Document:

MEMBERSHIP UNIT SUBSCRIPTION AGREEMENT

THIS MEMBERSHIP UNIT SUBSCRIPTION AGREEMENT (this “Agreement”) is made and entered into as of [________], 2007, by and among RHI Entertainment, Inc., a Delaware corporation (“RHI Inc.”), KRH Investments LLC, a Delaware limited liability company (formerly RHI Entertainment Holdings, LLC, “KRH”), and RHI Entertainment Holdings II, LLC, a Delaware limited liability company (“Holdings II”). 

RECITALS

A. WHEREAS, RHI Inc. is contemplating an offer and sale of its shares of common stock, par value $ 0.01 per share (“Shares”), to the public in an underwritten initial public offering (the “Initial Public Offering”). 

B. WHEREAS, pursuant to that certain reorganization agreement, dated as of September 14, 2007 (the “Reorganization Agreement”), KRH, Holdings II and RHI Inc. have agreed to effectuate the transactions described or referenced therein. 

C. WHEREAS, immediately prior to or simultaneously with the consummation of the transactions contemplated by this Agreement, RHI Inc. will become the sole managing member of Holdings II and KRH will become the non-managing member of Holdings II pursuant to that certain amended and restated limited liability operating agreement of Holdings II, as it may be amended, supplemented or otherwise modified from time to time (the “LLC Agreement”). 

D. WHEREAS, Holdings II desires to issue Membership Units to RHI Inc. in exchange for the proceeds received from RHI Inc.’s Initial Public Offering.

E. WHEREAS, Holdings II desires to issue Membership Units to KRH in exchange for the contribution of its interests in RHI Entertainment LLC, a Delaware limited liability company (the “Contributed Asset”).

F. WHEREAS, the parties hereto intend for the contribution of the Contributed Asset by KRH and the proceeds received from RHI Inc.’s Initial Public Offering in exchange for Membership Units to be treated as contributions of property governed by Section 721(a) of the Internal Revenue Code.

G. NOW, THEREFORE, In consideration of the covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, RHI Inc., KRH and Holdings II agree as follows:

 

AGREEMENT

 

1. Definitions

1.1 Certain Definitions. For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1:

 “Contributed Asset” has the meaning set forth in the Recitals.

“Encumbrance” means, with respect to any specified asset, any security interest, lien, mortgage, claim, charge, pledge, restriction, option, reservation, equitable interest, deed of trust, right of first refusal, easement, servitude or encumbrance of any nature.

 “Holdings II” has the meaning set forth in the Preamble.

“Initial Closing” means the closing of the transactions contemplated in Sections 2.1, 2.2, 3.1 and 3.2.

“Initial Closing Date” has the meaning set forth in Section 2.3.

“Initial Public Offering” has the meaning set forth in the Recitals.

“IPO Proceeds” means the proceeds received by RHI Inc. in exchange for the issuance and sale of Shares in connection with the Initial Public Offering, calculated by the price per share at which Shares are sold to the public multiplied by the number of Shares sold to the public, less underwriting discounts and commissions.

“KRH” has the meaning set forth in the Preamble. 

“KRH Units” has the meaning set forth in Section 3.1.

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

“Membership Units” means the common membership units of Holdings II as described in the LLC Agreement.

 “Optional Closing” means the closing of the transactions contemplated in Section 2.5.

“Optional Closing Date” has the meaning set forth in Section 2.5(c).

“Over-Allotment Option” has the meaning set forth in Section 2.5(a).

“Over-Allotment Proceeds” means the proceeds received by RHI Inc. in connection with the Underwriters’ purchase of the Over-Allotment Units, calculated by the price per share at which Shares are sold to the public multiplied by the number of Shares sold to the public, less underwriting discounts and commissions.

“Over-Allotment Units” means the Membership Units, if any, issued by Holdings II to RHI Inc. pursuant to Section 2.5.

 

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“Prospectus” means the final prospectus for the Initial Public Offering contained in the registration statement filed on Form S-1 with the Securities and Exchange Commission.

“RHI Inc.” has the meaning set forth in the Preamble.

“RHI Inc. Consideration” has the meaning set forth in Section 2.2.

“RHI Inc. Units” has the meaning set forth in Section 2.1.

“Shares” has the meaning set forth in the Recitals.

 “Total Issued Units” means the total number of KRH Units and RHI Inc. Units, including the number of Over-Allotment Units, if any, in connection with the Over-Allotment Option.

“Transaction Documents” mean the transactional and organizational documents entered into contemporaneously with this Agreement by either Holdings II, RHI Inc. or KRH, as applicable, in connection with the Initial Public Offering.

“Underwriting Agreement” means the underwriting agreement to be entered into among RHI Inc. and the managing underwriters for the Initial Public Offering.

2. RHI Inc. Units.

2.1 Transfer. Holdings II hereby agrees to issue to RHI Inc. on the Initial Closing Date, and RHI Inc. hereby agrees to subscribe to and accept on the Initial Closing Date, free and clear of all Encumbrances, a number of Membership Units equal to the number of Shares sold (excluding any Shares sold pursuant to the exercise of the Over-Allotment Option) in the Initial Public Offering (collectively, the “RHI Inc. Units”).

2.2 Consideration. The consideration for the RHI Inc. Units shall be an amount equal to the IPO Proceeds (the “RHI Inc. Consideration”), which shall be delivered to Holdings II at the Initial Closing by wire transfer of immediately available funds in accordance with Section 2.4.

2.3 Initial Closing. The Initial Closing Date shall be held at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022 at the time and date on which all the conditions set forth in Section 7 have been satisfied or waived, or at such later time and date as RHI Inc., Holdings II and KRH shall agree in writing (such time and date, the “Initial Closing Date”).

2.4 Initial Closing Deliverables. 

(a) Holdings II shall deliver, or cause to be delivered, the following documents to RHI Inc. at the Initial Closing:

(i) a certificate or certificates representing the RHI Inc. Units being issued to RHI Inc. identifying RHI Inc. as the registered holder thereof; and

 

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(ii)  all other customary documents, instruments or certificates as shall be reasonably requested by RHI Inc. and as shall be consistent with the terms of this Agreement; and

(b) RHI Inc. shall deliver, or cause to be delivered, the following documents to Holdings II at the Initial Closing:

(i) the RHI Inc. Consideration by wire transfer of immediately available funds to an account designated by Holdings II at least three business days prior to the Initial Closing.

