemplated
hereby and so that all the benefits and burdens relating to such Excluded Asset, including
possession, use, risk of loss, potential for gain, and dominion, control and command over such
Excluded Asset, is to inure from and after the Effective Date to the CCU Group.
(c) If and when the Consents and Governmental Approvals, the absence of which caused the
deferral of transfer of any Excluded Asset or the deferral of assumption of any Excluded Liability,
are obtained, the transfer or assignment of the applicable Excluded Asset or Excluded Liability
shall be effected in accordance with the terms of this Agreement and/or the applicable Transfer
Document.
(d) Any member of the Entertainment Group retaining an Excluded Asset or Excluded Liability
due to the deferral of the transfer of such Excluded Asset or the deferral of the assumption of
such Excluded Liability shall not be obligated, in connection with the foregoing, to expend any
money unless the necessary funds are advanced (or otherwise made available) by CCU or the member of
the CCU Group intended to be subject to the Excluded Liability, other than reasonable out-of-pocket
expenses, attorneys’ fees and recording or similar fees, all of which shall be promptly reimbursed
by CCU or the member of the CCU Group entitled to such Excluded Asset or intended to be subject to
such Excluded Liability.
(e) Pursuant to and in accordance with this Section 2.9, the Excluded Assets and
Excluded Liabilities relating to the businesses or the support of the businesses of the members of
the CCU Group listed on Schedules 2.2(b)(i), 2.2(b)(ii) and 2.3(b)(iii),
respectively, are to be transferred to CCU or its designated Group member on the Effective Date.
2.10 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES.
EACH OF CCU (ON BEHALF OF ITSELF AND EACH MEMBER OF THE CCU GROUP) AND ENTERTAINMENT (ON
BEHALF OF ITSELF AND EACH MEMBER OF THE ENTERTAINMENT GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS
EXPRESSLY SET FORTH HEREIN OR IN ANY TRANSACTION DOCUMENT, NO PARTY TO THIS AGREEMENT, ANY
TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, ANY
TRANSACTION DOCUMENT OR OTHERWISE, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS,
BUSINESSES OR LIABILITIES CONTRIBUTED, TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS
TO ANY CONSENTS OR APPROVALS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OR
FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY,
OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT
TO ANY CLAIM OR OTHER ASSET, INCLUDING ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL
SUFFICIENCY OF ANY CONTRIBUTION, ASSIGNMENT, DOCUMENT, CERTIFICATE OR INSTRUMENT DELIVERED
HEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING
HEREOF OR THEREOF. EXCEPT AS
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MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY TRANSACTION DOCUMENT, ALL SUCH ASSETS ARE BEING
TRANSFERRED ON AN “AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A
QUITCLAIM OR SIMILAR FORM DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE
ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE
TRANSFEREE GOOD TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST, AND (II) ANY NECESSARY CONSENTS OR
GOVERNMENTAL APPROVALS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT
COMPLIED WITH.
ARTICLE III
CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION
CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION
3.1 Time and Place of Distribution.
Subject to the terms and conditions of this Agreement, the Distribution shall be consummated
at such place and at such time as CCU designates (the day on which the Distribution takes place
being the “Distribution Date”).
3.2 Pre-Distribution Transactions.
(a) On or prior to the Distribution Date, the Contribution shall be effected in accordance
with this Agreement.
(b) On or prior to the Distribution Date, the appropriate parties shall enter into, and (as
necessary) shall cause their respective Subsidiaries to enter into, the agreements set forth below
(collectively with the Transfer Documents and the documents and agreements referenced therein, the
“Transaction Documents”):
(i) the Transition Services Agreement in the form attached as Exhibit A (the
“Transition Services Agreement”);
(ii) the Tax Matters Agreement in the form attached as Exhibit B (the “Tax
Matters Agreement”);
(iii) the Employee Matters Agreement in the form attached as Exhibit C (the
“Employee Matters Agreement”); and
(iv) the Trademark and Copyright License Agreement in the form attached as Exhibit D
(the “Trademark License Agreement”).
3.3 Related Transactions.
Prior
to the Distribution Date, CCU shall consummate the Capital
Contribution. Following the Capital Contribution and prior to the
Distribution Date, Entertainment shall, and shall cause the
applicable members of the Entertainment Group to, consummate the
Series A Preferred Stock Issuance and the Series B Preferred Stock
Issuance. Following the
Capital Contribution and on or prior to the Distribution Date, Entertainment shall, and shall cause
the applicable members of the Entertainment Group to, enter into the Credit Facility and
related agreements, and Entertainment shall borrow
[$___] million under the Credit Facility. Upon the Entertainment Group’s receipt of the net
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cash proceeds of
such borrowings and the Series A Preferred Stock Issuance, and on or prior to the Distribution
Date, Entertainment shall repay, or cause the appropriate members of the Entertainment Group to
repay, the remaining balance of the Intercompany Debt outstanding following the Capital
Contribution.
3.4 Certificate of Incorporation, Bylaws and Rights Plan.
At or prior to the Distribution, CCU and Entertainment shall each take all necessary actions
that may be required to provide for the adoption by Entertainment of the Amended and Restated
Certificate of Incorporation of Entertainment in the form attached hereto as Exhibit E (the
“Charter”), the Amended and Restated Bylaws of Entertainment in the form attached hereto as
Exhibit F (the “Bylaws”), and the rights agreement in the form attached hereto as
Exhibit G (the “Rights Agreement”).
3.5 Election of Entertainment Board of Directors.
Prior to the Distribution, CCU agrees to vote all shares of Entertainment Common Stock held by
it in favor of the nominees to the Board of Directors of Entertainment, as set forth on
Schedule 3.5.
ARTICLE IV
THE DISTRIBUTION
THE DISTRIBUTION
4.1 Sole Discretion of CCU.
CCU shall, in its sole and absolute discretion, determine the Distribution Date and all terms
of the Distribution, including, without limitation, the form, structure and terms of any
transactions and/or offerings to effect the Distribution and the timing of and conditions to the
consummation thereof. In addition, CCU may at any time and from time to time until the completion
of the Distribution decide to abandon the Distribution or modify or change the terms of the
Distribution, including, without limitation, by accelerating or delaying the timing of the
consummation of all or part of the Distribution.
4.2 The Distribution.
(a) Entertainment shall cooperate with CCU to accomplish the Distribution and shall, at CCU’s
direction, promptly take any and all commercially reasonable actions to effect the Distribution.
CCU may select any investment bank or manager in connection with the Distribution, as well as any
financial printer, solicitation and/or exchange agent and financial, legal, accounting and other
advisors for CCU; provided that nothing herein shall prohibit Entertainment from
engaging (at its own expense) its own financial, legal, accounting and other advisors in connection
with the Distribution. Entertainment and CCU, as the case may be, will provide to the distribution
or exchange agent to be appointed by CCU (the “Distribution Agent”), all share certificates
and any information required in order to complete the Distribution.
(b) Subject to Sections 4.1, 4.4 and 4.5, each holder of CCU Common
Stock on the Record Date (or such holder’s designated transferee or transferees) will be entitled
to receive in
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the Distribution one share of Entertainment Common Stock for every [ ] shares of CCU
Common Stock held by such stockholder. No action will be necessary for any shareholder of CCU to
receive Entertainment Common Stock in the Distribution. Entertainment will issue to CCU the number
of shares of Entertainment Common Stock required so that the total number of shares of
Entertainment Common Stock held by CCU immediately prior to the Distribution is equal to the total
number of shares of Entertainment Common Stock distributable in the Distribution. Subject to
Sections 4.1, 4.4, and 4.5 on or prior to the Distribution Date, CCU will
deliver to the Distribution Agent for the benefit of holders of CCU Common Stock on the Record
Date, stock certificates, endorsed by CCU in blank, representing all of the outstanding shares of
Entertainment Common Stock then owned by CCU. CCU will cause the transfer agent for the CCU Common
Stock to credit the appropriate class and number of such shares of Entertainment Common Stock to
book entry accounts for each such holder or designated transferee or transferees of such holder of
CCU Common Stock. For shareholders of CCU who own CCU Common Stock through a broker or other
nominee, their shares of Entertainment Common Stock will be credited to their respective accounts
by such broker or nominee. The Distribution shall be effective at 11:59 p.m. Eastern Standard Time
on the Distribution Date.
4.3 Actions in Connection with the Distribution.
(a) Entertainment shall file such amendments and supplements to the Form 10 as CCU may
reasonably request, and such amendments as may be necessary in order to cause the same to become
and remain effective as required by Law, including filing such amendments and supplements to the
Form 10 as may be required by the SEC or federal, state or foreign securities Laws. Entertainment
shall mail to the holders of CCU Common Stock, at such time on or prior to the Distribution Date as
CCU shall determine, the information statement included in the Form 10, as well as any other
information concerning Entertainment, its business, operations and management, the Contribution,
the Distribution and such other matters as CCU shall reasonably determine are necessary and as may
be required by Law.
(b) CCU and Entertainment shall also cooperate in preparing, filing with the SEC and causing
to become effective registration statements or amendments thereof which are required to reflect the
establishment of, or amendments to, any employee benefit and other plans necessary or appropriate
in connection with the Distribution, the Contribution or other transactions contemplated by this
Agreement and the Transaction Documents, including the Employee Matters Agreement. Promptly after
receiving a request from CCU, to the extent requested, Entertainment shall prepare and, in
accordance with applicable Law, file with the SEC any such documentation that CCU determines is
necessary or desirable to effectuate the Distribution, and CCU and Entertainment shall each use
commercially reasonable efforts to obtain all necessary approvals from the SEC with respect thereto
as soon as practicable.
(c) Promptly after receiving a request from CCU, Entertainment shall take all such actions as
may be necessary or appropriate under the state securities or blue sky Laws of the United States
(and any comparable Laws under any foreign jurisdiction) in connection with the Distribution.
(d) Promptly after receiving a request from CCU, Entertainment shall prepare and file, and
shall use commercially reasonable efforts to have approved and made effective, an
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application for the original listing of the Entertainment Common Stock to be distributed in
the Distribution on the NYSE, subject to official notice of distribution.
