EX-10.2






Exhibit 10.2




TAX RECEIVABLE AGREEMENT




          This TAX RECEIVABLE AGREEMENT (this “Agreement”) is dated as of June 23, 2008, by and
among RHI Entertainment, Inc., a Delaware corporation (the “Corporation”), RHI
Entertainment Holdings II, LLC, a Delaware limited liability company (“Holdings II”) and
KRH Investments LLC, a Delaware limited liability company (“KRH”).




RECITALS:




          WHEREAS, pursuant to that certain Membership Unit Subscription Agreement, dated as of the date
hereof, by and among the Corporation, KRH and Holdings II, Holdings II will issue to the
Corporation membership interests in Holdings II (“Interests”) in exchange for a cash
purchase price of $176,242,500 (the “Original Issue”) and Holdings II will issue Interests
to KRH in exchange for the contribution of its interests in RHI Entertainment LLC, a Delaware
limited liability company.




          WHEREAS, pursuant to that certain Limited Liability Company Agreement of Holdings II, dated as
of the date hereof (the “LLC Agreement”), by and between the Corporation and KRH, KRH has
the right under certain circumstances to exchange Interests for (i) cash, (ii) shares of common
stock of the Corporation, par value $0.01 per share (the “Shares”) or (iii) a combination
of cash and Shares (an “Exchange”);




          WHEREAS, Holdings II and any direct or indirect subsidiary (owned through a chain of
pass-through entities) of Holdings II that is treated as a partnership for U.S. federal income tax
purposes (together with Holdings II and any direct or indirect subsidiary (owned through a chain of
pass-through entities) of Holdings II that is treated as a disregarded entity for U.S. federal
income tax purposes, the “Holdings II Group”) will have in effect an election under Section
754 of the Code (as defined herein) for the Taxable Year (as defined herein) in which any Exchange
occurs, which election will result in an adjustment to the Corporation’s share of the tax basis of
the assets owned by the Holdings II Group as of the date of the Exchange, with a consequent result
on the taxable income subsequently derived therefrom; and




          WHEREAS, the parties to this Agreement desire to provide for certain payments and make certain
arrangements with respect to any tax benefits to be derived by the Corporation as the result of
Exchanges and the receipt of payments under this Agreement, as contemplated by the LLC Agreement.




          NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements
set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:




ARTICLE I

DEFINITIONS




          As used in this Agreement, the terms set forth in this Article I shall have the following
meanings (such meanings to be equally applicable to both the singular and plural forms of the terms
defined). Capitalized terms used herein and not otherwise defined shall have the respective
meanings ascribed to such terms in the LLC Agreement.




 









 








          “Advisory Firm” means an accounting or law firm that is nationally recognized as being
expert in Covered Tax matters and not an Affiliate of the Corporation, selected by the Corporation.




          “Advisory Firm Letter” means a letter from the Advisory Firm stating that the relevant
schedule, notice or other information to be provided by the Corporation to KRH and all supporting
schedules and work papers were prepared in a manner consistent with the terms of this Agreement
and, to the extent not expressly provided in this Agreement, on a reasonable basis in light of the
facts and law in existence on the date such schedule, notice or other information is delivered to
KRH.




          “Affiliate” means, with respect to a specified Person, any other Person which,
directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under
common control with such specified Person. For purposes of this definition, “control” of any
Person means possession, directly or indirectly, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of voting capital stock,
by contract or otherwise.




          “Agreement” is defined in the preamble.




          “Amended Tax Benefit Schedule” is defined in Section 2.3(b) of this Agreement.




          “Assumed Tax Liability” means the actual liability for Covered Taxes of the
Corporation.




          “Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. § 101 et seq.),
as amended from time to time.




          “Basis Adjustment” means the increase or decrease to the tax basis of, or the
Corporation’s share of the tax basis of, the Holdings II Group’s assets under Sections 732, 734(b),
743(b), 754 and/or 1012 of the Code and the comparable sections of U.S. state and local income and
franchise tax law as a result of any (i) Exchange and (ii) payments under this Agreement.




          “Beneficial Owner” of a security means a Person who directly or indirectly, through
any contract, arrangement, understanding, relationship or otherwise has or shares: (i) voting
power, which includes the power to vote, or to direct the voting of, such security and/or (ii)
investment power, which includes the power to dispose, or to direct the disposition of, such
security. The term “Beneficially Own” shall have a correlative meaning.




          “Business Day” means any calendar day that is not a Saturday, Sunday or other calendar
day on which banks are required or authorized to be closed in the City of New York.




          “Change of Control” means the occurrence of any of the following events (whether or
not approved by the board of directors of the Corporation):





	 	i.	 	any Person or Group is or becomes the Beneficial
Owner (other than a Permitted Holder), directly or indirectly, of the
Corporation’s voting stock representing 50% or more of the total voting
power of all outstanding voting stock of the Corporation;
	 
	 	ii.	 	the Corporation consolidates with, or merges with
or into, another entity or Person, or the Corporation sells, assigns,
conveys, transfers, leases or




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	 	 	 	otherwise disposes of all or substantially all of its assets to any Person
or entity, other than any such transaction where immediately after such
transaction the shareholders of the Corporation immediately prior to such
transaction, Beneficially Own or owns (as so determined), directly or
indirectly, voting stock representing a majority of the total voting power
of the outstanding voting stock of the surviving entity or transferee
Person;
	 
	 	iii.	 	during any consecutive one-year period, the
Continuing Directors cease for any reason to constitute a majority of the
board of directors of the Corporation; or
	 
	 	iv.	 	the adoption of a plan of liquidation or
dissolution of the Corporation.





          “Code” means the Internal Revenue Code of 1986, as amended (or any successor U.S.
federal income tax statute and the corresponding provisions thereof).




          “Continuing Directors” means, as of any date of determination, any member of the board
of directors of the Corporation who was (1) a member of such board of directors at the time of the
Original Issue, (2) nominated for election or elected to such board of directors with, or whose
election to such board of directors was approved by the affirmative vote of, a majority of
Continuing Directors who were members of such board of directors at the time of such nomination or
election or (3) nominated by KRH pursuant to the Director Designation Agreement.




          “Corporation” is defined in the preamble.




          “Covered Tax” means any tax imposed under Subtitle A of the Code or any other
provision of U.S. federal income tax law (including, without limitation, the taxes imposed by
Sections 11, 55, 59A, and 1201(a) of the Code) and U.S. state and local income and franchise taxes.




