EXHIBIT 10.3
 
EXECUTION VERSION
 
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) dated as of October
26 2016, between Hemisphere Media Group, Inc., a Delaware corporation (the
“Company”), and Alex J. Tolston (“Executive”).
WHEREAS, Executive is currently employed by the Company in the capacity of
General Counsel and Corporate Secretary;
WHEREAS, the Company and Executive are parties to an Employment Agreement, dated
as of May 6, 2013 (the “Original Employment Agreement”);
WHEREAS, the parties desire to amend and restate the Original Employment
Agreement such that Executive’s employment continues on the terms and conditions
set forth herein, effective as of April 9, 2016; and
WHEREAS Executive’s agreement to enter into this Agreement and be bound by the
terms hereof, including the restrictive covenants herein, is a material
inducement to the Company’s willingness to grant stock options and restricted
stock to Executive and the Company would not otherwise grant such stock options
and restricted stock to Executive if Executive did not agree to enter into this
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, and intending to be legally bound hereby, the
parties hereto agree as set forth below:
1.            Term.  (a)  The term of Executive’s employment under this
Agreement shall be effective on April 9, 2016 (the “Effective Date”), and shall
continue until April 9, 2019 (the “Initial Expiration Date”), provided that on
the Initial Expiration Date and each subsequent anniversary of the Initial
Expiration Date, the term of Executive’s employment under this Agreement shall
be automatically extended for one additional year unless either party provides
written notice to the other party at least 180 days prior to the Initial
Expiration Date (or any such anniversary, as applicable) that Executive’s
employment hereunder shall not be so extended (in which case Executive’s
employment and this Agreement shall terminate on the Initial Expiration Date or
expiration of the extended term, as applicable); provided, however, that
Executive’s employment and this Agreement may be terminated at any time pursuant
to the provisions of Section 4.  The period of time from the Effective Date
through the termination of this Agreement and Executive’s employment hereunder
pursuant to its terms is herein referred to as the “Term”; and the date on which
the Term is scheduled to expire (i.e., the Initial Expiration Date or the
scheduled expiration of the extended term, if applicable) is herein referred to
as the “Expiration Date”.
(b)            Executive agrees and acknowledges that the Company has no
obligation to extend the Term or to continue Executive’s employment following
the Expiration Date, and Executive expressly acknowledges that no promises or
understandings to the contrary have been made or reached.  Executive also agrees
and acknowledges that, should Executive and the Company choose to continue
Executive’s employment for any period of time following the Expiration Date
without extending the term of Executive’s employment under this Agreement or
entering into a new written employment agreement, Executive’s employment with
the Company shall be “at will”, such that the Company may terminate Executive’s
employment at any time, with or without reason and with or without notice, and
Executive may resign at any time, with or without reason and with or without
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(c)            For purposes of this Agreement, the following terms, as used
herein, shall have the definitions set forth below.
“Affiliate” means, with respect to any specified Person, any other Person that
directly or indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such specified Person, provided
that, in any event, any business in which the Company has any direct or indirect
ownership interest shall be treated as an Affiliate of the Company.
“Change in Control” has the meaning set forth in the Plan.
“Control” (including, with correlative meanings, the terms “Controlled by” and
“under common Control with”), as used with respect to any Person, means the
direct or indirect possession of the power to direct or cause the direction of
the management or policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
“Governmental Entity” means any national, state, county, local, municipal or
other government or any court of competent jurisdiction, administrative agency
or commission or other governmental authority or instrumentality.
“Person” means any individual, firm, corporation, partnership, limited liability
company, trust, joint venture, association, Governmental Entity, unincorporated
entity or other entity.
“Plan” means the Hemisphere Media Group, Inc. Amended and Restated 2013 Equity
Incentive Plan.
2.            Duties and Responsibilities.  (a)  During the Term, Executive
agrees to be employed and devote substantially all of Executive’s business time
and efforts to the Company and the promotion of its interests and the
performance of Executive’s duties and responsibilities hereunder as Executive
Vice President, General Counsel and Corporate Secretary, upon the terms and
conditions of this Agreement.  Executive shall perform such lawful duties and
responsibilities as directed from time to time by the Board of Directors of the
Company (the “Board”) or the Chief Executive Officer of the Company (“CEO”) that
are customary for an Executive Vice President, General Counsel and Corporate
Secretary of a corporation of the size and nature of the Company.
(b)            During the Term, Executive shall report directly to the CEO. 
Executive acknowledges that Executive’s duties and responsibilities shall
require Executive to travel on business to the extent necessary to fully perform
Executive’s duties and responsibilities hereunder.  It is anticipated that
Executive shall physically be on Company premises (or traveling on Company
business) during normal business hours (unless absent due to vacation, injury,
illness or other approved leave of absence).
(c)            During the Term, Executive shall use Executive’s best efforts to
faithfully and diligently serve the Company and shall not act in any capacity
that is in conflict with Executive’s duties and responsibilities hereunder;
provided, however, Executive may manage Executive’s personal investments and
affairs and participate in non-profit, educational, charitable and civic
activities, to the extent that such activities do not interfere with the
performance of Executive’s duties hereunder, and are not in conflict with the
business interests of the Company or its Affiliates or otherwise compete with
the Company or its Affiliates.  Except as provided in the immediately preceding
sentence, for the avoidance of doubt, during the Term Executive shall not be
permitted to become engaged in or render services for any Person other than the
Company and its Affiliates, and shall not be permitted to be a member of the
board of directors of any company, in any case without the consent of the
Company (for
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all purposes under this Agreement, any required consent of the Company shall be
evidenced by a duly authorized resolution of the Board).
3.            Compensation and Related Matters.  (a)  Base Salary.  During the
Term, for all services rendered under this Agreement, Executive shall receive an
annualized base salary (“Base Salary”) at a rate of $400,000, payable in
accordance with the Company’s applicable payroll practices.  Base Salary shall
be subject to review by the Board annually for increases, but not decreases,
deemed necessary or appropriate in its sole discretion.  References in this
Agreement to “Base Salary” shall be deemed to refer to the most recently
effective annual base salary rate.  For the avoidance of doubt, within thirty
(30) days after Executive’s execution of this Agreement, the Company shall pay
to Executive an amount equal to the product of (i) the difference between
$400,000 and Executive’s Base Salary as of April 8, 2016, and (ii) a fraction,
the numerator of which is the number of calendar days between April 9, 2016 and
the date on which Executive shall have executed this Agreement, and the
denominator of which is 365.
(b)            Annual Bonus.
(i)            During the Term, subject to Section 4(b), for each calendar year,
Executive shall have the opportunity to earn an annual bonus (“Annual Bonus”)
based on performance against specified objective (including budgetary or
EBITDA-based) performance criteria (“Performance Goals”) established by the
Board prior to or as soon as practicable following each calendar year, which
goals shall be substantially consistent with, but to the extent applicable, no
less favorable than, the performance goals applicable to the annual bonus for
the CEO and the Company’s Chief Financial Officer (“CFO”), subject to
Executive’s continued employment through December 31 of each such calendar
year.  The Annual Bonus shall be equal to 37.5% of Base Salary if the Company
achieves at least 80% of its Performance Goals, 50% of Base Salary (the “Target
Bonus”) if the Company achieves at least 100% of its Performance Goals and 62.5%
of Base Salary if the Company achieves 110% or more of its Performance Goals,
with the actual Annual Bonus determined by linear interpolation based on the
Company’s achievement of Performance Goals between 80% and 100% or between 100%
and 110%, as applicable.
(ii)            Any Annual Bonus payable for any calendar year shall be paid in
cash as soon as practicable following the determination of the Company’s
performance results for such calendar year, but in  no event later than
March 15th of the calendar year following the calendar year to which such Annual
Bonus relates.
(c)            Equity.  As promptly as practicable following the execution of
this Agreement, the Company will grant Executive (i) an option (the “Option”) to
purchase 200,000 shares of Company common stock (“Stock”), and (ii) 25,000
restricted shares of Stock (“Restricted Stock” and together with the Option, the
“Equity Awards”), each pursuant to, and subject to, the terms of the Plan and,
respectively, the form of award certificate attached hereto as Exhibit A and the
restricted stock certificate attached hereto as Exhibit B.   Each share of Stock
subject to the Option shall have an exercise price equal to the fair market
value of a share of Stock on the date of grant, and the Equity Awards will vest
in 3 equal annual installments on the first 3 anniversaries of April 9, 2016.
(d)            Benefits and Perquisites.  During the Term, Executive shall be
entitled to participate in the benefit plans and programs commensurate with
Executive’s position, that are provided by the Company from time to time for its
senior executives generally, subject to the terms and conditions of such plans.
In addition, the Company shall pay the premiums for life and AD&D insurance
policies
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having an aggregate face value of $1 million that shall be transferable to
Executive upon termination of employment.
(e)            Business Expense Reimbursements.  During the Term, the Company
shall promptly reimburse Executive for Executive’s reasonable and necessary
business expenses incurred in connection with performing Executive’s duties
hereunder in accordance with its then prevailing policies and procedures for
expense reimbursement (which shall include appropriate itemization and
