EX-10.1





Exhibit 10.1


 





RHI ENTERTAINMENT HOLDINGS II, LLC




AMENDED AND RESTATED

LIMITED LIABILITY COMPANY OPERATING AGREEMENT




DATED AS OF JUNE 23, 2008




 





 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1 DEFINITIONS
	 	 	1	 
	1.1 Defined Terms
	 	 	1	 
	1.2 Other Definitional Provisions; Interpretation
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 2 FORMATION
	 	 	16	 
	2.1 Formation; Qualification
	 	 	16	 
	2.2 Name
	 	 	16	 
	2.3 Term
	 	 	16	 
	2.4 Headquarters Office
	 	 	17	 
	2.5 Registered Agent and Office
	 	 	17	 
	2.6 Purposes
	 	 	17	 
	2.7 Powers
	 	 	17	 
	 
	 	 	 	 
	ARTICLE 3 MEMBERS AND INTERESTS
	 	 	17	 
	3.1 Members
	 	 	17	 
	3.2 Meeting of Members
	 	 	18	 
	3.3 Certain Duties and Obligations of the Members
	 	 	19	 
	3.4 Units
	 	 	20	 
	3.5 Authorization and Issuance of Additional Units
	 	 	21	 
	3.6 Business Opportunities; Non-Competition
	 	 	22	 
	 
	 	 	 	 
	ARTICLE 4 MANAGEMENT AND OPERATIONS
	 	 	22	 
	4.1 Manager
	 	 	22	 
	4.2 Management Authority
	 	 	22	 
	4.3 Limitations on the Business of the Manager; Approval Rights of KRH
	 	 	23	 
	4.4 Duties
	 	 	27	 
	4.5 Reliance by Third Parties
	 	 	27	 
	4.6 Resignation
	 	 	27	 
	4.7 Removal
	 	 	27	 
	4.8 Vacancies
	 	 	27	 
	4.9 Information Relating to the Company
	 	 	27	 
	4.10 Insurance
	 	 	27	 
	4.11 Transactions Between Company and Manager
	 	 	27	 
	4.12 Officers
	 	 	27	 
	4.13 Management Fee; Reimbursement of Expenses
	 	 	28	 
	4.14 Limitation of Liability; Exculpation
	 	 	28	 
	4.15 Indemnification
	 	 	29	 
	4.16 Title to Assets
	 	 	30	 
	 
	 	 	 	 
	ARTICLE 5 CAPITAL CONTRIBUTIONS; DISTRIBUTIONS
	 	 	30	 
	5.1 Capital Contributions
	 	 	30	 
	5.2 Loans from Members
	 	 	31	 






 









 






	 	 	 	 	 
	 	 	Page	 
	5.3 Loans from Third Parties
	 	 	31	 
	5.4 Distributions
	 	 	31	 
	5.5 Valuation
	 	 	32	 
	 
	 	 	 	 
	ARTICLE 6 BOOKS AND RECORDS; TAX; CAPITAL ACCOUNTS; ALLOCATIONS
	 	 	33	 
	6.1 General Accounting Matters
	 	 	33	 
	6.2 Certain Tax Matters
	 	 	34	 
	6.3 Allocations
	 	 	34	 
	6.4 Allocations of Net Income and Net Losses for Federal Income Tax Purposes
	 	 	36	 
	6.5 Elections
	 	 	36	 
	6.6 Tax Year
	 	 	37	 
	6.7 Withholding Requirements
	 	 	37	 
	6.8 Reports to Members
	 	 	37	 
	6.9 Auditors
	 	 	38	 
	6.10 Transfers During Year
	 	 	38	 
	6.11 Code Section 754 Election
	 	 	38	 
	 
	 	 	 	 
	ARTICLE 7 DISSOLUTION
	 	 	38	 
	7.1 Dissolution
	 	 	38	 
	7.2 Winding-Up
	 	 	39	 
	7.3 Final Distribution
	 	 	39	 
	 
	 	 	 	 
	ARTICLE 8 TRANSFER; SUBSTITUTION; ADJUSTMENTS
	 	 	40	 
	8.1 Restrictions on Transfer
	 	 	40	 
	8.2 Substituted Members
	 	 	41	 
	8.3 Effect of Void Transfers
	 	 	42	 
	 
	 	 	 	 
	ARTICLE 9 EXCHANGE RIGHT OF MEMBER
	 	 	42	 
	9.1 Exchange Right of a Member
	 	 	42	 
	9.2 Effect of Exercise of Exchange Right
	 	 	43	 
	 
	 	 	 	 
	ARTICLE 10 MISCELLANEOUS
	 	 	44	 
	10.1 Agreement to Cooperate; Further Assurances
	 	 	44	 
	10.2 Amendments
	 	 	44	 
	10.3 Confidentiality
	 	 	44	 
	10.4 Injunctive Relief
	 	 	45	 
	10.5 Successors, Assigns and Transferees
	 	 	45	 
	10.6 Notices
	 	 	45	 
	10.7 Integration
	 	 	46	 
	10.8 Severability
	 	 	46	 
	10.9 Counterparts
	 	 	46	 
	10.10 Governing Law; Submission to Jurisdiction
	 	 	46	 
	 
	 	 	 	 
	Exhibit A Members and Units
	 	 	1	 






ii









 







	 	 	 	 	 
	 	 	Page	 
	Exhibit B Form of Membership Unit Certificate
	 	 	1	 






iii









 





AMENDED AND RESTATED




LIMITED LIABILITY COMPANY OPERATING AGREEMENT




OF

RHI ENTERTAINMENT HOLDINGS II, LLC




     This Amended and Restated Limited Liability Company Operating Agreement (this
“Agreement”) of RHI Entertainment Holdings II, LLC, a Delaware limited liability company
(the “Company”), is made and entered into as of June 23, 2008, by and among each of the
parties hereto and amends and restates in full that certain Limited Liability Company Agreement of
RHI Entertainment Holdings II, LLC, dated as of September 6, 2007.



RECITALS




     A. WHEREAS, On September 6, 2007, RHI Entertainment, Inc. (“RHI Inc.”), a Delaware
corporation, formed the Company. RHI Inc. became the sole Member and Manager of the Company.



     B. WHEREAS, On June 18, 2008, RHI Entertainment Holdings, LLC changed its name to KRH
Investments LLC (“KRH”).



     C. WHEREAS, The Company, RHI Inc. and KRH have entered into a Membership Unit Subscription
Agreement, dated as of June 23, 2008 (the “Subscription Agreement”), pursuant to which the
Company has agreed to issue Membership Units to RHI Inc. in exchange for the proceeds received from
RHI Inc.’s Initial Public Offering and to issue Membership Units to KRH in exchange for the
contribution of its interests in RHI Entertainment LLC, a Delaware limited liability company.



     D. WHEREAS, The respective board of directors of each of RHI Inc. and KRH have approved this
Agreement.



          NOW, THEREFORE, The Members hereby duly adopt this Agreement pursuant to and in accordance
with the Delaware Limited Liability Company Act (6 Del. C. § 18-101 et seq.), as amended from time
to time (the “LLC Act”), and hereby agree as follows:




ARTICLE 1




DEFINITIONS




     1.1 Defined Terms. The following terms shall have the following meanings in this
Agreement:



          “Additional Contribution Amount” has the meaning set forth in Section 3.4(d).




          “Additional Equity Issuance” means the issuance by RHI Inc. of any Equity Interests in
RHI Inc.




1









 





          “Adjusted Capital Account Balance” means, with respect to any Member, the balance in
such Member’s Capital Account after giving effect to the following adjustments: (a) debit to such
Capital Account of the items described in Section l.704-1(b)(2)(ii)(d)(4), (5) and (6) of the
Treasury Regulations, and (b) credit to such Capital Account, such Member’s share of Company
Minimum Gain or Member Non-recourse Debt Minimum Gain or of any amount which such Member would be
required to restore under this Agreement or otherwise. The foregoing definition of Adjusted
Capital Account Balance is intended to comply with the provisions of Section l.704-1(b)(2)(ii)(d)
of the Treasury Regulations and shall be interpreted consistently therewith.




          “Affiliate” means with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, Controls, is Controlled by or is under common
Control with such Person. Notwithstanding the foregoing, (i) no Member shall be deemed an
Affiliate of the Company, (ii) the Company shall not be deemed an Affiliate of any Member, and
(iii) no partner or member of KRH, or any of such partner or member’s Affiliates (other than KRH
and its Subsidiaries) shall be deemed an Affiliate of any Member or the Company or of RHI Inc.




          “Amendment No. 1 to the Credit Agreement” means Amendment No. 1, dated as of October
12, 2007, to the Credit Agreement.




          “Amendment No. 2 to the Credit Agreement” means Amendment No. 2, dated as of May 29,
2008, to the Credit Agreement, or with Majority Member Vote, any other agreement that defines “Tax
Distribution”.




          “Agreement” has the meaning set forth in the preamble of this Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.




          “Annual Business Plan” means the annual business plan which sets out the strategy and
action plans for the Company. This business plan may include any of the following: financial
performance and forecasts, an outline of changes to be made to the Company, potential changes to
the market, customers and competition, operating budgets, capital budgets, capital plan, objectives
and goals for the year (including the planned production slate for the year), key performance
indicators, issues or problems, any operational changes, and any changes to management and
personnel.




          “Applicable Tax Rate” means (i) 41% or (ii) if, in the good faith determination of the
Manager, the highest combined federal, state and local marginal rate applicable to corporate or
individual taxpayers residing in New York City, New York, taking into account the deductibility of
state and local income taxes for federal income tax purposes is increased, such appropriate higher
rate, as determined by the Manager.




          “Approved Plan” means the Equity Incentive Plan in effect on the date of this
Agreement.




          “Available Cash” means, at any given time, the amount of cash available for
distributions determined by the Manager at such time after taking into account amounts believed by
the Manager to be required to pay the operating and capital requirements of the business,



2









 






reserves of the business and after making adequate provision for Tax Distribution Amounts due
or anticipated to become due.




          “Beneficial Owner” or “beneficial owner” (including, with correlative meanings, the
terms “beneficial ownership” and “beneficially owns”) has the meaning attributed to it in Rules
13d-3 and 13d-5 under the Exchange Act, whether or not applicable, except that a Person shall be
deemed to have Beneficial Ownership of all Units or Shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage of time or is
exercisable only upon the occurrence of a subsequent condition; provided, further,
that the provisions of Section 4.3 of this Agreement will also apply in calculating the beneficial
ownership of Membership Units by KRH or a Permitted Transferee.




          “Board” or “Board of Directors” means the board of directors of the Manager,
or the equivalent governing body if the Manager does not have a board of directors.




          “Business Day” means a day other than a Saturday, Sunday, federal holiday or other day
on which commercial banks in New York, New York are authorized or required by law to close.




          “Capital Account” means the Capital Account maintained for each Member on the
Company’s books and records in accordance with the following provisions:





(1) To each Member’s Capital Account there shall be added (a) such Member’s Capital
Contributions, (b) such Member’s allocable share of Net Income and any items in the nature
of income or gain that are specially allocated to such Member pursuant to Article 6 or other
provisions of this Agreement and (c) the amount of any Company liabilities assumed by such
Member or which are secured by any property distributed to such Member.




(2) From each Member’s Capital Account there shall be subtracted (a) the amount of (i) cash
and (ii) the Gross Asset Value of any Company Assets (other than cash) distributed to such
Member (other than any payment of principal and/or interest to such Member pursuant to the
terms of a loan made by the Member to the Company) pursuant to any provision of this
Agreement, (b) such Member’s allocable share of Net Losses and any other items in the nature
of expenses or losses that are specially allocated to such Member pursuant to Article 6 or
other provisions of this Agreement and (c) liabilities of such Member assumed by the Company
or which are secured by any property contributed by such Member to the Company.




(3) In the event any Interest in the Company is Transferred in accordance with the terms of
this Agreement, the transferee shall succeed to the Capital Account of the transferor to the
extent it relates to the transferred Interest.




(4) In determining the amount of any liability for purposes of Paragraphs 1 and 2 of this
definition, there shall be taken into account Code Section 752(c) and any other applicable
provisions of the Code.



3









 






(5) The foregoing provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Sections 1.704-1(b) and 1.704-2
of the Treasury Regulations and shall be interpreted and applied in a manner consistent with
such sections of the Treasury Regulations. In the event that the Manager shall determine
that it is prudent to modify the manner in which the Capital Accounts, or any additions or
subtractions thereto, are computed in order to comply with such sections of the Treasury
Regulations, the Manager may make such modification; provided, however, that it is not
likely to have a material effect on the amounts distributable to any Member pursuant to
Article 7 hereof upon the dissolution of the Company. The Manager shall also make (a) any
adjustments that are necessary or appropriate to maintain equality between the Capital
Accounts of the Members and the amount of Company capital reflected on the Company’s balance
sheet, as computed for book purposes, in accordance with Section 1.704-1(b)(2)(iv)(q) of the
Treasury Regulations, and (b) any appropriate modifications in the event that unanticipated
events might otherwise cause this Agreement not to comply with Section 1.704-1(b) or 1.704-2
of the Treasury Regulations.



          “Capital Contribution” means the total amount of cash and the agreed fair market value
(net of all liabilities secured by such assets that the Company is considered to assume or take
subject to under Section 752 of the Code) of all other assets contributed to the Company by a
Member.




          “Cash Amount” means, with respect to any Membership Units subject to an Exchange
pursuant to Article 9 hereof,, an amount of cash equal to the Deemed Partnership Interest Value
attributable to such Membership Units.




          “Cash Equivalents” means any of the following denominated in U.S. Dollars:
(i) marketable direct obligations issued or unconditionally guaranteed by the government of the
United States or issued by any agency thereof and backed by the full faith and credit of the United
States maturing within one year from the date of acquisition thereof; (ii) marketable direct
obligations issued by any state of the United States or any political subdivision of any such state
or any public instrumentality thereof maturing within one year from the date of acquisition thereof
and, at the time of acquisition, having the highest rating obtainable from any of Standard & Poor’s
Corporation or any successor rating agency (“S&P”) or Moody’s Investors Service, Inc. or
any successor rating agency (“Moody’s”); (iii) commercial paper maturing not more than one
year from the date of issuance thereof and, at the time of acquisition, having the highest rating
obtainable from either S&P or Moody’s; (iv) time deposits, certificates of deposit or bankers’
acceptances, maturing not more than one year from the date of issuance thereof, of any commercial
bank or trust company having capital and surplus in excess of $500,000,000 and the commercial paper
of the holding company of which has the highest rating obtainable from either S&P or Moody’s; or
(v) investments in money market funds complying with the risk limiting conditions of Rule 2a-7 or
any successor rule of the Securities and Exchange Commission under the Investment Company Act of
1940, in each case provided in clauses (i), (ii), (iii) and (iv) above, maturing within one year
from the date of acquisition.




          “Certificate” has the meaning set forth in Section 2.1(a) of this Agreement.




4









 








          “Certificate of Incorporation” means that certain Amended and Restated Certificate of
Incorporation of RHI Inc., dated as of June 23, 2008.




