Document:

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (the “Employment Agreement”) is made as of November 8, 2007, between Hallmark Entertainment LLC, a Delaware limited liability company (“Employer”), and Anthony Guido (“Employee”).

W I T N E S S E T H:

WHEREAS, Since January 1, 1995, the Employee has rendered services to the Employer upon and subject to the terms, conditions and other provisions of that certain Employment Agreement between Employee and the Employer dated as of January 1, 1995 and amended as of July 1, 1996, July 1, 1999, June 15, 2000, September 25, 2001, June 28, 2002 and June 21, 2005 (the “Prior Agreement”);

WHEREAS, Employer desires to continue to retain the services of Employee and Employee desires to continue to be employed by Employer upon the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the covenants herein contained, the parties hereto agree as follows:

1. Employment and Duties. (a) Effective November 8, 2007 (the “Effective Date”), Employer hereby employs Employee and Employee hereby agrees to serve as Executive Vice President, Legal and Business Affairs of Employer reporting to one of the following: the Chief Operating Officer, the Chief Executive Officer, the Chief Financial Officer or higher position of Employer (“Supervisor”). Employee agrees to perform such services consistent with Employee’s position as shall, from time to time, be assigned to Employee by the Supervisor. Employee shall use Employee’s best efforts to promote the interests of Employer and shall devote Employee’s full business time, energy and skill exclusively to the business and affairs of Employer during the “Term” (as “Term” is defined in Paragraph 2 below).

(b) Employee’s primary duties shall consist of such duties assigned to him by the Supervisor involving negotiation, preparation, oversight of others in the negotiation and preparation, of contracts (as requested by Employer), including but not limited to production/development contracts, option agreements, talent contracts, sales and distribution agreements, asset purchase agreements, and copyright administration. All such contracts will be subject to final approval by Employer.

(c) During the course of Employee’s employment hereunder, Employer may be incorporating subsidiary production companies for the development of individual television programs and other audiovisual properties (collectively, the “Properties” and individually, a “Property”). Employer shall have the right to loan or make available, without additional compensation to Employee, Employee’s services as an officer or director of any of Employer's subsidiaries or to perform services for any Property owned or controlled by Employer or any such subsidiary, provided, that his duties as an officer of any such subsidiary shall be consistent with his duties hereunder. 

 

 

Employee further agrees that all the terms of this Agreement shall be applicable to Employee’s services for each such subsidiary.

2. Term of Employment.

The initial term of Employee’s employment with Employer shall commence on the Effective Date and shall expire on June 30, 2008 (“Term”).

3. Compensation.

(a) Salary. As compensation for Employee’s services hereunder, Employer shall pay to Employee a salary at the minimum rate of $703.470.00 per year. Such salary shall be earned weekly, in arrears and shall be paid on the Employer’s customary payroll periods (which periods shall be not less frequently than monthly). Employer shall review such salary at least annually for possible increases.

(b) Bonus. Employee shall receive such annual bonus as the Employer determines in its sole discretion, provided such bonus shall be at least 30% of Employee’s then annual salary rate.

(c) Withholding. All payments of salary shall be made in appropriate installments to conform with the regular payroll dates for salaried personnel of Employer. Employee shall be responsible for payment of all federal, state and local income taxes, FICA, unemployment insurance and disability contributions, and such other deductions as may be required by law.  Upon a change of Employee’s employment and/or tax status such that Employer shall be responsible for such payments, Employer shall be entitled to deduct from each payment of compensation to Employee such items as federal, state and local income taxes, FICA, unemployment insurance and disability contributions, and such other deductions as may be required by law.

(d) Expenses. During the Term, Employer shall pay or reimburse Employee on an accountable basis for all reasonable and necessary out-of-pocket expenses for entertainment, travel, meals, hotel accommodations and other expenditures, including monthly parking charges in New York City incurred with daily commuting, incurred by Employee in connection with Employee’s services to Employer in accordance with Employer’s expense account policies for its senior executive personnel.

(e) Fringe Benefits. During the Term, Employee shall be entitled to receive the following fringe benefits: (i) paid vacation per year according to Employer’s policy applied to its employees generally but at least 5 weeks, (ii) group medical insurance, and (iii) any other fringe benefits that may become available to senior executives of Employer.

4. Place of Employment. During the Term, Employee shall be required to perform Employee’s duties at the principal office of Employer set forth above, or at such other locations in the New York metropolitan area only as Employer may designate, and Employee shall undertake all reasonable travel customarily required by Employer in connection with the performance of Employee’s duties hereunder.

 

 

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5. Confidentiality; Intellectual Property; Name and Likeness.

(a) Employee agrees that Employee will not during the Term or thereafter divulge to anyone (other than Employer or any persons designated by Employer) any knowledge or information of any type whatsoever of a confidential nature relating to the business of Employer or any of its subsidiaries or affiliates, 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 subparagraph (b) below. Employee further agrees that Employee will not disclose, publish or make use of any such knowledge or information of a confidential nature (other than in the performance of Employee’s duties hereunder) without the prior written consent of Employer. This provision does not apply to information which becomes available publicly without the fault of Employee or
information which Employee is required to disclose in legal proceedings, provided Employee gives advance notice to the President of Employer and an opportunity to Employer to resist such disclosure.

(b) During the Term, Employee will disclose to Employer all ideas, proposals, plans, scripts, treatments, and formats invented or developed by Employee which relate directly or indirectly to the business of Employer or any of its subsidiaries or affiliates including, without limitation, any ideas, proposals and plans which may be copyrightable, trademarkable, patentable or otherwise exploitable. Employee agrees that all such ideas, proposals, plans, scripts, treatments, and formats are and will be the property of Employer. Employee further agrees, at Employer’s request, to do whatever is necessary or desirable to secure for the Employer 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 Employer. Nothing in this Paragraph 5(b) shall apply
to an original work written and composed by Employee tentatively entitled “Nutcracker: The Musical,” or to Employee’s activities permitted under the proviso to Paragraph 7(a).