substantiation of expenses incurred).
(f)            Vacation.  During the Term, Executive shall be entitled to four
weeks paid vacation each calendar year, in accordance with the Company’s
vacation policy to be taken at such times as may be mutually agreed by Executive
and the Company.  Unused vacation in any calendar year shall be carried over to
the next calendar year; provided that, in no event shall Executive’s eligible
vacation time exceed 8 weeks in any calendar year.  Within thirty (30) days
following the execution of this Agreement, the Company shall make a payment to
Executive in respect of all accrued but unused vacation through December 31,
2015.
(g)            Attorney’s Fees.  The Company shall reimburse the Executive
within thirty (30) days following the execution of this Agreement his reasonable
attorneys’ fees incurred in connection with the amendment and restatement of
this Agreement, up to a maximum of $5,000, subject to appropriate itemization
and substantiation of expenses incurred.
(h)            Indemnification.  The Company agrees that in the event Executive
is, or is threatened to be, made a party to any pending, contemplated or
threatened action, suit, arbitration or other proceeding, whether civil,
criminal, administrative or investigative, and whether formal or informal (each
a “Proceeding”), by reason of the fact that Executive is or was, or had agreed
to become, an officer, employee, agent, representative or fiduciary of the
Company, or is or was serving at the request of the Company as a board member,
officer, employee, agent or fiduciary of another Person, the Company shall
indemnify and hold Executive harmless, to the maximum extent permitted by the
Company’s governing documents or, if greater, by applicable law (but not in any
event in contravention of the Company’s governing documents), against all
expenses, damages, liabilities and losses incurred by Executive, provided that
Executive acted in good faith and in a manner that he reasonably believed to be
in or not opposed to the best interests of the Company, and, with respect to any
criminal Proceeding, had no reasonable cause to believe his conduct was
unlawful; provided, further, that Executive shall not be entitled to any such
indemnification (A) in respect of any Proceeding based upon or attributable to
Executive gaining in fact any personal profit or advantage to which he is not
entitled or resulting from Executive’s fraudulent, dishonest or willful
misconduct, (B) to the extent Executive has already received indemnification or
payment pursuant to the Company’s operating agreement or other governing
documents, D&O insurance or otherwise or (C) in respect of any Proceeding
initiated by Executive, unless the Company has joined in or the Board has
authorized such Proceeding.  Expenses incurred by Executive in defending any
claim shall be paid by the Company in advance of the final disposition of such
claim upon receipt by the Company of an undertaking by or on behalf of Executive
to repay such amount if it shall be ultimately determined that Executive is not
entitled to be indemnified by the Company pursuant to this Section 3(h).  To the
extent the Company maintains an insurance policy covering the errors and
omissions of its Board members and officers, Executive shall be covered by such
policy during the Term and for six years following Executive’s termination of
employment in a manner no less favorable than Board members and other officers
of the Company.
4.            Termination of Employment.  (a)  Executive’s employment may be
terminated by either party at any time and for any reason; provided, however,
that Executive shall be required to give
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the Company at least 60 days advance written notice of any voluntary resignation
of Executive’s employment hereunder (and in such event the Company in its sole
discretion may elect to accelerate Executive’s date of termination of
employment, it being understood that such termination shall still be treated as
a voluntary resignation for purposes of this Agreement).  Notwithstanding the
foregoing, Executive’s employment shall automatically terminate upon Executive’s
death.
(b)            Following any termination of Executive’s employment,
notwithstanding any provision to the contrary in this Agreement, the obligations
of the Company to pay or provide Executive with compensation and benefits under
Section 3 shall cease, and the Company shall have no further obligations to
provide compensation or benefits to Executive hereunder except (i) for payment
of (w) any accrued but unpaid Base Salary through the date of termination, (x)
any unpaid Annual Bonus for the year prior to the year in which termination
occurs, (y) any accrued but unused vacation days, and (z) any unreimbursed
expenses under Section 3(e), in each case accrued or incurred through the date
of termination of employment, payable as soon as practicable and in all events
within 30 days following termination of employment, (ii) as explicitly set forth
in any other benefit plans, programs or arrangements applicable to terminated
employees in which Executive participates, other than severance plans or
policies, and (iii) as otherwise expressly required by applicable law
(collectively, the “Accrued Obligations”).  For the avoidance of doubt, (A) any
Annual Bonus for the year of termination of employment is forfeited if
Executive’s employment is terminated for Cause or resignation by Executive other
than for Good Reason, and (B) in the case of Executive’s death, any payments to
be made to Executive in accordance with this Section 4 shall be paid to
Executive’s beneficiaries, devisees, heirs, legates or estate, as applicable.
(c)            (i)            Except as otherwise provided herein, if
Executive’s employment is terminated (I) by the Company without Cause (other
than due to death or Disability (as defined below) or due to the Company’s
election not to extend the Term beyond the scheduled expiration of the Term on
the Expiration Date as contemplated under Section 1(a)), or (II) by the
Executive for Good Reason, then Executive, in addition to the Accrued
Obligations, shall be entitled to receive an aggregate amount equal to (A) the
sum of (x) Executive’s Base Salary and (y) the Target Bonus (the “Severance
Payment”), plus (B) the product of (x) the actual Annual Bonus that Executive
would have been entitled to receive for the year of termination had Executive
continued to be employed through the end of the calendar year in which such
termination occurs, and (y) a fraction, the numerator of which is the number of
calendar days Executive was employed in the calendar year of termination, and
the denominator of which is 365 (the “Pro Rata Bonus”).   The Severance Payment
shall be paid during the 12-month period immediately following such termination
in substantially equal installments consistent with the Company’s payroll
practices, and the Pro Rata Bonus shall be paid on the date that other
executives are paid their annual bonuses in respect of the year in which
Executive’s termination occurs.
(ii)            Notwithstanding anything herein to the contrary, if at any time
within 60 days before, or 12 months following, a Change in Control, Executive’s
employment is terminated (I) by the Company without Cause (other than due to
death or Disability or due to the Company’s election not to extend the Term
beyond the scheduled expiration of the Term on the Expiration Date as
contemplated under Section 1(a)), or (II) by the Executive for Good Reason, then
Executive, in addition to the Accrued Obligations but in lieu of the payments
described in Section 4(c)(i), shall be entitled to receive an aggregate amount
equal to (A) two times the Severance Payment plus (B) the product of (x) the
Target Bonus for the year of termination, and (y) a fraction, the numerator of
which is the number of calendar days Executive was employed in the calendar year
of termination, and the denominator of which is 365.  Notwithstanding anything
herein to the contrary, at any time following a Change in Control, if
Executive’s employment is terminated due to the Company’s election not to
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extend the Term beyond the scheduled expiration of the Term on the Expiration
Date as contemplated under Section 1(a), then Executive, in addition to the
Accrued Obligations, shall be entitled to (X) the Severance Payment, plus (Y)
the product of (x) the Target Bonus and (y) a fraction, the numerator of which
is the number of calendar days Executive was employed in the calendar year in
which Executive’s employment actually ends, and the denominator of which is
365.  All payments described in this Section 4(c)(ii) shall be paid in cash in a
lump sum within 30 business days following the execution of the Release that has
become irrevocable by its terms; provided, that to the extent any portion of
such lump sum payment would violate Section 409A (as defined below), then such
portion shall be paid during the 12-month period immediately following such
termination in substantially equal installments consistent with the Company’s
payroll practices. 
(iii)            If Executive’s employment is terminated due to death or by the
Company due to Disability, or due to the Company’s election not to extend the
Term beyond the scheduled expiration date of the Term on the Expiration Date as
contemplated under Section 1(a), then Executive, in addition to the Accrued
Obligations, shall be entitled to receive payment of the Pro Rata Bonus, payable
no later than March 15 of the calendar year following the calendar year in which
Executive’s termination of employment occurs.  In addition to the foregoing, if
Executive’s employment is terminated due to the Company’s election not to extend
the Term beyond the scheduled expiration of the Term on the Expiration Date as
contemplated under Section 1(a) prior to a Change in Control, then Executive
shall be entitled to (I) continued payment of Executive’s Base Salary during the
6-month period immediately following such termination, in substantially equal
installments consistent with the Company’s payroll practices and (II) the
product of (x) the Target Bonus and (y) a fraction, the numerator of which is
the number of calendar days Executive was employed in the calendar year in which
Executive’s employment actually ends, and the denominator of which is 365.  The
payment described in the foregoing Section 4(c)(iii)(II) shall be remitted by
the Company as a lump sum, no later than the Company’s first payroll date
following the Expiration Date.
(iv)            If Executive’s employment is terminated (I) by the Company
without Cause, (II) by the Executive for Good Reason, (III) by reason of the
Executive’s death or Disability, or (IV) due to the Company’s election not to
extend the Term beyond the scheduled expiration of the Term on the Expiration
Date as contemplated under Section 1(a), at any time, then in addition to the
benefits described in Section 4(c)(i), 4(c)(ii) or 4(c)(iii), if the Executive
is then enrolled in the Company’s medical and dental plans on the date of
termination and the Executive (or his estate or legal representative on behalf
of his dependents) elects to continue his participation (if applicable) and that
of his eligible dependents in those plans for a period of time under the federal
law known as “COBRA” (or an applicable state-law COBRA corollary) then, (A) if