(e) Immediately prior to the consummation of the Distribution, except as otherwise set forth
on Schedule 4.3(e), (i) each person who is both an officer, director or employee of any
member of the CCU Group and an officer, director or employee of any member of the Entertainment
Group immediately prior to the Distribution Date (each a “Shared Employee”) and who is to
continue as an officer, director or employee of any member of the CCU Group after the Distribution
Date shall resign from each of such person’s positions with each member of the Entertainment Group,
and (ii) each such Shared Employee who is to continue as an officer, director or employee of any
member of the Entertainment Group after the Distribution Date shall resign from each of such
person’s positions with each member of the CCU Group.
(f) Entertainment shall take all reasonable steps necessary and appropriate to cause the
conditions set forth in Section 4.4 to be satisfied and to effect the Distribution, or any
portion thereof, on the Distribution Date.
4.4 Conditions to Distribution.
Subject to Section 4.1, the following are conditions to the consummation of any part
of the Distribution. The conditions are for the sole benefit of CCU and shall not give rise to or
create any duty on the part of CCU or the CCU board of directors to waive or not waive any such
condition.
(a) The Form 10 shall have been declared effective by the SEC, with no stop order in effect
with respect thereto, and the information statement shall have been mailed to the holders of CCU
Common Stock.
(b) The actions and filings with regard to state securities and blue sky laws of the United
States (and any comparable Laws under any foreign jurisdictions) described in Section
4.3(c) shall have been taken and, where applicable, have become effective or been accepted.
(c) The Entertainment Common Stock to be delivered in the Distribution shall have been
approved for listing on the NYSE, subject to official notice of distribution.
(d) CCU shall have obtained a private letter ruling from the Internal Revenue Service, in form
and substance satisfactory to CCU (in its sole discretion), and such ruling shall remain in effect,
substantially to the effect that, among other things, the Distribution will be a reorganization
under Sections 355 and 368(a)(1)(D) of the Code.
(e) CCU shall have obtained an opinion from its tax counsel, in form and substance
satisfactory to CCU (in its sole discretion), substantially to the effect that, among other things,
the Distribution will be a reorganization under Sections 355 and 368(a)(1)(D) of the Code.
(f) CCU shall have obtained a solvency opinion, in form and substance satisfactory to CCU (in
its sole discretion), regarding the Entertainment Group after the Distribution.
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(g) Any material Governmental Approvals and other Consents necessary to consummate the
Distribution or any portion thereof shall have been obtained and be in full force and effect.
(h) No order, injunction or decree issued by any court or agency of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of all or any portion of the
Distribution shall be in effect, and no other event outside the control of CCU shall have occurred
or failed to occur that prevents the consummation of all or any portion of the Distribution.
(i) The CCU board of directors shall have approved the Distribution and shall have not
determined that any events or developments shall have occurred that make it inadvisable to effect
the Distribution.
4.5 Fractional Shares.
CCU shareholders of fewer than [___] shares of CCU Common Stock or any multiple thereof, on
the Record Date, which would entitle such shareholders to receive less than one whole share of
Entertainment Common Stock in the Distribution, will receive cash in lieu of fractional shares.
Fractional shares of Entertainment Common Stock will not be distributed in the Distribution nor
credited to book-entry accounts. The Distribution Agent shall (a) determine the number of whole
shares and fractional shares of Entertainment Common Stock allocable to each holder of record or
beneficial owner of CCU Common Stock as of close of business on the Record Date, (b) aggregate all
such fractional shares into whole shares and sell the whole shares obtained thereby in open market
transactions at then prevailing prices on behalf of holders who would otherwise be entitled to
fractional share interests, and (c) distribute to each such holder, or for the benefit of each such
beneficial owner, such holder or owner’s ratable share of the net proceeds of such sale, based upon
the average gross selling price per share of Entertainment Common Stock, after making appropriate
deductions for any amount required to be withheld for United States federal income tax purposes.
Entertainment shall bear the cost of brokerage fees incurred in connection with these sales of
fractional shares, which such sales shall occur as soon after the Distribution Date as practicable
and as determined by the Distribution Agent. None of CCU, Entertainment or the Distribution Agent
will guarantee any minimum sale price for the fractional shares of Entertainment Common Stock.
Neither Entertainment nor CCU will pay any interest on the proceeds from the sale of fractional
shares. The Distribution Agent will have the sole discretion to select the broker-dealers through
which to sell the aggregated fractional shares and to determine when, how and at what price to sell
such shares. Neither the Distribution Agent nor the selected broker-dealers will be affiliates of
CCU or Entertainment.
ARTICLE V
FINANCIAL AND OTHER COVENANTS
FINANCIAL AND OTHER COVENANTS
5.1 Auditors and Audits; Annual Statements and Accounting.
Entertainment agrees that for its 2005 fiscal year and for all fiscal years thereafter for so
long as CCU is required to consolidate the results of operations and financial position of
Entertainment and any members of the Entertainment Group with the results of operations and
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financial position of CCU (in accordance with GAAP and consistent with SEC reporting
requirements):
(a) Unless required by law or as directed by CCU in accordance with a change by CCU in its
accounting firm, Entertainment will not select a different accounting firm than Ernst & Young LLP
(or its affiliate accounting firms) to serve as the Entertainment Group’s independent certified
public accountants (the “Entertainment Auditors”), without CCU’s prior written consent
(which will not be unreasonably withheld); provided, however, that, to the extent
any members of the Entertainment Group are currently using a different accounting firm to serve as
their independent certified public accountants, such members of the Entertainment Group may
continue to use such accounting firm provided such accounting firm is reasonably satisfactory to
CCU.
(b) Entertainment will use commercially reasonable efforts to enable the Entertainment
Auditors to complete their audit such that they will be able to date their opinion on
Entertainment’s audited annual financial statements (the “Entertainment Annual Statements”)
on the same date that CCU’s independent certified public accountants (the “CCU Auditors”)
date their opinion on CCU’s audited annual financial statements (the “CCU Annual
Statements”), and to enable CCU to meet its schedule for the printing, filing and public
dissemination of the CCU Annual Statements, as required by applicable law.
(c) Entertainment will provide to CCU on a timely basis all information that CCU reasonably
requires to meet its schedule for the preparation, printing, filing, and public dissemination of
the CCU Annual Statements and CCU’s financial statements included in its Quarterly Reports on Form
10-Q as required by applicable law. Without limiting the generality of the foregoing, Entertainment
will provide all required financial information with respect to the Entertainment Group to the
Entertainment Auditors in a sufficient and reasonable time and in sufficient detail to permit the
Entertainment Auditors to take all steps and perform all reviews necessary to provide sufficient
assistance to the CCU Auditors with respect to information to be included or contained in the CCU
Annual Statements.
(d) Entertainment will authorize the Entertainment Auditors to make available to the CCU
Auditors the personnel who performed, or are performing, the annual audit of Entertainment as well
as the work papers related to the annual audit of Entertainment, in all cases within a reasonable
time prior to the date of the Entertainment Auditors’ opinion on the Entertainment Annual Financial
Statements, so that the CCU Auditors are able to perform the procedures they consider necessary to
take responsibility for the work of the Entertainment Auditors as it relates to the CCU Auditors’
report on the CCU Annual Statements, all within sufficient time to enable CCU to meet its schedule
for the preparation, printing, filing and public dissemination of the CCU Annual Statements.
(e) If CCU determines in good faith that there may be any inaccuracy in an Entertainment Group
member’s financial statements or deficiency in an Entertainment Group member’s internal accounting
controls or operations that could materially impact CCU’s financial statements, at CCU’s request,
Entertainment will provide CCU’s internal auditors with access to the Entertainment Group’s books
and records so that CCU may conduct reasonable
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audits relating to the financial statements provided by Entertainment under this Agreement as
well as to the internal accounting controls and operations of the Entertainment Group.
(f) Entertainment will give CCU as much prior notice as reasonably practicable of any proposed
determination of, or any significant changes in, Entertainment’s accounting estimates or accounting
principles from those in effect on the Distribution Date. Entertainment will consult with CCU and,
if requested by CCU, Entertainment will consult with the CCU Auditors with respect thereto.
5.2 Agreement for Exchange of Information; Archives.
(a) Each of CCU and Entertainment, on behalf of its respective Group, agrees to provide, or
cause to be provided, to the other Group, at any time before or after the Distribution Date, as
soon as reasonably practicable after written request therefor, any Information in the possession or
under the control of such respective Group which the requesting party reasonably needs (i) to
comply with reporting, disclosure, filing or other requirements imposed on the requesting party
(including under applicable securities or tax Laws) by a Governmental Authority having jurisdiction
over the requesting party, (ii) for use in any other judicial, regulatory, administrative, tax or
other proceeding or in order to satisfy audit, accounting, claim, regulatory, litigation, tax or
other similar requirements, in each case other than claims or allegations that one party to this
Agreement has against the other, or (iii) subject to the foregoing clause (ii), to comply
with its obligations under this Agreement or any Transaction Document; provided,
however, that in the event that any party reasonably determines that any such provision of
Information could be commercially detrimental, violate any Law or agreement, or waive any
attorney-client privilege, the parties shall take all commercially reasonable measures to permit
the compliance with such obligations in a manner that avoids any such harm or consequence.
(b) After the Distribution Date, Entertainment shall have access during regular business hours
(as in effect from time to time) to the documents and objects of historic significance that relate
to the Entertainment Business that are located in archives retained or maintained by any member of
the CCU Group. Entertainment may obtain copies (but not originals unless it is an Entertainment
Asset) of documents for bona fide business purposes and may obtain objects for exhibition purposes
for commercially reasonable periods of time if required for bona fide business purposes;
provided that Entertainment shall cause any such objects to be returned promptly in
the same condition in which they were delivered to Entertainment, and Entertainment shall comply
with any rules, procedures or other requirements, and shall be subject to any restrictions
(including prohibitions on removal of specified objects), that are then applicable to CCU.
Entertainment shall pay the applicable fee or rate per hour for archive research services (subject
to increase from time to time to reflect rates then in effect for CCU generally). Nothing herein
shall be deemed to restrict the access of any member of the CCU Group to any such documents or
objects or to impose any liability on any member of the CCU Group if any such documents or objects
are not maintained or preserved by CCU.