(c) Employer shall have the right in perpetuity to use Employee’s name, in connection with credits for Properties for which Employee performs any services, and during the Term and for one year thereafter otherwise in connection with the Employer and its business.

6. Employee’s Representations. Employee represents and warrants that:

(a) Employee has the right to enter into this Agreement and is not subject to any contract, commitment, agreement, arrangement or restriction of any kind which would prevent Employee from performing Employee’s duties and obligations hereunder;

(b) Employee is currently in good health and to the best of Employee’s knowledge; Employee is not subject to any undisclosed medical condition which might have a material effect on Employee’s ability to perform satisfactorily Employee’s services hereunder.

7. Non-Competition; No Raid.

(a) During the Term, Employee shall not engage directly or indirectly, whether as an employee, independent contractor, consultant, partner or otherwise, in a business or other 

 

 

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endeavor which interferes with any of his duties or obligations hereunder or which is competitive with the business of the Employer or its subsidiaries, including but not limited to the production, distribution or any other exploitation of audiovisual material (the “Other Business”), provided that nothing herein shall prohibit Employee on his own personal time, from writing original stage musicals and selling or licensing the rights to same solely for live theatrical performances and provided further that Employee may invest in up to 1% of the equity securities of any publicly traded corporation.

(b) Employee further agrees that during the Term and for a period of six months thereafter, Employee will not employ or attempt to employ or assist anyone else to employ any person who is, at the date of expiration of Employee’s employment, working as an officer, policymaker or in creative development or distribution (including without limitation executive employees) for or rendering services as such to Employer.

(c) In consideration of Employer’s agreements herein, Employee further agrees that except in the event (i) of his termination without cause as defined herein, (ii) termination upon expiration of the Term, or (iii) determination by a court of competent jurisdiction that termination of Employee’s employment constituted a substantial breach of this Agreement by Employer, in addition to the obligations imposed by Paragraphs 7(a) and (b) but subject to the provisos of Paragraph 7(a), for six months following the termination of his employment with Employer he will not engage directly or indirectly, whether as an employee, independent contractor, consultant, partner, shareholder (other than as permitted by paragraph 7(a)) or otherwise, in a business or other endeavor which is competitive with the business of the Employer or its subsidiaries including Other Business in the
U.S. Employee specifically acknowledges that he is of special, unique and extraordinary value to Employer because of, inter alia, his personal relationships with exhibitors and distributors; that if he were to leave Employer and compete with it, Employer’s business would be materially damaged; that as a key executive of Employer, he has access to all confidential information, trade secrets, and the like, of Employer; and that in view of the foregoing, the restrictions imposed by Paragraphs 7(a) and 7(b) and this Paragraph 7(c) are reasonably necessary to protect Employer against unfair competition by Employee and are not unduly burdensome to Employee. Accordingly in the event of a breach of Paragraphs 7(a) and 7(b) and this Paragraph 7(c) by Employee, Employer shall have all of the remedies available to it under paragraph 9 hereof in addition to any other remedies available to Employer at law or equity.

8. Termination.

(a) Employee’s employment may be terminated prior to the expiration of the Term on ten (10) business days’ written notice for any one of the following reasons (except (i) in which case termination shall occur on the date of death):

(i) The death of Employee;

(ii) The physical or mental disability of Employee to such an extent that it impairs the ability of Employee to effectively render services to Employer for a continuous period exceeding an aggregate of 130 business days during any twelve month period of the

 

 

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Term. For purposes of counting the aggregate of 130 business days, days properly designated by Employee as vacation days shall not be counted;

(iii) For “cause,” which for purposes of this Agreement shall be defined as:

(A) The use of drugs and/or alcohol which interfere materially with Employee’s performance of Employee’s services under this Agreement;

(B) Employee’s conviction of any act which constitutes a felony under federal, state or local laws or the law of any foreign country;

(C) Employee’s persistent failure after written notice to perform, or Employee’s persistent refusal to perform after written notice, Employee’s duties and responsibilities pursuant to this Agreement which materially adversely affects Employer’s business or financial condition; or

(D) Employee’s dishonesty in non-trivial financial dealings with or on behalf of Employer, its subsidiaries, affiliates and parent corporation or in connection with performance of his duties hereunder.

(b) In addition to termination pursuant to Paragraph 8(a), Employer shall have the right to terminate Employee’s employment at any time prior to the last three months of the Term by providing Employee with not less than ninety (90) days’ advance notice in writing. In the event of a termination pursuant to this Paragraph 8(b): (i) the Employer shall pay to the Employee on the first payroll period following the 30th day following the date of such termination of employment the same amounts as are payable to Employee pursuant to Paragraph 8(f), (i) and (ii), and except as set forth in clause (ii) of this sentence and Paragraph 16 of the Agreement, Employer shall have no further obligations to Employee hereunder; (ii) Employer shall be obligated to continue to make available to Employee Employee’s fringe benefits as set forth in Paragraph 3(e) (other than vacation) from the date of such
termination and for the remainder of the Term but in no event for less than a minimum of one year from the date of termination; (iii) if Employee shall be in violation of the provisions of Paragraph 5 or Paragraph 7, no further amounts shall be paid to Employee hereunder; and (iv) Employer will provide and pay for all reasonable expenses incurred in connection with executive outplacement services in New York City for Employee for as long as required by Employee, but not exceeding one year.