2.5 Issuance of Additional Membership Units. 

(a) Holdings II hereby agrees to issue to RHI Inc., and RHI Inc. hereby agrees to subscribe to and accept, free and clear of all Encumbrances, 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 Over-Allotment Proceeds of such Over-Allotment Option, which shall be delivered to Holdings II at the Optional Closing by wire transfer of immediately available funds in accordance with Section 2.5(c). 

(b) RHI Inc. and Holdings II both agree and acknowledge that Holdings II’s obligations to issue any Over-Allotment Units in connection with the Over-Allotment Option are contingent upon the Underwriters’ exercise of their Over-Allotment Option. If the Underwriters exercise their Over-Allotment Option, RHI Inc. will, contemporaneously with the sale of Shares by RHI Inc. to the Underwriters pursuant to the Over-Allotment Option, subscribe to a number of Membership Units or Over-Allotment Units from Holdings II equal to the number of Shares purchased by the Underwriters from RHI Inc. pursuant to the Over-Allotment Option.

(c) The Optional Closing shall be held at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022 at the time and date on which all the conditions set forth in Section 7 have been satisfied or waived, or at such later time and date as RHI Inc. and Holdings II shall agree in writing (such time and date, the “Optional Closing Date”).

(d) Holdings II shall deliver, or cause to be delivered, the following documents to RHI Inc. at the Optional Closing:

(i) a certificate or certificates representing the Over-Allotment Units being issued and sold to RHI Inc. in connection with the Over-Allotment Option, identifying RHI Inc. as the registered holder thereof; and

(ii) all other customary documents, instruments or certificates as shall be reasonably requested by RHI Inc. and as shall be consistent with the terms of this Agreement.

 

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(e) RHI Inc. shall deliver, or cause to be delivered, the following documents to Holdings II at such Optional Closing:

(i) the Over-Allotment Proceeds by wire transfer of immediately available funds to an account designated by Holdings II at least three business days prior to such Optional Closing; and

(ii) a letter evidencing the exercise of the Over-Allotment Option by the Underwriters in a form reasonably satisfactory to Holdings II.

2.6 Closing Costs; Transfer Taxes and Fees. Holdings II shall be responsible for the documentary and transfer taxes and any sales or other similar taxes, if any, imposed on the issuance of the Membership Units under this Agreement (including those Membership Units issued and sold in connection with the Over-Allotment Option) and any deficiency, interest or penalty asserted with respect thereto.

3. Contribution of Contributed Asset; Issuance of Membership Units.

3.1 Transfer. Subject to the terms and conditions of this Agreement, Holdings II hereby agrees to issue to KRH on the Initial Closing Date, and KRH hereby agrees to accept on the Initial Closing Date, free and clear of all Encumbrances, [____________] Membership Units (the “KRH Units”). In exchange for the KRH Units, KRH shall contribute, convey, assign, transfer and deliver to Holdings II or its designee free and clear of any Encumbrances, and Holdings II or its designee does hereby acquire and accept from KRH, all of KRH’s right, title and interest in the Contributed Asset. 

3.2 Assumed Liabilities. Subject to the terms and conditions of this Agreement, at the Initial Closing, Seller shall assign, and Holdings II or its designee shall assume and agree to pay and otherwise perform and discharge, all liabilities and obligations of any kind and nature relating to, arising from or in connection with the Contributed Asset. The intent of this Section 3.2 is that Holdings II or its designee shall assume all liabilities and obligations of KRH relating to the Contributed Asset as if Holdings II or its designee were purchasing the stock of a separate corporation whose assets and liabilities included only those of the Contributed Asset. 

3.3 Initial Closing. The Initial Closing shall be held on the Initial Closing Date.

3.4 Initial Closing Deliverables.

(a) Holdings II shall deliver, or cause to be delivered, the following documents to KRH at the Initial Closing:

(i) a certificate or certificates representing the KRH Units being issued and sold to KRH identifying KRH as the registered holder thereof; and

(ii) all other customary documents, instruments or certificates as shall be reasonably requested by KRH and as shall be consistent with the terms of this Agreement; and

 

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(b) KRH shall deliver, or cause to be delivered, the following documents to Holdings II at the Initial Closing:

(i) all customary documents, instruments or certificates as shall be reasonably requested by Holdings II and as shall be consistent with the terms of this Agreement.

3.5 Closing Costs; Transfer Taxes and Fees. Holdings II shall be responsible for the documentary and transfer taxes and any sales or other similar taxes, if any, imposed on the issuance of the KRH Units under this Agreement and any deficiency, interest or penalty asserted with respect thereto.

4. Representations and Warranties of Holdings II. As of the date of this Agreement and as of each of the Initial Closing Date and, if applicable, the Optional Closing Date, Holdings II represents and warrants to RHI Inc. and KRH as follows:

4.1 Organization; Good Standing; Qualification. Holdings II is a limited liability company, duly organized and validly existing under the laws of the State of Delaware and is in good standing under such laws. Holdings II has the requisite power and authority to own and operate its properties and assets, and to carry on its business as presently conducted and as proposed to be conducted. Holdings II is in good standing and qualified to do business in every jurisdiction where the failure to so qualify would have a material adverse effect on its business or financial condition or its ability to enter into this Agreement or to consummate the transactions contemplated hereby.

4.2 Authorization. The execution, delivery and performance of this Agreement and the issuance of the Membership Units have been duly authorized by Holdings II. This Agreement constitutes the legal, valid and binding obligation of Holdings II enforceable against Holdings II in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) the effect of rules of law governing the availability of equitable remedies.

4.3 Consents. Except as has been obtained or will be obtained prior to the Initial Closing and, if applicable, the Optional Closing, no consent, approval or authorization of, or designation, declaration or filing with, any governmental authority or other third party on the part of Holdings II is required in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

4.4 Capitalization of Holdings II. Immediately prior to the execution and delivery of this Agreement, there are no Membership Units issued and outstanding. There are no outstanding options, warrants, rights (including conversion or preemptive rights), voting agreements, investor or other type of agreement with respect to the Membership Units or other agreements for the purchase or acquisition from Holdings II of any Membership Units; provided, however, that the execution of any Transaction Document by the parties hereto either prior to, or contemporaneously with, this Agreement shall be expressly excluded from this Section 4.4. The assets and liabilities of Holdings II are as set forth in the financial statements included in the Prospectus as of the date indicated.