(c) After the Distribution Date, CCU shall have access during regular business hours (as in
effect from time to time) to the documents and objects of historic significance that relate to the
businesses of any member of the CCU Group that are located in archives retained or maintained by
any member of the Entertainment Group. CCU may obtain copies (but not
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originals unless it is not an Entertainment Asset) of documents for bona fide business
purposes and may obtain objects for exhibition purposes for commercially reasonable periods of time
if required for bona fide business purposes; provided that CCU shall cause any such
objects to be returned promptly in the same condition in which they were delivered to CCU, and CCU
shall comply with any rules, procedures or other requirements, and shall be subject to any
restrictions (including prohibitions on removal of specified objects), that are then applicable to
Entertainment. CCU shall pay the applicable fee or rate per hour for archive research services
(subject to increase from time to time to reflect rates then in effect for Entertainment
generally). Nothing herein shall be deemed to restrict the access of any member of the
Entertainment Group to any such documents or objects or to impose any liability on any member of
the Entertainment Group if any such documents or objects are not maintained or preserved by
Entertainment.
(d) After the Distribution Date, each of CCU and Entertainment, on behalf of their respective
Groups, will maintain in effect, at its own cost and expense, adequate systems and internal
controls for its business, to the extent necessary to enable members of the other Group to satisfy
their respective reporting, accounting, audit and other obligations.
5.3 Ownership of Information.
Any Information owned by a member of a Group that is provided to a requesting party pursuant
to Section 5.2 shall be deemed to remain the property of the providing party. Unless
specifically set forth herein, nothing contained in this Agreement shall be construed as granting
or conferring rights of license or otherwise in any such Information.
5.4 Compensation for Providing Information.
The party requesting Information agrees to reimburse the party providing Information for the
reasonable out-of-pocket costs, if any, of creating, gathering and copying such Information, to the
extent that such costs are incurred for the benefit of the requesting party. Except as may be
otherwise specifically provided elsewhere in this Agreement, the Transaction Documents or in any
other agreement between the parties, such costs shall be computed in accordance with the providing
party’s standard methodology and procedures.
5.5 Record Retention.
To facilitate the possible exchange of Information pursuant to this Article V and
other provisions of this Agreement and the Transaction Documents, after the Distribution Date, the
parties agree to use commercially reasonable efforts to retain all Information in their respective
possession or control in accordance with the policies of CCU as in effect on the Distribution Date
or such other policies as may be reasonably adopted by the appropriate party after the Distribution
Date. No party will destroy, or permit any of its Subsidiaries to destroy, any Information which
the other party may have the right to obtain pursuant to this Agreement prior to the seventh
anniversary of the date hereof without first notifying the other party of the proposed destruction
and giving the other party the opportunity to take possession of such Information prior to such
destruction; provided, however, that in the case of any Information relating to
Taxes or employee benefits, such period shall be extended to the expiration of the applicable
statute of limitations (giving effect to any extensions thereof); provided,
further,
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however, no party will destroy, or permit any of its Subsidiaries to destroy, any
Information required to be retained by applicable Law.
5.6 Liability.
No party shall have any liability to any other party in the event that any Information
exchanged or provided pursuant to this Agreement which is an estimate or forecast, or which is
based on an estimate or forecast, is found to be inaccurate in the absence of willful misconduct by
the party providing such Information. No party shall have any liability to any other party if any
Information is destroyed after commercially reasonable efforts by such party to comply with the
provisions of Section 5.5.
5.7 Other Agreements Providing for Exchange of Information.
(a) The rights and obligations granted under this Article V are subject to any
specific limitations, qualifications or additional provisions on the sharing, exchange, retention
or confidential treatment of Information set forth in any Transaction Document.
(b) When any Information provided by one Group to the other Group (other than Information
provided pursuant to Section 5.5) is no longer needed for the purposes contemplated by this
Agreement or any other Transaction Document or is no longer required to be retained by applicable
Law, the receiving party will promptly after request of the other party either return to the other
party all Information in a tangible form (including all copies thereof and all notes, extracts or
summaries based thereon) or certify to the other party that it has destroyed such Information (and
such copies thereof and such notes, extracts or summaries based thereon).
5.8 Production of Witnesses; Records; Cooperation.
(a) After the Distribution Date, except in the case of an adversarial Action by one or more
members of one Group against one or more members of the other Group, each party hereto shall use
commercially reasonable efforts to make available to each other party, upon written request, the
former, current and future directors, officers, employees, other personnel and agents of the
members of its respective Group as witnesses and any books, records or other documents within its
control or which it otherwise has the ability to make available, to the extent that any such person
(giving consideration to business demands of such directors, officers, employees, other personnel
and agents) or books, records or other documents may reasonably be required in connection with any
Action or IP Application in which the requesting party may from time to time be involved,
regardless of whether such Action or IP Application is a matter with respect to which
indemnification may be sought hereunder. The requesting party shall bear all costs and expenses in
connection therewith.
(b) If an Indemnifying Party chooses to defend or to seek to compromise or settle any Third
Party Claim, the parties shall make available to such Indemnifying Party, upon written request, the
former, current and future directors, officers, employees, other personnel and agents of the
members of its respective Group as witnesses and any books, records or other documents within its
control or which it otherwise has the ability to make available, to the extent that any such person
(giving consideration to business demands of such directors, officers, employees, other personnel
and agents) or books, records or other documents may reasonably be required in
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connection with such defense, settlement or compromise, or the prosecution, evaluation or
pursuit thereof, as the case may be, and shall otherwise cooperate in such defense, settlement or
compromise, or such prosecution, evaluation or pursuit, as the case may be.
(c) Without limiting the foregoing, the parties shall cooperate and consult to the extent
reasonably necessary with respect to any Actions, except in the case of an adversarial Action by
one or more members of one Group against one or more members of the other Group.
(d) Without limiting any provision of this Section 5.8, each of the parties agrees to
cooperate, and to cause each member of its respective Group to cooperate, with each other in the
defense of any infringement or similar claim with respect to any intellectual property and shall
not claim to acknowledge, or permit any member of its respective Group to claim to acknowledge, the
validity or infringing use of any intellectual property of a third Person in a manner that would
hamper or undermine the defense of such infringement or similar claim, except as required by Law.
(e) The obligation of the parties to provide witnesses pursuant to this Section 5.8 is
intended to be interpreted in a manner so as to facilitate cooperation and shall include the
obligation to provide as witnesses inventors and other officers without regard to whether the
witness or the employer of the witness could assert a possible business conflict (subject to the
exception set forth in the first sentence of Section 5.8(a)).
(f) In connection with any matter contemplated by this Section 5.8, the parties will
enter into a mutually acceptable joint defense agreement so as to maintain to the extent
practicable any applicable attorney-client privilege, work product immunity or other applicable
privileges or immunities of any member of any Group.
5.9 Privilege.
The provision of any information pursuant to this Article V shall not be deemed a
waiver of any privilege, including privileges arising under or related to the attorney-client
privilege or any other applicable privileges (a “Privilege”). Following the Distribution
Date, neither Entertainment or its Subsidiaries nor CCU or its Subsidiaries will be required to
provide any information pursuant to this Article V if the provision of such information
would serve as a waiver of any Privilege afforded such information.
ARTICLE VI
RELEASE; INDEMNIFICATION
RELEASE; INDEMNIFICATION
6.1 Release of Pre-Distribution Claims.
(a) Except (i) as provided in Section 6.1(c), (ii) as may be provided in any
Transaction Document and (iii) for any matter for which an Entertainment Indemnified Party is
entitled to indemnification or contribution pursuant to Sections 6.3 or 6.4,
effective as of the Distribution Date, Entertainment, for itself and each other member of the
Entertainment Group, their respective Affiliates and all Persons who at any time prior to the
Distribution Date were directors, officers, agents or employees of any member of the Entertainment
Group (in their respective capacities as such), in each case, together with their respective heirs,
executors,
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administrators, successors and assigns, does hereby remise, release and forever discharge CCU
and the other members of the CCU Group, their respective Affiliates and all Persons who at any time
prior to the Distribution Date were shareholders, directors, officers, agents or employees of any
member of the CCU Group (in their respective capacities as such), in each case, together with their
respective heirs, executors, administrators, successors and assigns, from any and all Liabilities
whatsoever, whether at Law or in equity (including any right of contribution), whether arising
under any contract or agreement, by operation of Law or otherwise, existing or arising from any
acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur
or any conditions existing or alleged to have existed on or before the Distribution Date, including
in connection with the transactions and all other activities to implement the Contribution, the
Distribution and any of the other transactions contemplated hereunder and under the Transaction
Documents.
(b) Except (i) as provided in Section 6.1(c), (ii) as may be provided in any
Transaction Document and (iii) for any matter for which a CCU Indemnified Party is entitled to
indemnification or contribution pursuant to Sections 6.2 or 6.4, effective as of
the Distribution Date, CCU, for itself and each other member of the CCU Group, their respective
Affiliates and all Persons who at any time prior to the Distribution Date were shareholders,
directors, officers, agents or employees of any member of the CCU Group (in their respective
capacities as such), in each case, together with their respective heirs, executors, administrators,
successors and assigns, does hereby remise, release and forever discharge Entertainment and the
other members of the Entertainment Group, their respective Affiliates and all Persons who at any
time prior to the Distribution Date were stockholders, directors, officers, agents or employees of
any member of the Entertainment Group (in their respective capacities as such), in each case,
together with their respective heirs, executors, administrators, successors and assigns, from any
and all Liabilities whatsoever, whether at Law or in equity (including any right of contribution),
whether arising under any contract or agreement, by operation of Law or otherwise, existing or
arising from any acts or events occurring or failing to occur or alleged to have occurred or to
have failed to occur or any conditions existing or alleged to have existed on or before the
Distribution Date, including in connection with the transactions and all other activities to
implement the Contribution, the Distribution and any of the other transactions contemplated
hereunder and under the Transaction Documents.