(c) (i) In the event that Employer terminates this Agreement due to any of the reasons set forth in Paragraphs 8(a)(i) and 8(a)(iii)(A)-(D) above, Employee shall be paid Employee’s salary through the later of the expiration of the ten (10) business days period referred to in Paragraph 8(a) or the end of the month in which the termination event occurs after which Employer’s obligation to pay salary to Employee shall terminate; (ii) should Employer terminate this Agreement due to Employee’s disability as defined above in Paragraph 8(a)(ii), Employee shall continue to receive three months of salary unless the term of this Agreement was scheduled (without giving effect to any renewal period under Paragraph 8(f)) to expire during said three month period, in which case Employee shall receive Employee’s salary only up to the expiration 

 

 

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date of this Agreement. After making the payments provided for in this sub-paragraph (c), Employer shall have no further obligations to Employee.

(d) Upon termination of Employee’s employment, Employee shall promptly return all of Employer’s property to Employer.

(e) Upon termination of Employee’s employment for any reason, Employee shall tender Employee’s resignation from the Board of Directors of any of Employer’s subsidiaries or affiliates on which Employee is serving.

(f) If the Employer decides that it does not desire to continue Employee’s employment beyond June 30, 2008, then Employer will give Employee at least 90 days prior written notice of such termination, subject to Section 17(a), and Employee will receive (i) on the first payroll period following the 30th day following such termination a lump sum severance payment equal to the sum of (A) eighteen (18) months salary (at the then current rate) and (B) a bonus payment equal to 30% of his severance payment, and (ii) other benefits (e.g. COBRA and outplacement, both at Employer’s expense) required under the Agreement. If the parties (for reasons other than those stated in Paragraph 8(c)) do not renew or replace the Agreement for a period after June 30, 2008 on terms substantially similar to Employee as those last afforded Employee (e.g. an agreement with no less than a two year term and with no less than a 10% increase in salary and bonus in the the first year and no less than a 5% increase during the second year), the Employee will receive: (x) on the first payroll period following the 30th day after the Term expires a lump sum severance payment equal to the sum of (A) eighteen (18) months salary (at the then current rate) and (B) a bonus payment equal to 30% of his severance payment, and (y) other benefits (e.g. COBRA and outplacement, both at Employer’s expense) required under the Agreement, provided that at the time of such non-renewal Employee is willing and able to execute such a new employment agreement and to continue providing such services; and provided, further, that as a result of such non-renewal the Employee’s employment is terminated (and such a termination constitutes an “involuntary separation from service” within the meaning of Treasury Regulation 1.409-A1(n)).

(g) Nothing in this Paragraph 8 shall be a diminution or derogation of any benefits to which Employee is entitled under COBRA. Employer shall reimburse Employee for any COBRA costs incurred by him during any period after termination of employment for which he is receiving a severance amount under Paragraph 8(f).

9. Breach; Remedies. (a) Both parties recognize that the services to be rendered under this Agreement by Employee are special, unique and extraordinary in character, and that in the event of the breach by Employee of the terms and conditions of this Agreement, Employer shall be entitled, inter alia, if it so elects, to institute and prosecute proceedings in any court of competent jurisdiction, either in law or in equity, to obtain damages for any breach of this Agreement, and to seek to enforce the specific performance thereof by Employee, and/or to seek to enjoin Employee from performing services for any other person, firm or corporation. The parties further stipulate that the law of Missouri shall apply to any dispute or action regarding this agreement and Employee agrees to submit to the jurisdiction of any court of competent
jurisdiction in Missouri in any such action and agrees to waive all objections to such jurisdiction, including (but not limited to) any objections based upon lack of personal jurisdiction or venue or forum non conveniens.

(b) Notwithstanding the foregoing, except when a party is seeking an injunction or specific performance hereunder, the parties agree to submit any dispute concerning this 

 

 

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Agreement to binding arbitration. The parties may agree to submit the matter to a single arbitrator or to several arbitrators, may require that arbitrators possess special qualifications or expertise or may agree to submit a matter to a mutually acceptable firm of experts for decision. In the event the parties shall fail to thus agree upon terms of arbitration within twenty (20) days from the first written demand for arbitration, then such disputed matter shall be settled by arbitration under the Rules of the American Arbitration Association, by three arbitrators appointed in accordance with such Rules. Such arbitration shall be held in New York City. Once a matter has been submitted to arbitration pursuant to this section, the decision of the arbitrators reached and promulgated as a result thereof shall be final and binding upon all parties. The cost of arbitration shall be shared equally by
the parties and each party shall pay the expenses of his/its attorneys, except that the arbitrators shall be entitled to award the costs of arbitration, attorneys and accountants’ fees, as well as costs, to the party that they determine to be the prevailing party in any such arbitration.

10. Assignment. This Agreement is a personal contract and, except as specifically set forth herein, the rights, interests and obligations of Employee herein may not be sold, transferred, assigned, pledged or hypothecated. The rights and obligations of Employer hereunder shall bind in their entirety the successors and assigns of Employer, including Hallmark Entertainment, Inc. and Signboard Hill Productions, Inc. if Employer elects to assign this Agreement to one of them. As used in this Agreement, the term “successor” shall include any person, firm, corporation or other business entity which at the time, whether by merger, purchase or otherwise, acquires all or substantially all of the assets or business of Employer.

11. Amendment; Captions. This Agreement contains the entire agreement between the parties. It may not be changed orally, but only by agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought. Paragraph headings are for convenience of reference only and shall not be considered a part of this Agreement. If any clause in this Agreement is found to be unenforceable, illegal or contrary to public policy, the parties agree that this Agreement shall remain in full force and effect except for such clause.

12. Prior Agreements. This Agreement supersedes and terminates all prior agreements between the parties relating to the subject matter herein addressed (including, without limitation, the Prior Agreement), and sets out the full agreement between the parties concerning its subject matter.