 

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5. Representations and Warranties of RHI Inc. As of the date of this Agreement and as of each of the Initial Closing Date and, if applicable, the Optional Closing Date, RHI Inc. hereby represents and warrants to Holdings II as follows:

5.1 Organization; Good Standing; Qualification. RHI Inc. is a corporation duly organized and validly existing under the laws of the State of Delaware and is in good standing under such laws. RHI Inc. has the requisite power and authority to own and operate its properties and assets, and to carry on its business as presently conducted and as proposed to be conducted. RHI Inc. is in good standing and qualified to do business in every jurisdiction where the failure to so qualify would have a material adverse effect on its ability to enter into this Agreement or to consummate the transactions contemplated hereby.

5.2 Authorization. The execution, delivery and performance of this Agreement and the subscription to the RHI Inc. Units have been duly authorized by RHI Inc. This Agreement constitutes the legal, valid and binding obligation of RHI Inc. enforceable against RHI Inc. in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) the effect of rules of law governing the availability of equitable remedies.

5.3 Consents. Except as has been obtained or will be obtained prior to Initial Closing and, if applicable, the Optional Closing no consent, approval or authorization of, or designation, declaration or filing with, any governmental authority or other third party on the part of RHI Inc. is required in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

6. Representations and Warranties of KRH.

As of the date of this Agreement and as of the Initial Closing Date, KRH hereby represents and warrants to Holdings II as follows:

6.1 Organization; Good Standing; Qualification. KRH is a limited liability company duly organized and validly existing under the laws of the State of Delaware and is in good standing under such laws. KRH has the requisite power and authority to own and operate its properties and assets, and to carry on its business as presently conducted and as proposed to be conducted. KRH is in good standing and qualified to do business in every jurisdiction where the failure to so qualify would have a material adverse effect on its ability to enter into this Agreement or to consummate the transactions contemplated hereby.

6.2 Authorization. The execution, delivery and performance of this Agreement and the subscription to the KRH Units and contribution of the Contribution Asset have been duly authorized by KRH. This Agreement constitutes the legal, valid and binding obligation of KRH enforceable against KRH. in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) the effect of rules of law governing the availability of equitable remedies.

 

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6.3 Consents. Except as has been obtained or will be obtained prior to Initial Closing, no consent, approval or authorization of, or designation, declaration or filing with, any governmental authority or other third party on the part of KRH is required in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

7. Conditions to Closing.

7.1 Conditions to the Obligations of All Parties. The obligations of the parties under this Agreement are subject to the fulfillment or waiver of the following conditions:

(a) There shall not have been issued and be in effect any order, decree or judgment of, or in, any court, tribunal of competent jurisdiction or governmental authority which makes the issue of the Total Issued Units or any of the other transactions contemplated by this Agreement illegal or invalid;

(b) RHI Inc. shall have entered into the Underwriting Agreement with respect to the Initial Public Offering and all conditions to the consummation thereof shall have been, or will contemporaneously be, satisfied, except for conditions to be satisfied under this Agreement at the Initial Closing and, if applicable, the Optional Closing; 

(c) Holdings II shall have been recapitalized in the manner described in the Prospectus; and

(d) The transactions described in the Prospectus under “Reorganization and offering transactions” shall have been completed prior to, or will be completed contemporaneously with, the execution of this Agreement.

7.2 Condition to Obligations of RHI Inc. In addition to the conditions specified in Section 7.1, the obligations of RHI Inc. under this Agreement are subject to the fulfillment or waiver of the following conditions:

(a) all covenants, agreements and conditions contained in this Agreement to be performed by Holdings II on or prior to each of the Initial Closing and, if applicable, the Optional Closing shall have been performed or complied with in all material respects;

(b) each of the representations and warranties of Holdings II set forth in this Agreement that is qualified as to a material adverse effect shall be true and correct, and each of the representations and warranties of Holdings II set forth in this Agreement that is not so qualified shall be true and correct in all material respects, in each case, as of the date of this Agreement and as of each of the Initial Closing Date and, if applicable, the Optional Closing Date as though made on and as of the Initial Closing Date and, if applicable, the Optional Closing Date (except to the extent in either case that such representations and warranties speak as of another date); and

 

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(c) Holdings II shall have delivered, or caused to be delivered, to RHI Inc. instruments of transfer and other transaction documents, in form and substance reasonably satisfactory to RHI Inc., to effect the issue of the RHI Inc. Units and the other transactions contemplated by this Agreement, including those documents identified in Section 2.4(a) and 3.4(a).

7.3 Conditions to the Obligations of Holdings II. In addition to the conditions specified in Section 7.1, the obligations of Holdings II under this Agreement are subject to the fulfillment or waiver of the following conditions:

(a) all covenants, agreements and conditions contained in this Agreement to be performed by RHI Inc. on or prior to the Initial Closing and, if applicable, the Optional Closing shall have been performed or complied with in all material respects;

(b) each of the representations and warranties of RHI Inc. set forth in this Agreement that is qualified as to a material adverse effect shall be true and correct, and each of the representations and warranties of RHI Inc. set forth in this Agreement that is not so qualified shall be true and correct in all material respects, in each case, as of the date of this Agreement and as of the Initial Closing Date and, if applicable, the Optional Closing Date as though made on and as of the Initial Closing Date and, if applicable, the Optional Closing Date (except to the extent in either case that such representations and warranties speak as of another date); and

(c) RHI Inc. shall have delivered to Holdings II instruments of transfer and other transaction documents, in form and substance reasonably satisfactory to Holdings II, to effect the issue of the RHI Inc. Units and the other transactions contemplated by this Agreement, including those documents identified in Section 2.4(b).