such termination occurs prior to a Change in Control, until  the 12-month
anniversary of Executive’s termination of employment, or (B) if such termination
occurs after a Change in Control, until the 18-month anniversary of Executive’s
termination of employment (the “Applicable COBRA Period”), or, if earlier, until
the date the Executive enrolls in the medical and dental plans offered in
connection with his new employment, the Company will pay 100% of all costs of
such participation.  The Executive is required to notify the Company immediately
if he begins new employment during the Applicable COBRA Period and to repay
promptly any excess benefits contributions made by the Company. After the
Company’s contributions end, the Executive may continue benefits coverage for
the remainder of the COBRA period, if any, by paying the full premium cost of
such benefits.
(v)            Any payments or benefits under Section 4(c)(i), 4(c)(ii),
4(c)(iii) or 4(c)(iv) shall be (A) conditioned upon Executive and the Company
having executed a mutual, irrevocable waiver and general release of claims
substantially in a form attached hereto as Exhibit C (the
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“Release”) that has become effective in accordance with its terms, (B) subject
to Executive’s continued compliance with the terms of this Agreement and
(C) subject to Section 25.
(vi)            For purposes of this Agreement, “Cause” means: (A) Executive’s
willful refusal to perform his duties for the Company, which refusal or failure
remains uncured for 15 days after he receives written notice from the Board
demanding cure; (B) in carrying out his duties under the employment agreement,
Executive engages in willful  misconduct, or gross neglect, that in either case
causes material economic harm to the Company’s business or reputation; or
(C) Executive is convicted of, or enters a plea of guilty or nolo contendere to,
a felony and such conviction or plea has a material adverse effect on his
ability to perform his duties for the Company or causes material harm to the
Company or its Affiliates.
(vii)            For purposes of this Agreement, “Disability” means Executive
would be entitled to long-term disability benefits under the Company’s long-term
disability plan as in effect from time to time, without regard to any waiting or
elimination period under such plan and assuming for the purpose of such
determination that Executive is actually participating in such plan at such
time.  If the Company does not maintain a long-term disability plan,
“Disability” means Executive’s inability to perform Executive’s duties and
responsibilities hereunder due to physical or mental illness or incapacity that
is expected to last for a consecutive period of 90 days or for a period of 120
days in any 365 day period as determined by the Board in its good faith
judgment.
(viii)            For purposes of this Agreement, “Good Reason” shall mean the
occurrence of any of the following events without Executive’s prior express
written consent: (A) any reduction in Executive’s Base Salary or Target Bonus,
or any material diminution in Executive’s authorities, titles or offices, or the
assignment to him of duties that materially impair his ability to perform the
duties normally assigned to an Executive Vice President, General Counsel and
Corporate Secretary of a corporation of the size and nature of the Company;
(B) any change in the reporting structure so that Executive reports other than
to the CEO; (C) any relocation of Executive’s principal place of employment, to
a location outside of the Miami, Florida metropolitan area; (D) any material
breach by the Company, or any of its Affiliates, of any material obligation to
Executive; or (E) the failure of the Company to obtain the assumption in writing
of its obligation to perform this Agreement by any successor to all or
substantially all of the business and assets of the Company within 15 days after
any merger, consolidation, sale or similar transaction; provided however, that
prior to resigning for Good Reason, Executive shall give written notice to the
Company of the facts and circumstances claimed to provide a basis for such
resignation not more than thirty (30) days following his knowledge of such facts
and circumstances, and the Company shall have thirty (30) days after receipt of
such notice to cure such facts and circumstances (and if so cured then Executive
shall not be permitted to resign for Good Reason in respect thereof).
(d)            Upon termination of Executive’s employment for any reason, upon
the Company’s request Executive agrees to resign, as of the date of such
termination of employment or such other date requested, from the Board and any
committees thereof (and, if applicable, from the board of directors (and any
committees thereof) of any Affiliate of the Company) to the extent Executive is
then serving thereon.
(e)            The payment of any amounts accrued under any benefit plan,
program or arrangement in which Executive participates shall be subject to the
terms of the applicable plan, program or arrangement, and any elections
Executive has made thereunder.  Except as prohibited by the terms of any Company
benefit plan, program or arrangement, the Company may offset any amounts due and
payable by Executive to the Company or its subsidiaries against any amounts the
Company owes
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Executive hereunder; provided, however, no offsets shall be permitted against
amounts that constitute deferred compensation subject to Section 409A.  Except
as set forth in this Section 4(e), Executive shall be under no obligation to
seek other employment or to otherwise mitigate the obligations of the Company
under this Agreement, and there shall be no offset against amounts or benefits
due to Executive under this Agreement or otherwise on account of any claim
(other than any preexisting debts then due in accordance with their terms) the
Company or its affiliates may have against him or any remuneration or other
benefit earned or received by the Executive after such termination.
5.            Noncompetition and Nonsolicitation.  For purposes of Sections 5,
6, 7, 8, 9, 10 and 11 of this Agreement, references to the Company shall include
its subsidiaries and Affiliates.
(a)            Executive agrees that Executive shall not, while an employee of
the Company and during the one-year period following termination of employment
(such collective duration, the “Restriction Period”), directly or indirectly,
without the prior written consent of the Company:
(i)            (A) engage in activities or businesses (including without
limitation by owning any interest in, managing, controlling, participating in,
consulting with, advising, rendering services for, or in any manner engaging in
the business of owning, operating or managing any business) anywhere in the
world that are principally or primarily in the business of producing Spanish
language media content, or owning or operating Hispanic television networks
(“Competitive Activities”) or (B) assisting any Person in any way to do, or
attempt to do, anything prohibited by this Section 5(a)(i)(A) above; or
(ii)            perform any action, activity or course of conduct which is
substantially detrimental to the businesses or business reputations of the
Company, including (A) soliciting, recruiting or hiring (or attempting to
solicit, recruit or hire) any employees of the Company or Persons who have
worked for the Company during the 12-month period immediately preceding such
solicitation, recruitment or hiring or attempt thereof; (B) soliciting or
encouraging (or attempting to solicit or encourage) any employee of the Company
to leave the employment of the Company; (C) intentionally interfering with the
relationship of the Company with any Person who or which is employed by or
otherwise engaged to perform services for, or any customer, client, supplier,
licensee, licensor or other business relation of, the Company; or (D) assisting
any Person in any way to do, or attempt to do, anything prohibited by
Section 5(a)(ii)(A), (B) or (C) above.
The Restriction Period shall be tolled during (and shall be deemed automatically
extended by) any period in which Executive is in violation of the provisions of
this Section 5(a).
(b)            The provisions of Section 5(a) shall not be deemed breached as a
result of (i) Executive’s passive ownership of less than an aggregate of 3% of
any class of securities of a Person engaged, directly or indirectly, in
Competitive Activities, so long as Executive does not actively participate in
the business of such Person; provided, however, that such stock is listed on a
national securities exchange or (ii) Executive’s rendering services following
termination of employment with the Company as a lawyer at a law firm to such law
firm’s clients in the normal course of its business (including without
limitation any such clients engaged in Competitive Activities) (for the sake of
clarity, Executive shall remain bound by the other restrictive covenants in this
agreement, including but not limited to Section 6 hereof).
(c)            Without limiting the generality of Section 11, notwithstanding
the fact that any provision of this Section 5 is determined not to be
specifically enforceable, the Company may
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 nevertheless be entitled to recover monetary damages as a result of Executive’s
material breach of such provision.
(d)            Executive acknowledges that the Company has a legitimate business
interest and right in protecting its Confidential Information (as defined
below), business strategies, employee and customer relationships and goodwill,
and that the Company would be seriously damaged by the disclosure of
Confidential Information and the loss or deterioration of its business
strategies, employee and customer relationships and goodwill.  Executive
acknowledges that Executive is being provided with significant additional
consideration (to which Executive is not otherwise entitled), including stock
options and restricted stock, to induce Executive to enter into this Agreement. 
Executive expressly acknowledges and agrees that each and every restraint
imposed by this Agreement is reasonable with respect to subject matter, time
period and geographical area.  Executive further acknowledges that although
Executive’s compliance with the covenants contained in Sections 5, 6, 7, 8 and 9
may prevent Executive from earning a livelihood in a business similar to the
business of the Company, Executive’s experience and capabilities are such that
Executive has other opportunities to earn a livelihood and adequate means of
support for Executive and Executive’s dependents.
6.            Nondisclosure of Confidential Information.
(a)            Executive acknowledges that Executive is and shall become
familiar with the Company’s Confidential Information (as defined below),
including trade secrets, and that Executive’s services are of special, unique
and extraordinary value to the Company.  Executive acknowledges that the
Confidential Information obtained by Executive while employed by the Company is
the property of the Company.  Therefore, Executive agrees that Executive shall
not disclose to any unauthorized Person or use for Executive’s own purposes any
Confidential Information without the prior written consent of the Company,
unless and to the extent that the aforementioned matters become generally known