(c) Nothing contained in Section 6.1(a) or Section 6.1(b) shall impair any
right of any Person to enforce this Agreement, any Transaction Document or any agreements,
arrangements, commitments or understandings to continue in effect after the Distribution Date in
accordance with Section 2.4(b), in each case in accordance with its terms. Nothing
contained in Section 6.1(a) or Section 6.1(b) shall release any Person from:
(i) any Liability provided in or resulting from any agreement among any members of the CCU
Group or the Entertainment Group that is to continue in effect after the Distribution Date in
accordance with Section 2.4(b), or any other Liability specified in such Section
2.4(b) not to terminate as of the Distribution Date;
(ii) any Liability, contingent or otherwise, assumed, transferred, assigned or allocated to
the Group of which such Person is a member in accordance with, or any other Liability of any
member of such Group under, this Agreement or any Transaction Document;
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(iii) any Liability for the sale, lease, construction or receipt of goods, property or
services purchased, obtained or used in the ordinary course of business by a member of one Group
from a member of the other Group prior to the Distribution Date;
(iv) any Liability for unpaid amounts for products or services or refunds owing on products
or services due on a value-received basis for work done by a member of one Group at the request or
on behalf of a member of the other Group; or
(v) any Liability that the parties may have with respect to indemnification or contribution
pursuant to this Agreement or otherwise for claims brought against the parties by third Persons,
which Liability shall be governed by the provisions of this Article VI and, if applicable,
the appropriate provisions of the Transaction Documents.
In addition, nothing contained in Section 6.1(a) shall release CCU from indemnifying
any director, officer or employee of Entertainment who was a director, officer or employee of CCU
or any of its Affiliates on or prior to the Distribution Date, to the extent such director, officer
or employee is or becomes a named defendant in any Action with respect to which he or she was
entitled to such indemnification pursuant to then existing obligations.
(d) Entertainment shall not make, and shall not permit any member of the Entertainment Group
to make, any claim or demand, or commence any Action asserting any claim or demand, including any
claim of contribution or any indemnification, against CCU or any member of the CCU Group, or any
other Person released pursuant to Section 6.1(a), with respect to any Liabilities released
pursuant to Section 6.1(a). CCU shall not, and shall not permit any member of the CCU
Group, to make any claim or demand, or commence any Action asserting any claim or demand, including
any claim of contribution or any indemnification against Entertainment or any member of the
Entertainment Group, or any other Person released pursuant to Section 6.1(b), with respect
to any Liabilities released pursuant to Section 6.1(b).
(e) It is the intent of each of CCU and Entertainment, by virtue of the provisions of this
Section 6.1, to provide for a full and complete release and discharge of all Liabilities
existing or arising from all acts and events occurring or failing to occur or alleged to have
occurred or to have failed to occur and all conditions existing or alleged to have existed on or
before the Distribution Date, whether known or unknown, between or among Entertainment or any
member of the Entertainment Group, on the one hand, and CCU or any member of the CCU Group, on the
other hand (including any contractual agreements or arrangements existing or alleged to exist
between or among any such members on or before the Distribution Date), except as expressly set
forth in Sections 6.1 (a), (b) and (c). At any time, at the request of any other
party, each party shall cause each member of its respective Group and each other Person on whose
behalf it released Liabilities pursuant to this Section 6.1 to execute and deliver releases
reflecting the provisions hereof.
6.2 General Indemnification by Entertainment.
Except as provided in Section 6.5, Entertainment shall, and shall cause the other
members of the Entertainment Group to, jointly and severally, indemnify, defend and hold harmless
on an After-Tax Basis each member of the CCU Group and each of their respective directors, officers
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and employees, and each of the heirs, executors, successors and assigns of any of the
foregoing (collectively, the “CCU Indemnified Parties”), from and against any and all
Liabilities of the CCU Indemnified Parties relating to, arising out of or resulting from any of the
following items (without duplication):
(a) the failure of Entertainment or any other member of the Entertainment Group or any other
Person to pay, perform or otherwise promptly discharge any Entertainment Liabilities or
Entertainment Contract in accordance with its respective terms, whether prior to or after the
Effective Date;
(b) any Entertainment Liability or any Entertainment Contract;
(c) except to the extent it relates to an Excluded Liability, any guarantee, indemnification
obligation, surety bond or other credit support agreement, arrangement, commitment or understanding
by any member of the CCU Group for the benefit of any member of the Entertainment Group that
survives the Distribution;
(d) any breach by any member of the Entertainment Group of this Agreement or any of the
Transaction Documents or any action by Entertainment in contravention of the Charter or Bylaws;
(e) any untrue statement or alleged untrue statement of a material fact contained in any
document filed with the SEC by any member of the CCU Group pursuant to the Securities Act or the
Exchange Act, or any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, in each case to the extent, but only to the extent, that
those Liabilities are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information that is either furnished to any member of the CCU Group by any
member of the Entertainment Group or incorporated by reference by any member of the CCU Group from
any filings made by any member of the Entertainment Group with the SEC pursuant to the Securities
Act or the Exchange Act, and then only if that statement or omission was made or occurred after the
Distribution Date; and
(f) any untrue statement or alleged untrue statement of a material fact contained or
incorporated by reference in the Form 10 filed by Entertainment or in any offering memorandum,
registration statement or information statement relating to the Credit Facility or in any other
documents filed with the SEC in connection with the Distribution or the other Transactions, or any
omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading, in each case, except to the extent that those Liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon information that is
furnished to any member of the Entertainment Group by any member of the CCU Group expressly for use
in the Form 10 or in any such offering memorandum, registration statement or information statement,
all of which statements that have been furnished by the CCU Group being set forth on Schedule
6.2.
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6.3 General Indemnification by CCU.
Except as provided in Section 6.5, CCU shall indemnify, defend and hold harmless on an
After-Tax Basis each member of the Entertainment Group and each of their respective directors,
officers and employees, and each of the heirs, executors, successors and assigns of any of the
foregoing (collectively, the “Entertainment Indemnified Parties”), from and against any and
all Liabilities of the Entertainment Indemnified Parties relating to, arising out of or resulting
from any of the following items (without duplication):
(a) the failure of any member of the CCU Group or any other Person to pay, perform or
otherwise promptly discharge any Liabilities of the CCU Group other than the Entertainment
Liabilities, whether prior to or after the Effective Date;
(b) any Excluded Liability or any Liability of a member of the CCU Group other than the
Entertainment Liabilities;
(c) any breach by any member of the CCU Group of this Agreement or any of the Transaction
Documents;
(d) any untrue statement or alleged untrue statement of a material fact contained in any
document filed with the SEC by any member of the Entertainment Group pursuant to the Securities Act
or the Exchange Act, other than such statements, facts or information in, or incorporated by
reference in, the Form 10 filed by Entertainment or any offering memorandum, registration statement
or information statement related to the Credit Facility or in any other documents filed with the
SEC in connection with the Distribution or the other Transactions, or any omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that those Liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon information that is
either furnished to any member of the Entertainment Group by any member of the CCU Group or
incorporated by reference by any member of the Entertainment Group from any filings made by any
member of the CCU Group with the SEC pursuant to the Securities Act or the Exchange Act, and then
only if that statement or omission was made or occurred after the Distribution Date; and
(e) any untrue statement or alleged untrue statement of a material fact contained or
incorporated by reference in the Form 10 filed by Entertainment or any offering memorandum,
registration statement or information statement relating to the Credit Facility or in any other
documents filed with the SEC in connection with the Distribution or other Transactions contemplated
in this Agreement, or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, in each case to the extent, but only to the extent, that
those Liabilities are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information that is furnished to any member of the Entertainment Group by
any member of the CCU Group expressly for use in the Form 10 or in any such offering memorandum,
registration statement or information statement, all of which statements that have been furnished
by the CCU Group being set forth on Schedule 6.2.
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6.4 Contribution.
(a) If the indemnification provided for in this Article VI is unavailable to, or
insufficient to hold harmless on an After-Tax Basis, an Indemnified Party under Sections
6.2(e) or (f) or Sections 6.3(d) or (e) in respect of any Liabilities
referred to therein, then each Indemnifying Party shall contribute to the amount paid or payable by
such Indemnified Party as a result of such Liabilities in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party and the Indemnified Party in connection with
the actions or omissions that resulted in Liabilities as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates to information
supplied by such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.
(b) The parties agree that it would not be just and equitable if contribution pursuant to this
Section 6.4 were determined by a pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in Section 6.4(a).
The amount paid or payable by an Indemnified Party as a result of the Liabilities referred to in
Section 6.4(a) shall be deemed to include, subject to the limitations set forth above, any
legal or other fees or expenses reasonably incurred by such Indemnified Party in connection with
investigating any claim or defending any Action. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
6.5 Indemnification Obligations Net of Insurance Proceeds and Other Amounts on an
After-Tax Basis.
(a) Any Liability subject to indemnification or contribution pursuant to this Article
VI will be net of Insurance Proceeds that actually reduce the amount of the Liability and will
be determined on an After-Tax Basis. Accordingly, the amount which any Person is required to pay
pursuant to this Article VI (an “Indemnifying Party”) to any Person entitled to
indemnification or contribution pursuant to this Article VI (an “Indemnified
Party”) will be reduced by any Insurance Proceeds theretofore actually recovered by or on
behalf of the Indemnified Party in respect of the related Liability. If an Indemnified Party
receives a payment required by this Agreement from an Indemnifying Party in respect of any
Liability (an “Indemnity Payment”) and subsequently receives Insurance Proceeds, then the
Indemnified Party will pay to the Indemnifying Party an amount equal to the excess of the Indemnity
Payment received over the amount of the Indemnity Payment that would have been due if the Insurance
Proceeds had been received, realized or recovered before the Indemnity Payment was made.
(b) An insurer who would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto or, solely by virtue of the indemnification and contributions
provisions hereof, have any subrogation rights with respect thereto. The Indemnified Party shall
use commercially reasonable efforts to seek to collect or recover any third-party Insurance
Proceeds (other than Insurance Proceeds under an arrangement where future premiums are adjusted to
reflect prior claims in excess of prior premiums) to which the
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Indemnified Party is entitled in connection with any Liability for which the Indemnified Party
seeks contribution or indemnification pursuant to this Article VI; provided
that the Indemnified Party’s inability to collect or recover any such Insurance Proceeds
shall not limit the Indemnifying Party’s obligations hereunder.