13. Notices. Any notices or other communications required or permitted hereunder shall be in writing and shall be deemed effective when delivered in person or, if mailed, by registered or certified mail, return receipt requested, in which case the notice shall be deemed effective on the date of deposit in the mails, postage prepaid, addressed to Employee at Employee’s then current address, and, in the case of Employer, addressed to its President with a copy to General Counsel, RHI Entertainment, LLC, 1325 Avenue of the Americas, New York, NY 10019. Either party may change the address to which notices are to be addressed by notice in writing given to the other in accordance with the terms hereof.

 

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14. Periods of Time. Whenever in this Agreement there is a period of time specified for the giving of notices or the taking of action, the period shall be calculated excluding the day on which the giver sends notice and excluding the day on which action to be taken is actually taken.

15. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, and all of which, taken together, shall constitute one instrument.

16. Indemnification. Employer agrees to indemnify and hold harmless Employee from any charges, claims, damages, costs, judgments, decrees, losses, legal fees and expenses at standard rates, penalties, demands, liabilities and causes of action (collectively, “Claims”) of any nature whatsoever made by third parties against Employee (but excepting any Claims by Employer or its affiliates against Employee), whether or not groundless, arising or resulting from or in connection with Employee’s employment (whether past, present, or future) by Employer pursuant to the Agreement and Employer shall undertake the defense of such Claims through counsel reasonably approved by Employee. This indemnity shall survive the expiration or termination of the Agreement.

17. Section 409A. 

(a) Notwithstanding any provision to the contrary in this Agreement: (i) no amount shall be payable pursuant to Paragraph 8 unless the Employee’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 Employee executes a waiver and release of claims agreement in the Employer’s customary form and (B) such waiver and release of claims agreement shall not have been revoked by the Employee prior to such 30th day; and (ii) if the Employee is deemed at the time of his separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the “Code”), to the extent delayed commencement of any portion
of the termination benefits to which Employee 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 Employee’s termination benefits shall not be provided to Employee prior to the earlier of (A) the expiration of the six-month period measured from the date of the Employee’s “separation from service” with the Employer (as such term is defined in the Treasury Regulations issued under Section 409A of the Code) or (B) the date of Employee’s death (and upon the earlier of such dates, all payments deferred pursuant to this Paragraph 17(a)(ii) shall be paid in a lump sum to the Employee, and any remaining payments due under the Agreement shall be paid as otherwise provided herein); and (iii) the reimbursement of any expense under Section 3 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 Employee 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 Employer in accordance

 

 

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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). Notwithstanding the foregoing, the parties acknowledge and agree that all severance payments that may be made pursuant to Section 8 are intended to be “short term deferrals” within the meaning of Treasury Regulation Section 1.409A-1(b)(y) that do not constitute a deferral of compensation within the meaning of Section 409A of the Code.

(b) 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 Code, 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 Employer determines that any compensation or benefits payable or provided under this Agreement may be subject to Section 409A, the Employer may adopt such limited amendments to this Agreement and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Employer 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.

IN WITNESS WHEREOF, Employer has by its appropriate officer signed this Agreement and Employee has signed this Agreement as of the day and year first above written.

 

	
                         
 	
                         
 	
                        RHI ENTERTAINMENT, LLC
 
	
                          
 	
                         
 	
                        

                        By: 
 	
      /s/ Peter von Gal

 
	
                         
 	
                         
 	
                        
 Title
 	
                        Chief Operating Officer
 

 

	
       
 	
                         
 	
                         
 	
                        EMPLOYEE:
 
	
                          
 	
                         
 	
                         
 	
                        /s/ Anthony Guido

      
 
	
                         
 	
                         
 	
                         
 

 

 

9“1st Lien Amendment”

AMENDMENT NO. 1 dated as of October 12, 2007 (this “Amendment”) to the Credit, Security, Guaranty and Pledge Agreement, dated as of January 12, 2006, as amended and restated as of April 13, 2007, among RHI Entertainment, LLC (the “Borrower”), the Guarantors referred to therein, the Lenders referred to therein and JPMorgan Chase Bank, N.A., as Issuing Bank and as Administrative Agent for the Lenders (the “Administrative Agent”) (as the same has been amended, supplemented or otherwise modified from time to time prior to this Amendment, the “Credit Agreement”).

INTRODUCTORY STATEMENT

WHEREAS, the Lenders have made available to the Borrower certain credit facilities pursuant to the terms of the Credit Agreement.

WHEREAS, the Borrower proposes that, in connection with the proposed initial public offering described below, the Parent undertake a reorganization as a result of which (a) the Parent will be renamed KRH Investments LLC, (b) KRH Investments LLC will transfer all of the Equity Interests in the Borrower to RHI Entertainment Holdings II, LLC, a newly formed Delaware limited liability company (“Holdings II”), which will become the sole direct parent of the Borrower, and (c) KRH Investments LLC and RHI Entertainment, Inc., a newly formed Delaware corporation (“RHI Inc.”), will become the sole members of Holdings II, with RHI Inc. acting as the sole managing member of Holdings II.

WHEREAS, the Borrower proposes that (a) RHI Inc. consummate an initial public offering of its common stock (for which a registration statement has been filed with the U.S. Securities and Exchange Commission), substantially all of the proceeds to RHI Inc. of which (after deducting underwriting discounts and commissions, as well as fees and expenses incurred in connection with the proposed reorganization and the initial public offering transactions, including $6.0 million to be paid to the Kelso Group in exchange for the termination of the existing Management Agreement) will be contributed to Holdings II in exchange for membership interests in Holdings II, (b) Holdings II will contribute such net proceeds to the Borrower, and (c) the Borrower will use all or a portion of such net proceeds received from Holdings II (together, at the Borrower’s option, with additional
Indebtedness to be borrowed under the Credit Agreement upon the effectiveness of this Amendment as further described below) to retire Indebtedness outstanding under the Second Lien Facility (and, to the extent that the net proceeds from the initial public offering of RHI Inc. exceed the amount required to discharge the Indebtedness outstanding under the Second Lien Facility in full, such excess net proceeds, if any, may be retained by RHI Inc., Holdings II or the Borrower, as the case may be, and used for general corporate purposes).