7.4 Conditions to the Obligations of KRH. In addition to the conditions specified in Section 7.1, the obligations of KRH under this Agreement are subject to the fulfillment or waiver of the following conditions:

(a) all covenants, agreements and conditions contained in this Agreement to be performed by Holdings II on or prior to the Initial Closing shall have been performed or complied with in all material respects;

(b) each of the representations and warranties of Holdings II set forth in this Agreement that is qualified as to a material adverse effect shall be true and correct, and each of the representations and warranties of Holdings II set forth in this Agreement that is not so qualified shall be true and correct in all material respects, in each case, as of the date of this Agreement and as of the Initial Closing Date as though made on and as of the Initial Closing Date (except to the extent in either case that such representations and warranties speak as of another date); and

(c) Holdings II shall have delivered to KRH instruments of transfer and other transaction documents, in form and substance reasonably satisfactory to KRH, to effect the issue of the KRH Units and the other transactions contemplated by this Agreement, including those documents identified in Section 3.4(a).

 

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8. Termination If the conditions set forth in Section 7 are not satisfied or waived on or before the completion of the Initial Public Offering or if the registration statement with respect to the Initial Public Offering is withdrawn for any reason prior to that date, this Agreement shall become null and void and be of no further force or effect whatsoever and neither Holdings II, KRH nor RHI Inc. shall have any further obligations hereunder or with respect hereto.

9. Covenants

9.1 Further Assurances. From time-to-time and after the date hereof, Holdings II shall deliver or cause to be delivered to RHI Inc. and KRH such further documents and instruments and shall do and cause to be done such further acts as RHI Inc. and KRH shall reasonably request to carry out more effectively the provisions and purposes of this Agreement.

9.2 No Transfer or Encumbrance . Between the date hereof and each of the Initial Closing Date and, if applicable, the Optional Closing Date and except as specifically disclosed in the Prospectus, Holdings II shall not issue, grant or sell any additional Membership Units or any rights to any Membership Units.

9.3 Conduct of the Business . Between the date hereof and each of the Initial Closing Date and, if applicable, the Optional Closing Date and except as specifically disclosed in the Prospectus, Holdings II shall (i) conduct the business of Holdings II in the ordinary course consistent with past practice, (ii) use all commercially reasonable efforts to (A) retain the services of its key employees, (B) preserve Holdings II’s relationships with material customers, suppliers, sponsors, licensees and creditors, and (C) maintain and keep Holdings II’s properties and assets in as good repair and condition as at present, ordinary wear and tear excepted, (iii) maintain its capital structure as it exists on the date of this Agreement, except as specifically contemplated hereunder.

10. Miscellaneous

10.1 Governing Law . This Agreement shall be governed by and construed in all respects in accordance with the laws of the State of Delaware without giving effect to principles of conflicts of law.

10.2 Notices. All notices, demands or other communications to be given under or by reason of this Agreement shall be in writing and shall be deemed to have been received when delivered personally, or when transmitted by overnight delivery service, addressed as follows:

If to RHI Inc.:

RHI Entertainment, Inc.

1325 Avenue of the Americas, 21st Floor

New York, NY 10019

Attention:  General Counsel

Fax:  (212) 977-3917

 

 

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with a copy to:

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Attention:  Raymond Y. Lin, Esq.

Fax:  (212) 751-4864

	 	 

If to Holdings II:

RHI Entertainment Holdings, II LLC

1325 Avenue of the Americas, 21st Floor

New York, NY 10019

Attention:  General Counsel

Fax:  (212) 977-3917

with a copy to:

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Attention:  Raymond Lin, Esq.

Fax:  (212) 751-4864

If to KRH:

KRH Investments LLC

  c/o Kelso & Company L.P.

  325 Park Avenue, 24th Floor

  New York, NY 10022

Attn: James Conners, Esq. 

Fax: (212) 223-2379

Any party to this Agreement may change its address for notices, demands and other communications under this Agreement by giving notice of such change to the other party hereto in accordance with this Section 10.2.

10.3 Survival The representations, warranties, covenants and agreements made herein shall survive any investigation made by any of the parties hereto and the closing of the transactions contemplated hereby.

10.4 Benefit of Parties; Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, legal representatives and permitted assigns. This Agreement may not be assigned by any party without the prior written consent of the other parties to this Agreement, and any assignment without such consent shall be null and void. Nothing herein contained shall confer or is intended to confer on any third party or entity that is not a party to this Agreement any rights under this Agreement.

 

 

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10.5 Amendment . This Agreement may not be amended, modified, altered or supplemented except by means of a written instrument executed on behalf of each of RHI Inc., KRH and Holdings II.

10.6 Waiver No failure on the part of either party hereto to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of either party hereto in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver thereof; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy.

10.7 Severability . If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

10.8 Entire Agreement. This Agreement sets forth the entire understanding of the parties hereto and supersedes all other agreements and understandings between the parties hereto relating to the subject matter hereof including, without limitation, the Reorganization Agreement.

10.9 Counterparts and Facsimiles. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the  same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other. The parties hereto may execute the signature pages hereof and exchange such signature pages by facsimile transmission.

	
                         
 	
                        10.10
 	
                        Interpretation of Agreement.
 

(a) As used in this Agreement, the words “include” and “including, “and variations thereof, shall not be deemed to be terms of limitation, and shall be deemed to be followed by the words “without limitation.”

(b) Unless otherwise specified, references in this Agreement to “Sections” and “Exhibits” are intended to refer to Sections of, and Exhibits to, this Agreement.

(c) The Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement.

(d) Each party hereto and its counsel cooperated in drafting and preparation of this Agreement and the documents referred to in this Agreement. Any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against the party that drafted it is of no application and is hereby expressly waived.

[Signature page to follow]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and year first above written.

 

	
                         
 	
                         
 	
                        RHI ENTERTAINMENT HOLDINGS II, LLC
 
	
                          
 	
                         
 	
      

        By:
 	
        
 
	
                         
 	
                         
 	
                         
 	
                        Name:
 Title:
 

 

	
                         
 	
                         
 	
                        RHI ENTERTAINMENT, INC.
 
	
                          
 	
                         
 	
      

        By:
 	
        
 
	
                         
 	
                         
 	
                         
 	
                        Name:
 Title:
 

 

	
                         
 	
                         
 	
                        KRH INVESTMENTS LLC
 
	
                          
 	
                         
 	
      

        By:
 	
        
 
	
                         
 	
                         
 	
                         
 	
                        Name:
 Title:
 

Signature Page – Subscription AgreementExecution Copy

Amended and Restated Employment Agreement

This Amended and Restated Employment Agreement (the “Agreement”), entered into on November 8, 2007 and effective as of the Effective Date (as defined in Section 2(b)), is made by and between Hallmark Entertainment, LLC, a Delaware limited liability company which following its merger with HEI Acquisition, LLC shall be renamed RHI Entertainment, LLC (together with any successor thereto, the “Company”), and Robert Halmi, Jr. (the “Executive”).