          “Change of Control” means the occurrence of any of the following events (whether or
not approved by the Board of Directors of RHI Inc.):





     (i) any Person or Group is or becomes the Beneficial Owner (other than a
Permitted Holder), directly or indirectly, of RHI Inc.’s voting stock representing
50% or more of the total voting power of all outstanding voting stock of RHI Inc.;




     (ii) RHI Inc. consolidates with, or merges with or into, another entity or
Person, or RHI Inc. sells, assigns, conveys, transfers, leases or 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
RHI Inc. 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 RHI Inc.; or




     (iv) the adoption of a plan of liquidation or dissolution of RHI Inc.



          “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any
successor statute. Any reference herein to a specific provision of the Code shall mean, where
appropriate, the corresponding provision in any successor statute.




          “Company” has the meaning set forth in the preamble of this Agreement.




          “Company Assets” means all interests in real and personal property owned by the
Company from time to time (including the assets of all disregarded entities owned by the Company),
and shall include both tangible and intangible property (including cash).




          “Company Minimum Gain” has the meaning set forth in Sections 1.704-2(b)(2) and
1.704-2(d) of the Treasury Regulations for the phrase “partnership minimum gain.”




          “Confidential Information” has the meaning set forth in Section 10.3(a) of this
Agreement.




          “Continuing Director” means, as of any date of determination, any member of the Board
of Directors of the Company who was (1) a member of such Board of Directors on the date of the
completion of the Initial Public Offering, (ii) 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



5









 






Directors at the time of such nomination or election or (iii) nominated by KRH pursuant to the
Director Designation Agreement.




          “Control” (including the terms “Controlled by” and “under common Control with”), with
respect to the relationship between or among two or more Persons, means the possession, directly or
indirectly, of the power to direct or cause the direction of the affairs or management of a Person,
whether through the ownership of voting Equity Interests, as trustee or executor, by contract or
otherwise.




          “Credit Agreement” means the Credit, Security, Guaranty and Pledge Agreement, dated as
of January 12, 2006, as amended and restated as of April 13, 2007 and as amended by Amendment No. 1
thereto, dated as of October 12, 2007, as further amended by Amendment No. 2 thereto, dated as of
May 29, 2008, and as it may be thereafter amended, and, with Majority Member Vote, any replacement,
additional or supplemental credit facility, loan agreement, indenture or debt obligation.




          “Deemed Partnership Interest Value” means, as of any date, the Deemed Value of the
Membership Interests multiplied by the applicable Percentage Interest.




          “Deemed Value of the Membership Interests” means, as of any date, (i) the total number
of outstanding Membership Units beneficially owned by the Manager as of the close of business on
such date multiplied by the RHI Inc. Market Price determined as of such date of a Share, as
adjusted for stock dividends and distributions, stock splits and subdivisions, reverse stock splits
and combinations, distribution of warrants or options, distributions of evidences of indebtedness
and investments (ii) divided by the Percentage Interest of the Manager.




          “Depreciation” means, for each Fiscal Year or other period, an amount equal to the
federal income tax depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such year or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the beginning of such year or
other period, Depreciation shall be an amount that bears the same ratio to such beginning Gross
Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction
for such year or other period bears to such beginning adjusted tax basis; provided, however, that
if the federal income tax depreciation, amortization or other cost recovery deduction for such year
or other period is zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the Manager.




          “Dilutive Issuance” means any Additional Equity Issuance by RHI Inc. other than (i)
an Additional Equity Issuance where the total cash consideration received per Share (or to be
received) by RHI Inc. upon issuance of Shares in such Additional Equity Issuance (or upon
conversion or exercise of securities, options, warrants or rights issued in such Additional Equity
Issuance) plus any applicable underwriters’ or brokers’ discount or commission is not less than the
RHI Inc. Market Price as of a date not more than 5 trading days prior to the date of the Additional
Equity Issuance, (ii) an underwritten offering not primarily directed to existing shareholders of
RHI Inc. or their Affiliates where the price was determined by an investment banking firm of
international repute, (iii) an Additional Equity Issuance resulting from the



6









 






exercise or conversion of securities, options, warrants or rights where the issuance of such
securities, options, warrants or rights constituted an earlier Additional Equity Issuance that was
not a Dilutive Issuance, (iv) any Additional Equity Issuance approved by KRH, or (v) any Additional
Equity Issuance pursuant to the Equity Incentive Plan.




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




          “Discount” has the meaning set forth in Section 4.13.




          “Economic Interest” means a Person’s right to share in the Net Income, Net Losses, or
similar items of, and to receive distributions from, the Company, but does not include any other
rights of a Member including, without limitation, the right to vote or to participate in the
management of the Company or, except as specifically provided in this Agreement or required under
the LLC Act, any right to information concerning the business and affairs of the Company.




          “Equity Incentive Plan” means the RHI Inc. 2008 Equity Incentive Plan, as the same may
be amended, supplemented, replaced, increased or otherwise modified from time to time.




          “Equity Interests” means, with respect to any Person, any and all shares, interests,
participations or other equivalents (however designated, whether voting or non-voting) of capital
stock, partnership interests (whether general or limited), limited liability company interests or
equivalent ownership interests in or issued by, or interests, participations or other equivalents
to share in the revenues or earnings of (except as provided in any service agreement that includes
a revenue sharing component entered into in the ordinary course of business), such Person or
securities convertible into, or exchangeable or exercisable for, such shares, interests,
participations or other equivalents and options, warrants or other rights to acquire such shares,
interests, participations or other equivalents; provided that discounts and rebates granted
in the ordinary course of business shall not in any event constitute an Equity Interest.




          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended and the
rules and regulations promulgated thereunder, as the same may be amended from time to time.




          “Excess Non-recourse Liability” has the meaning set forth in Section 1.752-3(a)(3) of
the Treasury Regulations




          “Exchange” means the right to exchange Membership Units for Shares and/or cash
pursuant to Article 9 hereof.




          “Exchange Act” means the Securities and Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder, as the same may be amended from time to time.




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




7









 








          “Exchange Right” has the meaning set forth in Section 9.1(a) of this Agreement.




          “Exchanged Units” has the meaning set forth in Section 9.1(a) of this Agreement.




          “Exchanging Member” has the meaning set forth in Section 9.1(a) of this Agreement.




          “Exchange Date” has the meaning set forth in Section 9.1(a) of this Agreement.




          “Exchange Notice” has the meaning set forth in Section 9.1(a) of this Agreement.




          “Fiscal Period” means each fiscal quarter which shall consist of three Fiscal Months.




          “Fiscal Year” means the fiscal year of the Company ending on December 31st of each
year.




          “GAAP” means generally accepted accounting principles in the United States in effect
as of the relevant date on which GAAP is to be determined.




          “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.




          “Gross Asset Value” means, with respect to any asset of the Company, the asset’s
adjusted basis for federal income tax purposes, except as follows:





(1) The initial Gross Asset Value of any asset contributed by a Member to the Company shall
be the gross fair market value of such asset, as determined by the Manager and the
contributing Member.




(2) The Gross Asset Values of all Company Assets immediately prior to the occurrence of any
event described in Subparagraphs (a), (b), (c) or (d) of this Paragraph (2) shall be
adjusted to equal their respective gross fair market values, as determined by the Manager
using such reasonable method of valuation as it may adopt:




(a) the acquisition of an additional Interest in the Company by a new or existing
Member, if the Manager reasonably determines that such adjustment is necessary or
appropriate to reflect the relative Economic Interests of the Members in the
Company;




(b) the distribution by the Company to a Member of more than a de minimis amount of
Company Assets as consideration for an Interest in the Company, if the Manager
reasonably determines that such adjustment is necessary or appropriate to reflect
the relative Economic Interests of the Members in the Company;



8









 






(c) the liquidation of the Company within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Treasury Regulations; and




(d) at such other times as the Manager shall reasonably determine necessary or
advisable in order to comply with Sections 1.704-1(b) and 1.704-2 of the Treasury
Regulations.




(3) The Gross Asset Value of any Company Asset distributed to a Member shall be the gross
fair market value of such asset on the date of distribution as determined by the Manager.




(4) The Gross Asset Values of Company Assets shall be increased (or decreased) to reflect
any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code
Section 743(b), but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury
Regulations; provided, however, that Gross Asset Values shall not be adjusted pursuant to
this Paragraph (4) to the extent that the Manager reasonably determines that an adjustment
pursuant to Paragraph (2) above is necessary or appropriate in connection with a transaction
that would otherwise result in an adjustment pursuant to this Paragraph (4).




(5) If the Gross Asset Value of a Company Asset has been determined or adjusted pursuant to
Paragraph (1), (2) or (4) of this definition, such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such Company Asset for
purposes of computing Net Income and Net Losses.



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




          “Indebtedness” means, with respect to any Person, at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments issued by such Person, (iii) all
obligations of such Person to pay the deferred purchase price for property or services, except
trade accounts payable arising in the ordinary course of business and consistent with past
practice, (iv) all reimbursement obligations of such Person in respect of letters of credit or
other similar instruments, (v) all Indebtedness of others secured by any lien, encumbrance or
mortgage on any asset of such Person, and (vi) all Indebtedness of others guaranteed (whether by
virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain a minimum net worth, financial ratio or
similar requirements, or otherwise) by such Person.




          “Indemnitee” has the meaning set forth in Section 4.14(a) of this Agreement.




          “Independent Directors” means any director of RHI Inc. that, if the RHI Inc. common
stock is traded on the NASDAQ Global Market, satisfies the definition of an “independent director”
set forth in the applicable rules in the Marketplace Rules of the NASDAQ Global Market, Inc., as
such rules may be amended from time to time, or, if the RHI Inc.




9









 







common stock is then traded on a different exchange, such term shall mean any director of RHI
Inc. that satisfies the definition of independent director according to the rules of such exchange.




          “Initial Public Offering” means the initial public offering of the Shares of common
stock of RHI Inc. registered under the Securities Act of 1933, as amended.




          “Intellectual Property” means all U.S., state and foreign intellectual property,
including but not limited to all (i) (a) patents, inventions, discoveries, processes and designs;
(b) copyrights and works of authorship in any media; (c) trademarks, service marks, trade names,
trade dress and other source indicators and the goodwill of the business symbolized thereby;
(d) software; and (e) trade secrets and other confidential or proprietary documents, ideas, plans
and information; (ii) registrations, applications and recordings related thereto; (iii) rights to
obtain renewals, extensions, continuations or similar legal protections related thereto; and
(iv) rights to bring an action at law or in equity for the infringement or other impairment thereof




          “Interest” means a limited liability company interest in the Company as provided in
this Agreement and under the LLC Act and, in addition, any and all rights and benefits to which a
Member is entitled under this Agreement, together with all obligations of such Person to comply
with, and rights to benefit from, the terms and provisions of this Agreement.




          “Joint Venture Agreements” means, collectively, this Agreement, the Registration
Rights Agreement, the Director Designation Agreement, the Subscription Agreement and the Tax
Receivable Agreement.




          “Joint Venture Purposes” has the meaning set forth in Section 2.6(c) of this
Agreement.




          “KRH” means KRH Investments LLC (formerly RHI Entertainment Holdings, LLC), a Delaware
limited liability company, and a non-managing member of the Company.




          “KRH Approval” means the approval of KRH (which may be given or withheld in KRH’s sole
discretion).




          “KRH Approval Rights” has the meaning set forth in Section 4.3 of this Agreement.




          “Liabilities” has the meaning set forth in Section 4.15(a) of this Agreement.




          “Liquidator” has the meaning set forth in Section 7.2 of this Agreement.




          “LLC Act” has the meaning set forth in the Recitals.




          “Majority Member Vote” means the affirmative vote of the Members holding a majority of
the Membership Units in the Company plus the affirmative vote of KRH (only if KRH does not hold the
majority of Membership Units).




          “Manager” has the meaning set forth in Section 4.1 of this Agreement.




10









 








          “Member” means each Person that becomes a member, as contemplated in this Agreement,
of the Company in accordance with the provisions of this Agreement and has not ceased to be a
Member as provided in Section 3.1(d) of this Agreement, and each of such Member’s transferees, if
applicable.




          “Member Information” has the meaning set forth in Section 10.3(c) of this Agreement.




          “Member Non-recourse Debt” has the meaning set forth in Section 1.704-2(b)(4) of the
Treasury Regulations for the phrase “partner nonrecourse debt.”




          “Member Non-recourse Debt Minimum Gain” means an amount, with respect to each Member
Non-recourse Debt, equal to the Company Minimum Gain that would result if such Member Non-recourse
Debt were treated as a Non-recourse Debt, determined in accordance with Section 1.704-2(i) of the
Treasury Regulations with respect to “partner minimum gain.”




          “Membership Unit” means a Unit having the rights described in this Agreement.




          “Membership Unit Purchase” has the meaning set forth in Section 3.4 of this Agreement.




          “Net Income” or “Net Losses” means, for each Fiscal Year or other period, an
amount equal to the Company’s taxable income or loss for such year or period determined in
accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:





(1) Any income of the Company that is exempt from federal income tax and not otherwise taken
into account in computing Net Income or Net Losses pursuant to this definition shall be
added to such taxable income or loss;




(2) Any expenditure of the Company described in Code Section 705(a)(2)(B) or treated as Code
Section 705(a)(2)(B) expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the Treasury
Regulations, and not otherwise taken into account in computing Net Income or Net Losses
pursuant to this definition, shall be subtracted from such taxable income or loss;




(3) Gain or loss resulting from any disposition of Company Assets where such gain or loss is
recognized for federal income tax purposes shall be computed by reference to the Gross Asset
Value of the Company Assets disposed of, notwithstanding that the adjusted tax basis of such
Company Assets differs from its Gross Asset Value;




(4) In lieu of the depreciation, amortization and other cost recovery deductions taken into
account in computing such taxable income or loss, there shall be taken into account
Depreciation for such Fiscal Year or other period;



11









 






(5) To the extent an adjustment to the adjusted tax basis of any asset included in Company
Assets pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to
Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations to be taken into account in
determining Capital Accounts as a result of a distribution other than in liquidation of a
Member’s Interest, the amount of such adjustment shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis
of the asset) from the disposition of the asset and shall be taken into account for the
purposes of computing Net Income and Net Losses;




(6) If the Gross Asset Value of any Company Asset is adjusted in accordance with Paragraph
(2) or (3) of the definition of Gross Asset Value, the amount of such adjustment shall be
taken into account in the Fiscal Year of such adjustment as gain or loss from the
disposition of such asset for purposes of computing Net Income or Net Losses; and




(7) Notwithstanding any other provision of this definition, any items of Company income,
gain, loss or deduction that are specially allocated pursuant to Article 6 hereof shall not
be taken into account in computing Net Income or Net Losses. The amount of the items of
Company income, gain, loss or deduction available to be specially allocated pursuant to
Article 6 hereof shall be determined pursuant to rules analogous to those set forth in this
definition.



          “Nominating Committee” means the nominating committee of the Board or any
committee of the Board authorized to perform the function of nominating directors for the
Board of RHI Inc.




          “Non-recourse Debt” means any Company liability to the extent that no Member or
related person bears the economic risk of loss for such liability under Section 1.752-2 of the
Treasury Regulations.




          “Option Notice” has the meaning set forth in Section 9.1(b) of this Agreement.




          “Options” means options, issued under the RHI Inc. 2008 Equity Incentive Plan, to
acquire Shares or other equity equivalents of RHI Inc.




          “Original Agreement” has the meaning set forth in the Recitals of this Agreement.