 

 

WHEREAS, the Borrower proposes that the Borrower, the Guarantors, the Lenders, the Issuing Bank and the Administrative Agent agree to amend the Credit Agreement to (a) make technical amendments to facilitate the reorganization and the initial public offering of the common stock of RHI Inc. and the repayment of indebtedness under the “Second Lien Agreement” (as that term is defined in the Credit Agreement), (b) provide for an increase in the aggregate Revolving Credit Commitments under the Revolving Credit Facility, at the option of the Borrower, after the effectiveness of the Registration Statement at the closing of the initial public offering contemplated thereby, in an amount not to exceed $50,000,000 and (c) amend various other provisions described herein.

WHEREAS, the Borrower, the Guarantors and JPMorgan Chase Bank, N.A., in its capacity as the Administrative Agent on behalf of the Required Lenders have agreed to amend the Credit Agreement, on the terms and subject to the conditions hereinafter set forth.

NOW THEREFORE, the parties hereto hereby agree as follows:

SECTION 1. Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meaning given them in the Credit Agreement (for the avoidance of doubt, as amended by this Amendment).

SECTION 2. Amendments to the Credit Agreement. Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof: 

(A) Section 1.1 of the Credit Agreement is hereby amended by:

(1) inserting the following new definitions in appropriate alphabetical order:

“Amendment No. 1” shall mean that certain Amendment No. 1, dated as of October 12, 2007, to this Credit Agreement.

“Amendment No. 1 Effective Date” shall mean the Effective Date (as defined in Amendment No. 1).

“Continuing Director” shall mean, as of any date of determination, each member of the Board of Directors of the Borrower who (a) was a member of such Board of Directors on October 12, 2007 or (b) was nominated for election or elected to such Board of Directors either (x) with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election or (y) by or with the consent of KRH.

“IPO Net Proceeds” shall mean the gross proceeds of the Qualified IPO (but if there is a contemporaneous secondary offering on behalf of shareholders of Public Co. shall not include any proceeds applicable to the shares being sold by them) minus the aggregate of all underwriting discounts and commissions and fees and expenses incurred in 

 

 

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connection with the Reorganization and a Qualified IPO, including without limitation $6.0 million to be paid to the Kelso Group in exchange for the termination of the Management Agreement, fees and expenses of outside accountants and counsel, SEC and NASD filing and registration fees, exchange listing fees and expenses, transfer agent fees and expenses, printing and financial printer service expenses and road show expenses.

“IPO Proceeds Shortfall” shall mean the amount (if any) by which the aggregate “Obligations” (as defined in the Second Lien Agreement) outstanding under the Second Lien Facility on the Amendment No. 1 Effective Date exceeds the IPO Net Proceeds. 

“KRH” shall mean KRH Investments LLC, a Delaware limited liability company formerly known as RHI Entertainment Holdings, LLC (and which was, prior to the Amendment No. 1 Effective Date, defined under this Credit Agreement as the “Parent”), which upon consummation of a Qualified IPO and the Reorganization will own a portion of the Equity Interests of Parent.

“Parent LLC Agreement” shall mean the limited liability operating agreement of Parent (after giving effect to Amendment No. 1), substantially in the form heretofore delivered to the Administrative Agent, with such modifications as the Administrative Agent shall approve prior to the Amendment No. 1 Effective Date, as the same may be amended, supplemented, replaced, restated or otherwise modified from time to time thereafter, provided that the Administrative Agent may not (without the consent of the Required Lenders) approve changes which would materially increase the Tax Distributions or, materially change the management structure of the Parent or the Borrower.

“Public Co.” shall mean RHI Entertainment, Inc., a Delaware corporation that is initially wholly-owned by Robert Halmi, Jr. and will become owned by Robert Halmi, Jr. and public investors upon consummation of the Qualified IPO and the Reorganization and will thereafter own a portion of the Equity Interests of Parent.

“Qualified IPO” shall mean an initial public offering of the common stock of Public Co. by Public Co.

“Refinancing IPO Proceeds” means that portion of the IPO Net Proceeds contributed to the Borrower that are used by Borrower to repay “Obligations” (as defined in the Second Lien Agreement) outstanding under the Second Lien Facility.

“Registration Statement” shall mean Public Co.’s registration statement on Form S-1 filed with the SEC on September 14, 2007 in connection with a Qualified IPO.

 

 

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“Reorganization” shall mean the transactions and arrangements concerning the corporate structure and ownership of the Borrower as described in the registration statement on Form S-1 (at the time it is declared effective) under the heading “corporate history and reorganization”, provided that the terms thereof do not differ from those set forth in the Registration Statement in a manner that is materially adverse to the Lenders.

“SEC” shall mean the U.S. Securities and Exchange Commission and any successor agency.