RECITALS

A. Prior to the Effective Date, Executive has rendered services to the Company upon and subject to the terms, conditions and other provisions of that certain Employment Agreement between Executive and the Company dated as of January 12, 2006 (the “Prior Agreement”).

B. The Company desires to continue to assure itself of the services of the Executive by engaging the Executive to perform services under the terms hereof.

C. The Executive desires to continue to provide services to the Company on the terms herein provided.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below the parties hereto agree as follows:

1. Certain Definitions

(a) “Annual Base Salary” shall have the meaning set forth in Section 3(a). 

(b) “Board” shall mean the Board of Directors of the Company. 

(c) The Company shall have “Cause” to terminate the Executive’s employment hereunder upon: (i) the Executive’s conviction of, or plea of nolo contendere to, any felony (or any other crime having a material adverse effect on the Company); (ii) the Executive’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing the Executive’s duties and responsibilities under this Agreement; or (iii) the Executive’s commission of an act of fraud, embezzlement, misappropriation, willful misconduct, or breach of fiduciary duty against the Company.

(d) “Company” shall, except as otherwise provided by Section 6(h), have the meaning set forth in the preamble hereto. 

(e) “Date of Termination” shall mean (i) if the Executive’s employment is terminated by his death, the date of his death; (ii) if the Executive’s employment is terminated due to his Disability, the date determined pursuant to Section 4(a)(ii); or (iii) if the Executive’s employment is terminated pursuant to Section 4(a)(iii)-(v) either the date indicated in the Notice

 

 

of Termination or the date specified by the Company pursuant to Section 4(b), whichever is earlier.

(f) “Disability” shall mean the Executive’s incapacity due to reasonably documented physical or mental illness that shall have prevented the Executive from performing his duties for the Company on a full-time basis for more than six consecutive months. 

(g) “Effective Date” shall have the meaning set forth in Section 2(b).

(h) “Executive” shall have the meaning set forth in the preamble hereto.

(i) The Executive shall have “Good Reason” to resign his employment during the period of two years which follows the occurrence (without the Executive’s prior written consent) of any of the following: (i) failure of the Company to make any material payment under this Agreement; (ii) the Company’s material breach of this Agreement; or (iii) relocation of the Company’s principal office from the New York metropolitan area; provided, however, that the Executive may not resign his employment for Good Reason unless: (A) the Executive has provided the Company with at least 30 days prior written notice of his intent to resign for Good Reason (which notice must be
provided within 90 days following the occurrence of the event(s) purported to constitute Good Reason); and (B) the Company has not remedied the alleged violation(s) within the 30-day period.

(j) “HEI” shall mean HEI Acquisition, LLC, a Delaware limited liability company.

(k) “LLC Agreement” shall have the meaning set forth in Section 21.

(l) “Notice of Termination” shall have the meaning set forth in Section 4(b).

(m) “Section 409A” shall have the meaning set forth in Section 20.

(n) “Term” shall have the meaning set forth in Section 2(b).

2. Employment

(a) In General. The Company shall employ the Executive and the Executive shall enter the employ of the Company, for the period set forth in Section 2(b), in the position set forth in Section 2(c), and upon the other terms and conditions herein provided. 

(b) Term of Employment. The initial term of employment under this Agreement (the “Initial Term”) shall be for the period beginning on January 12, 2006 (the “Effective Date”) and ending on the third anniversary thereof, unless earlier terminated as provided in Section 4. The employment term hereunder shall automatically be extended for successive one-year periods (“Extension Terms” and, collectively with the Initial Term, the “Term”) unless either
party gives notice of non-extension to the other no later than 30 days prior to the expiration of the then-applicable Term.

 

 

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(c) Position and Duties

(i) During the Term, the Executive: (i) shall serve as Chief Executive Officer of the Company, with responsibilities, duties and authority customary for such position, subject to direction by the Board, including, but not limited to, the authority to hire and terminate employees of the Company and its subsidiaries; provided, however, that the Executive acknowledges and agrees that he shall consult with the Board prior to hiring or terminating the employment of any Chief Financial Officer of the Company or Chief Operating Officer of the Company; (ii) shall report directly to the Board; (iii) shall devote substantially all his working time and efforts to the business and affairs of the Company and its subsidiaries; and (iv) agrees to observe and comply with the
Company’s rules and policies as adopted by the Board from time to time. 

(ii) As of the Effective Date, HEI and its affiliates shall cause the Executive to be appointed or elected to the Board. During the Term, the Board shall propose the Executive for re-election to the Board and HEI and its affiliates shall vote in favor of such re-election. In addition, the Executive shall also serve as a director of any of the Company’s subsidiaries and/or in one or more executive offices of any entities owned by the Company.

3. Compensation and Related Matters

(a) Annual Base Salary. During the Term, the Executive shall receive a base salary (the “Annual Base Salary”) at a rate of $2,000,000 per annum, which amount shall be increased by 5% per annum on a cumulative basis on each anniversary of the Effective Date. The Annual Base Salary shall be payable in accordance with the customary payroll practices of the Company. 

(b) Benefits. The Executive shall be entitled to participate in employee benefit plans, programs and arrangements of the Company now (or, to the extent determined by the Board, hereafter) in effect which are applicable to the senior officers of the Company.

(c) Vacation. During the Term, the Executive shall be entitled to not less than six weeks paid vacation in accordance with the Company’s applicable policies and procedures.

(d) Expenses. The Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by him in the performance of his duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures and consistent with past practices as applied to the Executive.

(e) Profits Interest Award. As of the Effective Date, the Executive shall be awarded profits interests and other rights with respect thereto of the Company pursuant to the terms and conditions described on Exhibit A hereto.

(f) Discretionary Bonuses. The Board, in its sole discretion, may award the Executive additional annual or other bonuses during the Term.