          “Outside Counsel” means a law firm selected by the Manager and reasonably acceptable
to KRH.




          “Over-Allotment Option” has the meaning set forth in Section 3.4(b) of this Agreement.




          “Percentage Interest” means, with respect to any Member at any time, the percentage
represented by a fraction, the numerator of which is the number of Membership Units owned by such
Member, and the denominator of which is the aggregate number of Membership





12











 




Units then outstanding,
as shall be adjusted in accordance with Sections 3.4(d), 3.5 and 9.1, and as otherwise provided in
this Agreement.




          “Permitted Transferee” means (i) in the case of any Member (other than RHI Inc.) and
any Permitted Transferee of any Member (other than RHI Inc.), an Affiliate of such Member or
Permitted Transferee, or (ii) in the case of KRH and any Permitted Transferee of KRH, a
non-Affiliate of KRH or Permitted Transferee if more than 50% of the non-Affiliate’s general voting
power is owned directly or indirectly through one or more entities that are the same entities that
own 50% or more of the general voting power of the Ultimate Parent of KRH or if the Ultimate Parent
of KRH, directly or indirectly through Subsidiaries, manages the affairs or investments of such
non-Affiliate. RHI Inc. shall not have any Permitted Transferees.




          “Person” means any individual, corporation, limited liability company, partnership,
trust, joint stock company, business trust, unincorporated association, joint venture, Governmental
Authority or other entity or organization of any nature whatsoever or any Group of two or more of
the foregoing.




          “Proprietary Information” means all Intellectual Property, including but not limited
to information of a technological or business nature, whether written or oral and if written,
however produced or reproduced, received by or otherwise disclosed to the receiving party from or
by the disclosing party that is marked proprietary or confidential or bears a marking of like
import, or that the disclosing party states is to be considered proprietary or confidential, or
that a reasonable person would consider proprietary or confidential under the circumstances of its
disclosure.




          “Recapitalization” has the meaning set forth in Section 3.4(d).




          “Registration Rights Agreement” means that certain registration rights agreement,
dated as of June 23, 2008, by and between KRH and RHI Inc.




          “Regulatory Allocations” has the meaning set forth in Section 6.4(c) of this
Agreement.




          “Retraction Notice” has the meaning set forth in Section 9.1(b) of this Agreement.




          “Regulation S-K” means Regulation S-K promulgated under the Exchange Act, as may be
amended from time to time, and including any amendments or successor provisions.




          “RHI Inc.” has the meaning set forth in the Recitals of this Agreement.




          “RHI Inc. Market Price” means with respect to Shares, the per share closing price of
the Shares on the applicable date (which shall be the trading day immediately prior to the Exchange
Date with respect to an Exchange) on the national securities exchange or interdealer



13









 






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 date, then the Market Value shall mean the closing price of the Shares on the
Business Day immediately preceding such 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, “RHI Inc. Market Value” shall mean the fair market value of the
Shares, as determined by KRH in good faith.




          “Section 704(c) Property” means any asset of the Company if the Carrying Value of such
asset differs from its adjusted tax basis.




          “Shares” means the shares of common stock, par value $ 0.01 per share, of RHI Inc.




          “Subscription Agreement” has the meaning set forth in the Recitals of this Agreement.




          “Subsidiary” means, with respect to any Person, (i) a corporation a majority of whose
capital stock with the general voting power under ordinary circumstances to vote in the election of
directors of such corporation (irrespective of whether or not, at the time, any other class or
classes of securities shall have, or might have, voting power by reason of the happening of any
contingency) is at the time beneficially owned by such Person, by one or more Subsidiaries of such
Person or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other than
a corporation), including a joint venture, a general or limited partnership or a limited liability
company, in which such Person, one or more Subsidiaries thereof or such Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination thereof, beneficially
own at least a majority ownership interest entitled to vote in the election of directors, managers
or trustees thereof (or other Persons performing such functions) or act as a general partner or
managing member of such other Person.




          “Tax Distribution Amount” means, with respect to any period and with respect to any
Member, the product of (i) the Applicable Tax Rate, times (ii) the estimated or actual taxable
income of the Company, as determined for federal income tax purposes (and without regard for any
adjustments pursuant to Section 754 of the Code), allocable to such Member pursuant to this
Agreement for the period to which the Tax Distribution Amount relates, less prior losses of the
Company, as determined for federal income tax purposes, allocable to such Member pursuant to this
Agreement to the extent not previously taken into account in determining the Tax Distribution
Amount of such Member and to the extent utilizable by the Members, as determined by the Manager and
approved by KRH.




          “Tax Matters Member” has the meaning set forth in Section 6.2 of this Agreement.




          “Tax Receivable Agreement” means the Tax Receivable Agreement, dated as of June 23,
2008, by and among the Company, RHI Inc., and KRH, as the same may be amended, supplemented or
otherwise modified from time to time.




          “Total Membership Units Outstanding Immediately Prior To Issuance” means, with respect
to an Additional Equity Issuance, the total number of Membership Units outstanding immediately
prior to the Additional Equity Issuance, without giving effect to any issuances or adjustments
under Section 3.4(d) and without including any Membership Units that




14









 







are issuable upon conversion
or exercise of any securities, options, warrants or rights to acquire Membership Units.




          “Trading Day” means a day on which the principal United States securities exchange on
which RHI Inc. common stock is listed or admitted to trading, or the NASDAQ Global Market if RHI
Inc. common stock is not listed or admitted to trading on any such securities exchange, as
applicable, is open for the transaction of business (unless such trading shall have been suspended
for the entire day).




          “Transfer” (including the terms “Transferred” and “Transferring”)
means to sell, transfer, give, exchange, bequest, assign, pledge, encumber, hypothecate or
otherwise dispose of, either voluntarily or involuntarily (including upon the foreclosure under any
pledge or hypothecation that results in a change of title), any Equity Interests in the Company.




          “Transferring Member” has the meaning set forth in Section 8.1(a) of this Agreement.




          “Treasury Regulations” means the federal income tax regulations, including any
temporary regulations, promulgated under the Code, as such Treasury Regulations may be amended from
time to time. Any and all references herein to specific provisions of the Treasury Regulations
shall be deemed to refer to any corresponding successor provisions.




          “Ultimate Parent” means Kelso Interco VII, LLC, KEP VI AIV, 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.




          “Underwriters” means registered brokers and dealers that have entered into
underwriting agreements with RHI Inc. and that subscribe for and purchase Units from RHI Inc., and
“Underwriter” means any one of them.




          “Underwriting Agreement” means that certain underwriting agreement, dated as of June
17, 2008, by and between RHI Inc. and the underwriters for the Initial Public Offering.




          “Unit” means a fractional share of the Interests of all Members issued in accordance
with the terms of this Agreement. The number of Units outstanding and the holders thereof shall be
set forth on Exhibit A, as such may be amended from time to time in accordance with this
Agreement.




          “Wholly Owned Subsidiary” of any Person means a Subsidiary which is 100% owned
directly or indirectly by such Person.




     1.2 Other Definitional Provisions; Interpretation.



          (a) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this
Agreement will refer to this Agreement as a whole, including the Exhibits and Schedules attached
hereto, and not to any particular provision of this Agreement. Articles, section and subsection
references are to this Agreement unless otherwise specified.




15









 








          (b) The words “include” and “including” and words of similar import when used in this
Agreement shall be deemed to be followed by the words “without limitation”.




          (c) The titles and headings in this Agreement are included for convenience of reference only
and will not limit or otherwise affect the meaning or interpretation of this Agreement.




          (d) The meanings given to capitalized terms defined herein will be equally applicable to both
the singular and plural forms of such terms. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms.




ARTICLE 2




FORMATION




     2.1 Formation; Qualification.



          (a) A Certificate of Formation of the Company (the “Certificate”) has been executed by
an authorized person and was filed with the Secretary of State of the State of Delaware on
September 6, 2007, to form on such date the Company as a limited liability company pursuant to the
LLC Act. The rights, duties and liabilities of the Members shall be as provided in the LLC Act,
except as otherwise provided in this Agreement.




          (b) The Company shall be qualified or registered under foreign limited liability company
statutes or assumed or fictitious name statutes or similar laws in any jurisdiction in which the
Company owns property or transacts business to the extent, in the judgment of the Manager such
qualification or registration is necessary or advisable in order to protect the limited liability
of the Members or to permit the Company lawfully to own property or transact business. The Manager
shall, to the extent necessary in the judgment of the Manager, maintain the Company’s good standing
in each such jurisdiction.




          (c) The Manager and any Person to whom the Manager delegates authority under this Agreement
shall be an “authorized person” within the meaning of § 18-204(a) of the LLC Act, and shall have
the power and authority to execute, file and publish any certificates, notices, statements or other
documents (and any amendments or restatements thereof) necessary to permit the Company to conduct
business as a limited liability company in each jurisdiction where the Company elects to do
business.




     2.2 Name. The name of the limited liability company formed by the filing of the Certificate is “RHI
Entertainment Holdings II, LLC”. However, the business of the Company may be conducted upon
compliance with all applicable laws under any other name designated by the Manager.



     2.3 Term. The term of the Company has commenced as of the date of filing the Certificate and
will continue in perpetuity; provided that the Company may be dissolved in accordance with
the provisions of this Agreement or by the LLC Act.



16









 







     2.4 Headquarters Office. The Company’s headquarters office shall initially be located in New
York, New York. The Manager may determine to open, close or move any office at any time in its
absolute discretion.



     2.5 Registered Agent and Office. The address of the Company’s registered office in the State
of Delaware is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware
19808 in the County of New Castle. The name of the Company’s registered agent at such address is
Corporation Service Company. The Manager may at any time designate another registered agent or
registered office or both.



     2.6 Purposes. The purpose of the Company is to:



          (a) hold the 100% ownership interest in RHI Entertainment LLC;




          (b) manage the business and operations of RHI Entertainment LLC and its Subsidiaries; and




          (c) engage in all activities and transactions in connection with, in support of or
furtherance of the foregoing purposes (collectively, the “Joint Venture Purposes”).




     2.7 Powers. The Company shall have the power and authority to take any and all actions
necessary, appropriate, desirable, advisable, incidental or convenient to, or for the furtherance
of, the Joint Venture Purposes, alone or with other Persons.



ARTICLE 3




MEMBERS AND INTERESTS




     3.1 Members.



          (a) Upon the execution of this Agreement, KRH shall be admitted to the Company as a Member in
addition to RHI Inc. Following the Membership Unit Purchase, RHI
Inc. and KRH shall be deemed to own the number of Membership Units specified in
Exhibit A opposite each of their names. If the Over-Allotment Option is exercised, the
number of Membership Units of RHI Inc. on Exhibit A shall be increased by the same number that is
the number of Shares sold in the Over-Allotment Option.




          (b) Exhibit A hereto contains the name, address, capital contributions, including the
fair market value of all capital contributions and number of Membership Units owned by each Member
as of the date hereof following the Membership Unit Purchase and, if exercised, the Over-Allotment
Option. The Company shall revise Exhibit A (i) from time to time to reflect the issuance,
conversion or Transfer of Units in accordance with the terms of this Agreement and other
modifications to or changes in the information set forth therein, and (ii) in accordance with
Sections 3.4(d), 3.5 and 9.1. Any amendment or revision to Exhibit A or to the Company’s
records as contemplated by this Agreement to reflect information regarding Members or under
Section 3.4(d), 3.5 or 9.1 shall be deemed to amend this Agreement, but shall not require the
approval of the Manager or any Member.




17









 








          (c) One or more additional Persons may be admitted as a Member of the Company only upon (i) an
issuance of Units pursuant to Section 3.5 or a Transfer of Units pursuant to Article 8, and (ii)
the execution and delivery by such Person of a counterpart to this Agreement or other written
agreement, in a form satisfactory to the Manager, to be bound by all the terms and conditions of
this Agreement. Upon such execution, the Company shall amend Exhibit A and shall amend
this Agreement as the Manager may reasonably determine is necessary, to reflect the admission of
such Person as a Member and such other information of such Person as indicated in
Exhibit A. Unless admitted to the Company as a Member as provided in this Section 3.1 or
Section 8.2, no Person is, or will be considered to be, a Member.




          (d) Subject to the other provisions of this Section 3.1 and Section 8.2, each Person that
holds one or more Units in compliance with the terms of this Agreement shall be a Member. A Member
will cease to be a Member when such Person ceases to own any Units in the Company, in which case
Exhibit A shall be amended to reflect that such Person is no longer a Member.




          (e) Except as provided in the LLC Act, in no event shall any Member (or any former Member), by
reason of its status as a Member (or former Member), have any liability for (i) the debts, duties
or any other obligations of the Company, (ii) the repayment of any Capital Contribution of any
other Member or (iii) any act or omission of any other Member.




          (f) If KRH and one or more of its transferees (which have the rights and powers of KRH under
Section 8.2(c)) hold Membership Units in the Company at the same time, KRH and such transferees
shall designate one of them to act on behalf of all of them and vote all of their Membership Units
with respect to any matter requiring approval of KRH.




     3.2 Meeting of Members.



          (a) Annual Meeting. Subject to Section 3.2(g), an annual meeting of Members shall be
held on such date and at such time as (i) shall be designated from time to time
by the Manager, but no less often than once during each calendar year, and (ii) stated in the
notice of the meeting, at which meeting the Members entitled to vote shall transact such business
as may properly be brought before the meeting. At each annual meeting of the Members (i) the
Manager shall discuss the matters and affairs of the Company, and (ii) the Members shall address
such other matters as may be raised at the meeting by any Member or Manager.




          (b) Special Meetings. A special meeting of Members, for any purpose or purposes, may
be called by the Manager and shall be called by the Manager upon the receipt by the Manager of the
written request of any other Member. Such request shall state the purpose or purposes of the
proposed meeting.




          (c) Place and Conduct of Meetings. Meetings of the Members shall be held at such time
and place, either within or without the State of Delaware, as shall be designated from time to time
by the Manager and stated in the notice of the meeting or in a duly executed waiver of notice
thereof. All meetings shall be conducted by such Person as the Manager may appoint pursuant to
such rules for the conduct of the meeting as the Manager or such other Person deems




18









 







appropriate.
Such meetings may be held in person, by teleconference or by any other reasonable means, in each
case at the discretion of the Manager.




          (d) Notice of Meetings. Written notice of an annual meeting or special meeting
stating the place, date, and hour of the meeting and in the case of a special meeting, the purpose
or purposes for which the meeting is called, shall be given not less than five calendar days nor
more than 30 calendar days before the date of the meeting to each Member entitled to vote at such
meeting, unless waived by each such Member.




          (e) Quorum. The presence of both (a) the holders of a majority of all the Membership
Units then issued and outstanding and entitled to vote thereat and (b) KRH, whether in person or
represented by a valid written proxy, shall constitute a quorum at all meetings of the Members for
the transaction of business. If, however, such quorum shall not be present or represented at any
meeting of the Members, the Members entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.




          (f) Voting. Except as otherwise expressly provided for in this Agreement, all matters
submitted to the vote of the Company shall be decided by a majority vote of the directors of RHI
Inc. Such votes may be cast in person or by valid written proxy, but no proxy shall be voted after
three years from its date, unless such proxy provides for a longer period.