(c) The term “After-Tax Basis” as used in this Article VI means that, in
determining the amount of the payment necessary to indemnify any party against, or reimburse any
party for, Liabilities, the amount of such Liabilities will be determined net of any reduction in
Tax derived by the Indemnified Party as the result of sustaining or paying such Liabilities, and
the amount of such Indemnity Payment will be increased (i.e., “grossed up”) by the amount necessary
to satisfy any income or franchise Tax liabilities incurred by the Indemnified Party as a result of
its receipt of, or right to receive, such Indemnity Payment (as so increased), so that the
Indemnified Party is put in the same net after-Tax economic position as if it had not incurred such
Liabilities, in each case without taking into account any impact on the tax basis that an
Indemnified Party has in its assets.
6.6 Procedures for Indemnification of Third Party Claims.
(a) If an Indemnified Party shall receive notice or otherwise learn of the assertion by a
Person (including any Governmental Authority) who is not a member of the CCU Group or the
Entertainment Group of any claim or of the commencement by any such Person of any Action
(collectively, a “Third Party Claim”) with respect to which an Indemnifying Party may be
obligated to provide indemnification to such Indemnified Party pursuant to Section 6.2 or
Section 6.3, or any other Section of this Agreement or any Transaction Document, such
Indemnified Party shall give such Indemnifying Party written notice thereof within 20 days after
becoming aware of such Third Party Claim. Any such notice shall describe the Third Party Claim in
reasonable detail. Notwithstanding the foregoing, the failure of any Indemnified Party or other
Person to give notice as provided in this Section 6.6(a) shall not relieve the Indemnifying
Party of its obligations under this Article VI, except to the extent that such Indemnifying
Party is actually prejudiced by such failure to give notice.
(b) An Indemnifying Party may elect to defend (and to seek to settle or compromise), at such
Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel, any Third Party
Claim. Within 30 days after receipt of notice from an Indemnified Party in accordance with
Section 6.6(a) (or sooner, if the nature of such Third Party Claim so requires), an
Indemnifying Party electing to defend a Third Party Claim shall notify the Indemnified Party of its
election to assume responsibility for defending such Third Party Claim and shall agree and
acknowledge in writing that if such Third Party Claim is adversely determined, such Indemnifying
Party will have the obligation to indemnify the Indemnified Party in respect of all liabilities
relating to, arising out of or resulting from such Third Party Claim and that such Indemnifying
Party irrevocably waives in full all defenses it may have to contest such obligation. After such
notice and acknowledgment from an Indemnifying Party to an Indemnified Party of its election to
assume the defense of a Third Party Claim, such Indemnified Party shall have the right to employ
separate counsel and to participate in (but not control) the defense, compromise, or settlement
thereof, but the fees and expenses of such counsel shall be the expense of such Indemnified Party.
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(c) If an Indemnifying Party elects not to assume responsibility for defending a Third Party
Claim, or fails to notify an Indemnified Party of its election as provided in Section
6.6(b), such Indemnified Party may defend such Third Party Claim at the cost and expense of the
Indemnifying Party.
(d) Unless the Indemnifying Party has failed to assume the defense of the Third Party Claim in
accordance with the terms of this Agreement, no Indemnified Party may settle or compromise any
Third Party Claim without the consent of the Indemnifying Party. No Indemnifying Party shall
consent to entry of any judgment or enter into any settlement of any pending or threatened Third
Party Claim in respect of which any Indemnified Party is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Party without the consent of the Indemnified
Party if (i) the effect thereof is to permit any injunction, declaratory judgment, other order or
other nonmonetary relief to be entered, directly or indirectly against such Indemnified Party and
(ii) such settlement does not include a full, complete and unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of such Third Party
Claim.
6.7 Additional Matters.
(a) Indemnification or contribution payments in respect of any Liabilities for which an
Indemnified Party is entitled to indemnification or contribution under this Article VI
shall be paid by the Indemnifying Party to the Indemnified Party as such Liabilities are incurred
upon demand by the Indemnified Party, including reasonably satisfactory documentation setting forth
the basis for the amount of such indemnification or contribution payment, including documentation
with respect to calculations made on an After-Tax Basis and consideration of any Insurance Proceeds
that actually reduce the amount of such Liabilities. The indemnity and contribution agreements
contained in this Article VI shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Indemnified Party; (ii) the
knowledge by the Indemnified Party of Liabilities for which it might be entitled to indemnification
or contribution hereunder; and (iii) any termination of this Agreement.
(b) Any claim on account of a Liability which does not result from a Third Party Claim shall
be asserted by written notice given by the Indemnified Party to the applicable Indemnifying Party.
Such Indemnifying Party shall have a period of 30 days after the receipt of such notice within
which to respond thereto. If such Indemnifying Party does not respond within such 30-day period,
such Indemnifying Party shall be deemed to have refused to accept responsibility to make payment.
If such Indemnifying Party does not respond within such 30-day period or rejects such claim in
whole or in part, such Indemnified Party shall be free to pursue such remedies as may be available
to such party as contemplated by this Agreement and the Transaction Documents without prejudice to
its continuing rights to pursue indemnification or contribution hereunder.
(c) If payment is made by or on behalf of any Indemnifying Party to any Indemnified Party in
connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall
stand in the place of such Indemnified Party as to any events or circumstances in respect of which
such Indemnified Party may have any right, defense or claim relating to such Third Party Claim
against any claimant or plaintiff asserting such Third Party Claim or against
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any other Person. Such Indemnified Party shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any
subrogated right, defense or claim.
(d) In an Action in which the Indemnifying Party is not a named defendant, if either the
Indemnified Party or Indemnifying Party shall so request, the parties shall endeavor to substitute
the Indemnifying Party for the named defendant if they conclude that substitution is desirable and
practical. If such substitution or addition cannot be achieved for any reason or is not requested,
the named defendant shall allow the Indemnifying Party to manage the Action as set forth in this
Article VI, and the Indemnifying Party shall fully indemnify the named defendant against
all costs of defending the Action (including court costs, sanctions imposed by a court, attorneys’
fees, experts fees and all other external expenses), the costs of any judgment or settlement, and
the costs of any interest or penalties relating to any judgment or settlement.
6.8 Remedies Cumulative; Limitations of Liability.
The rights provided in this Article VI shall be cumulative and, subject to the
provisions of Article VIII, shall not preclude assertion by any Indemnified Party of any
other rights or the seeking of any and all other remedies against any Indemnifying Party.
NOTWITHSTANDING THE FOREGOING, NO INDEMNIFYING PARTY SHALL BE LIABLE TO AN INDEMNIFIED PARTY FOR
ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, CONSEQUENTIAL, EXEMPLARY, STATUTORILY-ENHANCED OR
SIMILAR DAMAGES IN EXCESS OF COMPENSATORY DAMAGES (PROVIDED THAT ANY SUCH LIABILITY WITH RESPECT TO
A THIRD PARTY CLAIM SHALL BE CONSIDERED DIRECT DAMAGES) ARISING IN CONNECTION WITH THE
TRANSACTIONS.
6.9 Survival of Indemnities.
The rights and obligations of each of CCU and Entertainment and their respective Indemnified
Parties under this Article VI shall survive the sale or other transfer by any party of any
Assets or businesses or the assignment by it of any Liabilities.
ARTICLE VII
OTHER AGREEMENTS
OTHER AGREEMENTS
7.1 Further Assurances.
(a) In addition to the actions specifically provided for elsewhere in this Agreement, each of
the parties will cooperate with each other and use (and will cause their respective Subsidiaries
and Affiliates to use) commercially reasonable efforts, prior to, on and after the Distribution
Date, to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things
reasonably necessary on its part under applicable Law or contractual obligations to consummate and
make effective the transactions contemplated by this Agreement and the Transaction Documents.
(b) Without limiting the foregoing, prior to, on and after the Distribution Date, each party
hereto shall cooperate with the other parties, and without any further consideration, but at
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the expense of the requesting party from and after the Distribution Date, to execute and
deliver, or use commercially reasonable efforts to cause to be executed and delivered, all
instruments, including instruments of conveyance, assignment and transfer, and to make all filings
with, and to obtain all consents, approvals or authorizations of, any Governmental Authority or any
other Person under any permit, license, agreement, indenture or other instrument (including any
Consents or Governmental Approvals), and to take all such other actions as such party may
reasonably be requested to take by any other party hereto from time to time, consistent with the
terms of this Agreement and the Transaction Documents, in order to effectuate the provisions and
purposes of this Agreement and the Transaction Documents and the transfers of the Entertainment
Assets and the assignment and assumption of the Entertainment Liabilities and the other
transactions contemplated hereby and thereby. Without limiting the foregoing, each party will, at
the reasonable request, cost and expense of any other party, take such other actions as may be
reasonably necessary to vest in such other party good and marketable title to the Assets allocated
to such party under this Agreement or any of the Transaction Documents, free and clear of any
Security Interest, if and to the extent it is practicable to do so.
(c) On or prior to the Distribution Date, CCU and Entertainment in their respective capacities
as direct and indirect stockholders of their respective Subsidiaries, shall each ratify any actions
that are reasonably necessary or desirable to be taken by CCU, Entertainment or any other
Subsidiary of CCU or Entertainment, as the case may be, to effectuate the transactions contemplated
by this Agreement.
(d) On or prior to the Distribution Date, CCU and Entertainment shall take all actions as may
be necessary to approve the stock-based employee benefit plans of Entertainment in order to satisfy
the requirements of Rule 16b-3 under the Exchange Act and the applicable rules and regulations of
the NYSE.