          “Covered Taxable Year” means any Taxable Year of the Corporation ending before or
including an Early Termination Date or a Unilateral Termination Date.




          “Covered Taxes” means every Covered Tax.




          “Designated Director” means any Person designated for nomination to the board of
directors of the Corporation by KRH pursuant to the Director Designation Agreement.




          “Determination” shall have the meaning ascribed to such term in Section 1313(a) of the
Code or similar provision of U.S. state or local income or franchise tax law, as applicable.




          “Director Designation Agreement” means the Director Designation Agreement, dated as of
June 23, 2008, by and among the Corporation, Holdings II and KRH, as the same may be amended,
supplemented or otherwise modified from time to time.




          “Early Termination Date” is the last day of the Taxable Year in which an Early
Termination Notice is given.




          “Early Termination Notice” is defined in Section 4.2 of this Agreement.




          “Early Termination Payment” means, as of the date of an Early Termination Notice, a
payment equal to the present value, discounted at the Termination Rate, of all Tax




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Benefit Payments that would be required to be paid by the Corporation beginning from the Early
Termination Date assuming the Valuation Assumptions are applied.




          “Exchange” is defined in the recitals.




          “Exchange Act” means the Securities Exchange Act of 1934, as amended.




          “Exchange Assets” means the assets owned by the Holdings II Group as of an applicable
Exchange Date (and any asset whose tax basis is determined, in whole or in part, by reference to
the adjusted basis of any such asset).




          “Exchange Basis Schedule” is defined in Section 2.2(a) of this Agreement.




          “Exchange Date” means the date on which an Exchange is effected.




          “Expert” is defined in Section 7.2(a) of this Agreement.




          “Governmental Entity” means any U.S. federal, state or local government or any court
of competent jurisdiction, administrative agency or commission or other domestic governmental
authority or instrumentality.




          “Group” has the meaning set forth in Section 13(d)(3) and Rule 13d-5 of the Exchange
Act.




          “Holdings II” is defined in the preamble.




          “Holdings II Group” is defined in the recitals.




          “Hypothetical Tax Basis” means, with respect to any asset at any time, the tax basis
that such asset would have at such time if no Basis Adjustment had been made as a result of any
Exchanges and payments under this Agreement.




          “Hypothetical Tax Liability” means, with respect to any Covered Taxable Year, the
liability for Covered Taxes of the Corporation that hypothetically would arise using the same
methods, elections, conventions and similar practices used on the actual Tax Returns of the
Corporation, but using the Hypothetical Tax Basis instead of the actual tax basis of each relevant
asset and excluding any deduction attributable to the Imputed Interest.




          “Imputed Interest” means the portion of a payment treated as interest under Section
1272, 1274 or 483 or other provision of the Code and the similar section of the applicable U.S.
state or local income or franchise tax law with respect to the Corporation’s payment obligations
under this Agreement.




          “Interests” is defined in the recitals.




          “IRS” means the U.S. Internal Revenue Service.




          “Kelso” means Kelso & Company L.P., Kelso Investment Associates VII, L.P., KEP VI,
LLC, any investment fund managed by Kelso & Company L.P. or any affiliate of Kelso & Company L.P.
or any of their respective subsidiaries or any successors thereto.




          “KRH” is defined in the preamble.




          “LIBOR” means, for each month (or portion thereof) during any period, an interest rate
per annum equal to the rate per annum reported on the date two days prior to the first day of such
month on the Telerate Page 3750 (or if such screen shall cease to be publicly available, as
reported on Reuters Screen page “LIBO” or by any other publicly available source



4









 






of such market rate) for London interbank offered rates for U.S. dollar deposits due on the last
day of such month (or portion thereof).




          “LLC Agreement” is defined in the recitals.




          “Lump Sum Election Notice” is defined in Section 3.3(a).




          “Lump Sum Present Value” is defined in Section 3.3(a).




          “Market Value” means with respect to Shares, the closing price of the Shares on the
applicable Exchange Date on the national securities exchange or interdealer quotation system on
which such Shares are then traded or listed, as reported by the Wall Street Journal; provided that
if the closing price is not reported by the Wall Street Journal for the applicable Exchange Date,
then the Market Value shall mean the closing price of the Shares on the Business Day immediately
preceding such Exchange Date on the national securities exchange or interdealer quotation system on
which such Shares are then traded or listed, as reported by the Wall Street Journal; provided
further, that if the Shares are not then listed on a national securities exchange or interdealer
quotation system, “Market Value” shall mean the fair market value of the Shares, as determined by
KRH in good faith. “Market Value” with respect to assets other than Shares shall mean the fair
market value of such assets as determined by KRH in good faith.




          “Material Breach” means a breach by the Corporation of any of its material obligations
under this Agreement (including as a result of failure to make any payment when due, failure to
honor any other material obligation required hereunder or by operation of law as a result of the
rejection of this Agreement in a case commenced under the Bankruptcy Code). For these purposes,
the parties agree that the failure to make any payment due pursuant to this Agreement within three
months of the date such payment is due shall be deemed a Material Breach, and that it will not be
considered a Material Breach to make a payment due pursuant to this Agreement within three months
of the date such payment is due.




          “Membership Units Subscription Agreement” is defined in the recitals.




          “Original Issue” is defined in the recitals.




          “Original Issue Date” means the date on which the Original Issue is effected.




          “Permitted Holder” means KRH, Kelso or any person controlled by KRH or Kelso.




          “Person” means and includes any individual, firm, corporation, partnership (including,
without limitation, any limited, general or limited liability partnership), company, limited
liability company, trust, joint venture, association, joint stock company, unincorporated
organization or similar entity or Governmental Entity.




          “Proceeding” means a suit, action or proceeding relating to this Agreement.




          “Realized Tax Benefit” means, for a Covered Taxable Year, the excess, if any, of the
Hypothetical Tax Liability over the Assumed Tax Liability for such Covered Taxable Year, less the
fees, charges and expenses of the Advisory Firm and the Expert related to this Agreement paid by
the Corporation (excluding, for the avoidance of doubt, costs and expenses of KRH for which the
Corporation reimburses KRH pursuant to the second sentence of Section 7.2(b) and costs and expenses
of the Corporation borne by the Corporation pursuant to the second sentence of Section 7.2(b)) in
the relevant Covered Taxable Year. If all or a portion of



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the Assumed Tax Liability for the Covered Taxable Year arises as a result of an adjustment pursuant
to an audit by a Taxing Authority of any Covered Taxable Year, such adjustment to the liability
shall not be included in determining the Realized Tax Benefit unless and until there has been a
Determination.