          (g) Action by Consent. Any consent required herein or action required to be taken at
any annual or special meeting, or any action which may be taken at any annual or special meeting,
may be taken without a meeting, without a vote, without prior written notice and with a consent or
consents in writing signed by Members who are holders of Membership Units having not less than the
minimum number of votes that would be necessary to authorize or take such action at a meeting at
which all Membership Units entitled to vote thereon were present and voted. Prompt notice of the
taking of the action without a meeting by less than unanimous written consent shall be given to
those Members who are holders of Membership Units and who
have not consented in writing; provided that the failure to give any such notice shall
not affect the validity of the action taken by such written consent.




     3.3 Certain Duties and Obligations of the Members. Except as otherwise provided in this
Agreement, the Company shall not be classified as anything other than a partnership for income tax
purposes and shall be a partnership only for income tax purposes and this Agreement shall not be
deemed to create a partnership, joint venture, agency or other relationship among the Members
creating fiduciary or quasi-fiduciary duties or similar duties and obligations or to subject the
Members to joint and several or vicarious liability or to impose any duty, obligation or liability
that would arise therefrom with respect to any or all of the Members or their Affiliates for any
other purposes. Except as otherwise provided in this Agreement, no Member shall have any authority
to act for, bind, commit or assume any obligation or responsibility on behalf of the Company, its
properties or any other Member. No Member, in its capacity as a Member under this Agreement, shall
be responsible or liable for any indebtedness or obligation of another Member. The Company shall
not be responsible or liable for any indebtedness or obligation of any Member, incurred either
before or after the execution and delivery of this Agreement by



19









 




such Member, except as to those
responsibilities, liabilities, indebtedness or obligations incurred pursuant to and as limited by
the terms of this Agreement and the LLC Act.




     3.4 Units.



          (a) Membership Unit Purchase. In connection with the execution of this Agreement: (i)
RHI Inc. is making its required Capital Contribution to the Company as set forth in the
Subscription Agreement and, in exchange for RHI Inc.’s Capital Contribution, the Company is issuing
a number of Membership Units to RHI Inc. equal to the number of Shares sold in the Initial Public
Offering; and (ii) KRH is making its required Capital Contribution to the Company as set forth in
the Subscription Agreement and, in exchange for KRH’s Capital Contribution, the Company is issuing
a number of Membership Units to KRH as set forth in the prospectus for the Initial Public Offering
(the Company’s issuance of Membership Units to RHI Inc, and KRH, collectively, the “Membership
Unit Purchase”).




          (b) Over-Allotment Option. Pursuant to the terms of the Subscription Agreement, the
Company has agreed to sell to RHI Inc. a number of Membership Units equal to the number of Shares
sold to the Underwriters pursuant to the Underwriters’ option to purchase additional Shares under
the Underwriting Agreement (the “Over-Allotment Option”) in exchange for RHI Inc.’s
contribution of the proceeds of such Over-Allotment Option.




          (c) Membership Units. The Membership Units shall consist of equal whole, fractional
units into which Interests in the Company shall be divided. The Membership Units shall be entitled
to share in distributions and allocations as provided in Sections 5.4, 6.4 and 7.3, and as
otherwise provided in this Agreement.




          (d) Adjustments Upon RHI Inc. Issuing Additional Equity Interests. RHI Inc. agrees
with the Company and each other Member that RHI Inc. will not make any Additional
Equity Issuance unless either (x) KRH has consented to such issuance or (y) such issuance is
in compliance with this paragraph (d) and the provisions of this Agreement are complied with,
including without limitation, Sections 4.2(b) and 4.3(b) with respect to the issuance of additional
Membership Units pursuant to clause (ii) below. If RHI Inc. makes any Additional Equity Issuance,
then RHI Inc. and the Company shall undertake all actions with respect to the Membership Units,
such additional Equity Interests, the Exchange Right, the other terms of this Agreement, the
certificate of incorporation or the securities or instruments of RHI Inc. or as otherwise necessary
(such actions collectively in response to an issuance of additional Equity Interests in RHI Inc., a
“Recapitalization”), such that after giving effect to the Recapitalization, except with the
consent of KRH:




          (i) all of the proceeds of such Additional Equity Issuance shall be contributed to the Company
(the “Additional Contribution Amount”);




          (ii) subject to compliance with the other provisions of this Agreement with respect to the
issuance of Membership Units (including, without limitation, Sections 4.2(b) and 4.3(b)), the
Company shall issue to RHI Inc. (in consideration of the contribution, if any, set forth in clause
(i)) Interests in the Company that are economically equivalent to the securities issued in the
Additional Equity Issuance, as reasonably determined by the Manager (including,



20









 






without limitation,
as to priority in right to distributions or liquidations) but in no event shall RHI Inc. receive
Membership Units pursuant to this Section 3.4 in exchange for an Additional Contribution Amount
with a fair market value, as determined by the Manager and KRH in excess of such Additional
Contribution Amount, after the application of Section 4.13; and




          (e) Certificates; Transfer. Membership Units shall be evidenced by a certificate
issued by the Company to the holder thereof and substantially in the form of Exhibit B
attached hereto. Such certificates shall be entered in the books of the Company as they are
issued, and shall be signed by a duly designated officer of the Company and may be sealed with the
Company’s seal or a facsimile thereof. Upon any Transfer permitted under this Agreement (i) the
Transferring Member shall surrender to the Company a certificate or certificates representing at
least the number of Membership Units being Transferred, and (ii) the Company shall issue (x) to the
transferee a certificate for the number of Membership Units Transferred, and (y) to the
Transferring Member a certificate representing the remaining number of Membership Units equal to
the difference (if any) between the number of Membership Units evidenced by the certificate or
certificates surrendered pursuant to clause (i) and the number of Membership Units Transferred. No
Transfer of Membership Units shall be valid as against the Company except upon surrender to and
cancellation of the appropriate certificate or certificates, accompanied by an assignment or
Transfer by the Member, subject to any restrictions on Transfer contained in this Agreement. The
Company may issue a new certificate for Membership Units in place of any certificate or
certificates previously issued by it, alleged to have been lost or destroyed, upon the making of an
affidavit of that fact, and providing an indemnity in form and substance reasonably satisfactory to
the Manager, by the Person claiming the certificate or certificates to be lost or destroyed.




     3.5 Authorization and Issuance of Additional Units.



          (a) In General. The Company shall only be permitted to issue additional Units or
other Equity Interests in the Company to the Persons and on the terms and conditions provided for
in Section 3.4 and this Section 3.5. Subject to the provisions of this Agreement, approval of the
Independent Directors of the Board is required before the Manager may cause the Company to issue
additional Membership Units authorized under this Agreement at such times and upon such terms as
the Manager shall determine. Subject to the approval of the Independent Directors of the Board,
the Manager shall amend this Agreement as necessary in connection with the issuance of additional
Membership Units and admission of additional Members under this Section 3.5.




          (b) Equity Compensation Issued by the Company. Upon the exercise of options for
Shares that the Company has issued or the vesting of shares for other types of equity compensation
(such as issuance of restricted or non-restricted stock, payment of bonuses in stock or settlement
of stock appreciation rights in stock), the Company will purchase from RHI Inc., at the RHI Inc.
Market Price as of a date that is the trading day immediately preceding the date of such exercise
or vesting, the number of Shares to be issued in connection with the exercise of such options or
vesting of shares for other types of equity compensation. RHI Inc. will contribute to the Company
all consideration received from the Company for such Shares and the Company will issue RHI Inc.
such number of Membership Units in the Company equal to the number of Shares purchased by the
Company.




21









 









     3.6
Business Opportunities; Non-Competition  (i). Except as provided in this Agreement and
as may be otherwise provided in any written agreement with the Company to which a Member or its
Affiliates is a party, each Member (other than RHI Inc.) and their Affiliates may have other
business interests or may engage in other business ventures of any nature or description whatsoever
regardless of whether they compete with the business and purpose of the Company set forth in
Section 2.6.



ARTICLE 4




MANAGEMENT AND OPERATIONS




     4.1 Manager. The Company shall be managed by one manager (the “Manager”) that
initially shall be RHI Inc. The Manager may not be removed as a Manager except as provided in
Section 4.7. Any Manager that is properly removed pursuant to Section 4.7 shall be replaced in the
manner provided in Section 4.8.



     4.2 Management Authority.



          (a) Except as otherwise expressly provided for in this Agreement, the Manager shall have
authority on behalf of the Company to make all decisions with respect to the Company’s day-to-day
business affairs and decision-making of the Company without the approval of any non-managing
Members. As such, RHI Inc., in its capacity as Manager and
through its officers and Board of Directors, will be responsible for all operational and
administrative decisions of the Company. In connection with the implementation, consummation or
administration of any matter within the scope of the Manager’s authority, the Manager is
authorized, without the approval of the other Members, to execute and deliver on behalf of the
Company contracts, instruments, conveyances, checks, drafts and other documents of any kind or
character to the extent the Manager deems it necessary or desirable. The Manager may delegate to
officers, employees, agents or representatives of the Company or the Manager any or all of the
foregoing powers by written authorization identifying specifically or generally the powers
delegated or acts authorized.




          (b) Supermajority Vote of Board of Directors for Certain Matters. So long as KRH
beneficially owns at least 30% of the issued and outstanding Membership Units in the Company,
approval of at least 75% of the Board of Directors of RHI Inc. then in office will be required
before RHI Inc., in its capacity as Manager of the Company, may authorize the Company or any of its
Subsidiaries to take any of the following actions:





	 	(i)	 	except as provided in the Annual Business Plan,
acquire, dispose, lease or license assets by the Company or any
Subsidiary or enter into any contract or contracts to do the foregoing,
in a single transaction or in two or more transactions (related or
unrelated) in any consecutive twelve-month period with an aggregate value
(as determined in good faith by the Board) exceeding 20% of the fair
market value of the business of the Company and its Subsidiaries taken
together and operating as a going concern (as determined in good faith by
the Board);




22









 












	 	(ii)	 	merge, reorganize, recapitalize, reclassify,
consolidate, dissolve, liquidate or enter into a similar transaction;
	 
	 	(iii)	 	incur any funded indebtedness (including the
refinancing of any funded indebtedness) or repay before due any funded
indebtedness (other than a working capital revolving line of credit) with
a fixed term in either case, in a single transaction or in two or more
transactions (related or unrelated) in an aggregate amount in excess of
$50.0 million per year;
	 
	 	(iv)	 	authorize, issue, grant or sell additional
Membership Units in the Company (including, without limitation, pursuant
to Section 3.4(d)(ii)) or rights with respect to Membership Units, other
than under or pursuant to the Approved Plan;
	 
	 	(v)	 	enter into, modify or terminate certain contracts
not in the ordinary course of business of the type specified in Item
601(b)(10)(i) of Regulation S-K;
	 
	 	(vi)	 	except as specifically set forth in this Agreement
(including, without limitation, with respect to required tax
distributions pursuant to Section 5.4 (a) (i)), declare, set aside or pay
any redemption of, or
dividends with respect to, membership interests, payable in cash, property
or otherwise; and
	 
	 	(vii)	 	approve any actions relating to the Company that
could reasonably be expected to have a material adverse tax effect on
KRH.





     4.3 Limitations on the Business of the Manager; Approval Rights of KRH.



          (a) Except to the extent necessary with maintaining its status as not being an “investment
company” within the meaning of the Investment Company Act of 1940 (based upon written advice to the
Manager from Outside Counsel), the Manager shall not, without KRH Approval, directly or
indirectly, enter into or conduct any business other than (i) in connection with the ownership,
acquisition or disposition of Units as a Member, (ii) the management of the business of the Company
as provided herein, (iii) RHI Inc.’s operation as a public reporting company with a class of
securities registered under the Exchange Act, and (iv) such other activities that are in connection
with or incidental to the foregoing or in connection with or in support of Joint Venture Purposes.
For the purposes of clarification, the provision by the Manager of guarantees, credit support or
entering into other obligations or agreements in support of obligations or operations of the
Company or any Subsidiary of the Company shall be deemed for purposes of this Section 4.3 to be “in
connection with or incidental” to the management of the business of the Company and “in connection
with or in support of Joint Venture Purposes”.




          (b) So long as KRH holds at least five percent of the Membership Units in the Company (such
ownership threshold shall be calculated in accordance with Section 4.2(e)), the Manager shall not
take, or cause the Company or any of its Subsidiaries to take, action with respect to the matters
provided for in this Section 4.3(b) without KRH Approval (“KRH Approval Rights”) if (i) an
individual designated by KRH pursuant to a Director Designation Agreement is not nominated or
appointed to the board of directors of RHI Inc. under



23









 






circumstances constituting a breach of the
Director Designation Agreement, or (ii) such designee (or if the designee is not elected in
circumstances under which KRH can designate a successor, such successor designee) is not elected to
the board of directors of RHI Inc. after being designated in accordance with the Director
Designation Agreement. Upon the occurrence of a condition giving rise to KRH Approval Rights, KRH
Approval Rights shall continue until the earlier of (x) the date on which the conditions that gave
rise to KRH Approval Rights no longer exist, or (y) the delivery of written notice waiving KRH
Approval Rights by KRH. KRH may waive KRH Approval Rights with respect to a particular matter by
delivering written notice to the Company and KRH. Any waiver by KRH of its KRH Approval Rights
shall only serve as a waiver with respect to the specific conditions that gave rise to KRH Approval
Rights being waived and shall not constitute a waiver with respect to any other rights under this
Agreement and any KRH Approval Rights that KRH may have in the future as a result of the existence
of a condition giving rise to KRH Approval Rights subsequent to such waiver. The matters provided
for in this Section 4.3(b) are not intended to modify the Manager’s responsibilities for managing
the day-to-day business and affairs of the Company. Subject to the foregoing and notwithstanding
anything to the contrary in this Agreement, the Company shall not take, cause to be taken, or agree
to take or authorize any of the following actions without KRH Approval:




               (i) approving the Annual Business Plan or any amendment or modification of the Annual Business
Plan for the Company and its Subsidiaries;



               (ii) incurring indebtedness greater than $50.0 million in any one or series of transactions by
the Company or its Subsidiaries or entering into or consummating any other financing transaction
that is not previously approved and provided for in the Annual Business Plan;



               (iii) entering into or consummating any agreements or arrangements involving annual payments
by the Company or its Subsidiaries (including the fair market value of any barter) in excess of
$1.0 million, except as provided for in the Annual Business Plan, or any material modification of
any such agreements or arrangements;



               (iv) greenlighting or authorizing production of any made-for-television movie, mini-series or
series with an individual production cost greater than $2.0 million for any made-for-television
movie, $8.0 million for any mini-series or $15.0 million for any episodic series , where either
such production was not in the budget or where such production does not have at least 100% of the
production costs covered by initial license sales at the time production begins, or the termination
of any such production provided for in the Annual Business Plan;



               (v) entering into or consummating any agreements or arrangements (including license fees) by
the Company or its Subsidiaries involving total receipts (including the value of any barter) in
excess of $5.0 million, or any material modification of any such agreements or arrangements;



               (vi) declaring, setting aside or paying any redemption of, dividends on, or the making of any
other distributions in respect of, any of its Membership Units or other equity interests in the
Company, as the case may be, payable in cash, stock, property or otherwise, or any reorganization
or recapitalization or split, combination or reclassification or



24









 




similar transaction of any of its
units, limited liability company interests or capital stock, as the case may be;