7.2 Confidentiality.
(a) From and after the Distribution, subject to Section 7.2(c) and except as
contemplated by this Agreement or any Transaction Document, CCU shall not, and shall cause the
other members of the CCU Group and all of such parties’ respective officers, directors, employees,
and other agents and representatives, including attorneys, agents, customers, suppliers,
contractors, consultants and other representatives of any Person providing financing (collectively,
“Representatives”), not to, directly or indirectly, disclose, reveal, divulge or
communicate to any Person (other than Representatives of such party or of its Affiliates who
reasonably need to know such information in providing services to any member of the CCU Group) or
use or otherwise exploit for its own benefit or for the benefit of any third party, any
Entertainment Confidential Information. If any disclosures are made by a member of the CCU Group
to its Representatives in connection with such Representatives providing services to any member of
the CCU Group under this Agreement or any Transaction Document, then the Entertainment Confidential
Information so disclosed shall be used only as required to perform the services. CCU shall, and
shall cause the other members of the CCU Group to, use the same degree of care to prevent and
restrain the unauthorized use or disclosure of the Entertainment Confidential Information by any of
their Representatives as they currently use for their own confidential information of a like
nature, but in no event less than a reasonable standard of care. Any information, material or
documents relating to the Entertainment Business currently or
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formerly conducted, or proposed to be conducted, by any member of the Entertainment Group
furnished to or in possession of any member of the CCU Group, irrespective of the form of
communication, and all notes, analyses, compilations, forecasts, data, translations, studies,
memoranda or other documents prepared by or on behalf of any member of the CCU Group that contain
or otherwise reflect such information, material or documents is referred to herein as
“Entertainment Confidential Information.” “Entertainment Confidential Information” does
not include, and there shall be no obligation hereunder with respect to, information that (i) is or
becomes generally available to the public, other than as a result of a disclosure by any member of
the CCU Group or any of their Representatives not otherwise permissible hereunder, (ii) such member
of the CCU Group can demonstrate was or became available to such member of the CCU Group from a
source other than Entertainment or its Affiliates or (iii) is developed independently by such
member of the CCU Group without reference to the Entertainment Confidential Information;
provided, however, that, in the case of clause (ii), the source of such
information was not known by such member of the CCU Group to be bound by a confidentiality
agreement with, or other contractual, legal or fiduciary obligation of confidentiality to,
Entertainment or any member of the Entertainment Group with respect to such information.
(b) From and after the Distribution, subject to Section 7.2(c) and except as
contemplated by this Agreement or any Transaction Document, Entertainment shall not, and shall
cause the other members of the Entertainment Group and all of such parties’ respective
Representatives not to, directly or indirectly, disclose, reveal, divulge or communicate to any
Person (other than Representatives of such party or of its Affiliates who reasonably need to know
such information in providing services to Entertainment or any member of the Entertainment Group),
or use or otherwise exploit for its own benefit or for the benefit of any third party, any CCU
Confidential Information. If any disclosures are made by a member of the Entertainment Group to
its Representatives in connection with such Representatives providing services to any member of the
Entertainment Group under this Agreement or any Transaction Document, then the CCU Confidential
Information so disclosed shall be used only as required to perform the services. Entertainment
shall, and shall cause the other members of the Entertainment Group to, use the same degree of care
to prevent and restrain the unauthorized use or disclosure of the CCU Confidential Information by
any of their Representatives as they currently use for their own confidential information of a like
nature, but in no event less than a reasonable standard of care. Any information, material or
documents relating to the businesses currently or formerly conducted, or proposed to be conducted,
by any member of the CCU Group furnished to or in possession of any member of the Entertainment
Group, irrespective of the form of communication, and all notes, analyses, compilations, forecasts,
data, translations, studies, memoranda or other documents prepared by or on behalf of Entertainment
or any member of the Entertainment Group that contain or otherwise reflect such information,
material or documents is referred to herein as “CCU Confidential Information.” “CCU
Confidential Information” does not include, and there shall be no obligation hereunder with respect
to, information that (i) is or becomes generally available to the public, other than as a result of
a disclosure by any member of the Entertainment Group or any of their Representatives not otherwise
permissible hereunder, (ii) such member of the Entertainment Group can demonstrate was or became
available to such Entertainment Group member from a source other than CCU or its Affiliates or
(iii) is developed independently by such member of the Entertainment Group without reference to the
CCU Confidential Information; provided, however, that, in the case of clause
(ii), the source of such information was not known by such member of the Entertainment Group to
be bound by a
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confidentiality agreement with, or other contractual, legal or fiduciary obligation of
confidentiality to, CCU or any other member of the CCU Group with respect to such information.
(c) If any member of the CCU Group or their respective Representatives, on the one hand, or
any member of the Entertainment Group or their respective Representatives, on the other hand, are
requested or required (by oral question, interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process) by any Governmental Authority or pursuant
to applicable Law to disclose or provide any Entertainment Confidential Information or CCU
Confidential Information (other than with respect to any such information furnished pursuant to the
provisions of Article V of this Agreement), as applicable, the entity or person receiving
such request or demand shall use all commercially reasonable efforts to provide the other party
with written notice of such request or demand as promptly as practicable under the circumstances so
that such other party shall have an opportunity to seek an appropriate protective order. The party
receiving such request or demand agrees to take, and cause its representatives to take, at the
requesting party’s expense, all other commercially reasonable steps necessary to obtain
confidential treatment by the recipient. Subject to the foregoing, the party that received such
request or demand may thereafter disclose or provide any Entertainment Confidential Information or
CCU Confidential Information, as the case may be, to the extent required by such Law (as so advised
by counsel) or by lawful process of such Governmental Authority.
7.3 Litigation.
(a) As of the Distribution Date, Entertainment shall, and shall cause the other members of the
Entertainment Group to assume those Actions relating in any material respect to the Entertainment
Business in which one or more members of the CCU Group is a defendant or the party against whom any
claim or investigation is directed (collectively, the “Assumed Actions”), including the
Assumed Actions listed on Schedule 7.3(a).
(b) As of the Distribution Date, CCU shall, and shall cause the other members of the CCU Group
to, transfer the Transferred Actions to Entertainment, and Entertainment shall receive and have the
benefit of all of the proceeds of such Transferred Actions. “Transferred Actions” means
those Actions relating primary to the Entertainment Business in which one or more members of the
CCU Group is a plaintiff or claimant, all of which are listed on Scheduled 7.3(b).
(c) From and after the Distribution, Entertainment shall, and shall cause the other members of
the Entertainment Group to, (i) diligently conduct, at its sole cost and expense, the defense of
all Assumed Actions and all Existing Actions, (ii) except as may be provided in Section 7.4, pay
all Liabilities that may result from the Assumed Actions and the Existing Actions, and (iii) pay
all fees and costs relating to the defense of the Assumed Actions and the Existing Actions,
including attorneys’ fees and costs incurred after the Distribution Date. “Existing Actions” means
those Actions (other than Assumed Actions) in which Entertainment or any other member of the
Entertainment Group has been named as a defendant or is the party against whom any claim or
investigation is directed, including those listed on Schedule 7.3(c).
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(d) Notwithstanding anything in this Section 7.3 to the contrary, CCU shall have the
right to participate in the defense of any Assumed Action and to be represented by attorneys of its
own choosing and at its sole cost and expense. In no event shall Entertainment (or any other
member of the Entertainment Group) settle or compromise any Assumed Action or Transferred Action
without the express prior written consent of CCU unless (i) there is no finding or admission of any
violation of any law or any violation of the rights of any Person by CCU or any other member of the
CCU Group, (ii) there is no relief (either monetary or non-monetary) binding upon CCU or any other
member of the CCU Group, and (iii) neither CCU nor any other member of the CCU Group has any
Liability with respect to any such settlement or compromise.
(e) Each of CCU and Entertainment agrees that at all times from and after the Distribution
Date, if an Action is commenced by a third party naming both parties (or any member of its
respective Group) as defendants thereto and with respect to which one party (or any member of its
respective Group) is a nominal defendant, then the other party shall use commercially reasonable
efforts to cause such nominal defendant to be removed from such Action.
(f) Notwithstanding anything in this Section 7.3 to the contrary, the Actions set
forth on Schedule 7.3(f) shall be handled in accordance with the terms, conditions and
procedures set forth on such schedule.
7.4 Insurance Matters.
(a) Except as may otherwise be expressly provided in this Section 7.4, Entertainment
does hereby, for itself and each other member of the Entertainment Group, agree that CCU and the
other members of the CCU Group shall not have any Liability whatsoever as a result of the insurance
policies and practices of CCU in effect at any time on or before the Distribution Date, including
as a result of the level or scope of any such insurance, the creditworthiness of any insurance
carrier, the terms and conditions of any policy and the adequacy or timeliness of any notice to any
insurance carrier with respect to any claim or potential claim or otherwise.
(b) The CCU Group shall continue to own all property damage and business interruption, and
liability insurance policies and programs, including, without limitation, primary and excess
general liability, executive liability, automobile, workers’ compensation, property damage and
business interruption, crime and surety insurance policies, in effect on or before the Distribution
Date (collectively, the “CCU Policies”). Subject to the provisions of this Agreement, the
members of the CCU Group shall retain all of their respective rights, benefits and privileges, if
any, under the CCU Policies. Nothing contained herein shall be construed to be an attempted
assignment of or a change to any part of the ownership of the CCU Policies. With respect to any
claim under the CCU Policies relating to the Entertainment Business or the Entertainment Assets,
CCU shall have sole responsibility for claims administration and financial administration of such
policies and such administration shall be governed solely by the terms of Sections 7.4(d)
and 7.4(e). Except as expressly set forth in Sections 7.4(d) and 7.4(e),
no CCU Group member shall have any responsibility for, or obligation to, any member of the
Entertainment Group under the CCU Policies relating to property damage, business interruption,
liability or workers’ compensation matters for any period, whether prior to, on or after the
Distribution Date.
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(c) As of the Distribution Date, Entertainment shall be responsible for establishing and
maintaining separate property damage and business interruption and liability insurance policies and
programs (including, primary and excess general liability, executive liability, automobile,
workers’ compensation, property damage and business interruption, crime, surety and other similar
insurance policies) for activities and claims involving any member of the Entertainment Group, in
each case with commercially reasonable limits and deductibles. Entertainment shall be responsible
for all administrative and financial matters relating to insurance policies established and
maintained by the Entertainment Group for claims involving any member of the Entertainment Group.
