Exhibit 10.1
SETTLEMENT AGREEMENT AND RELEASE
This settlement agreement and release (the “Settlement Agreement and Release”)
dated as of July 15, 2009, is made by and between ION Media Networks, Inc.
(“ION”) and RHI Entertainment Distribution, LLC (“RHI”).
WHEREAS, ION and RHI are parties to that certain license agreement, dated
December 1, 2007 (the “Agreement”), pursuant to which RHI licensed to ION
certain programs for broadcast on ION’s television network, and ION provided to
RHI the exclusive right to air such programming during certain time periods on
ION’s television network, on the terms and conditions set forth therein;
WHEREAS, on May 19, 2009, ION and certain of its affiliates (collectively, the
“Debtors”) each filed a petition under chapter 11 of title 11 of the United
States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for
the Southern District of New York (the “Bankruptcy Court”);
WHEREAS, on June 8, 2009, ION commenced an adversary proceeding against RHI in
the Bankruptcy Court (Adv. Pro. No. 09-01268 (JMP) (referred to herein as the
“Lawsuit”), alleging that RHI breached the Agreement in a number of respects;
WHEREAS, RHI denies the allegations in the Complaint and intends to assert
certain affirmative defenses and counterclaims against ION;
WHEREAS, following the commencement of the Lawsuit, ION and RHI engaged in
settlement communications concerning the alleged breach of the Agreement by RHI
as well as certain claims that RHI allegedly believes it has against ION; and
WHEREAS, the signatories to this Settlement Agreement and Release desire to
resolve fully and finally all of the disputes and claims they have or may have
that arise out of or relate in any way to the Agreement, the Lawsuit, and each
party’s claims against the other, without any admission of liability or
wrongdoing;
NOW, THEREFORE, in consideration of the promises herein made and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby mutually agreed as follows:

  1.   This Settlement Agreement and Release will become effective on the date
(the “Effective Date”) that is two (2) business days following the date on which
the Bankruptcy Court enters an order approving this Settlement Agreement and
Release, provided RHI has made the Settlement Payment provided for in paragraph
2 below. If the Bankruptcy Court declines to approve this Settlement Agreement
and Release, then the entire Settlement Agreement and Release shall be null and
void.

 

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  2.   In consideration of the rights and releases herein granted, RHI shall pay
Two Million Five Hundred Thousand Dollars ($2,500,000) to ION (the “Settlement
Payment”) no later than the Effective Date by wire transfer to an account
designated in writing by ION. The Settlement Payment is made in compromise of
all amounts allegedly owed by each party to the other pursuant to the Agreement,
including all Annual Minimum Guarantee payments (as defined in the Agreement),
accounts receivable for cumulative advertising sales, and certain minimum
advertising, marketing and promotion expenditures in connection with RHI
Programming.         ION will be solely responsible for any and all tax
liabilities associated with the Settlement Payment, and RHI makes no
representation or warranty of any kind regarding same.     3.   RHI and ION will
retain for their own accounts all monies they have collected from advertising
sales under the Agreement through and including June 30, 2009. Any monies
collected by RHI from advertising sales under the Agreement after June 30, 2009
but prior to the Effective Date, will be paid by RHI to ION on the Effective
Date. All such monies collected by RHI during any calendar month after the
Effective Date (including any checks dated prior to, but received after,
June 30, 2009) will be paid to ION no later than the 15th day of the month
following the calendar month in which the money was collected. ION shall
continue to retain for its own account any monies it collects from advertising
sales under the Agreement after June 30, 2009.     4.   RHI and ION hereby
acknowledge and agree that, as of the Effective Date, and following payment of
the Settlement Payment, the Agreement shall be terminated and of no further
force or effect and neither shall have any further obligation to the other in
connection therewith. For the avoidance of doubt, as of the Effective Date, RHI,
subject to the payment of the Settlement Payment, shall have no further
obligation whatsoever under the Agreement, including to: (i) provide any RHI
Programming (as defined in the Agreement) to ION; (ii) pay any Annual Minimum
Guarantee or other payment to ION (except as provided in paragraph 3 above);
(iii) spend any amount for “off network” marketing, advertising or promotion in
connection with RHI Programming; (iv) spend or cause a third party to spend any
amount for “on network” advertising, marketing or promotion in connection with
RHI Programming; or (v) with respect to any remaining advertising sales
“liability” resulting from audience delivery shortfalls, provide Audience
Deficiency Units (“ADU’s”) or other methods such as “cash back” payments to
advertisers who purchased RHI Programming Time Period advertising inventory.    
5.   For the avoidance of doubt, as of the Effective Date, ION shall have no
further obligation or right to telecast or otherwise exploit RHI Programming. On
or before the Effective Date, ION, at its sole cost and expense, shall return to