               (vii) amending any provision of this Agreement to authorize, or to issue, any additional
Membership Units (including, without limitation, pursuant to Section 3.4(d)(ii)) or classes or
units or other equity interests and the designations, preferences and relative, participating or
other rights, powers or duties thereof; provided, however, that KRH’s approval shall not be
required in connection with: (1) the grant of options or restricted equity awards under any
Approved Plan; (2) an amendment that increases the size of an Approved Plan of Membership Units or
other equity interests available under such plan by no more than 10%; or (3) the issuance of
Membership Units or other equity interests of the Company pursuant to convertible securities or
option awards, either approved by KRH or issued prior to any approval rights set forth in this
section;



               (viii) hiring or terminating the employment of the chief executive officer, chief financial
officer or any executive officer of the Company or its Subsidiaries or the entering into, amendment
or termination of any employment, severance, change of control or
other contract with any employee who has a written employment agreement with the Company or
its Subsidiaries;



               (ix) entering into any agreement with respect to or the taking of any material steps to
facilitate a transaction that constitutes a Change of Control of the Company or a proposal for such
a transaction;



               (x) entering into any agreement, or the modification or termination of any agreement, by the
Company or any of its Subsidiaries with, or for the benefit of, any shareholder of the managing
member who beneficially owns five percent or more of the common stock of the managing member or any
affiliate of such a shareholder;



               (xi) changing the purpose of the Company, or the entering into of any materially different
line of business or substantially changing the strategic business plan of the Company or its
Subsidiaries, except as contemplated by the Annual Business Plan;



               (xii) leasing (as lessor), licensing (as licensor) or other transfer of assets (including
securities) or intellectual property by the Company or its Subsidiaries: (i) having a fair market
value or for consideration exceeding $5.0 million, taken as a whole; or (ii) to which the revenue
or the profits attributable exceed $5.0 million, taken as a whole, in any one transaction or series
of related transactions, in each case, determined using the most recent quarterly consolidated
financial statements of the Company;



               (xiii) entering into any agreement with respect to or consummating any acquisition by the
Company or its Subsidiaries of any business or assets having a fair market value in excess of $5.0
million taken as a whole, in any one transaction or series of related transactions, whether by
purchase and sale, merger, consolidation, restructuring, recapitalization or otherwise;



25









 





               (xiv) entering into, modifying or terminating any agreement for the Company or its
Subsidiaries to provide any services to any person that requires capital expenditures or payments
in excess of $1.0 million in the aggregate;



               (xv) settling claims or suits in which the Company or its Subsidiaries is a party for an
amount that exceeds the relevant provision in the budget by more than $1.0 million (including any
related litigation expenses) or where equitable or injunctive relief is included as part of such
settlement or entering into any consent decree or similar binding order with any governmental
agency;



               (xvi) dissolving of the Company or any of its Subsidiaries, adopting a plan of liquidation of
the Company or any of its Subsidiaries or effecting any action by the Company or any of its
Subsidiaries to commence any suit, case, proceeding or other action: (i) under any existing or
future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of
debtors seeking to have an order for relief entered with respect to the Company or any of its
Subsidiaries, or seeking to adjudicate the Company or any of its Subsidiaries as bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment winding up, liquidation, dissolution,
composition or other relief with respect to the Company or any of its Subsidiaries; or (ii) seeking
appointment of a receiver, trustee, custodian or other
similar official for the Company or any of its Subsidiaries, or for all or any material
portion of the assets of the Company or any of its Subsidiaries, or making a general assignment for
the benefit of the creditors of the Company or any of its Subsidiaries; and



               (xvii) approving any significant tax matter involving the Company or its Subsidiaries.



          (c) Except for the matters expressly provided for in this Agreement, KRH Approval rights shall
not affect the Manager’s right to conduct the Company’s business under this Agreement.




          (d) RHI Inc. may not make any Additional Equity Issuance that is a Dilutive Issuance without a
Majority Member Vote.




          (e) For purposes of calculating the Beneficial Ownership of Membership Units by KRH with
respect to the supermajority vote of the RHI Inc. Board under Section 4.2 and KRH’s approval rights
enumerated under this Section 4.3, the following shall apply: (i) Shares held by KRH or a Permitted
Transferee issued upon an Exchange of Membership Units will be counted, without duplication, as
being Membership Units beneficially owned by KRH and as if the Membership Units had not been
exchanged, so long as KRH or a Permitted Transferee continues to hold such Shares; (ii) Shares held
by KRH or a Permitted Transferee issued as a stock dividend, stock split, recapitalization,
anti-dilution adjustment or acquired through a rights offering to shareholders and/or Members, to
the extent acquired in respect of Shares described in clause (i) above or this clause (ii) shall be
counted, without duplication, as being Membership Units Beneficially Owned by KRH as if such Shares
were received in an Exchange and KRH or the Permitted Transferee held the non-Exchanged Membership
Units; and (iii) Membership Units Beneficially Owned by Permitted Transferees of KRH will be
counted as being beneficially owned by KRH.




26









 








     4.4 Duties. The Manager shall carry out its duties in good faith, in a manner that it believes
to be in the best interests of the Company and each of its Members and shall act as a fiduciary to
the other Members in respect of the Company’s business. The Manager shall devote such time to the
business and affairs of the Company as it may determine, in its reasonable discretion, is necessary
for the efficient carrying on of the Company’s business.



     4.5 Reliance by Third Parties. No third party dealing with the Company shall be required to
ascertain whether the Manager is acting in accordance with the provisions of this Agreement. All
third parties may rely on a document executed by the Manager as binding the Company. The foregoing
provisions shall not apply to third parties who are Affiliates of the Manager. If the Manager acts
without authority it shall be liable to the Members for any damages arising out of its unauthorized
actions.



     4.6 Resignation. The Manager may resign at any time by giving written notice to the Members. Unless otherwise
specified in the notice, the resignation shall take effect upon receipt thereof by the Members, and
the acceptance of the resignation shall not be necessary to make it effective.



     4.7 Removal. The Manager may not be removed without the consent of the Manager.



     4.8 Vacancies. If the Manager resigns or is removed in accordance with this Article 4, then
the position of Manager shall be filled by Majority Member Vote.



     4.9 Information Relating to the Company. In addition to the matters set forth in Section 6.8,
upon request, the Manager shall supply to a Member (i) any information required to be available to
the Members under the LLC Act, and (ii) any other information requested by such Member regarding
the Company or its activities, provided that obtaining the information described in this
clause (ii) is not unduly burdensome to the Manager. During ordinary business hours, each Member
and its authorized representative shall have access to all books, records and materials in the
Company’s offices regarding the Company or its activities.



     4.10 Insurance. The Company shall maintain or cause to be maintained in force at all times, for
the protection of the Company and the Members to the extent of their insurable interests, such
insurance as the Manager believes is warranted for the operations being conducted.



     4.11 Transactions Between Company and Manager. The Manager may cause the Company to contract
and deal with any Affiliate of the Manager, provided such contracts and dealings are on terms
comparable to and competitive with those available to the Company from others dealing at arm’s
length or are approved by a Majority Member Vote. The Members hereby approve the Membership Unit
Subscription Agreement, the Director Designation Agreement, the Registration Rights Agreement and
the Tax Receivable Agreement.



     4.12 Officers.



          (a) The Manager may, from time to time, designate one or more Persons to fill one or more
officer positions of the Company. Any officers so designated shall have such





27












 




titles and authority
and perform such duties as the Manager may, from time to time, delegate to them. If the title
given to a particular officer is one commonly used for officers of a business corporation, the
assignment of such title shall constitute the delegation to such officer of the authority and
duties that are normally associated with that office, subject to any specific delegation of
authority and duties made to such officer, or restrictions placed thereon, by the Manager. Each
officer shall hold office until his or her successor is duly designated, until his or her death or
until he or she resigns or is removed in the manner hereinafter provided. Any number of offices
may be held by the same Person. The salaries or other compensation, if any, of the officers of the
Company shall be fixed from time to time by the Manager.




          (b) Any officer of the Company may resign at any time by giving written notice thereof to the
Manager. Any officer may be removed, either with or without cause, by the Manager whenever in its
judgment the best interests of the Company will be served thereby; provided,
however, that such removal shall be without prejudice to the contract rights, if any, of
the Person so removed. Designation of an officer shall not, by itself, create contract rights.




     4.13 Management Fee; Reimbursement of Expenses. The Manager shall not be entitled to
compensation for performance of its duties hereunder unless such compensation has been approved by
a Majority Member Vote. The Manager shall be reimbursed by the Company for any reasonable
out-of-pocket expenses incurred on behalf of the Company, including all expenses and costs
associated with the Initial Public Offering. In the case of Shares sold to underwriters in
connection with the Initial Public Offering (or any subsequent public offering) at a price lower
than the price for which such Shares are sold in the Initial Public Offering (or such subsequent
public offering), as applicable (such difference, the “Discount”), the Company shall
reimburse the Manager for such Discount by treating such Discount as an Additional Contribution
Amount made by the Manager to the Company and increasing the Manager’s Capital Account by such
Discount.



     4.14 Limitation of Liability; Exculpation.



          (a) No Manager, Member or officer of the Company, nor any of their respective Subsidiaries or
Affiliates (including any stockholder of RHI Inc. that would be deemed an Affiliate but for the
exception set forth in the definition of Affiliate herein, or any of such stockholder’s Affiliates)
nor any of their respective direct or indirect officers, directors, trustees, members, partners,
equity holders, employees or agents, nor any of their heirs, executors, successors and assigns
(individually, an “Indemnitee”), shall be
liable to the Company or any Member for any act
or omission by such Indemnitee in connection with the conduct of affairs of the Company or
otherwise incurred in connection with the Company or this Agreement or the matters contemplated
herein, in each case unless such act or omission was the result of gross negligence or willful
misconduct or constitutes a breach of, or a failure to comply with, any agreement between (x) such
Indemnitee and (y) the Company or its Subsidiaries and Affiliates (including, without limitation,
this Agreement).




          (b) Notwithstanding any other provision of this Agreement or otherwise applicable provision of
law or equity, whenever in this Agreement a Member (other than RHI Inc.) is permitted or required
to make a decision (i) in its “sole discretion” or “discretion,” with “complete discretion” or
under a grant of similar authority or latitude, such Member shall be




28









 







entitled to consider only such
interests and factors as it desires, including its own interests, and shall, to the fullest extent
permitted by applicable law, have no duty or obligation to give any consideration to any interest
of or factors affecting the Company or the other Members, or (ii) in its “good faith” or under
another expressed standard, such Member shall act under such express standard and shall not be
subject to any other or different standards.




          (c) Any Manager, Member, Liquidator or officer of the Company may consult with legal counsel
and accountants selected by it at its expense or with legal counsel and accountants for the Company
at the Company’s expense. Each Manager, Member, Liquidator and officer of the Company shall be
fully protected in relying in good faith upon the records of the Company and upon information,
opinions, reports, or statements presented by another Manager, Member, Liquidator or officer, or
employee of the Company, or committees of the Company, Manager or Members, or by any other Person
(including, without limitation, legal counsel and public accountants) as to matters that the
Manager, Member, Liquidator or officer reasonably believes are within such other Person’s
professional or expert competence, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, Net Income or Net Losses of the Company, or the value
and amount of assets or reserves or contracts, agreements or other undertakings that would be
sufficient to pay claims and obligations of the Company or to make reasonable provision to pay such
claims and obligations, or any other facts pertinent to the existence and amount of assets from
which distributions to Members or creditors might properly be paid.




     4.15 Indemnification.



          (a) Indemnification Rights. The Company shall indemnify and hold harmless each
Indemnitee from and against any and all losses, claims, demands, costs, damages, liabilities,
expenses of any nature (including attorneys’ fees and disbursements), judgments, fines, settlements
(whether on an individual or joint and several basis) and other amounts arising from any and all
claims, demands, actions, suits or proceedings, whether civil, criminal, administrative, arbitral
or investigative, in which the Indemnitee was involved or may be involved, or threatened to be
involved, as a party or otherwise, arising out of or in connection with the business of the
Company, this Agreement, any Person’s status as a Manager, Member or officer of the Company or any
action taken by any Manager, Member or officer of the Company or under this Agreement or otherwise
on behalf of the Company (collectively, “Liabilities”), regardless of whether the
Indemnitee continues to be a Manager, Member or officer of the Company, or an Affiliate, officer,
director, employee, trustee, member or partner or agent of a Manager, Member or officer of the
Company, to the fullest extent permitted by the LLC Act and all other applicable laws;
provided that an Indemnitee shall be entitled to indemnification hereunder only to the
extent that such Indemnitee’s conduct did not result from gross negligence or willful misconduct
and, if the Indemnitee is or was the Manager, the conduct did not breach this Agreement. The
termination of any proceeding by settlement, judgment, order, conviction,
or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption
that such Indemnitee’s conduct resulted from gross negligence or willful misconduct.




          (b) Expenses. Expenses incurred by an Indemnitee in defending against any Liability
or potential Liability subject to this Section 4.15 shall, from time to time, be advanced by the
Company prior to the final disposition of such Liability upon receipt by the Company of



29









 






an
undertaking reasonably acceptable in form and substance to the Manager by or on behalf of the
Indemnitee to repay such amount if it shall be determined that such Person is not entitled to be
indemnified as authorized in this Section 4.15.




          (c) Indemnification Rights Non-Exclusive; Rights of Indemnified Parties. The
indemnification provided by this Section 4.15 shall be in addition to any other rights to which
those indemnified may be entitled under any agreement, by a Majority Member Vote, as a matter of
law or equity, or otherwise. Such indemnification shall continue with respect to an Indemnitee
even though it has ceased to serve in any particular capacity and shall inure to the benefit of its
heirs, executors, successors, assigns and other legal representatives.




          (d) Assets of the Company. Any indemnification under this Section 4.15 shall be
satisfied solely out of the assets of the Company, and no Member shall be subject to personal
liability or required to fund or cause to be funded any obligation by reason of these
indemnification provisions.




          (e) Other Liability Insurance. The Company may purchase and maintain insurance, at
the Company’s expense, on behalf of such Persons as the Manager shall reasonably determine, against
any liability that may be asserted against, or any expense that may be incurred by, such Person in
connection with the activities of the Company and its Subsidiaries or Affiliates regardless of
whether the Company would have the obligation to indemnify such Person against such liability under
the provisions of this Agreement.




     4.16 Title to Assets. Unless specifically licensed or leased to the Company, title to the
assets of the Company, whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Company as an entity, and no Members, individually or collectively, shall
have any ownership interest in such assets (other than licensed or leased assets) or any portion
thereof.



ARTICLE 5




CAPITAL CONTRIBUTIONS; DISTRIBUTIONS




     5.1 Capital Contributions.



          (a) KRH will make its required Capital Contributions to the Company as set forth in the
Subscription Agreement and RHI Inc. will make its required Capital Contribution to the Company as
set forth in the Subscription Agreement. Except as provided in Sections 3.4(d)
and 3.5(b) or otherwise expressly provided for in this Agreement, no Member shall be required
to make any other capital contribution to, or provide credit support for, the Company.




          (b) Except as provided in Article 9 and Section 5.4 of this Agreement, no Member shall be
entitled to withdraw, or demand the return of, any part its Capital Contributions or Capital
Account. No Member shall be entitled to interest on or with respect to any Capital Contribution or
Capital Account.