“Tax Distributions” shall mean, with respect to any taxable period, an amount not to exceed the product of (i) the estimated (in the case of a payment on account of quarterly estimated tax payments or extension payments) or actual (in the case of a payment on account of the filing of a tax return) taxable income of the Parent (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754 election), as determined for federal income tax purposes and (ii) the highest combined federal, state and local marginal tax rate applicable to corporations residing in New York City, New York, or, if greater and KRH’s percentage ownership of the outstanding membership interests of Parent is
at least 20%, the highest combined federal, state and local marginal tax rate applicable to individuals residing in New York City, New York, in each case taking into account the deductibility of state and local income taxes for federal income tax purposes, reduced by any tax credits of Parent and its Subsidiaries allocated to its members and in the reasonable judgment of the Borrower would be utilizable by the members or their direct or indirect owners if their allocated income of the Parent (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754 election) was their only taxable income; provided, it is understood and agreed that (a) Tax Distributions with regard to estimated and extension tax payments may be made not earlier than 15 days prior to the date that the quarterly estimated or extension tax payment is due (using the earlier of the corporate or individual due
date for such payment), (b) not earlier than 15 days prior to the date that the federal income tax return for Parent is filed, a final Tax Distribution may be made equal to the excess of (1) the product of clause (i) and clause (ii) above with respect to a taxable year over (2) the prior Tax Distributions with respect to estimated and extension tax payments made for such taxable year, (c) if the amount in clause (b) above is negative, such amount shall reduce otherwise permitted future Tax Distributions, (d) in the event that the taxable income of the Parent or its Subsidiaries (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754 election) is 

 

 

4

 

increased for a taxable period pursuant to a federal income tax audit or challenge by the Internal Revenue Service or the filing of an amended federal income tax return, the calculation of the taxable income of the Parent shall be appropriately increased and the Borrower shall be permitted to distribute a corresponding additional amount pursuant to Section 6.5(b) (reduced by any distribution made pursuant to clause (e) below for such taxable period) in the year during which a settlement occurs, a decision of a court having jurisdiction with respect to such matters becomes final or it files an amended federal income tax return, (e) in the event that the taxable income of the Parent or its Subsidiaries (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754
election, but taking into account any increases described in clause (d) above for such taxable period) is increased for a taxable period pursuant to an state or local income tax audit or challenge by the state or local taxing authority, the calculation of the taxable income of the Parent shall be appropriately increased and the Borrower shall be permitted to distribute a corresponding additional amount pursuant to Section 6.5(b) in the year during which a settlement occurs or a decision of a court having jurisdiction with respect to such matters becomes final provided that the tax rate used shall be the applicable state or local income tax rate (reduced by the federal tax benefit using the higher of the maximum federal corporate or individual rate) and (f) except as permitted in clauses (d) and (e) above, no Tax Distribution with respect to a taxable year may be made more than 30 days after the date on which the federal income tax return for such year is filed.

(2) replacing the definition of the term “Parent” with the following replacement definition:

“Parent” shall mean RHI Entertainment Holdings II, LLC, a Delaware limited liability company.

(3) amending clauses (iv) and (vii) of the term “Borrowing Base” in their entirety to read as follows:

(iv) 90% of Eligible Receivables from Crown Media for which Borrowing Base credit is not provided under clause (iii) above and for which the conditions precedent to payment are met after the Original Closing Date (subject to the proviso appearing in clause (vii)), plus

.  .  .

(vii) 50% of Eligible Receivables from Crown Media for which Borrowing Base credit is not provided under clause (iii) above and for which the conditions precedent to payment have been met by the Original Closing Date, provided that the Borrowing Base credit at any time pursuant to 

 

 

5

 

clause (iv) and this clause (vii) shall at no time in the aggregate exceed $40,000,000, plus

(4) amending the definition of the term “Consolidated Net Worth” by inserting the following proviso immediately prior to the end thereof:

“provided, that Borrower may (other than for purposes of determining the “base” Consolidated Net Worth as of December 31, 2006) add back to Consolidated Net Worth the amount of any deductions therefrom relating to the fees, premiums, penalties, costs and expenses arising out of refinancing or repayment of the Facilities and the Second Lien Facility (including any OID charges) from time to time (including the retirement of all or a portion of the “Obligations” (as defined in the Second Lien Agreement) in connection with a Qualified IPO) but shall not include the fee to be paid to the Kelso Group in exchange for terminating the Management Agreement”;

(5) replacing the definition of the term “Change in Control” with the following replacement definition:

“Change in Control” shall mean (i) the first day on which a majority of the members of the Board of Directors of the Borrower are not Continuing Directors, (ii) any “person” (as that term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder as in effect from time to time) other than KRH or the Kelso Group or any of their respective beneficial owners shall own, directly or indirectly, beneficially or of record, Equity Interests representing more than 50% of the voting Equity Interests of Public Co. or such person shall own, directly or indirectly, beneficially or of record, Equity Interests representing more than 50% of the voting Equity Interests of the Parent (measured by voting power rather than
number of shares or membership interests), (iii) the Parent shall cease to have both beneficial ownership and control of 100% of the voting Equity Interests of the Borrower or (iv) the Borrower shall cease to have both beneficial ownership and control of 100% of the voting Equity Interests of each of RHI Entertainment Distribution, LLC, RHI Entertainment Productions, LLC and RHI International Distribution, Inc., except as a result of a disposition permitted under Section 6.6 hereof.

(6) amending the definition of the term “Kelso Group” by deleting the proviso appearing therein; 

(B) Section 5.1 of the Credit Agreement is hereby amended by deleting the word “and” appearing after Section 5.1(j), inserting the word “; and” immediately prior to the period appearing at the end of Section 5.1(k) and inserting the following new Section 5.1(l). 

 

 

6

 

“(l) Promptly upon receipt thereof, any and all correspondence delivered or received by (whether originating from or to Public Co., Parent or KRH) any Credit Party to the extent that such correspondence relates to any calculation of Tax Distributions.”