to and available for use by the public other than as a result of Executive’s
acts or omissions in violation of this Agreement; provided, however, that if
Executive receives a request to disclose Confidential Information pursuant to a
deposition, interrogatory, request for information or documents in legal
proceedings, subpoena, civil investigative demand, governmental or regulatory
process or similar process, (i) Executive shall promptly notify in writing the
Company, and consult with and assist the Company in seeking a protective order
or request for other appropriate remedy, (ii) in the event that such protective
order or remedy is not obtained, or if the Company waives compliance with the
terms hereof, Executive shall disclose only that portion of the Confidential
Information which, in the written opinion of Executive’s legal counsel, is
legally required to be disclosed and shall exercise reasonable best efforts to
provide that the receiving Person shall agree to treat such Confidential
Information as confidential to the extent possible (and permitted under
applicable law) in respect of the applicable proceeding or process and (iii) the
Company shall be given an opportunity to review the Confidential Information
prior to disclosure thereof.
(b)            For purposes of this Agreement, “Confidential Information” means
information, observations and data concerning the business or affairs of the
Company, including, without limitation, all business information (whether or not
in written form) which relates to the Company, or its customers, suppliers or
contractors or any other third parties in respect of which the Company has a
business relationship or owes a duty of confidentiality, or their respective
businesses or products, and which is not known to the public generally other
than as a result of Executive’s breach of this Agreement, including but not
limited to: technical information or reports; formulas; trade secrets; unwritten
knowledge and “know-how”; operating instructions; training manuals; customer
lists; customer buying records and habits; product sales records and documents,
and product development, marketing and sales strategies; market surveys;
marketing plans; profitability analyses; product cost; long-range plans;
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information relating to pricing, competitive strategies and new product
development; information relating to any forms of compensation or other
personnel-related information; contracts; and supplier lists. Confidential
Information will not include such information known to Executive prior to
Executive’s involvement with the Company or information rightfully obtained from
a third party (other than pursuant to a breach by Executive of this Agreement). 
Without limiting the foregoing, Executive agrees to keep confidential the
existence of, and any information concerning, any dispute between Executive and
the Company, except that Executive may disclose information concerning such
dispute to his immediate family, to the court that is considering such dispute
or to Executive’s legal counsel and other professional advisors (provided that
such counsel and other advisors agree not to disclose any such information other
than as necessary to the prosecution or defense of such dispute).
(c)            Except as expressly set forth otherwise in this Agreement,
Executive agrees that Executive shall not disclose the terms of this Agreement,
except to Executive’s  immediate family and Executive’s financial and legal
advisors, or as may be required by law or ordered by a court.  Executive further
agrees that any disclosure to Executive’s financial or legal advisors shall only
be made after such advisors acknowledge and agree to maintain the
confidentiality of this Agreement and its terms.
(d)            Executive further agrees that Executive will not improperly use
or disclose any confidential information or trade secrets, if any, of any former
employers or any other Person to whom Executive has an obligation of
confidentiality, and will not bring onto the premises of the Company any
unpublished documents or any property belonging to any former employer or any
other Person to whom Executive has an obligation of confidentiality unless
consented to in writing by the former employer or other Person.
7.            Return of Property.  Executive acknowledges that all notes,
memoranda, specifications, devices, formulas, records, files, lists, drawings,
documents, models, equipment, property, computer, software or intellectual
property relating to the businesses of the Company, in whatever form (including
electronic), and all copies thereof, that are received or created by Executive
while an employee of the Company or its subsidiaries or Affiliates (including
but not limited to Confidential Information and Inventions (as defined below))
are and shall remain the property of the Company, and Executive shall
immediately return such property to the Company upon the termination of
Executive’s employment and, in any event, at the Company’s request.  Executive
further agrees that any property situated on the premises of, and owned by, the
Company, including disks and other storage media, filing cabinets or other work
areas, is subject to inspection by the Company’s personnel at any time with or
without notice.
8.            Intellectual Property Rights.
(a)            Executive agrees that the results and proceeds of Executive’s
services for the Company (including, but not limited to, any trade secrets,
products, services, processes, know-how, designs, developments, innovations,
analyses, drawings, reports, techniques, formulas, methods, developmental or
experimental work, improvements, discoveries, inventions, ideas, source and
object codes, programs, matters of a literary, musical, dramatic or otherwise
creative nature, writings and other works of authorship) resulting from services
performed while an employee of the Company and any works in progress, whether or
not patentable or registrable under copyright or similar statutes, that were
made, developed, conceived or reduced to practice or learned by Executive,
either alone or jointly with others (collectively, “Inventions”), shall be
works-made-for-hire and the Company shall be deemed the sole owner throughout
the universe of any and all trade secret, patent, copyright and other
intellectual property rights (collectively, “Proprietary Rights”) of whatsoever
nature therein, whether or not now or hereafter known, existing, contemplated,
recognized or developed, with the right to use the same in perpetuity in any
manner the Company determines in its sole discretion, without any further
payment to
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Executive whatsoever.  If, for any reason, any of such results and proceeds
shall not legally be a work-made-for-hire and/or there are any Proprietary
Rights which do not accrue to the Company under the immediately preceding
sentence, then Executive hereby irrevocably assigns and agrees to assign any and
all of Executive’s right, title and interest thereto, including any and all
Proprietary Rights of whatsoever nature therein, whether or not now or hereafter
known, existing, contemplated, recognized or developed, to the Company, and the
Company shall have the right to use the same in perpetuity throughout the
universe in any manner determined by the Company without any further payment to
Executive whatsoever.  As to any Invention that Executive is required to assign,
Executive shall promptly and fully disclose to the Company all information known
to Executive concerning such Invention.
(b)            Executive agrees that, from time to time, as may be requested by
the Company and at the Company’s sole cost and expense, Executive shall do any
and all things that the Company may reasonably deem useful or desirable to
establish or document the Company’s exclusive ownership throughout the United
States of America or any other country of any and all Proprietary Rights in any
such Inventions, including the execution of appropriate copyright and/or patent
applications or assignments.  To the extent Executive has any Proprietary Rights
in the Inventions that cannot be assigned in the manner described above,
Executive unconditionally and irrevocably waives the enforcement of such
Proprietary Rights.  This Section 8(b) is subject to and shall not be deemed to
limit, restrict or constitute any waiver by the Company of any Proprietary
Rights of ownership to which the Company may be entitled by operation of law by
virtue of the Company’s being Executive’s employer.  Executive further agrees
that, from time to time, as may be requested by the Company and at the Company’s
sole cost and expense, Executive shall assist the Company in every proper and
lawful way to obtain and from time to time enforce Proprietary Rights relating
to Inventions in any and all countries.  Executive shall execute, verify and
deliver such documents and perform such other acts (including appearances as a
witness) as the Company may reasonably request for use in applying for,
obtaining, perfecting, evidencing, sustaining, and enforcing such Proprietary
Rights and the assignment thereof.  In addition, Executive shall execute, verify
and deliver assignments of such Proprietary Rights to the Company or its
designees.  Executive’s obligations under this Section 8 shall continue beyond
the termination of Executive’s employment with the Company.
(c)            Executive hereby waives and quitclaims to the Company any and all
claims, of any nature whatsoever, that Executive now or may hereafter have for
infringement of any Proprietary Rights assigned hereunder to the Company.
9.            Nondisparagement.  Executive shall not, whether in writing or
orally, malign, denigrate or disparage the Company or its predecessors and
successors, or any of the current or former directors, officers, employees,
shareholders, partners, members, agents or representatives of any of the
foregoing, with respect to any of their respective past or present activities,
or otherwise publish (whether in writing or orally) statements that tend to
portray any of the aforementioned parties in an unfavorable light; provided that
nothing herein shall or shall be deemed to prevent or impair Executive from, in
the course of and consistent with his duties for the Company, making public
comments which include good faith, candid discussions, or acknowledgements
regarding the Company’s performance or business, or discussing other officers,
directors, and employees in connection with normal performance evaluations, or
otherwise testifying truthfully in any legal or administrative proceeding where
such testimony is compelled, or requested or from otherwise complying with legal
requirements.  The Company shall not, and shall instruct its senior executives
not to, whether in writing or orally, malign, denigrate or disparage Executive,
or otherwise publish (whether in writing or orally) statements that tend to
portray Executive in an unfavorable light; provided that nothing herein shall or
shall be deemed to prevent or impair the Company or any such executives
discussing Executive in connection with normal performance
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evaluations or from testifying truthfully in any legal or administrative
proceeding where such testimony is compelled, or requested or from otherwise
complying with legal requirements.