          (c) Except as otherwise provided in this Agreement, no Person shall have any preemptive,
preferential or similar right to subscribe for or to acquire any Units.




30









 








     5.2 Loans from Members. Loans by Members to the Company shall not be considered contributions
to the capital of the Company hereunder. If any Member shall advance funds to the Company in
excess of the amounts required to be contributed to the capital of the Company, the making of such
advances shall not result in any increase in the amount of the Capital Account of such Member and
shall be payable or collectible in accordance with the terms and conditions upon which advances are
made; provided that the terms of any such loan shall not be less favorable to the Company,
taken as a whole, than would be available to the Company from unrelated lenders and such loan shall
be approved by the Manager (or a Majority Member Vote in the event the Manager is making the loan
to the Company). Such Loans made by the Manager shall be unsecured and bear interest at the same
rate as the lowest rate of the Company’s (or its Subsidiaries) revolving credit facilities.



     5.3 Loans from Third Parties. The Company may incur Indebtedness, or enter into other similar
credit, guarantee, financing or refinancing arrangements for any purpose with any Person upon such
terms as the Manager determines appropriate; provided that the Company shall not incur any
Indebtedness that is recourse to any Member, except to the extent otherwise agreed to in writing by
the applicable Member in its sole discretion.



     5.4 Distributions. All distributions made by the Company, if any, shall be made in accordance
with this Section 5.4.



          (a) Nonliquidating Distributions. The Manager will cause the Company to make
distributions in the following manner:




               (i) At least quarterly (and, in any event on or before the applicable quarterly federal filing
date for estimated federal income taxes), the Company shall distribute, to the extent there is cash
available, to the Members, pro rata in accordance with their Percentage Interests, an amount so
that each Member receives at least its Tax Distribution Amount with respect to such quarter by wire
transfer in immediately available funds; provided that if, in the event that the income tax
liability of the Company (or any of its Members with respect to taxes attributable to the income of
the Company) is increased pursuant to an audit or challenge by a taxing authority (including if a
voluntary payment is made to limit the accrual of interest on audit
issues) or the filing of an amended tax return, the Manager shall increase the Tax
Distribution Amount, by an amount sufficient to satisfy for each Member such tax liability
increase, for the quarter during which (a) a settlement with respect to such matters is entered
into with the taxing authority, (b) a decision of a court having jurisdiction with respect to such
matters becomes final, (c) the applicable Member(s) make a voluntary tax payment to such taxing
authority or (d) the amended tax return is filed; provided, however, that so long
as there are any amounts outstanding under the Credit Agreement, in the event that there is a
conflict between the provisions of this Section 5.4(a)(i) and the terms of the Credit Agreement
with respect to the amount or the timing of the distributions required to be made under this
Section 5.4(a)(i), the amount of the distribution required to be made under this Section 5.4(a)(i)
shall be no greater than the maximum amount permitted as a “Tax Distribution” as defined in
Amendment No. 2 to the Credit Agreement for the relevant period under the Credit Agreement and the
timing of such payment shall be as set forth in Amendment No. 2 to the Credit Agreement. For the
avoidance of doubt, all distributions made pursuant to this Section 5.4(a) shall be made pro rata
in accordance with Percentage Interests.



31









 





               (ii) The Manager, in its sole discretion, from time to time, may (but shall not be required
to) declare and make additional distributions of Available Cash among all the Members, pro rata in
accordance with their Percentage Interests.



          (b) Liquidating Distributions. All distributions made in connection with the sale,
exchange or other disposition of all or substantially all of the Company’s assets, or with respect
to the winding up and liquidation of the Company, shall be made among the Members as provided in
Article 7 hereof.




          (c) Sole Discretion of the Manager. Except as specified in Sections 4.3, 5.4(a),
5.4(b) or 7.3, (i) the Company shall have no obligation to distribute any cash or other property of
the Company to the Members, (ii) the Manager shall have sole discretion in determining whether to
distribute any cash or other property of the Company, when available, and in determining the
timing, kind and amount of any and all distributions, and (iii) no Member is entitled to receive
any distribution unless and until declared by the Manager.




          (d) Distributions in Kind. No Member has any right to demand or receive property
other than cash. However, the Manager may, in its sole discretion, elect to make distributions,
entirely or in part, in property of the Company other than cash. Property distributed in kind
shall be deemed to have been sold for their valuation determined in accordance with Section 5.5.




          (e) Limitations on Distributions. Notwithstanding anything in this Agreement to the
contrary, no distribution shall be made in violation of the LLC Act.




          (f) Exculpation. The Members hereby consent and agree that, except as expressly
provided herein or required by applicable law and except for distributions not made in compliance
with this Agreement, no Member shall have an obligation to return cash or other property paid or
distributed to such Member by the Company, whether such obligation would have arisen under
§ 18-502(b) of the LLC Act or otherwise.




          (g) Manager to Cause Funds to be Available for Tax Distribution. The Manager shall
use its best efforts to operate the business and affairs of the Company and its Subsidiaries in
such manner as to cause the Company to have available the funds necessary to make the distributions
under Section 5.4(a)(i) in the amounts and at the times required under Section 5.4(a)(i), subject,
however, in all cases, to compliance with the terms of the Credit Agreement and other third party
contractual obligations.




     5.5 Valuation. All valuation determinations to be made under this Agreement (unless otherwise
expressly provided for in this Agreement, including without limitation, in the definitions of
“Deemed Partnership Interest Value” or “Deemed Value of the Membership Interests”) shall be made
pursuant to the terms of this Section, which determinations shall be conclusive and binding on the
Company, all Members, former Members, their successors, assigns, legal representatives and any
other Person, except for computational errors or fraud, and to the fullest extent permitted by law,
no such Person shall have the right to an accounting or an appraisal of the assets of the Company
or any successor thereto except for computational errors or fraud. Valuations shall be determined
by a reasonable method of valuation determined by the



32









 




Manager, which may include an independent
appraisal, a reasonable estimate by the Manager or some other reasonable method of valuation; and
provided, further, that with respect to any valuation of the Company, RHI Inc. or
any Subsidiary thereof, that such valuation shall be based upon (i) to the extent applicable, the
RHI Market Price if the Shares are publicly traded, and (ii) no discount shall be taken in respect
of a minority interest or due to the illiquidity of any Membership Unit. Distributions of
property in kind shall be valued at fair market value; provided that any valuation under
this Section shall be determined by an independent appraiser selected by the Manager if so
requested by KRH.




ARTICLE 6




BOOKS AND RECORDS; TAX; CAPITAL ACCOUNTS; ALLOCATIONS




     6.1 General Accounting Matters.



          (a) Allocations of Net Income or Net Losses pursuant to Section 6.4 shall be made at the end
of each Fiscal Period, at such times as the Carrying Value of Company assets is adjusted pursuant
to the definition thereof and at such other times as required by this Agreement.




          (b) Each Member shall be supplied with the information of the Company necessary to enable such
Member to prepare in a timely manner (and in any event within 120 days after the end of the Company
Fiscal Year) its federal, state and local income tax returns and such other financial or other
statements and reports that the Manager deems appropriate.




          (c) The Manager shall keep or cause to be kept books and records pertaining to the Company’s
business showing all of its assets and liabilities, receipts and disbursements, Net Income and Net
Losses, Members’ Capital Accounts and all transactions entered into by the Company. Such books and
records of the Company shall be kept at the office of the Company
 and the Members and their representatives shall at all reasonable times have free access
thereto for the purpose of inspecting or copying the same.




          (d) The Company’s books of account shall be kept on an accrual basis or as otherwise provided
by the Manager and otherwise in accordance with GAAP, except that for income tax purposes such
books shall be kept in accordance with applicable tax accounting principles.




          (e) The Company shall, and shall cause each of its Subsidiaries to, (i) maintain accurate
books and records reflecting its assets and liabilities and maintain proper and adequate “internal
control over financial reporting” (as such term is defined in Rules 13a-15(f) and 15d-15(f)
promulgated under the Exchange Act, and as such rules may be amended and supplemented from time to
time); and (ii) deliver to any Member, immediately upon request, certifications and statements with
respect to the Company and its
Subsidiaries satisfying the requirements of Rule 13a-l4(a) or
15d-14(a) under the Exchange Act, and 18 U.S.C. § 1350 (Section 906 of the Sarbanes-Oxley Act of
2002).




          (f) Subject to the confidentiality provisions of this Agreement, the Company will permit
representatives of a Member and its Affiliates, at their expense, to obtain all books and accounts,
documents and other information in the possession of the Company and its




33









 







Subsidiaries, if any, as
may reasonably be requested in order to enable such Member to monitor its investment in the Company
and to exercise its rights under this Agreement and, to the extent applicable, to provide such
other access and information as may be reasonably required to enable such Member to account for the
investment in the Company and otherwise comply with the requirements of applicable laws, generally
accepted accounting principles and requirements of any Governmental Authority.




     6.2 Certain Tax Matters. The “tax matters partner” for purposes of Section 6231(a)(7) of the
Code shall be RHI Inc. (the “Tax Matters Member”). The Tax Matters Member shall have all
the rights, duties, powers and obligations provided for in Sections 6221 through 6232 of the Code
with respect to the Company. The Tax Matters Member shall inform each other Member of all
significant matters that may come to its attention in its capacity as such by giving notice thereof
within ten days after becoming aware thereof and, within such time, shall forward to each other
Member copies of all significant written communications it may receive in such capacity. KRH shall
be entitled to participate in any tax proceeding relating to the Company and the Tax Matters Member
shall not settle any such proceeding without KRH’s consent not to be unreasonably withheld. This
provision is not intended to authorize the Tax Matters Member to take any action left to the
determination of an individual Member under Sections 6222 through 6231 of the Code.



     6.3 Allocations.



          (a) General. Except as provided in Section 6.3(b) and as otherwise provided in this
Agreement, Net Income and Net Losses, and, to the extent necessary, individual items of Company
income, gain, loss and deduction, shall be allocated to the Members in such amounts,
to the maximum extent possible, to make the Adjusted Capital Account Balances of the Members
(after the application of this Section 6.3(a)) to be in proportion to the Members’ Percentage
Interests.




          (b) Special Allocations.




               (i) Qualified Income Offset. If any Member receives an unexpected adjustment,
allocation, or distribution described in Sections l.704-l(b)(2)(ii)(d)(4-6) of the Treasury
Regulations in any Fiscal Year or other period which would cause such Member to have a deficit
Adjusted Capital Account Balance as of the end of such Fiscal Year or other period, items of
Company income and gain (consisting of a pro rata portion of each item of Company income, including
gross income and gain) shall be specifically allocated to such Member in an amount and manner
sufficient to eliminate, to the extent required by the Treasury Regulations, the deficit in such
Member’s Adjusted Capital Account Balance as quickly as possible. This Section 6.3(b)(i) is
intended to comply with the qualified income offset provision in Section l.704-l(b)(2)(ii)(d) of
the Treasury Regulations and shall be interpreted consistently therewith.



               (ii) Gross Income Allocation. If any Member would otherwise have a deficit Adjusted
Capital Account Balance as of the last day of any Fiscal Year or other period, individual items of
income and gain of the Company shall be specifically allocated to such



34









 




Member (in the manner
specified in Section 6.3(b)(i)) so as to eliminate such deficit as quickly as possible.




               (iii) Company Minimum Gain Chargeback. If there is a net decrease in Company Minimum
Gain during a Company taxable year, then each Member shall be allocated items of Company income and
gain for such taxable year (and, if necessary, for subsequent years) in an amount equal to such
Member’s share of the net decrease in Company Minimum Gain, determined in accordance with Section
1.704-2(g)(2) of the Treasury Regulations. This Section 6.3(b)(iii) is intended to comply with the
minimum gain chargeback requirement of Sections 1.704-2(f) of the Treasury Regulations and shall be
interpreted consistently therewith.



               (iv) Member Non-recourse Debt Minimum Gain Chargeback. If there is a net decrease in
Member Non-recourse Debt Minimum Gain during a Fiscal Year or other period, then each Member shall
be allocated items of Company gross income or gain equal to such Member’s share of such net
decrease, except to the extent such allocation would not be required under Sections l.704-2(i)(4)
or 1.704-2(j)(2) of the Treasury Regulations. The amounts referred to in this Section 6.43(b)(iv)
and the items to be so allocated shall be determined in accordance with Section 1.704-2 of the
Treasury Regulations. This Section 6.3(b)(iv) is intended to comply with the minimum gain
chargeback requirement contained in Section 1.704-2(i)(4) of the Treasury Regulations and shall be
interpreted consistently therewith.



               (v) Limitations on Net Loss Allocations. With respect to any Member, notwithstanding
the provisions of Section 6.4(a), the amount of Net Losses for any Fiscal Year or other period that
would otherwise be allocated to a Member under Section 6.4(a) shall not cause or increase a deficit
Adjusted Capital Account Balance. Any Net Losses in excess of the limitation set forth in this
Section 6.3(b)(v) shall be allocated among the Members, pro rata, to
the extent each, respectively, is liable or exposed with respect to any debt or other
obligations of the Company.



               (vi) Member Non-recourse Deductions. Member nonrecourse deductions (as described in
Section 1.704-2(i) of the Treasury Regulations) for any Fiscal Year or other period shall be
specifically allocated to the Members who bear the economic risk of loss with respect to Member
Non-recourse Debt to which such partner nonrecourse deductions are attributable in accordance with
Section 1.704-2(i)(1) of the Treasury Regulations.



               (vii) Non-recourse Deductions. Non-recourse deductions (as described in Section
1.704-2(b) of the Treasury Regulations) for any Fiscal Year or other period shall be allocated to
the Members in accordance with their relative Percentage Interests.



               (viii) Excess Non-recourse Liabilities. If the built-in gain in Company assets
subject to Non-recourse Debts exceeds the gain described in Section 1.752-3(a)(2) of the Treasury
Regulations, the Excess Non-recourse Liabilities shall be allocated (i) first, to KRH up to the
amount of built-in gain that is allocable to KRH on Section 704(c) Property, other than built-in
gain already taken into account under
Sections 1.752-3(a)(1) and (2), (ii) second, among the
Members other than KRH up the amount of built in gain that is allocable to such other Members on
Section 704(c) Property, other than built-in gain already taken into account under



35









 




Sections
1.752-3(a)(1) and (2) and (iii) last, any remaining Excess Non-recourse Liabilities shall be
allocated among the Members in accordance with their relative Percentage Interests.




               (ix) Ordering Rules. Anything contained in this Agreement to the contrary
notwithstanding, allocations for any Fiscal Period or other period of nonrecourse deductions (as
described in Section 1.704-2(b) of the Treasury Regulations) or partner nonrecourse deductions (as
described in Section 1.704-2(i) of the Treasury Regulations), or of items required to be allocated
pursuant to the minimum gain chargeback requirements contained in Sections 6.3(b)(iii) and
6.3(b)(iv), shall be made before any other allocations hereunder.