          “Realized Tax Detriment” means, for a Covered Taxable Year, the excess, if any, of the
Assumed Tax Liability over the Hypothetical Tax Liability for such Covered Taxable Year, plus the
fees, charges and expenses of the Advisory Firm and the Expert related to this Agreement paid by
the Corporation (excluding, for the avoidance of doubt, costs and expenses of KRH for which the
Corporation reimburses KRH pursuant to the second sentence of Section 7.2(b) and costs and expenses
of the Corporation borne by the Corporation pursuant to the second sentence of Section 7.2(b)) in
the relevant Covered Taxable Year. If all or a portion of the Assumed Tax Liability for the
Covered Taxable Year arises as a result of an audit by a Taxing Authority of any Covered Taxable
Year, such adjustment to the liability shall not be included in determining the Realized Tax
Detriment unless and until there has been a Determination.




          “Reconciliation Dispute” is defined in Section 7.2(a).




          “Reconciliation Procedures” means those procedures set forth in Section 7.2 of this
Agreement.




          “Registrable Securities” means the Shares and any other securities issued or issuable
with respect to or in exchange for the Shares. As to any particular Registrable Securities, such
Shares and any other securities issued or issuable with respect to or in exchange for the Shares
shall cease to be Registrable Securities when (i) a registration statement with respect to the sale
of such Shares and any other securities issued or issuable with respect to or in exchange for the
Shares shall have become effective under the Securities Act and such Shares and any other
securities issued or issuable with respect to or in exchange for the Shares shall have been
disposed of in accordance with such registration statement, (ii) such Shares and any other
securities issued or issuable with respect to or in exchange for the Shares shall have been
distributed to the public pursuant to Rule 144 of the Securities Act, or (iii) such Shares and any
other securities issued or issuable with respect to or in exchange for the Shares shall have ceased
to be outstanding.




          “Registration Rights Agreement” means that certain Registration Rights Agreement,
dated June 23, 2008, by and between KRH and the Corporation.




          “Senior Obligations” means principal, interest or other amounts due and payable in
respect of any debt or guarantee of the Corporation for borrowed funds.




          “Shares” is defined in the recitals.




          “Securities Act” means the Securities Act of 1933, as amended.




          “Tax Benefit Payment” is defined in Section 3.1(b) of this Agreement.




          “Tax Benefit Schedule” is defined in Section 2.3(a) of this Agreement.




          “Tax Return” means any return or filing required to be made with respect to Covered
Taxes, including amended returns, for any Taxable Year with any Taxing Authority.




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          “Taxable Year” means a taxable year as defined in Section 441(b) of the Code or
comparable section of U.S. state or local income or franchise tax law, as applicable (and,
therefore, for the avoidance of doubt, may include a period of less than 12 months for which a Tax
Return is made).




          “Taxing Authority” means the IRS and any state or local Governmental Entity
responsible for the administration of any Covered Tax.




          “Termination Rate” means the lesser of (i) 7.0% and (ii) LIBOR plus 150 basis points.




          “Treasury Regulations” means the final, temporary and proposed regulations under the
Code promulgated from time to time (including corresponding provisions of succeeding provisions) as
in effect for the relevant time.




          “Unilateral Termination Date” is defined in Section 4.5 of this Agreement.




          “Unilateral Termination Notice” is defined in Section 4.5 of this Agreement.




          “Valuation Assumptions” means as of any Valuation Date, the assumptions that:





	 	1.	 	The Corporation will have income that exceeds the amount of any increase in
deductions that may be derived from the Basis Adjustment and Imputed Interest
throughout the relevant period for purposes of all Covered Taxes.
	 
	 	2.	 	There will be no change in the applicable tax rates for any Covered Tax
throughout the relevant period, except to the extent such changes have already been
enacted into law.
	 
	 	3.	 	All taxable income of the Corporation will be subject to the maximum applicable
tax rates for each Covered Tax throughout the relevant period.
	 
	 	4.	 	Any loss carryovers or carrybacks generated by the Basis Adjustment or the
Imputed Interest (including such Basis Adjustment and Imputed Interest generated as a
result of payments made under this Agreement) and available as of the date of the Early
Termination Notice will be utilized by the Corporation on a pro rata basis from the
Early Termination Date through the scheduled expiration date of such loss carryovers or
carrybacks.
	 
	 	5.	 	Any non-amortizable assets are deemed to be disposed of on the fifteenth
anniversary of the earlier of the Basis Adjustment and the Early Termination Date.
	 
	 	6.	 	If an Early Termination Date occurs prior to an Exchange of all Interests, such
remaining Interests not Exchanged as of the Early Termination Date shall be treated as
sold in an Exchange occurring on the Early Termination Date with the Shares received in
such deemed sale to be valued at the Market Value.





          “Valuation Date” means the date of an Early Termination Notice for purposes of
determining an Early Termination Payment.




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ARTICLE II

DETERMINATION OF REALIZED TAX BENEFIT OR REALIZED TAX DETRIMENT




          Section 2.1 Basis Adjustment Attributable to an Exchange. Pursuant to an Exchange, KRH has
the right to exchange Interests for cash, Shares or a combination of cash and Shares. The parties
hereto acknowledge that the Corporation’s share of the basis in the Exchange Assets shall be
increased by the excess, if any, of (A) the sum of (x) the Market Value of Shares, cash or other
consideration transferred to KRH pursuant to the Exchange as payment for Interests, (y) the amount
of payments made pursuant to this Agreement with respect to such Exchange and (z) the amount of
liabilities allocated to the Interests acquired pursuant to the Exchange, over (B) the
Corporation’s proportionate share of the basis of the Exchange Assets immediately after the
Exchange attributable to the Interests exchanged, determined as if each member of the Holdings II
Group remains in existence as an entity for tax purposes and no member of the Holdings II Group
made the election provided by Section 754 of the Code. For the avoidance of doubt, payments made
under this Agreement shall not be treated as resulting in a Basis Adjustment to the extent such
payments are treated as Imputed Interest.




          Section 2.2 Exchange Basis Schedule.