 

 

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4. Termination. The Executive’s employment hereunder may be terminated by the Company or the Executive, as applicable, without any breach of this Agreement only under the following circumstances:

(a) Circumstances

(i) Death. The Executive’s employment hereunder shall terminate upon his death.

(ii) Disability. If the Executive incurs a Disability, the Company may give the Executive written notice of its intention to terminate the Executive’s employment. In that event, the Executive’s employment with the Company shall terminate effective on the later of the 30th day after receipt of such notice by the Executive or the date specified in such notice, provided that within the 30 days after such receipt, the Executive shall not have returned to full-time performance of his duties.

(iii) Termination for Cause. The Company may terminate the Executive’s employment for Cause.

(iv) Termination without Cause. The Company may terminate the Executive’s employment without Cause.

(v) Resignation with or without Good Reason. The Executive may resign his employment with or without Good Reason.

(b) Notice of Termination. Any termination of the Executive’s employment by the Company or by the Executive under this Section 4 (other than termination pursuant to paragraph (a)(i)) shall be communicated by a written notice to the other party hereto indicating (i) the specific termination provision in this Agreement relied upon, (ii) except with respect to a termination pursuant to Section 4(a)(iv), setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (iii) specifying a Date of Termination which, if submitted by the Executive (or, in the case of a termination described in Section 4(a)(ii), by the Company), shall be at least 30 days following the date of such notice (a
“Notice of Termination”); provided, however, that a Notice of Termination delivered by the Company pursuant to Section 4(a)(ii) shall not be required to specify a Date of Termination, in which case the Date of Termination shall be determined pursuant to Section 4(a)(ii); and provided, further, that in the event that the Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, change the Date of Termination to any date that occurs during the period beginning on the date of Company’s receipt of such Notice of Termination and ending on the date specified in such Notice of Termination. A Notice of Termination submitted by the Company may provide for a Date of Termination on the date the Executive
receives the Notice of Termination, or any date within 180 days thereafter. The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

 

 

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      5.
 	
                        Company Obligations Upon Termination of Employment
 

(a) In General. Upon a termination of the Executive’s employment for any reason, the Executive (or the Executive’s estate) shall be entitled to receive the sum of the Executive’s Annual Base Salary through the Date of Termination not theretofore paid; any expenses owed to the Executive under Section 3(d); any accrued vacation pay owed to the Executive pursuant to Section 3(c); and any amount arising from the Executive’s participation in, or benefits under, any employee benefit plans, programs or arrangements under Section 3(b), which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements.

(b) Termination without Cause or due to Resignation with or without Good Reason. If the Executive’s employment shall be terminated by the Company without Cause or by the Executive due to his resignation with or without Good Reason, but not by reason of the Executive’s death, Disability, or termination by the Company for Cause, then, in addition to the payments described in Section 5(a), beginning with the first payroll period following the 30th day following the Date of Termination, the Company shall:

(i) Continue to pay to the Executive, in accordance with the Company’s regular payroll practice following the Date of Termination, the Executive’s Annual Base Salary until the earlier of (A) the second anniversary of the Date of Termination or (B) the date the Executive first violates any of the restrictive covenants set forth in Section 6, provided however, that the initial payment shall include Base Salary amounts for all payroll periods from the Date of Termination through the date of such initial payment; and 

(ii) Continue coverage for the Executive and any eligible dependents under all Company group health benefit plans in which the Executive and any dependents were entitled to participate immediately prior to the Date of Termination, to the extent permitted thereunder and subject to any cost-sharing or similar provisions in effect thereunder as of the Date of Termination, until earlier of (A) the second anniversary of the Date of Termination or (B) the date the Executive first violates any of the restrictive covenants set forth in Section 6. As of the date that the Executive ceases to receive coverage under any group health plan pursuant to this Section 5(b)(ii), the Executive shall be eligible to elect to receive “COBRA” continuation coverage to the extent permitted by Section 601 et
seq. of the Executive Retirement Income Security Act of 1974, as amended. If such benefits cannot be provided under the Company’s group health benefit plans, such benefits will be provided on an individual basis to the Executive such that his after-tax costs will be no greater than the costs for such benefits under the Company’s plans.

(c) Notwithstanding any provision to the contrary in this Agreement: (i) no amount shall be payable pursuant to Section 5(b) unless the Executive’s termination of employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations and unless, on or prior to the 30th day following the Date of Termination (A) the Executive executes a waiver and release of claims agreement in the Company’s customary form and (B) such waiver and release of claims agreement shall not have been revoked by the Executive prior to such 30th day; and (ii) if the Executive is deemed at the time of his separation from service to be a “specified employee” for purposes of Section

 

 

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409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the termination benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s termination benefits shall not be provided to Executive prior to the earlier of (A) the expiration of the six-month period measured from the date of the Executive’s “separation from service” with the Company (as such term is defined in the Treasury Regulations issued under Section 409A of the Code) or (B) the date of Executive’s death. Upon the earlier of such dates, all payments deferred pursuant to this Section 5(c)(ii) shall be paid in a lump sum to the Executive, and any remaining payments due under the Agreement shall be paid as otherwise provided herein;  (iii) for purposes of
Section 409A of the Code, the Executive’s right to receive installment payments pursuant to Section 5(b) shall be treated as a right to receive a series of separate and distinct payments; and (iv) the reimbursement of any expense under Sections 3(b) or 5(b) shall be made no later than December 31 of the year following the year in which the expense was incurred. The amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year. The determination of whether the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his separation from service shall made by the Company in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

(d) Termination due to Death or Disability. If the Executive’s employment with the Company is terminated by reason of his death or Disability, then the Executive or, as applicable, his estate or other legal representative, shall be entitled to receive the amounts described in Section 5(a), including any amount arising from the Executive’s participation in, or benefits under, any employee benefit plans, programs or arrangements described in Section 3(b) (including without limitation any disability or life insurance benefit plans, programs or arrangements), which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements. 