(C) Section 6.5 of the Credit Agreement is hereby amended by deleting clause (b) appearing therein and inserting in lieu thereof the following replacement clause (b):

“(b) so long as no Event of Default or Default has occurred and is continuing or would be created thereby, distributions by the Borrower to the Parent (i) in an amount necessary to pay all Tax Distributions (provided that the Borrower shall have certified to the Administrative Agent that all correspondence and other documents described in Section 5.1(l) have been delivered to the Administrative Agent and shall have provided a certificate of either (i) its independent auditor or (ii) its Chief Financial Officer and its Tax Director, confirming the computation thereof), (ii) for any purpose, the proceeds of the issuance of any additional Equity Interests, including Specified Equity Contributions that are used to
cure an Event of Default pursuant to the Coverage Ratio as provided in Section 6.21 hereof, but excluding all other Specified Equity Contributions and (iii) for any purpose, provided that (w) the Leverage Ratio is less than 6.5:1.0 (calculated on a Pro Forma Basis after giving effect to the contemplated dividend), (x) the Liquidity Ratio of the Borrower and the Guarantors (calculated on a Pro Forma Basis after giving effect to the contemplated dividend) is at least 1.25:1 for the ensuing four fiscal quarters, (y) the aggregate amount of all dividends paid under this clause (iii) does not exceed $50,000,000 and (z) no dividends are paid under this clause (iii) until the first anniversary of the Closing Date; provided, however, that such dividends may
not be used for (A) payments of principal of Indebtedness under the Second Lien Agreement, (B) payments of principal of Indebtedness which is subordinate or otherwise junior to the Obligations or (C) payments of principal of Indebtedness incurred in accordance with the provisions of Section 6.1(i) hereof;”

(D) Section 6.5 of the Credit Agreement is hereby amended by deleting clause (d) appearing therein and inserting in lieu thereof the following replacement clause (d):

 “(d) so long as no Event of Default has occurred and is continuing, the payment of dividends in respect of, or the redemption, acquisition, re-acquisition or retirement of, Equity Interests of the Borrower with cash proceeds received from the issuance by the Borrower of Equity Interests after the Closing Date, other than (i) the Specified Equity Contributions, (ii) the Refinancing IPO Proceeds and (iii) to the extent such proceeds have been otherwise utilized consistent with an exception from a negative covenant contained in this Article 6 (i.e., as 

 

 

7

 

an Investment permitted under Section 6.4(p) or to fund a Permitted Business Acquisition);”

(E) Section 6.5 of the Credit Agreement is hereby amended by deleting the word “and” appearing at the end of paragraph (k) thereof; deleting the period which appears at the end of paragraph (l) thereof and inserting in its place a semi-colon and the word “and”; and by adding the following additional paragraph (m):

“(m) So long as no Event of Default has occurred and is continuing, distributions by the Borrower to the Parent in an amount necessary to pay corporate overhead expenses and legal, accounting and other professional fees and expenses of Parent, Public Co. and KRH, without duplication in each case incurred in connection with any activity not prohibited by this Credit Agreement, not to exceed $2,000,000 in the aggregate per fiscal year.”

(F) Section 6.10 of the Credit Agreement is hereby amended by (i) deleting clause (ix) appearing therein and inserting in lieu thereof the words “(ix) [intentionally omitted]”, (ii) deleting the words “the Kelso Group” appearing in clause (xi) thereof and inserting in lieu thereof the words “the Parent” and (iii) deleting the word “and” appearing before clause (xi) appearing therein and inserting the following new clause (xii):

“; and (xii) involves the consummation of the Qualified IPO and/or the Reorganization or the performance of any obligations under the Reorganization Agreement (as described in the Registration Statement), the Parent LLC Agreement, the Director Designation Agreement (as described in the Registration Statement), the Registration Rights Agreement (as described in the Registration Statement) or the KRH Value Units (as described in the Registration Statement)”.

(G) Section 6.23 of the Credit Agreement is hereby deleted in its entirety and replaced with the following replacement Section 6.23:

“SECTION 6.23 Activities of Parent and Public Co. 

(a) Permit the Parent to (i) own assets other than the membership interests of the Borrower, (ii) engage in any business activities other than such ownership or (iii) incur any lien upon its ownership of membership interests of the Borrower. 

(b) Permit Public Co. to incur any lien upon its ownership of the membership interests of the Parent.

(c) Permit the Parent or Public Co. to engage in any business activities which are currently engaged in by the Borrower or any of its subsidiaries of which may be engaged in by the Borrower and its Subsidiaries pursuant to section 6.11 hereof.”

 

 

8

 

(H) Section 12.1 of the Credit Agreement is hereby amended by deleting clause (b)(viii) and inserting in lieu thereof the following replacement clause (b)(viii):

“(viii) to, in connection with the closing of the Qualified IPO after the effectiveness of the Registration Statement, as amended, (A) accept Revolving Credit Commitments from existing Lenders or additional Lenders in an incremental amount not to exceed the lowest of (1) $50,000,000, (2) the IPO Proceeds Shortfall or (3) such lesser amount requested by Borrower in accordance with the provisions of Amendment No. 1, and (B) make such other technical modifications to the Credit Agreement, including without limitation appropriate modifications to Schedule 1 to the Credit Agreement, as are necessary to accommodate the incremental Revolving Credit Commitments described in the foregoing clause (A).”

(I) Solely to the extent that New Commitments (as defined below) are implemented in accordance with the provisions of this Amendment, the Introductory Statement to the Credit Agreement is hereby amended by inserting the following new paragraph after the third paragraph thereof:

 “Pursuant to Amendment No. 1 (as defined herein), among other things, the Revolving Credit Commitment has been increased from $275,000,000 to [appropriate amount to be inserted] in connection with the consummation of the Qualified IPO, which resulted in a commensurate increase in the aggregate amount of the Facilities from $450,000,000 to [appropriate amount to be inserted].”

(J) Schedule 3.7(a) to the Credit Agreement is hereby replaced in its entirety with Schedule 3.7(a) attached to this Amendment.