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      RHI all masters, sub-masters and other such materials in its possession or
control related to RHI Programming.     6.   (a) Except for claims to enforce
the terms of, or for any breaches of the warranties and representations set
forth in, this Settlement Agreement and Release, and in consideration of the
Settlement Payment, the sufficiency of which is hereby acknowledged by ION, and
of the covenants set forth herein, ION, and each of the Debtors, on behalf of
themselves and their respective past, present or future general partners,
limited partners, predecessors-in-interest, successors-in-interest,
administrators, parents, owners, officers, shareholders, directors, employees,
representatives, licensees, subsidiaries (whether wholly, partially or
indirectly owned), affiliates, divisions, entities, related entities, agents,
attorneys and assigns and each of their respective successors and assigns
(hereinafter collectively the “ION Parties”) hereby release and discharge RHI,
and its past, present or future general partners, limited partners,
predecessors-in-interest, successors-in-interest, administrators, parents,
owners, officers, shareholders, directors, employees, representatives,
licensees, subsidiaries (whether wholly, partially or indirectly owned),
affiliates, divisions, entities, related entities, agents, attorneys and assigns
and each of their respective successors and assigns (hereinafter collectively
the “RHI Parties”) from any and all liabilities, actions, claims, causes of
action, lawsuits (including, without limitation, the Lawsuit), debts, dues, sums
of money, accounts, reckonings, bills, covenants, contracts, controversies,
agreements, obligations, promises, judgments and demands, whatsoever, whether
known or unknown, contingent or vested, in law or equity, that the ION Parties
ever had, now have or hereafter can, shall or may have from the beginning of
time through and including the Effective Date against the RHI Parties, arising
out of, in connection with, or relating in any way to the Agreement, the
negotiation, execution or delivery thereof, or the transactions, events or
occurrences that are the subject matter of the Lawsuit or any claim or
allegation that was or could have been made in the Lawsuit.         (b) Except
for claims to enforce the terms of, or for any breaches of the warranties and
representations set forth in, this Settlement Agreement and Release and of the
covenants set forth herein, RHI, on behalf of itself and its respective past,
present or future general partners, limited partners, predecessors-in-interest,
successors-in-interest, administrators, parents, owners, officers, shareholders,
directors, employees, representatives, licensees, subsidiaries (whether wholly,
partially or indirectly owned), affiliates, divisions, entities, related
entities, agents, attorneys and assigns and each of their respective successors
and assigns hereby release and discharge ION, each of its Debtors, and each of
their past, present or future general partners, limited partners,
predecessors-in-interest, successors-in-interest, administrators, parents,
owners, officers, shareholders, directors, employees, representatives,
licensees, subsidiaries (whether wholly, partially or indirectly owned),
affiliates, divisions, entities, related entities, agents, attorneys and

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      assigns from any and all liabilities, actions, claims, causes of action,
lawsuits (including, without limitation, the Lawsuit), debts, dues, sums of
money, accounts, reckonings, bills, covenants, contracts, controversies,
agreements, obligations, promises, judgments and demands, whatsoever, whether
known or unknown, contingent or vested, in law or equity, that the RHI Parties
ever had, now have or hereafter can, shall or may have from the beginning of
time through and including the Effective Date against the ION Parties, arising
out of, in connection with, or relating in any way to the Agreement, the
negotiation, execution or delivery thereof, or the transactions, events or
occurrences that are the subject matter of the Lawsuit or any claim or
allegation that was or could have been made in the Lawsuit or in any
counterclaim therein.     7.   Within five (5) business days following the
Effective Date, counsel for ION and RHI shall execute and file with the Court a
Stipulation of Dismissal, dismissing the Lawsuit with prejudice. In addition to
the Stipulation of Dismissal, the parties to this Settlement Agreement and
Release shall prepare, execute and/or file with the Court any and all other
documents that may be necessary to effectuate the dismissal of the Lawsuit and
the approval of this Settlement Agreement and Release by the Bankruptcy Court.
In the event that RHI or any of its affiliates commences a case under chapter 11
of the Bankruptcy Code within ninety (90) days after the Effective Date and the
bankruptcy court having jurisdiction over any RHI chapter 11 case determines
that the Settlement Payment is subject to avoidance pursuant to chapter 5 of the
Bankruptcy Code, ION’s original claims and RHI’s counterclaims and affirmative
defenses shall be reinstated in full for purposes of RHI’s chapter 11 case, and
all of ION’s and RHI’s rights with respect to the Agreement and the Lawsuit
shall be unaltered as a result of this Settlement Agreement and Release.     8.
  Neither RHI nor ION will make any public statements regarding the Lawsuit or
this Settlement Agreement and Release other than to say — if asked — that the
parties “have resolved their differences amicably.” The provisions of this
Settlement Agreement and Release: (a) have not been and may not be cited by any
party hereto as an admission of any issue of fact or law; and (b) have not been
and may not be used for advertising or promotional purposes. Nothing in this
Settlement Agreement and Release shall prevent the parties from filing public
documents required to fulfill their disclosure or other legal obligations.    
9.   Neither RHI nor ION will make any disparaging comments about the other for
a period of one year from the Effective Date.     10.   Each party hereto
warrants and represents that it has all necessary authority to enter into this
Settlement Agreement and Release and to perform all of its obligations under
this Settlement Agreement and Release.