10.            Notification of Subsequent Employer.  Executive hereby agrees
that prior to accepting employment with, or agreeing to provide services to, any
other Person during any period during which Executive remains subject to any of
the covenants set forth in Section 5, Executive shall provide such prospective
employer with written notice of such provisions of this Agreement, with a copy
of such notice delivered simultaneously to the Company.
11.            Remedies and Injunctive Relief.  Executive acknowledges that a
violation by Executive of any of the covenants contained in Section 5, 6, 7, 8
or 9 would cause irreparable damage to the Company in an amount that would be
material but not readily ascertainable, and that any remedy at law (including
the payment of damages) would be inadequate.  Accordingly, Executive agrees
that, notwithstanding any provision of this Agreement to the contrary, the
Company shall be entitled (without the necessity of showing economic loss or
other actual damage) to injunctive relief (including temporary restraining
orders, preliminary injunctions and/or permanent injunctions) in any court of
competent jurisdiction for any actual or threatened breach of any of the
covenants set forth in Section 5, 6, 7, 8 or 9 in addition to any other legal or
equitable remedies it may have.  The preceding sentence shall not be construed
as a waiver of the rights that the Company may have for damages under this
Agreement or otherwise, and all of the Company’s rights shall be unrestricted.
12.            Representations of Executive; Advice of Counsel.  (a)  Executive
represents, warrants and covenants that as of the date hereof:  (i) Executive
has the full right, authority and capacity to enter into this Agreement and
perform Executive’s obligations hereunder, (ii) Executive is not bound by any
agreement that conflicts with or prevents or restricts the full performance of
Executive’s duties and obligations to the Company hereunder during or after the
Term and (iii) the execution and delivery of this Agreement shall not result in
any breach or violation of, or a default under, any existing obligation,
commitment or agreement to which Executive is subject.
(b)            Executive represents that, prior to execution of this Agreement,
Executive has been advised by an attorney of Executive’s own selection regarding
this Agreement.  Executive acknowledges that Executive has entered into this
Agreement knowingly and voluntarily and with full knowledge and understanding of
the provisions of this Agreement after being given the opportunity to consult
with counsel.  Executive further represents that in entering into this
Agreement, Executive is not relying on any statements or representations made by
any of the Company’s directors, officers, employees or agents which are not
expressly set forth herein, and that Executive is relying only upon Executive’s
own judgment and any advice provided by Executive’s attorney.
13.            Cooperation.  Executive agrees that, upon reasonable notice and
without the necessity of the Company obtaining a subpoena or court order,
Executive shall provide reasonable cooperation in connection with any suit,
action or proceeding (or any appeal from any suit, action or proceeding), and
any investigation and/or defense of any claims asserted against any of Executive
and the Company, its respective Affiliates, their respective predecessors and
successors, and all of the respective current or former directors, officers,
employees, shareholders, partners, members, agents or representatives of any of
the foregoing, which relates to events occurring during Executive’s employment
with the Company and its Affiliates as to which Executive may have relevant
information (including but not limited to furnishing relevant information and
materials to the Company or its designee and/or providing testimony at
depositions and at trial), provided that with respect to such cooperation
occurring following termination of employment, the Company shall reimburse
Executive for expenses reasonably
 