               (a) Generally. Within 45 calendar days after filing its U.S. federal income Tax Return for
the relevant Taxable Year, the Corporation shall deliver (or cause Holdings II to deliver) to KRH a
schedule (the “Exchange Basis Schedule”) that shows, in reasonable detail, for U.S. federal
income tax purposes, (i) the actual tax basis as of the first applicable Exchange Date in such
Taxable Year of the Exchange Assets, (ii) the Basis Adjustment with respect to the Exchange Assets
as a result of each Exchange effected in such Taxable Year, (iii) the period or periods, if any,
over which such Exchange Assets are amortizable or depreciable and (iv) the period or periods, if
any, over which each Basis Adjustment is amortizable or depreciable (which, for non-amortizable
assets, shall be based on the Valuation Assumptions). At the time the Corporation delivers (or
causes Holdings II to deliver) the Exchange Basis Schedule to KRH, it shall (x) deliver (or cause
Holdings II to deliver) to KRH schedules and work papers providing reasonable detail regarding the
preparation of the Exchange Basis Schedule and an Advisory Firm Letter supporting such Exchange
Basis Schedule and (y) allow KRH reasonable access to the appropriate representatives at the
Corporation, Holdings II and the Advisory Firm in connection with KRH’s review of such schedule.
The Exchange Basis Schedule shall become final and binding on the parties unless KRH, within 30
calendar days after receiving such Exchange Basis Schedule, provides the Corporation with notice of
a material objection to such Exchange Basis Schedule made in good faith and in reasonable detail.
If the parties, negotiating in good faith, are unable to successfully resolve the issues raised in
such notice within 30 calendar days after such notice was delivered to the Corporation, the
Corporation and KRH shall employ the Reconciliation Procedures.



               (b) Amendments to Exchange Basis Schedule. The Exchange Basis Schedule shall be amended from
time to time by the Corporation (i) in connection with a Determination, (ii) to correct
inaccuracies in the original Exchange Basis Schedule identified after the date of the Exchange as a
result of the receipt of additional information or (iii) to comply with the Expert’s determination
under the Reconciliation Procedures. The Corporation
shall deliver (or shall cause Holdings II to deliver) the amended Exchange Basis Schedule to
KRH within 60 days of the date of the related Determination, receipt of additional information or



8









 




Expert’s determination, as applicable. At the time the Corporation delivers such amended Exchange
Basis Schedule to KRH, it shall (x) deliver to KRH schedules and work papers providing reasonable
detail regarding the preparation of the amended Exchange Basis Schedule and an Advisory Firm Letter
supporting such amended Exchange Basis Schedule and (y) allow KRH reasonable access to the
appropriate representatives at the Corporation, Holdings II and the Advisory Firm in connection
with KRH’s review of such schedule. The amended Exchange Basis Schedule shall become final and
binding on the parties unless KRH, within 30 calendar days after receiving such amended Exchange
Basis Schedule, provides the Corporation with notice of a material objection to such amended
Exchange Basis Schedule made in good faith and in reasonable detail. If the parties, negotiating
in good faith, are unable to successfully resolve the issues raised in such notice within 30
calendar days after such notice was delivered to the Corporation, the Corporation and KRH shall
employ the Reconciliation Procedures.




          Section 2.3 Tax Benefit Schedule.




               (a) Generally. Within 45 calendar days after filing its U.S. federal income Tax Return for
the relevant Covered Taxable Year, the Corporation shall provide to KRH a schedule showing, in
reasonable detail, the calculation of the Corporation’s Realized Tax Benefit or Realized Tax
Detriment for such Covered Taxable Year (the “Tax Benefit Schedule”). At the time the
Corporation delivers the Tax Benefit Schedule to KRH it shall (i) deliver to KRH schedules and work
papers providing reasonable detail regarding the preparation of the Tax Benefit Schedule and an
Advisory Firm Letter supporting such Tax Benefit Schedule and (ii) allow KRH reasonable access to
the appropriate representatives at the Corporation, Holdings II and the Advisory Firm in connection
with KRH’s review of such schedules. The Tax Benefit Schedule shall become final and binding on
the parties unless KRH, within 30 calendar days after receiving such Tax Benefit Schedule, provides
the Corporation with notice of a material objection to such Tax Benefit Schedule made in good faith
and in reasonable detail. If the parties, negotiating in good faith, are unable to successfully
resolve the issues raised in such notice within 30 calendar days after receipt thereof by the
Corporation, the Corporation and KRH shall employ the Reconciliation Procedures.



               (b) Amendments to Tax Benefit Schedule. A Tax Benefit Schedule for any Covered Taxable Year
shall be amended from time to time by the Corporation (i) in connection with a Determination
affecting such Tax Benefit Schedule, (ii) to correct inaccuracies in the original Tax Benefit
Schedule identified as a result of the receipt of additional factual information relating to a
Covered Taxable Year after the date the Tax Benefit Schedule was provided to KRH, (iii) to reflect
a change in the Realized Tax Benefit or Realized Tax Detriment for such Covered Taxable Year
attributable to a carryback or carryforward of a loss or other tax item to such Covered Taxable
Year, (iv) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such
Covered Taxable Year attributable to an amended Tax Return filed for such Covered Taxable Year
(provided, however, that such a change attributable to an audit of a Tax Return by an applicable
Taxing Authority shall not be taken into account on an Amended Tax Benefit Schedule unless and
until there has been a Determination with respect to such change) or (v) to comply with the
Expert’s determination under the Reconciliation Procedures. The Corporation shall deliver the
Amended Tax Benefit Schedule to KRH within 60
days of the date of the related Determination, receipt of additional information, filing of
the amended Tax Return or application form or Expert’s determination, as applicable. At the time
the Corporation delivers such an amended Tax Benefit Schedule pursuant to this subsection (b)



9









 




(an
“Amended Tax Benefit Schedule”) to KRH it shall (x) deliver to KRH schedules and work
papers providing reasonable detail regarding the preparation of the Amended Tax Benefit Schedule
and an Advisory Firm Letter supporting such Amended Tax Benefit Schedule and (y) allow KRH
reasonable access to the appropriate representatives at the Corporation, Holdings II and the
Advisory Firm in connection with KRH’s review of such schedule. Such Amended Tax Benefit Schedule
shall become final and binding on the parties unless KRH, within 30 calendar days after receiving
such Amended Tax Benefit Schedule, provides the Corporation with notice of a material objection to
such Amended Tax Benefit Schedule made in good faith and in reasonable detail. If the parties,
negotiating in good faith, are unable to successfully resolve the issues raised in such notice
within 30 calendar days after such notice was delivered to the Corporation, the Corporation and KRH
shall employ the Reconciliation Procedures.