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  11.   This Settlement Agreement and Release is binding upon and shall inure to
the benefit of the licensees, representatives, employees, transferees,
affiliates, divisions, entities, related entities, subsidiaries, parent
corporations, successors and/or assigns of the parties hereto. Notwithstanding
the foregoing, ION, on behalf of itself and the ION Parties, represents that it
has not heretofore assigned or otherwise transferred any claim, demand, or cause
of action that is the subject of this Settlement Agreement and Release.     12.
  This Settlement Agreement and Release shall be governed by the laws of the
State of New York applicable to contracts made or to be performed in New York,
without regard to its conflicts of law principles. All parties consent to the
sole and exclusive personal jurisdiction and venue in any federal or state court
located in the County of New York, and agree that all disputes or litigation
arising out of and/or regarding this Settlement Agreement and Release shall be
submitted to and determined by said courts.     13.   All notices under this
Settlement Agreement and Release shall be provided by mail, with a
contemporaneous copy by e-mail, and addressed as follows:

If to ION:
ION Media Networks, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attn: Brandon Burgess, CEO
With a copy to:
Joshua Sussberg
Kirkland & Ellis LLP
601 Lexington Ave.
New York, NY 10022
If to RHI:
RHI Entertainment Distribution, LLC
1325 Avenue of the Americas, 21st Floor
New York, NY 10019
Attn: Henry S. Hoberman
Executive Vice President, General Counsel
& Secretary
With a copy to:
James Quinn
David Lender

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Weil, Gotshal & Manges
767 Fifth Ave.
Suite 3301
New York, NY 10153

  14.   If any provision of this Settlement Agreement and Release shall be
determined by a court of competent jurisdiction to be invalid or unenforceable,
such determination shall not affect the remaining provisions of this Settlement
Agreement and Release, all of which shall remain in full force and effect.    
15.   This Settlement Agreement and Release embodies the full, complete and
entire agreement and understanding of the parties of all of the terms and
conditions with respect to the matters discussed and supersedes any prior or
contemporaneous verbal or written discussions. It is expressly understood and
agreed that this Settlement Agreement and Release may not be altered, amended,
modified, superseded, terminated, canceled, renewed, extended or otherwise
changed in any respect whatsoever except by a written instrument duly executed
by the undersigned.     16.   This Settlement Agreement and Release shall be
deemed to have been written jointly by the parties. Ambiguities shall not be
construed against the interest of any party because that party drafted all or
any part of this Settlement Agreement and Release.     17.   The parties to this
Settlement Agreement and Release represent that they have read this Settlement
Agreement and Release and know and understand its contents. The parties
understand and expressly agree that this Settlement Agreement and Release has
been freely and voluntarily entered into and that no oral or written
representations or promises of any kind, unless specifically contained in this
Settlement Agreement and Release, have been made or relied upon by any of the
parties. The parties acknowledge that they have had the benefit of the advice of
legal counsel before executing this Settlement Agreement and Release.     18.  
The persons signing this Settlement Agreement and Release on behalf of the
parties hereby represent and warrant that they are duly authorized to execute
this Settlement Agreement and Release on behalf of the entities for which they
have signed, and that this Settlement Agreement and Release is legal, valid and
binding on the entities on whose behalf they have signed.

  19.   The representations, warranties and covenants contained in this
Settlement Agreement and Release or in any other document delivered hereunder
shall survive the execution of this Settlement Agreement and Release.

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  20.   No breach of any provision hereof can be waived unless in writing signed
by the waiving party. Waiver of any one breach of any provision hereof shall not
be deemed to be a waiver of any other breach of the same or any other provision
hereof.     21.   This Settlement Agreement and Release is the result of a
compromise and shall not at any time for any purpose be construed by the
parties, their attorneys, or anyone else as an admission by either party of any
liability or responsibility for any damages allegedly suffered by the other, and
the parties further acknowledge that they specifically disclaim any liability or
responsibility for such damages.     22.   The parties may execute this
Settlement Agreement and Release in separate counterparts, each of which shall
be deemed an original instrument as against the party who has signed it. Each
party’s signature at the bottom hereof will signify acceptance of, and agreement
to, the terms and provisions contained herein. Facsimile copies of this
Settlement Agreement and Release shall have the same force and effect as
originals.

IN WITNESS WHEREOF, the parties hereto have executed this Settlement Agreement
and Release on the date written below.

          ACCEPTED AND AGREED:    
 
        ION MEDIA NETWORKS, INC.    
 
       
By:
  /s/ Jeffrey J. Quinn    
 
 
 
     
Its:
 
 
Vice President & Treasurer       Date: 7/15/09    
 
        RHI ENTERTAINMENT DISTRIBUTION, LLC    
 
       
By:
  /s/ Henry S. Hoberman    
 
 
 
     
Its:
 
 
Henry S. Hoberman    
 
  Exec. V.P., General Counsel & Secretary    
 
       
Date:
  July 15, 2009    

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