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incurred in connection therewith, and further provided that any such cooperation
occurring after the termination of Executive’s employment shall be scheduled to
the extent reasonably practicable so as not to unreasonably interfere with
Executive’s business or personal affairs.
14.            Withholding Taxes.  The Company may deduct and withhold from any
amounts payable under this Agreement such Federal, state, local, non-U.S. or
other taxes as are required or permitted to be withheld pursuant to any
applicable law or regulation.
15.            Assignment.  (a)  This Agreement is personal to Executive and
without the prior written consent of the Company shall not be assignable by
Executive, except for the assignment by will or the laws of descent and
distribution of any accrued pecuniary interest of Executive, and any assignment
in violation of this Agreement shall be void.  The Company may assign this
Agreement, and its rights and obligations hereunder, to any of its Affiliates.
(b)            This Agreement shall be binding on, and shall inure to the
benefit of, the parties to it and their respective heirs, legal representatives,
successors and permitted assigns (including, without limitation, successors by
merger, consolidation, sale or similar transaction, and, in the event of
Executive’s death, Executive’s estate and heirs in the case of any payments due
to Executive hereunder).
(c)            Executive acknowledges and agrees that all of Executive’s
covenants and obligations to the Company, as well as the rights of the Company
hereunder, shall run in favor of and shall be enforceable by the Company and its
successors and assigns.
16.            Governing Law; No Construction Against Drafter.  This Agreement
shall be deemed to be made in the State of Delaware, and the validity,
interpretation, construction, and performance of this Agreement in all respects
shall be governed by the laws of the State of Delaware without regard to its
principles of conflicts of law.  No provision of this Agreement or any related
document will be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or drafted such
provision.
17.            Consent to Jurisdiction; Waiver of Jury Trial.  (a)  Except as
otherwise specifically provided herein, Executive and the Company each hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the District of Delaware (or, if subject matter jurisdiction in that
court is not available, in any state court located within the State of Delaware)
over any dispute arising out of or relating to this Agreement.  Except as
otherwise specifically provided in this Agreement, the parties undertake not to
commence any suit, action or proceeding arising out of or relating to this
Agreement in a forum other than a forum described in this Section 17(a);
provided, however, that nothing herein shall preclude the Company from bringing
any suit, action or proceeding in any other court for the purposes of enforcing
the provisions of this Section 17 or enforcing any judgment obtained by the
Company.
 