               (c) Applicable Principles. The Realized Tax Benefit or Realized Tax Detriment for each
Covered Taxable Year is intended to measure the decrease or increase in the actual liability for
Covered Taxes of the Corporation for such Covered Taxable Year attributable to the Basis Adjustment
and Imputed Interest, determined using a “with and without” methodology. For the avoidance of
doubt, the actual liability for Covered Taxes will take into account the deduction of the portion
of the Tax Benefit Payment that must be accounted for as Imputed Interest under the Code based upon
the characterization of the Tax Benefit Payment as additional consideration payable by the
Corporation for the Interests acquired in an Exchange. Carryovers or carrybacks of any Covered Tax
item attributable to the Basis Adjustment and Imputed Interest (determined using such “with and
without” methodology) shall be considered to be subject to the rules of the Code and the Treasury
Regulations or the appropriate provisions of U.S. state and local income and franchise tax law, as
applicable, governing the use, limitation and expiration of carryovers or carrybacks of the
relevant type. If a carryover or carryback of any Covered Tax item includes a portion that is
attributable to the Basis Adjustment or Imputed Interest and another portion that is not, such
portions shall be considered to be used in the order determined using such “with and without”
methodology. The parties agree that (i) all Tax Benefit Payments will (A) be treated as subsequent
upward purchase price adjustments that give rise to further Basis Adjustments for the Corporation
and (B) have the effect of creating additional Basis Adjustments for the Corporation in the year of
payment, and (ii) as a result, such additional Basis Adjustments will be incorporated into the
current year calculation and into future year calculations, as appropriate, with any circularity
created in the current year continuing until any incremental current year benefits equal an
immaterial amount.



               (d) At the time of any Exchange, KRH shall conclude whether the aggregate value of the Tax
Benefit Payments can be ascertained with any reasonable certainty for U.S. federal income tax
purposes. Unless there is a Determination to the contrary, the Corporation and KRH, on their own
behalf and on behalf of each of their affiliates, agree to report and cause to be reported for all
U.S. purposes, including for purposes of all Covered Taxes and U.S. financial reporting purposes,
all payments made under this Agreement in a manner consistent with such conclusion.



10









 







ARTICLE III

TAX BENEFIT PAYMENTS




          Section 3.1 Payments.




               (a) Within five (5) calendar days of the delivery of the Tax Benefit Schedule to KRH for any
Covered Taxable Year and, if applicable, within five (5) calendar days of the final determination
of the Tax Benefit Schedule pursuant to the procedures set forth in Section 2.3(a), the Corporation
shall pay to KRH an amount equal to the Tax Benefit Payment for such Covered Taxable Year or shall
make a payment to KRH with respect to an applicable dispute pursuant to Section 2.3(a). Each Tax
Benefit Payment shall be made by wire transfer of immediately available funds to the bank account
of KRH previously designated by KRH to the Corporation. For the avoidance of doubt, no Tax Benefit
Payment shall be made in respect of estimated tax payments, including, without limitation,
estimated U.S. federal income tax payments.



               (b) A “Tax Benefit Payment” for a Covered Taxable Year shall equal eighty-five percent
(85%) of the Corporation’s Realized Tax Benefit, if any, for such Covered Taxable Year,



               increased by:




               (i) interest calculated at the Termination Rate from the due date (without
extensions) for filing the relevant Tax Return for such Covered Taxable Year through
the date the Tax Benefit Payment is made; and




               (ii) eighty-five percent (85%) of the amount of the excess Realized Tax Benefit
reflected on an Amended Tax Benefit Schedule for a previous Covered Taxable Year
over the Realized Tax Benefit (or, in the case of a Realized Tax Detriment, the
Realized Tax Detriment (expressed as a negative number)) reflected on the Tax
Benefit Schedule for such previous Covered Taxable Year (plus interest thereon
calculated pursuant to paragraph (i) of this subsection (b)), and



               decreased by:





               (iii) an amount equal to eighty-five percent (85%) of the Corporation’s
Realized Tax Detriment (if any) for any previous Covered Taxable Year; and




               (iv) eighty-five percent (85%) of the amount of the excess Realized Tax Benefit
reflected on the Tax Benefit Schedule for a previous Covered Taxable Year over the
Realized Tax Benefit (or, in the case of a Realized Tax Detriment, the Realized Tax
Detriment (expressed as a negative number)) reflected on the Amended Tax Benefit
Schedule for such previous Covered Taxable Year (plus interest thereon calculated
pursuant to paragraph (i) of this subsection (b));


provided, however, that (A) the amounts described in clauses (ii), (iii) and (iv)
shall not be taken into account in determining a Tax Benefit Payment attributable to any Covered
Taxable Year to
the extent such amounts were taken into account in determining any Tax Benefit Payment in a
preceding Covered Taxable Year and (B) the Tax Benefit Payment shall not be a number less




11









 







than
zero. For the avoidance of doubt, KRH shall have no obligation to make any payment to the
Corporation, or to reimburse the Corporation for amounts previously paid, pursuant to this
Agreement.




          Section 3.2 No Duplicative Payment. No duplicative payment of any amount (including
interest) will be required under this Agreement.




          Section 3.3 Lump Sum Payment. (a) At any time that (1) the present value of the
remaining payments under Section 3.1 for each Covered Taxable Year beginning after the last Covered
Taxable Year for which a payment was made pursuant to Section 3.1, based upon the Valuation
Assumptions and using a discount rate of the Termination Rate, (the “Lump Sum Present
Value”) is equal to or less than $25 million, and (2) KRH is record owner of less than 10% of
the outstanding Interests in Holdings II, KRH may elect to require the Corporation to pay to KRH
the Lump Sum Present Value (in accordance with the next paragraph), by giving the Corporation a
notice (the “Lump Sum Election Notice”) stating that it is electing its right to receive
the Lump Sum Present Value payment under this Section 3.3 and showing in reasonable detail its
calculation of the Lump Sum Present Value (as of the date of the notice) and its ownership in
Holdings II.




               (b) The Corporation shall pay the Lump Sum Present Value in, at the Corporation’s election,
(i) cash, (ii) Shares (valued at Market Value as of the trading day immediately preceding the date
of payment) or (iii) a combination of cash and Shares (valued at Market Value as of the trading day
immediately preceding the date of payment). The Corporation shall pay the Lump Sum Present Value
within ten business days of receiving the Lump Sum Election Notice or within ten (10) business days
of the resolution of a dispute undertaken pursuant to Section 3.3(d) (or such other date as may be
agreed upon by KRH). The Lump Sum Present Value shall be calculated as of the date that such Lump
Sum Election Notice is received by the Corporation. If the Corporation elects to pay any portion
of such Lump Sum Present Value in Shares, such Shares will be fully paid, non-assessable and free
and clear of all liens, claims and encumbrances and such Shares will be treated as Registrable
Securities under the Registration Rights Agreement.