          (c) Curative Provisions. The allocations set forth in Sections 6.3(b)(i)-(viii) (the
“Regulatory Allocations”) are intended to comply with certain requirements of Sections
1.704-1(b) and 1.704-2 of the Treasury Regulations. The Regulatory Allocations may not be
consistent with the manner in which the Members intend to allocate Net Income and Net Losses or
make Company contributions. Accordingly, notwithstanding the other provisions of this Agreement,
but subject to the Regulatory Allocations, Members shall reallocate items of income, gain,
deductions and loss among the Members so as to eliminate the effect of the Regulatory Allocations
and thereby cause the respective Capital Accounts of the Members to be in the amounts (or as close
thereto as possible) they would have been if Net Income and Net Losses (and such other items of
income, gain, deduction and loss) had been allocated without reference to the Regulatory
Allocations. In general, the Members anticipate that this will be accomplished by specially
allocating other Net Income and Net Losses (and such other items of income, gain, deduction and
loss) among the Members so that the net amount of the Regulatory Allocations and such special
allocations to each such Member is zero. In addition, if in any Fiscal Year or other period there
is a decrease in Company Minimum Gain, or in Member Non-recourse Debt Minimum Gain, and application
of the minimum gain chargeback requirements set forth in this Section 6.4 would cause a distortion
in the economic arrangement among the Members, the
Members may, if they do not expect that the Company will have sufficient other income to
correct such distortion, request the Internal Revenue Service to waive either or both of such
minimum gain chargeback requirements. If such request is granted, this Agreement shall be applied
in such instance as if it did not contain such minimum gain chargeback requirements.




     6.4 Allocations of Net Income and Net Losses for Federal Income Tax Purposes. The Company’s
ordinary income and losses and capital gains and losses as determined for federal income tax
purposes (and each item of income, gain, loss or deduction entering into the computation thereof)
shall be allocated to the Members in the same proportions as the corresponding “book” items are
allocated pursuant to Section 6.4 of this Agreement. Notwithstanding the foregoing sentence,
federal income tax items relating to any Section 704(c) Property shall be allocated among the
Members in accordance with Section 704(c) of the Code and Treasury Regulations Section
1.704-1(b)(2)(iv)(g) to take into account the difference between the fair market value and the tax
basis of such Section 704(c) Property using any method approved by the Manager and prescribed under
Treasury Regulations corresponding to Section 704(c) of the Code. Items described in this
Section 6.4 shall neither be credited nor charged to the Members’ Capital Accounts.



     6.5 Elections. Except as otherwise expressly provided herein, all elections required or
permitted to be made by the Company under the Code or other applicable tax law, and all



36









 




decisions
with respect to the calculation of its taxable income or tax loss under the Code or other
applicable tax law, shall be made in such manner as may be reasonably determined by the Manager;
provided that the Company shall make the election to amortize organizational expenses
pursuant to Section 709 of the Code and the regulations promulgated thereunder provided,
further, that the Company shall not file any election pursuant to Section 301.7701-3(c) of
the Treasury Regulations to be treated as an entity other than a partnership.




     6.6 Tax Year. The taxable year of the Company shall be the same as its Fiscal Year.



     6.7 Withholding Requirements. Notwithstanding any provision herein to the contrary, the
Manager is authorized to take any and all actions that it determines to be necessary or appropriate
to ensure that the Company satisfies any and all withholding and tax payment obligations under
Sections 1441, 1445, 1446 or any other provision of the Code or other applicable law. Without
limiting the generality of the foregoing, the Manager may withhold from distributions the amount
that it determines is required to be withheld from the amount otherwise distributable to any Member
pursuant to Article 5; provided, however, that such amount shall be deemed to have
been distributed to such Member for purposes of applying Article 5 and this Article 6. The Manager
will not withhold any amounts from cash or other property distributable to any Member to satisfy
any withholding and tax payment obligations to the extent that such Member demonstrates to the
Manager’s satisfaction that such Member is not subject to such withholding and tax payment
obligation. In the event that the Manager withholds or pays tax in respect of any Member for any
period in
excess of the amount of cash or other property otherwise distributable to such Member for such
period (or there is a determination by any taxing authority that the Company should have withheld
or paid any tax for any period in excess of the tax, if any, that it actually withheld or paid for
such period), such excess amount (or such additional amount) shall be treated as a recourse loan to
such Member that shall bear interest at the rate of ten percent per annum and be payable on demand.



     6.8 Reports to Members.



          (a) If requested by KRH, the books of account and records of the Company shall be audited as
of the end of each Fiscal Year by the Company’s independent public accountants.




          (b) Within 45 calendar days after the end of each Fiscal Period of each Fiscal Year of the
Company (or if the Company or the Manager files reports under the Exchange Act, such earlier date
as the quarterly report for such Fiscal Period would be due under the Exchange Act), the Company
shall send to each Person who was a Member during such period an unaudited report setting forth the
following as of the end of such Fiscal Period:




               (i) unless such Fiscal Period is the last Fiscal Period of the Fiscal Year, an unaudited
balance sheet as of the end of such period;



               (ii) unless such Fiscal Period is the last Fiscal Period of the Fiscal Year, an unaudited
income statement of the Company for such period;



               (iii) a statement of each Member’s Capital Account;



37









 





               (iv) a summary of the Company’s activities during such period; and



               (v) a cash flow statement.



          (c) Within 100 calendar days after the end of each Fiscal Year of the Company (or the next
Business Day if the 100th calendar day is not a Business Day), the Company shall send to
each Person who was a Member during such period an audited report setting forth the following as of
the end of such Fiscal Year:




               (i) an audited balance sheet as of the end of such Fiscal Year;



               (ii) an audited income statement of the Company for such Fiscal Year;



               (iii) a statement of each Member’s Capital Account; and



               (iv) a cash flow statement.



          (d) The Company shall provide each Member with monthly reports containing the monthly
information that is provided to senior management.




          (e) With reasonable promptness, the Manager will deliver such other information available to
the Manager, including financial statements and computations, as any Member may from time to time
reasonably request in order to comply with regulatory requirements, including reporting
requirements, to which such Member is subject.




     6.9 Auditors. The auditors of the Company shall be KPMG LLP, unless otherwise
determined by the audit committee of the Board of Directors of the Manager.



     6.10 Transfers During Year. In order to avoid an interim closing of the Company’s
books, the allocation of Net Income and Net Losses under this Article 6 between a Member who
Transfers part or all of its Interest in the Company during the Company’s Fiscal Year and such
Member’s transferee, or to a Member whose Percentage Interest varies during the course of the
Company’s Fiscal Year, may be determined pursuant to any method chosen by the Manager.



     6.11 Code Section 754 Election. The Company shall make the election provided for under Code
Section 754 for the first Fiscal Year during which there is an Exchange pursuant to Section 9.1 or
earlier, if determined to be in the best interest of the Company and its Members by RHI Inc. and
such election shall not be revoked.



ARTICLE 7




DISSOLUTION




     7.1 Dissolution.



          (a) The Company shall be dissolved and subsequently terminated upon the occurrence of the
first of the following events:




38









 








               (i) the unanimous decision of the Members that then hold Membership Units to dissolve the
Company;



               (ii) the entry of a decree of judicial dissolution of the Company pursuant to § 18-802 of the
LLC Act; or



               (iii) the termination of the legal existence of the last remaining Member or the occurrence of
any other event that causes the last remaining Member to cease to be a Member of the Company,
unless the Company is continued without dissolution pursuant to Section 7.1(b).



          (b) Upon the occurrence of any event that causes the last remaining Member of the Company to
cease to be a Member of the Company (other than upon continuation of the Company without
dissolution upon an assignment by the Member of all of its Interest in the Company and the
admission of the transferee as a Member pursuant to Section 8.2), to the fullest extent permitted
by law, the personal representative of such Member is hereby authorized to, and shall, within 90
days after the occurrence of the event that terminated the continued membership of such Member in
the Company, agree in writing (i) to continue the Company and (ii) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute Member of the
Company, effective as of the occurrence of the event that terminated the continued membership of
such Member in the Company.




          (c) Notwithstanding any other provision of this Agreement, the bankruptcy (as defined in §§
18-101(1) and 18-304 of the LLC Act) of a Member shall not cause the Member to cease to be a Member
of the Company and upon the occurrence of such an event, the Company shall continue without
dissolution.




     7.2 Winding-Up. When the Company is dissolved, the business and property of the Company shall
be wound up in an orderly manner by the Manager or by a liquidating trustee as may be appointed by
the Manager (the Manager or such liquidating trustee, as the case may be, the
“Liquidator”). If the Members are unable to agree with respect to the distribution of any
Company assets, then the Liquidator shall use its reasonable best efforts to reduce to cash and
Cash Equivalents such assets of the Company as the Liquidator shall deem it advisable to sell,
subject to obtaining fair market value for such assets and any tax or other legal considerations.
No Member shall take any action (with respect to the Company) that is inconsistent with, or not
necessary to or appropriate for, the winding up of the Company’s business and affairs.



     7.3 Final Distribution.



          (a) As soon as reasonable following the event that caused the dissolution of the Company, the
assets of the Company shall be applied in the following manner and order:




               (i) to pay the expenses of the winding-up, liquidation and dissolution of the Company;



               (ii) to pay all creditors of the Company, other than the Members, either by actual payment or
by making a reasonable provision therefor, in the manner, and in the order of priority set forth in
§ 18-804 of the LLC Act;



39









 





               (iii) to pay, in accordance with the provisions of this Agreement, on a pro rata basis, the
debts payable to all creditors of the Company that are Members, either by actual payment or by
making a reasonable provision therefor; and



               (iv) to distribute the remaining assets to the Members in proportion to the positive balances
in the Members’ respective Capital Accounts, determined after taking into
account all Capital Account adjustments for the Company taxable year during which such
dissolution occurs (other than those made as a result of the distributions set forth in this
Section 7.3(a)(iii)), by the end of the taxable year in which such dissolution occurs or, if later,
within 90 days after the date of the dissolution.



          (b) If any Member has a deficit balance in its Capital Account in excess of any unpaid Capital
Contributions (if any), such Member shall have no obligation to make any Capital Contribution to
the Company with respect to such deficit, and such deficit shall not be considered a debt owed to
the Company or to any other Person for any purpose whatsoever.




          (c) Each Member shall look solely to the assets of the Company for the amounts distributable
to it hereunder and shall have no right or power to demand or receive property therefor from any
other Member.




          (d) The Company shall terminate when (i) all of the assets of the Company, after payment of or
due provision for all debts, liabilities and obligations of the Company shall have been distributed
to the Member in the manner provided for in this Agreement, and (ii) the Certificate shall have
been canceled in the manner required by the LLC Act.




ARTICLE 8




TRANSFER; SUBSTITUTION; ADJUSTMENTS




     8.1 Restrictions on Transfer.



          (a) Notwithstanding anything to the contrary herein contained, each Member may, subject to
Section 8.1(b), Transfer any or all of its Membership Units; provided, however,
that: (i) RHI Inc. shall not have the right to transfer any of its Membership Units; (ii) any
transferee of Membership Units must assume, by operation of law or written agreement, all of the
obligations of the transferring Member with respect to the transferred Membership Units, even if
the transferee is not admitted as a Member of the Company; and (iii) with respect to a transfer of
Membership Units by KRH, such transferee shall not have the rights and powers of KRH to designate
nominees to Manager’s Board of Directors (pursuant to the Director Designation Agreement), unless
the transferee is a Permitted Transferee. It is a condition to any Transfer by a Member (the
“Transferring Member”) otherwise permitted hereunder that the transferee (i) agrees to
become a party to, and be bound by the terms of, this Agreement to the same extent as the
Transferring Member, and (ii) assumes by operation of law or express agreement all of the
obligations of the Transferring Member under this Agreement or to which such Transferring Member is
a party with respect to such Transferred Units or other Equity Interests in the Company.
Notwithstanding the foregoing, any transferee of any Transferred Units or other Equity Interests in
the Company shall be subject to any and all ownership




40









 







limitations contained in this Agreement or
any other agreement with the Company to which such Transferring Member is a party. Any transferee,
whether or not admitted as a Member, shall take subject to the obligations of the transferor
hereunder.




          (b) In addition to any other restrictions on Transfer herein contained, including, without
limitation, the provisions of this Article 8, any purported Transfer or assignment of a Unit or
other Equity Interests in the Company by any Member made in the following events shall be void
ab initio:




               (i) to any Person who lacks the legal right, power or capacity to own Units;



               (ii) if such Transfer would cause the Company to become, with respect to any employee benefit
plan subject to Title I of ERISA, a “party-in-interest” (as defined in Section 3(14) of ERISA) or a
“disqualified person” (as defined in Section 4975(c) of the Code);



               (iii) if such Transfer would, in the opinion of counsel to the Company, cause any portion of
the assets of the Company to constitute assets of any employee benefit plan pursuant to Department
of Labor Regulations Section 2510.3-101;



               (iv) if such Transfer requires the registration of such Units pursuant to any applicable
federal, state or foreign securities laws or would otherwise violate any federal, state or foreign
securities laws or regulations applicable to the Company or the Units;



               (v) unless waived by the Manager after consulting with tax counsel, if such Transfer would
result in the Company being unable to satisfy at least one of the “lack of actual trading” safe
harbor of Section 1.7704-1(j) of the Treasury Regulations or the “private placement” safe harbor of
Section 1.7704-1(h) of the Treasury Regulations;



               (vi) if such Transfer subjects the Company to be regulated under the Investment Company Act of
1940, the Investment Advisors Act of 1940 or ERISA, each as amended;



               (vii) if such Transfer may cause the Company to cease to be classified as a partnership for
U.S. federal or state income tax purposes;



               (viii) if such Transfer violates any applicable laws; or



               (ix) if the Company does not receive written instruments (including without limitation, copies
of any instruments of Transfer and such assignee’s consent to be bound by this Agreement as an
assignee) that are in a form satisfactory to the Manager (in its sole and absolute discretion).



     8.2 Substituted Members.



          (a) No Member shall have the right to substitute a transferee as a Member in his or her place
with respect to any Units or other Equity Interests in the Company so Transferred (including any
transferee permitted by Section 8.1) unless (i) such Transfer is made




41









 







in compliance with the terms
of this Agreement and any other agreements with the Company or other Members to which such
transferor Member is a party and (ii) such transferee assumes, by
written instrument satisfactory to the Company pursuant to Section 8.l(b)(ix) above, all the
rights and powers and is subject to all the restrictions and liabilities that were applicable to
the transferor by virtue of the transferor’s ownership of the Units or other Equity Interests in
the Company being Transferred.




          (b) Except as provided in Section 8.2(c) and otherwise in this Agreement, a transferee who has
been admitted as a Member in accordance with Section 8.2(a) shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Member under this Agreement holding the
same Units or other Equity Interests in the Company. The admission of any transferee as a Member
shall be subject to the provisions of Section 3.1.




          (c) In the event of a Transfer by KRH, the transferee shall not have the rights and powers of
KRH under this Agreement unless the transferee is a Permitted Transferee of KRH prior to and
following the Transfer.




     8.3 Effect of Void Transfers. No Transfer of any Units owned by a Member in violation hereof
shall be made or recorded on the books of the Company, and any such purported Transfer shall be
void and of no effect.