(b)            The agreement of the parties to the forum described in
Section 17(a) is independent of the law that may be applied in any suit, action,
or proceeding and the parties agree to such forum even if such forum may under
applicable law choose to apply non-forum law.  The parties hereby waive, to the
fullest extent permitted by applicable law, any objection which they now or
hereafter have to personal jurisdiction or to the laying of venue of any such
suit, action or proceeding brought in an applicable court described in
Section 17(a), and the parties agrees that they shall not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court.  The parties agree that, to the fullest extent permitted by
applicable law, a final and non-appealable judgment in any
 
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 suit, action or proceeding brought in any applicable court described in
Section 17(a) shall be conclusive and binding upon the parties and may be
enforced in any other jurisdiction.
(c)            The parties hereto irrevocably consent to the service of any and
all process in any suit, action or proceeding arising out of or relating to this
Agreement by the mailing of copies of such process to such party at such party’s
address specified in Section 22.
(d)            Each party hereto hereby waives, to the fullest extent permitted
by applicable law, any right it may have to a trial by jury in respect of any
suit, action or proceeding arising out of or relating to this Agreement.  Each
party hereto (i) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such party would not,
in the event of any action, suit or proceeding, seek to enforce the foregoing
waiver and (ii) acknowledges that it and the other party hereto has been induced
to enter into this Agreement by, among other things, the mutual waiver and
certifications in this Section 17(d).
(e)            Each party shall bear its own costs and expenses (including
reasonable attorneys’ fees and expenses) incurred in connection with any dispute
arising out of or relating to this Agreement; provided that, the Company shall
reimburse the Executive for reasonable attorneys’ fees and expenses to the
extent that Executive substantially prevails as to a material issue with respect
to any matters subject to dispute hereunder.
18.            Amendment; No Waiver.  No provisions of this Agreement may be
amended, modified, waived or discharged except by a written document signed by
Executive and a duly authorized officer of the Company (other than Executive). 
The failure of a party to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver of such party’s
rights or deprive such party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.  No failure or delay
by either party in exercising any right or power hereunder will operate as a
waiver thereof, nor will any single or partial exercise of any such right or
power, or any abandonment of any steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.
19.            Severability.  If any term or provision of this Agreement is
invalid, illegal or incapable of being enforced by any applicable law or public
policy, all other conditions and provisions of this Agreement shall nonetheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated by this Agreement is not affected in any manner
materially adverse to any party; provided, however, that if any term or
provision of Section 5, 6, 7, 8 or 9 is invalid, illegal or incapable of being
enforced by any applicable law or public policy, all other conditions and
provisions of this Agreement shall nonetheless remain in full force and effect
to the fullest extent permitted by law; provided further, that in the event that
any court of competent jurisdiction shall finally hold in a non-appealable
judicial determination that any provision of Section 5, 6, 7, 8 or 9 (whether in
whole or in part) is void or constitutes an unreasonable restriction against
Executive, such provision shall not be rendered void but shall be deemed to be
modified to the minimum extent necessary to make such provision enforceable for
the longest duration and the greatest scope as such court may determine
constitutes a reasonable restriction under the circumstances.  Subject to the
foregoing, upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.
 