               (c) If KRH elects to receive the Lump Sum Present Value payment, and such Lump Sum Present
Value payment is paid in full in accordance with the provisions of this Section 3.3, then the
Corporation shall have no further obligations to make any further payments under Section 3.1 in
respect of any Covered Taxable Year included in the present value calculation under which the Lump
Sum Present Value payment was made. Differences in actual events after the date of the present
value calculation from those used in the present value calculation, including, without limitation,
in the assumptions, amounts of taxable income or other facts used in the present value calculation,
shall not affect, or require any adjustment or reimbursement of, the Lump Sum Present Value once
such amount has been paid in full.



               (d) The Corporation shall, within five calendar days of a request by KRH, prepare its
estimate of the Lump Sum Present Value as of the date of such request, together with
reasonable supporting detail showing the basis of its calculations. In the event the
Corporation’s estimate of the Lump Sum Present Value does not equal KRH’s estimate set forth in the
Lump Sum Election Notice, procedures similar to those set forth in Section 2.3(a) shall apply.



12









 





               (e) With respect to a Lump Sum Payment under this Section 3.3, the Corporation shall not
release any information to the public at any time until disclosure of such Lump Sum Payment is
required by the Exchange Act.



ARTICLE IV

TERMINATION




          Section 4.1 Early Termination. Upon the occurrence of a Change of Control, the Corporation
shall be obligated to terminate this Agreement effective as of the Early Termination Date by paying
to KRH the Early Termination Payment as provided in Section 4.3. Upon payment of the Early
Termination Payment by the Corporation, the Corporation shall have no further payment obligations
under this Agreement, other than for any (i) Tax Benefit Payment agreed to by the Corporation and
KRH as due and payable but unpaid as of the Early Termination Date and (ii) Tax Benefit Payment due
for the Covered Taxable Year ending with or including the Early Termination Date (except to the
extent that the amount described in clause (i) or (ii) is included in the Early Termination
Payment).




          Section 4.2 Early Termination Notice. Within 30 days of a Change of Control, the
Corporation shall deliver to KRH a notice (the “Early Termination Notice”) stating the date
of the Change of Control and showing in reasonable detail the calculation of the Early Termination
Payment. At the time the Corporation delivers the Early Termination Notice to KRH, the Corporation
shall (i) deliver to KRH schedules and work papers providing reasonable detail regarding the
calculation of the Early Termination Payment, in a manner consistent with the definition of such
term and an Advisory Firm Letter supporting such calculation and (ii) allow KRH reasonable access
to the appropriate representatives at the Corporation, Holdings II and the Advisory Firm in
connection with KRH’s review of such calculation. The calculation contained in such Early
Termination Notice shall become final and binding on the parties unless KRH, within 30 calendar
days after receiving such calculation, provides the Corporation with notice of a material objection
to such calculation made in good faith and in reasonable detail. If the parties, negotiating in
good faith, are unable to successfully resolve the issues raised in such calculation within 30
calendar days after such notice of material objection was delivered to the Corporation, the
Corporation and KRH shall employ the Reconciliation Procedures.




          Section 4.3 Payment upon Early Termination. Within (i), in the event KRH does not provide
the Corporation with notice of material objection pursuant to Section 4.2, 45 calendar days after
delivery to KRH of the Early
Termination Notice, (ii), in the event KRH provides the Corporation notice of material objection
and KRH and the Corporation successfully resolve the issues raised in such notice without
employment of the Reconciliation Procedures, in each case pursuant to Section 4.2, 10 calendar days
after such resolution or (iii), in the event of the employment of the Reconciliation Procedures
pursuant to Section 4.2, 10 days after the finalization of the Early Termination Notice pursuant to
such Reconciliation Procedures,




13









 







the Corporation shall pay to KRH an amount equal to the Early Termination Payment. Such payment
shall be made by wire transfer of immediately available funds to a bank account designated by KRH.




          Section 4.4 Breach of Agreement. In the event of a Material Breach, then all obligations
hereunder shall be accelerated and such obligations shall be calculated as if an Early Termination
Notice had been delivered on the date of such Material Breach and shall include, without
limitation, (1) the Early Termination Payment calculated as if an Early Termination Notice had been
delivered on the date of such Material Breach, (2) any Tax Benefit Payment agreed to by the
Corporation and KRH as due and payable but unpaid as of the date of such Material Breach and (3)
any Tax Benefit Payment due for the Taxable Year ending with or including the date of such Material
Breach. Notwithstanding the foregoing, in the event of a Material Breach, KRH shall be entitled to
elect to accelerate all obligations due to KRH hereunder as set forth in (1), (2) and (3) above or
to seek specific performance of the terms hereof.




          Section 4.5 Unilateral Termination by KRH. At any time, by providing notice (the
“Unilateral Termination Notice”) to the Corporation, KRH may elect to terminate this
Agreement effective as of the date designated by KRH in such notice (the “Unilateral Termination
Date”). Upon receipt of the Unilateral Termination Notice, the Corporation shall have no further
payment obligations under this Agreement, other than for any (i) Tax Benefit Payment agreed to by
the Corporation and KRH as due and payable but unpaid as of the Unilateral Termination Date and
(ii) Tax Benefit Payment due for the Covered Taxable Year ending with or including the Unilateral
Termination Date (except to the extent that the amount described in clause (ii) is attributable to
Interests exchanged after the Unilateral Termination Date).




ARTICLE V

SUBORDINATION AND LATE PAYMENTS




          Section 5.1 Subordination. Notwithstanding any other provision of this Agreement to the
contrary, any Tax Benefit Payment, Lump Sum Present Value payment (to the extent payable in cash)
or Early Termination Payment required to be made under this Agreement shall rank subordinate and
junior in right of payment to any Senior Obligations and shall rank pari passu with all current or
future unsecured obligations of the Corporation that are not Senior Obligations.




          Section 5.2 Late Payments by the Corporation. The amount of all or any portion of a payment not made to KRH when due under the terms of this
Agreement shall be payable together with interest thereon, computed at the Termination Rate and
commencing from the date on which such payment was due and payable and ending on the date of
payment.