(d) For property damage and business interruption losses related to the Entertainment Assets
or the Entertainment Business which occur prior to the Distribution, CCU shall have the sole right,
responsibility and authority to submit and process claims, including claims that are payable to any
member of the CCU Group in whole or in part because of insurance or reinsurance in support of
property damage and business interruption insurance maintained by any CCU Group member prior to the
Distribution Date. Any amounts received by CCU (net of any costs, expenses, deductibles and other
similar payments made by any CCU Group member) with respect to any such unresolved claims in
existence on the Distribution Date that are settled subsequent to the Distribution Date shall be
paid promptly to Entertainment after receipt thereof by CCU.
(e) With respect to workers’ compensation insurance claims administration for occurrences
prior to the Distribution:
(i) The members of the CCU Group shall have the sole right, responsibility and authority for
liability and workers’ compensation claims administration and financial administration for
pre-Distribution occurrences that relate to or affect the CCU Policies or that are uninsured due
to the terms of the CCU Policies.
(ii) Upon notification by a member of the Entertainment Group of a claim relating to a member
of the Entertainment Group under one or more of the CCU Policies, CCU shall cooperate with
Entertainment in asserting and pursuing coverage and payment for such claim by the appropriate
insurance carriers. CCU shall have sole power and authority to make binding decisions,
determinations, commitments and stipulations on its own behalf and on behalf of the Entertainment
Group, which decisions, determinations, commitments and stipulations shall be final and conclusive
if reasonably made to maximize the overall economic benefit of the CCU Policies.
(iii) The Entertainment Group shall assume responsibility for, and shall pay to the
appropriate insurance carriers or otherwise, any premiums, retrospectively rated premiums, defense
costs, indemnity payments, deductibles, retentions or uninsured costs arising from liability or
workers’ compensation losses which are uninsured because of coverage terms or conditions of the
policies covering such losses, or other charges (collectively, “Insurance Charges”)
whenever arising, which shall become due and payable under the terms and conditions of any
applicable CCU Policy in respect of any liabilities, losses, claims, actions or occurrences,
whenever arising or becoming known, arising out of the ownership, use or operation of any of the
assets, businesses, operations or liabilities of any member of the
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Entertainment Group, when the same relate to the period prior to, on or after the
Distribution Date. To the extent that the terms of any applicable CCU Policy provide that any CCU
Group member shall have an obligation to pay or guarantee the payment of any Insurance Charges
relating to any member of the Entertainment Group, CCU shall be entitled to demand that
Entertainment make such payment directly to the Person or entity entitled thereto. In connection
with any such demand, CCU shall submit to Entertainment a copy of any invoice or listing of claims
received by CCU pertaining to such Insurance Charges together with appropriate supporting
documentation. In the event that Entertainment fails to pay any such Insurance Charges when due
and payable, whether at the request of the Person entitled to payment or upon demand by CCU, the
members of the CCU Group may (but shall not be required to) pay such insurance charges for and on
behalf of the Entertainment Group and, thereafter, Entertainment shall reimburse CCU for such
payment within 30 days.
(f) An insurance carrier that would otherwise be obligated to pay any claim shall not be
relieved of the responsibility with respect thereto or, solely by virtue of the provisions of this
Section 7.4, have any subrogation rights with respect thereto, it being expressly
understood and agreed that no insurance carrier or any third party shall be entitled to a benefit
(i.e. a benefit they would not be entitled to receive had no Distribution occurred or in the
absence of the provisions of this Section 7.4) by virtue of the provisions hereof.
(g) Through the Distribution Date, CCU will maintain in full force and effect its existing
insurance to the extent that it applies to the Entertainment Assets or the Entertainment Business.
(h) The provisions of this Section 7.4 relate solely to matters involving property,
damage and business interruption, and liability insurance policies and programs, including, without
limitation, primary and excess general liability, executive liability, automobile, workers’
compensation, property damage and business interruption, crime and surety insurance policies, and
shall not be construed to affect any obligation of or impose any obligation on the parties with
respect to any life, health and accident, dental or medical or any other insurance policies
applicable to any of the officers, directors, employees or other representatives of the parties or
their respective Groups.
7.5 Allocation of Costs and Expenses.
CCU shall pay (or, to the extent incurred by and paid for by any member of the Entertainment
Group, will promptly reimburse such party for any and all amounts so paid) for all out-of-pocket
fees, costs and expenses incurred by Entertainment or any member of the CCU Group prior to and
simultaneously with the consummation of the Distribution in connection with the Transactions,
including (a) the preparation and negotiation of this Agreement, each Transaction Document (unless
otherwise expressly provided therein), and all other documentation related to the Transactions and
all related transactions, (b) the preparation and execution or filing of any and all other
documents, agreements, forms, applications, contracts or consents associated with the Transactions
and all related transactions, (c) the preparation and filing of Entertainment’s and its
Subsidiaries’ organizational documents, (d) the preparation, printing and filing of the Form 10,
including all fees and expenses of complying with applicable federal, state or foreign securities
Laws and domestic or foreign securities exchange rules and
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regulations, together with fees and expenses of counsel retained to effect such compliance,
(e) the private letter ruling from the Internal Revenue Service sought in connection with the
Transactions, (f) the initial listing of the Entertainment Common Stock on the NYSE, (g) the
preparation (including, but not limited to, the printing of documents) and implementation of
Entertainment’s or its Subsidiaries’ employee benefit plans, retirement plans and equity-based
plans and (h) the Series B Preferred Stock Sale, but excluding all out-of-pocket fees, commissions,
discounts, costs and expenses incurred in connection with the Credit Facility, the Series A
Preferred Stock Issuance and the Series B Preferred Stock Issuance, which shall be the
responsibility of Entertainment.
7.6 Tax Matters. Notwithstanding any provision in this Agreement to the contrary, to
the extent that any representations, warranties, covenants and agreements between CCU and
Entertainment, and their respective Groups, with respect to Tax matters are set forth in the Tax
Matters Agreement, including indemnification agreements or tax sharing agreements or arrangements,
such Tax matters shall be governed exclusively by such Tax agreements and not by this Agreement.
7.7 Trademarks and Trade Names. This Agreement does not assign any rights in any
trademarks, service marks or trade names containing “Clear Channel” or any variations thereof, or
any of their respective applications and registrations wherever used or registered, other than as
specifically set forth in the Trademark License Agreement. Entertainment shall, and shall cause
the other members of the Entertainment Group to, at its own expense, (a) within thirty (30) days
after the Distribution Date, change, if necessary, its corporate name to delete therefrom the words
“Clear Channel” or any other word that is confusingly similar to the words “Clear Channel,” and (b)
within one (1) year after the Distribution Date, remove any and all references to any trademarks,
service marks or trade names containing “Clear Channel” from any and all signs, displays or other
identification or advertising materials.
ARTICLE VIII
DISPUTE RESOLUTION
DISPUTE RESOLUTION
8.1 General Provisions.
(a) Any dispute, controversy or claim arising out of or relating to this Agreement or the
Transaction Documents (other than the Transaction Documents set forth on Schedule 8.1), or
the validity, interpretation, breach or termination thereof (a “Dispute”), shall be
resolved in accordance with the procedures set forth in this Article VIII, which shall be
the sole and exclusive procedures for the resolution of any such Dispute unless otherwise specified
below.
(b) Commencing with a request contemplated by Section 8.2, all communications between
the parties or their representatives in connection with the attempted resolution of any Dispute,
including any mediator’s evaluation referred to in Section 8.3, shall be deemed to have
been delivered in furtherance of a Dispute settlement and shall be exempt from discovery and
production, and shall not be admissible in evidence for any reason (whether as an admission or
otherwise), in any arbitral or other proceeding for the resolution of the Dispute.
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(c) IN CONNECTION WITH ANY DISPUTE, THE PARTIES EXPRESSLY WAIVE AND FORGO ANY RIGHT TO (I)
SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, CONSEQUENTIAL, EXEMPLARY, STATUTORILY ENHANCED OR SIMILAR
DAMAGES IN EXCESS OF COMPENSATORY DAMAGES (PROVIDED THAT LIABILITY FOR ANY SUCH DAMAGES WITH
RESPECT TO A THIRD PARTY CLAIM SHALL BE CONSIDERED DIRECT DAMAGES), AND (II) TRIAL BY JURY.
(d) The specific procedures set forth below, including but not limited to the time limits
referenced therein, may be modified by agreement of the parties in writing.
(e) All applicable statutes of limitations and defenses based upon the passage of time shall
be tolled while the procedures specified in this Article VIII are pending. The parties
will take such action, if any, required to effectuate such tolling.
(f) THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY STATE COURT
LOCATED WITHIN THE STATE OF TEXAS OVER ANY SUCH DISPUTE AND EACH PARTY HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH DISPUTE OR ANY ACTION RELATED THERETO MAY BE HEARD AND
DETERMINED IN SUCH COURTS. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUCH DISPUTE BROUGHT IN SUCH COURT OR ANY DEFENSE OF INCONVENIENT FORUM FOR THE MAINTENANCE OF SUCH
DISPUTE. EACH OF THE PARTIES AGREES THAT A JUDGMENT IN ANY SUCH DISPUTE MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
8.2 Consideration by Senior Executives.
If a Dispute is not resolved in the normal course of business at the operational level, the
parties first shall attempt in good faith to resolve such Dispute by negotiation between executives
who hold, at a minimum, the office of President and Chief Executive Officer of the respective
business entities involved in such Dispute prior to exercising remedies pursuant to Section
8.3 or Section 8.4. Either party may initiate the executive negotiation process by
providing a written notice to the other (the “Initial Notice”). Within fifteen (15) days
after delivery of the Initial Notice, the receiving party shall submit to the other a written
response (the “Response”). The Initial Notice and the Response shall include (i) a
statement of the Dispute and of each party’s position, and (ii) the name and title of the executive
who will represent that party and of any other person who will accompany the executive. Such
executives will meet in person or by telephone within thirty (30) days of the date of the Initial
Notice to seek a resolution of the Dispute.