ARTICLE 9




EXCHANGE RIGHT OF MEMBER




     9.1 Exchange Right of a Member.



          (a) Subject to compliance with the conditions to exchange set forth in this Article 9,
beginning on December 23, 2008, each Member (other than RHI Inc.) shall be entitled to exchange any
or all of its Membership Units (the “Exchange Right”) for the consideration set forth in
(b) and cause RHI Inc. to purchase such units for such consideration. A Member desiring to
exercise its Exchange Right (the “Exchanging Member”) shall exercise such right by giving
written notice (the “Exchange Notice”) to RHI Inc. The Exchange Notice shall specify the
number of Membership Units (the “Exchanged Units”) that the Exchanging Member intends to
have RHI Inc. acquire for the consideration set forth in Section 9.1(b) and a date, which is not
less than seven (7) Business Days nor more than 10 Business Days after delivery of the Exchange
Notice, on which exercise of the Exchange Right shall be completed (the “Exchange Date”).
Unless the Exchanging Member has timely delivered a Retraction Notice as provided in Section
9.1(b), on the Exchange Date (to be effective immediately prior to the close of business on the
Exchange Date) (i) the Exchanging Member shall transfer and surrender the Exchanged Units to RHI
Inc., free and clear of all liens and encumbrances, and (ii) RHI Inc. shall transfer to the
Exchanging Member the consideration to which the Exchanging Member is entitled under
Section 9.1(b).




          (b) In exercising its Exchange Right, an Exchanging Member, at RHI Inc.’s option, shall be
entitled to receive from RHI Inc. the Cash Amount, Shares with an aggregate RHI Market Price equal
to the Cash Amount or a combination of cash and Shares with an





42












 




aggregate RHI Inc. Market Price equal to the Cash Amount less cash to be received in the Exchange.
Within three (3) Business Days of delivery of the Exchange Notice, RHI Inc. shall give written
notice (the “Option Notice”) to the Exchanging Member of its intended settlement method;
provided that if RHI Inc. does not timely deliver an Option Notice, RHI Inc. shall be
deemed to have elected to pay the consideration entirely in Shares. If RHI Inc. elects to pay any
amount of the consideration in cash, the Exchanging Member may retract its Exchange Notice by
giving written notice (the “Retraction Notice”) to the Company (with a copy to RHI Inc.)
within two (2) Business Days of delivery of the Option Notice. The timely delivery of a Retraction
Notice shall terminate all of the Exchanging Member’s, Company’s and RHI Inc.’s rights and
obligations under this Section 9.1 arising from the Exchange Notice.




          (d) The number of Shares and the cash that an Exchanging Member is entitled to receive under
Section 9.1(b) shall not be adjusted on account of any distributions previously made with respect
to the Exchanged Units or dividends previously paid with respect to RHI Inc. common stock;
provided, however, that if a Exchanging Member causes RHI Inc. to exchange
Exchanged Units and the Exchange Date occurs subsequent to the record date for any distribution
with respect to the Exchanged Units but prior to payment of such distribution, the Exchanging
Member shall be entitled to receive such distribution with respect to the Exchanged Units on the
date that it is made notwithstanding that the Exchanging Member transferred and surrendered the
Exchanged Units to RHI Inc. prior to such date.




          (e) Upon consummation of a closing of an Exchange contemplated by this Section 9.1, each
Membership Unit transferred to RHI Inc. at such closing shall thereafter be registered in the name
of RHI Inc. as a Membership Unit, and the Manager shall modify the register and Exhibit A to
reflect such transfer. In the event that, as a result of an Exchange, KRH shall hold zero
Membership Units, KRH shall cease to be a Member of the Company for any purpose under this
Agreement or the Act.




          (f) The parties shall report an Exchange consummated pursuant to this Section 9.1 as a taxable
sale of Membership Units by KRH (or such other Exchanging Member) to RHI Inc. and no party shall
take a contrary position on any tax return. At the time of an Exchange, the consideration paid for
the Exchanged Units shall be allocated among the assets of the Company (and any subsidiary of the
Company that is a flow-thru or disregarded entity for U.S. federal income tax purposes) in
accordance with Sections 755 and 743(b) of the Code and the Treasury Regulations promulgated
thereunder, as reasonably determined by the Manager.




     9.2 Effect of Exercise of Exchange Right. This Agreement shall continue notwithstanding
the exercise of an Exchanging Member’s Exchange Right and all governance or other rights set forth
herein shall be exercised by the remaining Members and the Exchanging Member (to the extent of such
Exchanging Member’s remaining Interest in the Company). No exercise of an Exchanging Member’s
Exchange Right shall relieve such Exchanging Member of any prior breach of this Agreement.



43









 





ARTICLE 10




MISCELLANEOUS




     10.1 Agreement to Cooperate; Further Assurances. In case at any time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper officers and
Managers of the Company and each Member and their respective Affiliates shall execute such further
documents (including assignments, acknowledgments and consents and other instruments of Transfer)
and shall take such further action as shall be necessary or desirable to effect such Transfer and
to otherwise carry out the purposes of this Agreement, in each case to the extent not inconsistent
with applicable law.



     10.2 Amendments. Except as otherwise expressly provided in this Agreement (including as
provided in Sections 4.3(b)(vi) and 4.3(b)(xix)), amendments to this Agreement shall require a
Majority Member Vote. Amendments to specified provisions require the additional consent of the
Independent Directors of the Board of RHI Inc., as Manager. No amendment that would materially
impair the voting power or economic rights of any Membership Units in relation to any other
outstanding class of units may be made without the consent of a majority of the affected units. No
amendment that would materially impair the voting power or economic rights of any member in
relation to the other members may be made without the consent of the affected member.



     10.3 Confidentiality. For a period of three years after the earlier of (x) the dissolution
of the Company and the termination of this Agreement or (y) the date upon which such Member ceases
to be a Member of the Company:



          (a) (i) Each Member shall use and cause its Affiliates to use the same degree of care it uses
to safeguard its own Confidential Information (as defined below) and to cause its and its
Affiliates’ directors, officers, employees, agents and representatives to keep confidential all
Confidential Information, including but not limited to Intellectual Property and other Proprietary
Information of the other Members and the Company, and




               (ii) Each Member shall hold and shall cause its Affiliates to hold and shall cause its and its
Affiliates’ directors, officers, employees, agents and representatives to hold in confidence,
unless compelled to disclose by judicial or administrative process or, in the opinion of counsel,
by the requirements of law, all documents and information concerning any other party hereto
furnished it by such other party or its representatives in connection with the transactions
contemplated by this Agreement (together with the information referred to in clause (i) above, the
“Confidential Information”), except to the extent that any such information can be shown to
have been (A) previously known by the party to which it is
furnished lawfully and without breaching or having breached an obligation of such party or the
disclosing party to keep such documents and information confidential, (B) in the public domain
through no fault of the disclosing party, or (C) independently developed by the disclosing party
without using or having used the Confidential Information.



          (b) Each Member agrees that the Confidential Information of the Company shall only be
disclosed in secrecy and confidence, and is to be maintained by them in secrecy and




44









 







confidence
subject to the terms hereof. Each Member shall (i) not, directly or indirectly, use the
Confidential Information of the Company, except as necessary in the ordinary course of the
Company’s business, or disclose the Confidential Information of the Company to any third party and
(ii) inform all of its employees to whom the Confidential Information of the Company is entrusted
or exposed of the requirements of this Section and of their obligations relating thereto.




          (c) The Company shall preserve the confidentiality of all Confidential Information supplied by
the Members and their Affiliates (“Member Information”) to the same extent that a Member
must preserve the confidentiality of Confidential Information pursuant to Sections 10.3(a) and (b).




          (d) Member Information shall not be supplied by the Company or its Subsidiaries to any Person
who is not an employee of the Company or the Manager, including any employee of a Member who is not
an employee of the Company or the Manager. Notwithstanding the foregoing, Member Information may
be disclosed to authorized third-party contractors of the Company if the Company determines that
such disclosure is reasonably necessary to further the business of the Company, and if such
contractor executes a non-disclosure agreement preventing such contractor from disclosing such
Member Information for the benefit of each provider of Member Information in a form reasonably
acceptable to KRH. Member Information disclosed by any Member to the Company or the Manager shall
not be shared with any other Member that is not the Manager without the disclosing Member’s written
consent.




     10.4 Injunctive Relief. The Company and each Member acknowledge and agree that a violation
of any of the terms of this Agreement will cause the other Members and the Company, as the case may
be, irreparable injury for which an adequate remedy at law is not available. Accordingly, it is
agreed that each of the Members and the Company will be entitled to an injunction, restraining
order or other equitable relief to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court of competent jurisdiction, in
addition to any other remedy to which they may be entitled at law or, equity. Nothing stated
herein shall limit any other remedies provided under this Agreement or available to the parties at
law or in equity.



     10.5 Successors, Assigns and Transferees. The provisions of this Agreement will be binding
upon and will inure to the benefit of the parties hereto and their respective successors and
Permitted Transferees, and nothing in this Agreement, express or implied, is intended to or shall
confer upon any other Person, including but not limited to any creditor of the Company or its
Subsidiaries, any right, benefit, or remedy of any nature by reason of this Agreement. An
assignment of the rights, interests or obligations hereunder, including but not limited to an
assignment by operation of law, shall be null and void unless a provision of this Agreement
specifically provides otherwise or the Company gives its prior written consent therefor.



     10.6 Notices. All notices, demands or other communications to be given under or by reason
of this Agreement shall be in writing and shall be delivered by hand or sent by facsimile,
electronic mail or nationally recognized overnight delivery service and shall be deemed given when
received if delivered on a Business Day during normal business hours of the recipient or, if not so
delivered, on the next Business Day following receipt. Notices to the Company or any



45









 




Member shall
be delivered to the Company or such Member as set forth in Exhibit A, as it may be revised
from time to time. Any party to this Agreement may change its address or fax number for notices,
demands and other communications under this Agreement by giving notice of such change to the other
parties hereto in accordance with this Section 10.6.




     10.7 Integration. This Agreement, together with the other Joint Venture Agreements and the
documents referred to herein or therein, or delivered pursuant hereto or thereto, contain the
exclusive entire and final understanding of the parties with respect to the subject matter hereof
and thereof. There are no agreements, representations, warranties, covenants or undertakings with
respect to the subject matter hereof and thereof other than those expressly set forth herein and
therein. Except as expressly set forth herein, this Agreement together with the other Joint
Venture Agreements supersede all other prior agreements, discussions, negotiations, communications
and understandings between the parties with respect to such subject matter hereof and thereof. No
party has relied on any statement, representation, warranty, or promise not expressly contained in
this Agreement or another Joint Venture Agreement in connection with this transaction.



     10.8 Severability. If one or more of the provisions, paragraphs, words, clauses, phrases
or sentences contained herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, then such provision, paragraph, word,
clause, phrase or sentence shall be deemed restated to reflect the original intention of the
parties as nearly as possible in accordance with applicable law and the remainder of this
Agreement. The legality and enforceability of any such provision, paragraph, word, clause, phrase
or sentence in every other respect and of the remaining provisions, paragraphs, words, clauses,
phrases or sentences hereof will not be in any way impaired, it being intended that all
obligations, rights, powers and privileges of the Company and the Members will be enforceable to
the fullest extent permitted by law. Upon such determination of invalidity, illegality or
unenforceability, the Company and the Members shall negotiate in good faith to amend this Agreement
to effect the original intent of the Members.



     10.9 Counterparts. This Agreement may be executed in one or more counterparts and by
different parties on separate counterparts, each of which will be deemed an original, but all of
which will constitute one and the same instrument. The parties agree that this Agreement shall be
legally binding upon the electronic transmission, including by facsimile or email, by each party of
a signed signature page hereof to the other party.



     10.10 Governing Law; Submission to Jurisdiction.



          (a) This Agreement is to be construed in accordance with and governed by the internal laws of
the State of Delaware without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the State of Delaware
to the rights and duties of the parties.




          (b) Each party hereto agrees that any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement shall be brought or otherwise
commenced exclusively in any state or federal court located in Delaware or in New York, New York.
Subject to the preceding sentence, each party thereto:





46









 








               (i) expressly and irrevocably consents and submits to the jurisdiction of each state and
federal court located in Delaware or New York, New York (and each appellate court located in
Delaware or the State of New York) in connection with any such legal proceeding, including to
enforce any settlement, order or award;



               (ii) consents to service of process in any such proceeding in any manner permitted by the
applicable laws of Delaware or the State of New York, and agrees that service of process by
registered or certified mail, return receipt requested, at its address specified pursuant to
Section 10.6 is reasonably calculated to give actual notice, to the extent permitted by applicable
law;



               (iii) agrees that each state and federal court located in Delaware or New York, New York shall
be deemed to be a convenient forum;



               (iv) waives and agrees not to assert (by way of motion, as a defense or otherwise), in any
such legal proceeding commenced in any state or federal court located in Delaware or New York, New
York, any claim that such party is not subject personally to the jurisdiction of such court, that
such legal proceeding has been brought in an inconvenient forum, that the venue of such proceeding
is improper or that this Agreement or the subject matter hereof or thereof may not be enforced in
or by such court; and



               (v) agrees to the entry of an order to enforce any resolution, settlement, order or award made
pursuant to this Section by the state and federal courts located in Delaware or New York, New York
and in connection therewith hereby waives, and agrees not to assert by way of motion, as a defense,
or otherwise, any claim that such resolution, settlement, order or award is inconsistent with or
violative of the laws or public policy of the laws of Delaware or the State of New York or any
other jurisdiction.



          (c) In the event of any action or other proceeding relating to this Agreement or the
enforcement of any provision of this Agreement, the prevailing party (as determined by the court)
shall be entitled to payment by the non-prevailing party of all costs and expenses (including
reasonable attorneys’ fees) incurred by the prevailing party, including any costs and expenses
incurred in connection with any challenge to the jurisdiction or the convenience or propriety of
venue of proceedings before any state or federal court located in Delaware or New York, New York.




[Signature Page to Follow]





47









 








     IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or caused this
Agreement to be executed on its behalf as of the date first written above.



	 	 	 	 	 
	 	KRH INVESTMENTS LLC

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

General Counsel & Secretary	 
	 



	 	 	 	 	 
	 	RHI ENTERTAINMENT, INC.

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

General Counsel & Secretary	 
	 



Signature page — LLC Agreement





 









 









Exhibit A




Members and Units




	 	 	 
	Names and Addresses	 	Membership Units
	KRH Investments LLC

	 	9,900,000 
	c/o Kelso & Company,

	 	Membership Units
	320 Park Avenue, 24th Floor,
	 	 
	New York, NY 10022 
	 	 
	 
	 	 
	Attention: General Counsel
	 	 
	Fax: (212) 223-2379 
	 	 
	 
	 	 
	with a copy to:
	 	 
	Latham & Watkins LLP
	 	 
	885 Third Avenue
	 	 
	New York, NY 10019 
	 	 
	Attention: Raymond Y. Lin, Esq
	 	 
	Fax: (212) 751-4864 
	 	 
	 
	 	 
	RHI Entertainment, Inc.

	 	13,500,100 
	1325 Avenue of the Americas, 21st Floor

	 	Membership Units
	New York, NY 10019 
	 	 
	 
	 	 
	Attention: General Counsel
	 	 
	Fax: (212) 977-3917 
	 	 
	 
	 	 
	with a copy to:
	 	 
	Latham & Watkins LLP
	 	 
	885 Third Avenue
	 	 
	New York, NY 10019 
	 	 
	Attention: Raymond Y. Lin, Esq
	 	 
	Fax: (212) 751-4864 
	 	 
	 
	Totals:                                           

	 	23,400,100 
	 

	 	Membership Units






A-1









 






Exhibit B




Form of Membership Unit Certificate




B-1