14









 








ARTICLE VI

ELECTION; NO DISPUTES; CONSISTENCY; COOPERATION




          Section 6.1 Election to be Filed. As managing member of Holdings II, the Corporation shall
cause Holdings II and each Holdings II Group member that is treated as a partnership for U.S.
federal income tax purposes to file an election under Section 754 of the Code commencing with its
Taxable Year in which the Original Issue occurs and shall not cause any such entity to revoke such
election until this Agreement is no longer in effect. If Holdings II acquires an interest in an
entity that is treated as a partnership for U.S. federal income tax purposes, the Corporation shall
use its best efforts to cause such entity to file an election under Section 754 of the Code
effective for each such entity’s Taxable Year in which such acquisition occurs, unless such entity
already has an election under Section 754 of the Code in effect, and shall not cause such entity to
revoke such election until this Agreement is no longer in effect.




          Section 6.2 KRH’s Participation In Tax Matters of the Corporation. Except as otherwise
provided herein, the Corporation shall have full responsibility for, and sole discretion over, all
matters concerning Covered Taxes of the Corporation, including without limitation the preparation,
filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to
Covered Taxes. Notwithstanding the foregoing, the Corporation shall notify KRH of, and keep KRH
reasonably informed with respect to, and KRH shall have the right to participate in and monitor
(but, for the avoidance of doubt, not to control) the portion of any audit of the Corporation by a
Taxing Authority the outcome of which is reasonably expected to affect KRH’s rights under this
Agreement. The Corporation shall provide to KRH reasonable opportunity to provide information and
other input to the Corporation and its advisors concerning the conduct of any such portion of such
audits. The Corporation shall not settle or otherwise resolve any audit or other challenge by a
Taxing Authority relating to the Basis Adjustment or the deduction of Imputed Interest without the
consent of KRH, which consent KRH shall not unreasonably withhold, condition or delay.




          Section 6.3 Consistency. Unless there is a Determination to the contrary or except with
the consent of the Corporation and KRH, the Corporation and KRH, on their own behalf and on behalf
of each of their affiliates, agree to report and cause to be reported for all U.S. purposes,
including for purposes of all Covered Taxes and U.S. financial reporting purposes, all items
related to Covered Taxes and this Agreement (including without limitation the Basis Adjustment and
each Tax Benefit Payment) in a manner consistent with that specified by the Corporation in any
schedule, letter or certificate required to be provided by or on behalf of the Corporation under
this Agreement, as such schedule, letter or certificate is modified as a result of the negotiation
of the parties pursuant to this Agreement or the Reconciliation Procedures. In the event that an
Advisory Firm is replaced by the Corporation with another firm, such replacement Advisory Firm
shall be required to
perform its services under this Agreement using procedures and methodologies consistent with the
previous Advisory Firm, unless otherwise required by law or the Corporation and KRH agree to the
use of other procedures and methodologies.




          Section 6.4 Cooperation. The Corporation and KRH shall (and shall cause their respective
Affiliates to) (i) furnish to each other in a timely manner such information, documents and other
materials as the Corporation or KRH may reasonably request for purposes of making any determination
or computation necessary or appropriate under this Agreement, preparing any Tax Return or
contesting or defending any audit, examination or controversy with




15









 







any Taxing Authority, (ii) make
its employees and representatives available to provide explanations of documents and materials and
such other information as may the Corporation or KRH reasonably request in connection with any of
the matters described in clause (i) above and (iii) reasonably cooperate in connection with any
such matter.




ARTICLE VII

GENERAL PROVISIONS




          Section 7.1 Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed duly given and received (i) on the date of
delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s
fax machine if sent on a Business Day (or otherwise on the next Business Day) or (ii) on the first
Business Day following the date of dispatch if delivered by a recognized next-day courier service.
All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions
as may be designated in writing by the party to receive such notice:




if to the Corporation, to:



RHI Entertainment, Inc.

1325 Avenue of Americas, 21st Floor

New York, NY 10019

Fax: 212-977-3917

Attention: Henry S. Hoberman, Esq.



With a copy to:



Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Fax: 212-751-4864

Attention: Raymond Lin, Esq.




          if to KRH, the address of KRH set forth from time to time in the books and records
of Holdings II.



Any party may change its address or fax number by giving the other party written notice of its new
address or fax number in the manner set forth above.




          Section 7.2 Reconciliation.




               (a) In the event that the Corporation and KRH are unable to resolve a disagreement within the
relevant period designated in this Agreement (a “Reconciliation Dispute”), the
Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the
“Expert”) in the particular area of disagreement mutually acceptable to both parties. The
Expert shall be a partner in a nationally recognized accounting firm, a valuation firm, or a law
firm (other than the Advisory Firm), and the Expert shall not, and the firm that employs the Expert
shall not, have any material relationship with the Corporation or KRH or other actual or potential
conflict of interest. If the parties are unable to agree on an Expert within fifteen (15) days of
the last day of the relevant period otherwise designated in this Agreement for the resolution of a
disagreement, the Expert shall be appointed by the International Chamber of



16









 




Commerce Centre for
Expertise. The Expert shall resolve any matter relating to the Exchange Basis Schedule or an
amendment thereto, the Lump Sum Present Value calculation or the Early Termination Notice within 30
calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment
thereto within 15 calendar days or as soon thereafter as is reasonably practicable, in each case
after the matter has been submitted to the Expert for resolution. Notwithstanding anything in this
Agreement to the contrary, if the matter is not resolved before any payment that is the subject of
a disagreement is due or any Tax Return reflecting the subject of a disagreement is due, such
payment shall be made on the date prescribed by this Agreement and such Tax Return may be filed as
prepared by the Corporation, subject to adjustment or amendment upon resolution.




               (b) The costs and expenses relating to the engagement of the Expert or amending any Tax Return
shall be borne by the Corporation, except as provided in the next sentence. The Corporation and
KRH shall bear their own costs and expenses of such proceeding, unless KRH has a prevailing
position that is more than 10% of the payment at issue, in which case the Corporation shall
reimburse KRH for any reasonable out-of-pocket costs and expenses in such proceeding. Any dispute
as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.2 shall be
decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the
determinations of the Expert pursuant to this Section 7.2 shall be binding on the Corporation and
KRH and may be entered and enforced in any court having jurisdiction.



          Section 7.3 Withholding. The Corporation shall be entitled to deduct and withhold from any
payment payable pursuant to this Agreement such amounts as the Corporation is required to deduct
and withhold with respect to the making of such payment under the Code, or any provision of state,
local or foreign Tax law, and shall promptly remit such withheld amounts to the appropriate Taxing
Authority. To the extent that amounts are so withheld and paid over to the appropriate Taxing
Authority by the Corporation, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to KRH. Each party will cooperate to minimize withholding
obligations, if any, with respect to payments required hereunder.