8.3 Mediation.
If a Dispute is not resolved by negotiation as provided in Section 8.2 within
forty-five (45) days from the delivery of the Initial Notice, then either party may submit the
Dispute for resolution by mediation pursuant to the CPR Institute for Dispute Resolution (the
“CPR”) Model
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Mediation Procedure as then in effect prior to exercising remedies pursuant to Section
8.4. The parties will select a mediator from the CPR Panels of Distinguished Neutrals. Either
party at commencement of the mediation may ask the mediator to provide an evaluation of the Dispute
and the parties’ relative positions.
8.4 Arbitration.
(a) If a Dispute is not resolved by mediation as provided in Section 8.3 within thirty
(30) days of the selection of a mediator (unless the mediator chooses to withdraw sooner), either
party may submit the Dispute to be finally resolved by arbitration pursuant to the CPR Rules for
Non-Administered Arbitration as then in effect (the “CPR Arbitration Rules”). The parties
hereby consent to a single, consolidated arbitration for all known Disputes existing at the time of
the arbitration and for which arbitration is permitted.
(b) The neutral organization for purposes of the CPR Arbitration Rules will be the CPR. The
arbitral tribunal shall be composed of three arbitrators, of whom each party shall appoint one in
accordance with the “screened” appointment procedure provided in Rule 5.4 of the CPR Arbitration
Rules. The arbitration shall be conducted in San Antonio, Texas. Each party shall be permitted to
present its case, witnesses and evidence, if any, in the presence of the other party. A written
transcript of the proceedings shall be made and furnished to the parties. The arbitrators shall
determine the Dispute in accordance with the law of the State of Texas, without giving effect to
any conflict of law rules or other rules that might render such law inapplicable or unavailable,
and shall apply this Agreement and the Transaction Documents according to their respective terms;
provided, however, that any Dispute in respect of a Transaction Document which by
its terms is governed by the law of a jurisdiction other than the State of Texas shall be
determined by the law of such other jurisdiction and; provided, further,
however, that the provisions of this Agreement relating to arbitration shall in any event
be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq.
(c) The parties agree to be bound by any award or order resulting from any arbitration
conducted in accordance with this Section 8.4 and further agree that judgment on any award
or order resulting from an arbitration conducted under this Section 8.4 may be entered and
enforced in a court having jurisdiction thereof.
(d) Except as expressly permitted by this Agreement, no party will commence or voluntarily
participate in any court action or proceeding concerning a Dispute, except (i) for enforcement as
contemplated by Section 8.4(c), (ii) to restrict or vacate an arbitral decision based on
the grounds specified under applicable law, or (iii) for interim relief as provided in Section
8.4(e). For purposes of the foregoing and as provided in Section 8.1(f), the parties
submit to the exclusive jurisdiction of the courts of the State of Texas.
(e) In addition to the authority otherwise conferred on the arbitral tribunal, the tribunal
shall have the authority to make such orders for interim relief, including injunctive relief, as it
may deem just and equitable. Notwithstanding Section 8.4(d) above, each party acknowledges
that in the event of any actual or threatened breach of the provisions of (i) Section 7.2,
(ii) the Employee Matters Agreement, (iii) the Trademark License Agreement or (iv) the Tax Matters
Agreement, the remedy at law would not be adequate, and therefore injunctive
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or other interim relief may be sought immediately to restrain such breach. If the tribunal
shall not have been appointed, either party may seek interim relief from a court having
jurisdiction if the award to which the applicant may be entitled may be rendered ineffectual
without such interim relief. Upon appointment of the tribunal following any grant of interim
relief by a court, the tribunal may affirm or disaffirm such relief, and the parties will seek
modification or rescission of the court action as necessary to accord with the tribunal’s decision.
(f) Each party will bear its own attorneys’ fees and costs incurred in connection with the
resolution of any Dispute in accordance with this Article VIII.
ARTICLE IX
MISCELLANEOUS
MISCELLANEOUS
9.1 Corporate Power; Fiduciary Duty.
(a) Each of CCU and Entertainment represents as follows:
(i) each such Person has the requisite corporate or other power and authority and has taken
all corporate or other action necessary in order to execute, deliver and perform this Agreement
and each other Transaction Document to which it is a party and to consummate the transactions
contemplated hereby and thereby; and
(ii) this Agreement has been duly executed and delivered by each such Person and each
Transaction Document to which such Person is a party has been, or will be on or prior to the
Distribution Date, duly executed and delivered by it, and upon execution and delivery, this
Agreement and the other Transaction Documents will constitute a valid and binding agreement of
such Person enforceable in accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance or similar laws affecting the
enforcement of creditors’ rights generally and subject to general principles of equity (regardless
of whether enforcement is sought in a proceeding of law or in equity).
(b) Notwithstanding any provision of this Agreement or any Transaction Document, no member of
the Entertainment Group and no member of the CCU Group shall be required to take or omit to take
any act that would violate its fiduciary duties to any non-wholly-owned Subsidiary of CCU or
Entertainment, as the case may be (it being understood that directors’ qualifying shares or similar
interests will be disregarded for purposes of determining whether a Subsidiary is wholly-owned).
9.2 Governing Law.
This Agreement and, unless expressly provided therein, each other Transaction Document, shall
be governed by, and construed and interpreted in accordance with, the laws of the State of Texas,
without giving effect to any conflicts of law rule or principle that might require the application
of the laws of another jurisdiction.
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9.3 Survival of Covenants.
Except as expressly set forth in any Transaction Document, the covenants and other agreements
contained in this Agreement and each Transaction Document, and liability for the breach of any
obligations contained herein or therein, shall survive each of the Contribution and the
Distribution and shall remain in full force and effect.
9.4 Force Majeure.
No party hereto (or any Person acting on its behalf) shall have any liability or
responsibility for failure to fulfill any obligation (other than a payment obligation) under this
Agreement or, unless otherwise expressly provided therein, any Transaction Document, so long as and
to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or
delayed as a consequence of circumstances of Force Majeure. A party claiming the benefit of this
provision shall, as soon as reasonably practicable after the occurrence of any such event: (a)
notify the other parties of the nature and extent of any such Force Majeure condition and (b) use
due diligence to remove any such causes and resume performance under this Agreement as soon as
feasible.
9.5 Notices.
All notices, requests, claims, demands and other communications under this Agreement and, to
the extent applicable and unless otherwise provided therein, under each of the Transaction
Documents shall be in writing and shall be given or made (and shall be deemed to have been duly
given or made upon receipt) by delivery in person, by overnight courier service, by facsimile with
receipt confirmed (followed by delivery of an original via overnight courier service) or by
registered or certified mail (postage prepaid, return receipt requested) to the respective parties
at the following addresses (or at such other address for a party as shall be specified in a notice
given in accordance with this Section 9.5):
If to any member of the CCU Group, to:
Clear Channel Communications, Inc. | ||||||
Attn: | ||||||
Facsimile: | ||||||
If to any member of the Entertainment Group, to:
CCE Spinco, Inc. | ||||||
Attn: | ||||||
Facsimile: | ||||||
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9.6 Severability.
If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced under any Law or as a matter of public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the parties to this
Agreement shall negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated by this Agreement be consummated as originally contemplated to the
greatest extent possible.
9.7 Entire Agreement.
Except as otherwise expressly provided in this Agreement, this Agreement (including the
Schedules and Exhibits hereto) constitutes the entire agreement of the parties with respect to the
subject matter of this Agreement and supersedes all prior agreements and undertakings, both written
and oral, between or on behalf of the parties with respect to the subject matter of this Agreement.
9.8 Assignment; No Third-Party Beneficiaries.
This Agreement shall not be assigned by any party hereto without the prior written consent of
the other party hereto. Except as provided in Article VI with respect to Indemnified
Parties, this Agreement is for the sole benefit of the parties to this Agreement and members of
their respective Group and their permitted successors and assigns and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person or entity any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
9.9 Public Announcements.
CCU and Entertainment shall consult with each other before issuing, and give each other the
opportunity to review and comment upon, any press release or other public statements with respect
to the transactions contemplated by this Agreement and the Transaction Documents, and shall not
issue any such press release or make any such public statement prior to such consultation, except
as may be required by applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or national securities quotation system.
9.10 Amendment.
No provision of this Agreement may be amended or modified except by a written instrument
signed by both parties. No waiver by any party of any provision hereof shall be effective unless
explicitly set forth in writing and executed by the party so waiving. The waiver by either party
hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver
of any other subsequent breach.
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9.11 Rules of Construction.
Interpretation of this Agreement shall be governed by the following rules of construction:
(a) words in the singular shall be held to include the plural and vice versa and words of one
gender shall be held to include the other gender as the context requires, (b) references to the
terms Article, Section, paragraph, and Schedule are references to the Articles, Sections,
paragraphs, and Schedules to this Agreement unless otherwise specified, (c) the word “including”
and words of similar import shall mean “including, without limitation,” (d) provisions shall apply,
when appropriate, to successive events and transactions, (e) the table of contents and headings
contained herein are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement, and (f) this Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party drafting or causing
any instrument to be drafted.
9.12 Counterparts.
This Agreement may be executed in one or more counterparts, and by each party in separate
counterparts, each of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile or electronic mail shall be as effective as delivery
of a manually executed counterpart of any such Agreement.
9.13 Termination.
This Agreement and any Transaction Document may be terminated at any time prior to the
Effective Date by and in the sole discretion of CCU without the approval of Entertainment in which
case neither party will have any liability of any kind to the other party. The obligations of the
parties under Article IV (including the obligation to pursue or effect the Distribution)
may be terminated by CCU if (i) at any time after the Effective Date CCU determines, in its sole
and absolute discretion, that the Distribution would not be in the best interests of CCU or its
shareholders or (ii) the Distribution has not occurred by [___, 2006].
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have caused this Master Separation and Distribution Agreement
to be executed to be effective on the date first written above by their respective duly authorized
officers.
CLEAR CHANNEL COMMUNICATIONS, INC. | ||||
By: | ||||
Name: | ||||
Title: | ||||
CCE SPINCO, INC. | ||||
By: | ||||
Name: | ||||
Title: | ||||
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