6. Restrictive Covenants.

(a) Confidentiality. The Executive agrees that he will not during the Term or thereafter divulge to anyone (other than the Company or any persons designated by the Company) any knowledge or information of any type whatsoever of a confidential nature relating to the business of the Company, including, without limitation, all types of trade secrets, business strategies, marketing and distribution plans as well as ideas, proposals, plans, scripts, treatments and formats described in Section 6(b) below. The Executive further agrees that he will not disclose, publish or make use of any such knowledge or information of a confidential nature (other than in the performance of the Executive’s duties hereunder) without the prior written consent of the Company. This provision does not apply to information
which becomes available publicly without the fault of the Executive or information which the Executive is required to disclose in legal proceedings, provided the Executive gives advance notice to the Chairman of the Board and an opportunity to for the Company to resist such disclosure.

(b) Intellectual Property. During the Term, the Executive will disclose to the Company all ideas, proposals, plans, scripts, treatments, and formats invented or developed by the Executive which relate directly or indirectly to the business of the Company or any of its

 

 

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subsidiaries or affiliates including, without limitation, any ideas, proposals and plans which may be copyrightable, trademarkable, patentable or otherwise exploitable. The Executive agrees that all such ideas, proposals, plans, scripts, treatments, and formats are and will be the property of the Company. The Executive further agrees, at the Company’s request, to do whatever is necessary or desirable to secure for the Company the rights to said ideas, proposals, plans, scripts, treatments, and formats, whether by copyright, trademark, patent or otherwise and to assign, transfer and convey the rights thereto to the Company.

(c) Name and Likeness. The Company shall have the right in perpetuity to use the Executive’s name, image, and likeness in connection with credits, advertising and publicity for product for which the Executive performs any development and/or production services, and during the Term otherwise in connection with the Company and its business.

(d) Competitive Business Restrictions. During the Term, the Executive shall not engage directly or indirectly, whether as an employee, independent contractor, consultant, partner, shareholder or otherwise, in a business or other endeavor which would or might interfere with any of his duties or obligations hereunder or which is competitive with or similar to the business of the Company or any of its subsidiaries or affiliates, including but not limited to any business related to the production, distribution or other exploitation of made for television movies or miniseries or the ownership, management, production, distribution or any other exploitation of any other audiovisual or theatrical materials. Notwithstanding the foregoing, the Executive shall have the right to own up to five percent (5%) of
the shares of any publicly traded company in the entertainment business.

(e) Non-Solicitation. The Executive further agrees that during the Term and for a period of two years thereafter, the Executive will not employ or attempt to employ or assist anyone else to employ any person who is, as of the Date of Termination, working as an officer, policymaker or in creative development (including without limitation executive employees) for or rendering services as such to the Company (e.g., this prohibition does not apply to anyone who is a short term employee engaged by the Company specifically to work on the development or production of a particular motion picture, television or other audiovisual property).

(f) Non-Compete. In consideration of: (i) the Company’s agreements herein, (ii) the acquisition for value by HEI of substantially all of the outstanding Membership Interests of the Company, which acquisition constitutes an acquisition of, among other things, the good will of the business of the Company, said good will having resulted almost entirely from the efforts of the Executive and his father and being dependent upon the continuance of such efforts, and the Executive agrees, in addition to any other obligation imposed by this Section 6, that he will not, during the period beginning on the Date of Termination and ending on the second anniversary thereof (the “Non-Compete Period”), engage directly or
indirectly, whether as an employee, independent contractor, consultant, partner, shareholder or otherwise, in a business or other endeavor which is competitive with or similar to any business of the Company (e.g. any business related to the production, distribution or other exploitation of made for television movies or miniseries or any other business then material to the Company) or any potential business which as of the Date of Termination has been submitted to the Board for consideration and is under active consideration by the Board (any such business or endeavor, a “Competitive Business”), anywhere in the world. (For the avoidance of doubt, the parties acknowledge and

 

 

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agree that any potential business of the Company that is under active consideration by the Board as of the Date of Termination but with respect to which the Board elects to suspend or postpone further consideration at any time after the Date of Termination shall not be considered a Competitive Business. In order to effectuate the forgoing, the Board shall notify the Executive of any election to suspend or postpone further consideration of any potential business in accordance with the notice provisions set forth in Section 10.)  Notwithstanding the foregoing, at any time during the Non-Compete Period the Executive may request in writing to the Board that the Board consent to the Executive’s direct or indirect engagement in, ownership of equity interest in, or management or operation of (whether as a director, officer, employee, agent, representative, security holder, consultant or
otherwise) any Competitive Business which derives less than 10% of its aggregate annual revenues from the production, distribution or other exploitation of made for television movies or miniseries, which request the Board shall consider in good faith based upon the Board’s determination of the potential impact of the Executive’s involvement in such Competitive Business on the Company and its stockholders. The Executive specifically acknowledges that he is a founder, creator and builder of the business of the Company; that he is of special, unique and extraordinary value to the Company because of, inter alia, his personal relationships with performers, producers, writers, directors, creative sources, and distributors; that if he were to leave the Company and compete with it, the Company’s value would be materially diminished; that HEI which acquired substantially all of the outstanding
Membership Interests of the Company in reliance on the good will of the business arising from the performance by the Executive of his obligations hereunder would lose the benefit of that transaction; that HEI would not have made such acquisition of substantially all of the outstanding Membership Interests of the Company in the absence of this Agreement; that as a key executive of the Company, he has access to all confidential information, trade secrets, and the like, of the Company; that he has independent means of supporting himself and his family; and that in view of the foregoing, the restrictions imposed by this Section 6(f) are reasonably necessary to protect the Company against unfair competition by the Executive and are not unduly burdensome to the Executive. In addition, notwithstanding any provision of Section 6(d) or 6(f) to the contrary, the restrictions on the Executive under Section 6(d) and/or 6(f) shall terminate upon the 60th day following the Company’s
filing for relief under Chapter 7 of the United States Bankruptcy Code (provided that such Chapter 7 case is not converted into a Chapter 11 case under the United States Bankruptcy Code within the 60 day period following the Company’s Chapter 7 filing). The parties acknowledge and agree that if the Chapter 7 case described in the preceding sentence is timely converted into a Chapter 11 case but the Company is nevertheless liquidated rather than reorganized, then the restrictions on the Executive under Section 6(d) and/or 6(f) shall terminate upon the effective date of a liquidating plan of reorganization under Chapter 11. For the avoidance of doubt, in no event shall the Company’s filing for relief under Chapter 7 of the United States Bankruptcy Code (whether or not converted into a Chapter 11 case) cause the Non-Compete Period to extend beyond the second anniversary of the Date of Termination. 