          Section 7.4 Submission to Jurisdiction; Waivers. Any Proceeding must be brought against any of the parties in the Court of Chancery of the State
of Delaware in and for New Castle County or, if the Court of Chancery lacks subject matter
jurisdiction, in another court of the State of Delaware, County of New Castle, or in the United
States District Court for the District of Delaware, and each of the parties consent to the
jurisdiction of such courts (and of the appropriate appellate courts) in any such Proceeding and
waives any objection to venue laid therein. Process in any Proceeding referred to in the preceding
sentence may be served on any party anywhere in the world. Each party to this Agreement
irrevocably (i) waives any objection which such party may have at any time to the laying of venue
of any Proceeding brought in any such court, waives any claim that such Proceeding has been brought
in an inconvenient forum and further waives the right to object, with respect to such Proceeding,
that such court does not have jurisdiction over such party and (ii) waives, to the fullest extent
permitted by applicable law, any and all rights to trial by jury in connection with any Proceeding.




          Section 7.5 Amendments. No amendment to this Agreement shall be effective unless it is (i)
in writing and (ii) signed by the Corporation and KRH.





17









 








          Section 7.6 Entire Agreement; No Third Party Beneficiaries. This Agreement constitutes the
entire agreement and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their respective successors and permitted
assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any
other Person any right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.




          Section 7.7 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any law or public policy, all other terms and provisions
of this Agreement shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any manner materially
adverse to any party. 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 an
acceptable manner in order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.




          Section 7.8 Successors’ Assignment.




               (a) KRH may not assign this Agreement to any person without the prior written consent of the
Corporation; provided, however,




               (i) that, to the extent Interests are effectively transferred in accordance
with the terms of the LLC Agreement and any other agreements KRH may have entered
into with respect thereto, KRH may assign to the transferee of such Interests KRH’s
rights under this Agreement with respect to such transferred Interests, as long as
such transferee has executed and delivered,
or, in connection with such transfer, executes and delivers, a joinder to this
Agreement, in form and substance reasonably satisfactory to the Corporation,
agreeing to undertake all the rights, interests, entitlements and obligations of KRH
under this Agreement, except as otherwise provided in such joinder,




               (ii) that, once an Exchange has occurred, any and all payments that may become
payable to KRH pursuant to this Agreement with respect to such Exchange may be
assigned to any Person or Persons, as long as any such Person has executed and
delivered, or, in connection with such assignment, executes and delivers, a joinder
to this Agreement, in form and substance reasonably satisfactory to the Corporation,




               (iii) that KRH may pledge some or all of its rights, interests or entitlements
under this Agreement to any U.S. money center bank in connection with a bona fide
loan or other indebtedness and




               (iv) that (A) KRH or its permitted assignee may assign, transfer, pledge or
otherwise dispose of its rights and interests hereunder to any Person and (B) the
Corporation hereby agrees, at KRH’s (or, in the case of an assignment, transfer,
pledge or other disposition by a permitted assignee, at such permitted assignee’s)
expense, to execute and deliver such documents as may be reasonably necessary to
accomplish any such assignment, transfer, pledge or



18









 






other disposition of rights and
interests hereunder so long as the Corporation’s rights under this Agreement are not
thereby materially altered, amended, diminished or otherwise impaired.



               (b) The Corporation may not assign any of its rights, interests or entitlements under this
Agreement without the consent of KRH, not to be unreasonably withheld or delayed, and any
assignment without such consent shall be null and void.



               (c) Notwithstanding the foregoing, to the extent KRH transfers an interest to a member of KRH,
such member shall have all rights under this Agreement and the requirement to execute and deliver a
joinder pursuant to this Section 7.8 shall not be construed as requiring such execution and
delivery prior to an assignment becoming effective. At the time of such assignment and at the time
of any Tax Benefit Payment, KRH and the member shall determine the percentage of each Tax Benefit
Payment to be made by the Corporation to such member.



               (d) Subject to subsections (a) and (b), this Agreement will be binding upon, inure to the
benefit of and be enforceable by, the parties and their respective successors and assigns including
any acquirer of all or substantially all of the assets of the Corporation.



          Section 7.9 Admission of the Corporation into a Consolidated Group. If the Corporation
becomes a member of an affiliated or consolidated group of corporations that files a consolidated
income Tax Return pursuant to Sections 1501 et seq. of the Code or any corresponding provisions of
state, local or foreign law, then: (i) the provisions of this Agreement shall be applied with
respect to the group as a whole; and (ii) Tax Benefit Payments shall be computed with reference to
the consolidated taxable income of the group as a whole.




          Section 7.10 Remedies; Specific Performance. The parties hereto acknowledge that money damages would not be an adequate remedy at law if any
party fails to perform in any material respect any of its obligations hereunder and accordingly
agree that each party, in addition to any other remedy to which it may be entitled at law or in
equity, shall be entitled to seek to compel specific performance of the obligations of any other
party under this Agreement, without the posting of any bond, in accordance with the terms and
conditions of this Agreement in any court of the United States or any State thereof having
jurisdiction, and if any action should be brought in equity to enforce any of the provisions of
this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy
at law. No remedy shall be exclusive of any other remedy, and all available remedies shall be
cumulative.




          Section 7.11 Counterparts. This Agreement may be executed in one or more counterparts, all
of which shall be considered one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.




          Section 7.12 Titles and Subtitles. The titles of the sections and subsections of this
Agreement are for convenience of reference only and are not to be considered in construing this
Agreement.




          Section 7.13 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without giving effect to applicable principles
of conflict of laws.




19









 








               IN WITNESS WHEREOF, the Corporation, KRH and Holdings II have duly executed this Agreement as
of the date first written above.




	 	 	 	 	 
	 	RHI ENTERTAINMENT, INC.

 	 
	 	By:  	/s/ Henry S. Hoberman
 	 
	 	 	Name:  	Henry S. Hoberman  	 
	 	 	Title:  	Executive Vice President 	 
	 



	 	 	 	 	 
	 	KRH INVESTMENTS LLC

 	 
	 	By:  	/s/ Henry S. Hoberman
 	 
	 	 	Name:  	Henry S. Hoberman  	 
	 	 	Title:  	Executive Vice President 	 
	 



	 	 	 	 	 
	 	RHI ENTERTAINMENT HOLDINGS II, LLC

 	 
	 	By:  	/s/ Henry S. Hoberman
 	 
	 	 	Name:  	Henry S. Hoberman  	 
	 	 	Title:  	Executive Vice President 	 
	 



Signature Page — Tax Receivable Agreement