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20.            Entire Agreement.  This Agreement, including the Exhibits hereto,
constitutes the entire agreement and understanding between the Company and
Executive with respect to the subject matter hereof and supersedes all prior
agreements and understandings (whether written or oral), between Executive and
the Company, relating to such subject matter.  None of the parties shall be
liable or bound to any other party in any manner by any representations and
warranties or covenants relating to such subject matter except as specifically
set forth herein.
21.            Survival.  The rights and obligations of the parties under the
provisions of this Agreement shall survive, and remain binding and enforceable,
notwithstanding the expiration of the Term, the termination of this Agreement,
the termination of Executive’s employment hereunder or any settlement of the
financial rights and obligations arising from Executive’s employment hereunder,
to the extent necessary to preserve the intended benefits of such provisions.
22.            Notices.  All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by facsimile or electronic image scan (pdf) or sent, postage
prepaid, by registered, certified or express mail or overnight courier service
and shall be deemed given when so delivered by hand or facsimile, or if mailed,
three days after mailing (one business day in the case of express mail or
overnight courier service) to the parties at the following addresses or
facsimiles or email addresses (or at such other address for a party as shall be
specified by like notice):

If to the Company: Hemisphere Media Group, Inc.
4000 Ponce de Leon Blvd., Suite 650
Coral Gables, FL  33146
Attention: Craig Fischer
Fax:  (305) 421-6389
Email: cfischer@hemispheretv.com

With a copy (which shall not constitute notice hereunder) to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019-6064
Fax: (212) 757-3990
Attention: Jeffrey D. Marell, Esq.
Email: jmarell@paulweiss.com

And

Intermedia Partners, L.P.
405 Lexington Avenue
New York, NY 10174
Attention: Mark Coleman, Esq.
Email: mcoleman@intermediaadvisors.com

If to Executive: Alex J. Tolston
At the most recent address and fax or email in Company personnel records

 
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With a copy (which shall not constitute notice hereunder) to:

Venable LLP
1270 Avenue of the Americas
New York, NY 10020
Fax: (212) 307-5598
Attention: Brian Turoff, Esq.
Email: bturoff@venable.com
Notices delivered by facsimile shall have the same legal effect as if such
notice had been delivered in person.
23.            Headings and References.  The headings of this Agreement are
inserted for convenience only and neither constitute a part of this Agreement
nor affect in any way the meaning or interpretation of this Agreement.  When a
reference in this Agreement is made to a Section, such reference shall be to a
Section of this Agreement unless otherwise indicated.
24.            Counterparts.  This Agreement may be executed in one or more
counterparts (including via facsimile and electronic image scan (pdf)), each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties.
25.            Section 409A.
(a)            For purposes of this Agreement, “Section 409A” means Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury
Regulations promulgated thereunder (and such other Treasury or Internal Revenue
Service guidance) as in effect from time to time.  The parties intend that any
amounts payable hereunder that could constitute “deferred compensation” within
the meaning of Section 409A will be compliant with Section 409A or exempt from
Section 409A.  Notwithstanding the foregoing, the Company shall not be liable
to, and the Executive shall be solely liable and responsible for, any taxes or
penalties that may be imposed on such Executive under Section 409A of the Code
with respect to Executive’s receipt of payments hereunder.
(b)            Notwithstanding anything in this Agreement to the contrary, the
following special rule shall apply, if and to the extent required by
Section 409A, in the event that (i) Executive is deemed to be a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i), (ii) amounts or
benefits under this Agreement or any other program, plan or arrangement of the
Company or a controlled group affiliate thereof are due or payable on account of
“separation from service” within the meaning of Treasury Regulations
Section 1.409A-1(h) and (iii) Executive is employed by a public company or a
controlled group affiliate thereof:  no payments hereunder that are “deferred
compensation” subject to Section 409A shall be made to Executive prior to the
date that is six (6) months after the date of Executive’s separation from
service or, if earlier, Executive’s date of death; following any applicable six
(6) month delay, all such delayed payments will be paid in a single lump sum on
the earliest permissible payment date.
(c)            Any payment or benefit due upon a termination of Executive’s
employment that represents a “deferral of compensation” within the meaning of
Section 409A shall commence to be paid or provided to Executive 61 days
following a “separation from service” as defined in Treas. Reg. § 1.409A-1(h),
provided that Executive executes, if required by Section 4(c)(ii), the release
described therein, within 60 days following his “separation from service.”  Each
payment made under this
 
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Agreement (including each separate installment payment in the case of a series
of installment payments) shall be deemed to be a separate payment for purposes
of Section 409A.  Amounts payable under this Agreement shall be deemed not to be
a “deferral of compensation” subject to Section 409A to the extent provided in
the exceptions in Treasury Regulation §§ 1.409A-1(b)(4) (“short-term deferrals”)
and (b)(9) (“separation pay plans,” including the exception under subparagraph
(iii)) and other applicable provisions of Section 409A.  For purposes of this
Agreement, with respect to payments of any amounts that are considered to be
“deferred compensation” subject to Section 409A, references to “termination of
employment”, “termination”, or words and phrases of similar import, shall be
deemed to refer to Executive’s “separation from service” as defined in
Section 409A, and shall be interpreted and applied in a manner that is
consistent with the requirements of Section 409A.
(d)            Notwithstanding anything to the contrary in this Agreement, any
payment or benefit under this Agreement or otherwise that is exempt from
Section 409A pursuant to Treasury Regulation § 1.409A-1(b)(9)(v)(A) or
(C) (relating to certain reimbursements and in-kind benefits) shall be paid or
provided to Executive only to the extent that the expenses are not incurred, or
the benefits are not provided, beyond the last day of the second calendar year
following the calendar year in which Executive’s “separation from service”
occurs; and provided further that such expenses are reimbursed no later than the
last day of the third calendar year following the calendar year in which
Executive’s “separation from service” occurs.  To the extent any indemnification
payment, expense reimbursement, or the provision of any in-kind benefit is
determined to be subject to Section 409A (and not exempt pursuant to the prior
sentence or otherwise), the amount of any such indemnification payment or
expenses eligible for reimbursement, or the provision of any in-kind benefit, in
one calendar year shall not affect the indemnification payment or provision of
in-kind benefits or expenses eligible for reimbursement in any other calendar
year (except for any life-time or other aggregate limitation applicable to
medical expenses), and in no event shall any indemnification payment or expenses
be reimbursed after the last day of the calendar year following the calendar
year in which Executive incurred such indemnification payment or expenses, and
in no event shall any right to indemnification payment or reimbursement or the
provision of any in-kind benefit be subject to liquidation or exchange for
another benefit.  Any tax gross-up payment or benefit under this Agreement will
be treated as providing for payment at a specified time or on a fixed schedule
of payments to the extent that the payment is made by the end of Executive’s
taxable year next following Executive’s taxable year in which Executive remits
the related taxes.

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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties as of
the date first written above.
 
 
HEMISPHERE MEDIA GROUP, INC.
       
 
 
 
 
 
 
By:
/s/ Alan J. Sokol
 
 
 
Name:
Alan J. Sokol
 
 
 
Title:
President and Chief Executive Officer
                        ALEX J. TOLSTON            /s/ Alex J. Tolston          
 

 
 

 

[signature page to Tolston Employment Agreement]

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