(g) Non-Disparagement. The Executive agrees not to disparage the Company, any of its products or practices, or any of its directors, officers, agents, representatives, stockholders or affiliates, either orally or in writing, at any time.

(h) Interpretation. In the event the terms of this Section 6 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too 

 

 

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great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action. As used in this Section 6, the term “Company” shall include the Company, its parent, related entities, and any of its direct or indirect subsidiaries or affiliates.

7. Injunctive Relief. The Executive recognizes and acknowledges that a breach of the covenants contained in Section 6 will cause irreparable damage to Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the Executive agrees that in the event of a breach of any of the covenants contained in Section 6, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief.

8. Assignment and Successors. The Company may assign its rights and obligations under this Agreement to any entity which is a successor to all or substantially all the assets of the Company, by merger or otherwise, and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its affiliates. The Executive may not assign his rights or obligations under this Agreement to any individual or entity. This Agreement shall be binding upon and inure to the benefit of the Company, the Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable.

9. Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the State of New York, without reference to the principles of conflicts of law of New York or any other jurisdiction, and where applicable, the laws of the United States.

10. Notices. Any notice, request, claim, demand, document and other communication hereunder to any party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by telex, telecopy, or certified or registered mail, postage prepaid, to the following address (or at any other address as any party shall have specified by notice in writing to the other party):

(a)       If to the Company:

Hallmark Entertainment, LLC 

1325 Avenue of the Americas

New York, NY 10019

Attn:  General Counsel

Fax Number: (212) 977-3917

with a copy to:

HEI Acquisition, LLC

 

 

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c/o Kelso & Company

320 Park Avenue

New York, NY 10022

Attn: James Connors, General Counsel

Fax Number:  (212) 751-3939

and a copy to:

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022-4802

Attn: Bradd L. Williamson

Fax Number:  (212) 751-4864

(b) If to the Executive, at the address set forth on the signature page hereto.

with a copy to:

Frankfurt Kurnit Klein & Selz PC

488 Madison Avenue

New York, NY  10022

Attn: Thomas D. Selz

Fax Number: (347) 438-2115

11. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

12. Entire Agreement. The terms of this Agreement (together with any other agreements and instruments contemplated hereby or referred to herein) are intended by the parties to be the final expression of their agreement with respect to the employment of the Executive by the Company and may not be contradicted by evidence of any prior or contemporaneous agreement. This Agreement shall supersede all undertakings or agreements, whether written or oral, previously entered into by the Executive and the Company or any predecessor thereto or affiliate thereof (including without limitation the Prior Agreement and that certain Employment Agreement between RHI Entertainment, Inc. and the Executive dated as of April 26, 1994, as amended) with respect to the employment of the Executive by the
Company. The parties further intend that this Agreement shall constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.

13. Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by the Executive and the Chairman of the Board (or his delegate). By an instrument in writing similarly executed, the Executive or the Chairman of the Board (or his delegate) may waive compliance by the other party or parties with any provision of this Agreement that such other party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with

 

 

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respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.

14. No Inconsistent Actions. The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.

15. Construction. This Agreement shall be deemed drafted equally by both the parties. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any party shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (a) the plural includes the singular and the singular includes the plural; (b) “or” is used both conjunctively and disjunctively; (c) “any,” “all,”
“each,” or “every” means “any and all,” and “each and every”; (d) “includes” and “including” are each “without limitation”; (e) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (f) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.

16. Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable.

17. Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.

18. Employee Acknowledgement. The Executive acknowledges that he has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on his own judgment.

19. Survival. The expiration or termination of the Term shall not impair the rights or obligations of any party hereto, which shall have accrued prior to such expiration or termination.

 

 

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20. Section 409A. The parties acknowledge and agree that, to the extent applicable, this Agreement shall be interpreted in accordance with, and the parties agree to use their best efforts to achieve timely compliance with, Section 409A of the Internal Revenue Code of 1986, as amended, and the Department of Treasury Regulations and other interpretive guidance issued thereunder (“Section 409A”), including without limitation any such regulations or other guidance that may be issued after the Effective Date. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that any compensation or benefits payable or provided under this Agreement may be subject to Section 409A, the Company may adopt such limited amendments to this Agreement
and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Company reasonably determines are necessary or appropriate to (a) exempt the compensation and benefits payable under this Agreement from Section 409A and/or preserve the intended tax treatment of the compensation and benefits provided with respect to this Agreement or (b) comply with the requirements of Section 409A. 

21. Relationship with LLC Agreement.

(a) Restricted Covenants. The provisions of Section 6 of this Agreement (including without limitation the defined terms used therein) represent the entire understanding of the parties with respect to the subject matter set forth in Section 6. For the avoidance of doubt, the parties acknowledge and agree that the provisions of Section 6 shall supersede any similar provisions contained in that certain Amended and Restated Limited Liability Company Agreement of HEI Acquisition, LLC (the “LLC Agreement”) with respect to the subject matter of Section 6.

(b) Forfeiture. For the avoidance of doubt, the parties acknowledge and agree that the forfeiture provisions governing the “Value Units” set forth in Exhibit A to this Agreement shall supersede Section 8.2 of the LLC Agreement.

[signature page follows]

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

 

	
                         
 	
                         
 	
                        COMPANY
 
	
                         
 	
                         
 	
                         
 	
                         
 
	
                          
 	
                         
 	
                        By:
 	
                        /s/ Peter von Gal
 
	
                         
 	
                         
 	
                        Its:
 	
                        Chief Operating Officer
 
	
                         
 	
                         
 	
                         
 	
                         
 
	
                         
 	
                         
 	
                        EXECUTIVE
 
	
                         
 	
                         
 	
                         
 	
                         
 
	
                         
 	
                         
 	
                        By:
 	
                        /s/ Robert Halmi, Jr.
 
	
                         
 	
                         
 	
                         
 	
                        Robert Halmi, Jr.
 
	
                         
 	
                         
 	
                         
 	
                         
 
	
                         
 	
                         
 	
                         
 	
                        Residence Address:
 
	
                         
 	
                         
 	
                         
 	
                         
 
	
                         
 	
                         
 	
                         
 	
                         
 

 

 

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Exhibit A

[Profits Interest Award]

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