(K) Schedule 3.18 to the Credit Agreement is hereby replaced in its entirety with Schedule 3.18 attached to this Amendment.

SECTION 3. Consents. Upon the satisfaction of the conditions to the “Effective Date” set forth in Section 4 of this Amendment No. 1, the Lenders hereby consent, by act of the Required Lenders, as follows: 

(A) the Required Lenders consent to the transfer of all of the outstanding Equity Interests of the Borrower from KRH to Parent, notwithstanding anything to the contrary contained in the Credit Agreement; and

(B) to the extent that Section 2.10(a) of the Second Lien Credit Agreement and/or the provisions Second Lien Intercreditor Agreement require the prior written consent of the Required Lenders under the Credit Agreement for the Borrower to make a voluntary prepayment of Indebtedness outstanding under the Second Lien Facility prior to the “First Priority Obligations Payment Date” (as defined in the Second Lien Intercreditor Agreement), including without limitation the payment of all premiums and 

 

 

9

 

penalties and fees and expenses incurred in connection therewith, the Required Lenders hereby provide such consent with respect to the Refinancing IPO Proceeds together with Loans under the Revolving Credit Facility after giving effect to the incremental New Commitments, if any.

SECTION 4. Conditions to Effectiveness. The effectiveness of this Amendment is subject to the satisfaction of each of the following conditions prior to February 14, 2008 (the date on which such conditions have been satisfied referred to herein as the “Effective Date”): 

(A) the receipt by the Administrative Agent of counterparts of this Amendment which, when taken together, bear the signatures of the Borrower, each New Lender (as defined below), the Guarantors (and any entity required to join the Credit Agreement as a Guarantor pursuant to Section 5.21 of the Credit Agreement) and the Administrative Agent and the Collateral Agent;

(B) the receipt by the Administrative Agent of written consents from the Required Lenders to the Administrative Agent’s execution of this Amendment;

(C) the simultaneous consummation of the Qualified IPO in a manner which generates net proceeds which, together with Loans under the Revolving Credit Facility after giving effect to the New Commitments, is sufficient to retire all or a significant portion of the Indebtedness outstanding under the Second Lien Facility;

(D) to the extent the Second Lien Facility is not repaid in full on the Effective Date, the execution, delivery and effectiveness of (i) (a) an amendment to the Second Lien Agreement, substantially in the form of Exhibit A hereto and (b) an amendment to the Second Lien Intercreditor Agreement, substantially in the form of Exhibit B hereto or (ii) in lieu of the amendments in the forms of Exhibits A and B, the execution of documentation refinancing the portion of the Second Lien Facility not being repaid and which satisfies the provisions of the definition “Second Lien Agreement” and of the Intercreditor Agreement (after giving effect to the changes that would have been made therein had Exhibits A and B been executed).

(E) to the extent the Second Lien Facility is repaid in full on the Effective Date, the simultaneous retirement of all obligations thereunder (including all Indebtedness thereunder and any prepayment premiums arising thereunder) and termination of the Second Lien Facility, as evidenced by such documentation as the Administrative Agent may reasonably request;

(F) the Administrative Agent shall have received evidence satisfactory to it, including a joinder to Article 10 of the Credit Agreement as a Pledgor and a customary UCC-1 financing statement, that RHI Entertainment Holdings II, LLC shall have delivered a perfected first priority security interest in its Equity Interests in Borrower to Administrative Agent (on behalf of itself, the Issuing Bank and the Lenders);

(G) The Administrative Agent shall have received no later than December 31, 2007, from the Borrower for the account of the Lenders an amendment fee equal to 0.125% of the total Commitments held by each existing Lender that executes a 

 

 

10

 

consent authorizing this Amendment on or prior to 5:00 p.m. (New York City time) on October 12, 2007, such fees to be distributed pro rata according to such consenting Lenders’ existing Commitments;

(H) The Borrower shall have provided the Administrative Agent with no less than three (3) Business Days advance written notice of the intended consummation of the Qualified IPO, as well as the amount of the New Commitments (as defined below) which the Borrower desires to implement upon the Amendment No. 1 Effective Date; it being understood that (i) the Borrower is not required to implement any New Commitments, (ii) the Borrower may not implement New Commitments in an amount in excess of the lesser of (x) $50,000,000 and (y) the IPO Proceeds Shortfall and (iii) the implementation of any incremental Revolving Credit Facility pursuant to this Amendment is in all cases subject to the achievement of incremental New Commitments from New Lenders (as defined below) in an amount at least equal to the incremental New Commitments to be implemented;

(I) the Administrative Agent shall have received, and satisfied with (in its reasonable discretion) the provisions of an executed copy, certified by Borrower to be true and correct, of the Parent LLC Agreement;

(J) after giving effect to this Amendment, no Event of Default or Default shall have occurred and be continuing; and 

(K) the representations and warranties contained in Section 7 hereof being true and correct.

The fee provided for in paragraph (G) above shall be earned on October 12, 2007 and shall be payable no later than December 31, 2007 whether or not the Effective Date has theretofore occurred. In addition, notwithstanding the preceding provisions of this Section 4, the amendments contemplated by Sections 2(A)(3) and 2(A)(4) above shall become effective immediately upon the satisfaction of the condition contained in Sections 4(A), (B), (J) and (K) whether or not the Effective Date ever occurs.

SECTION 5. Effect of Amendment. Upon the Effective Date, each financial institution (whether or not an existing Lender, a “New Lender”) holding a portion of the new Revolving Credit Commitments, if any (“New Commitments”), being extended upon the Effective Date shall (a) by their execution of this Amendment or such other instrument as may be satisfactory to the Administrative Agent accept an assignment from the existing Revolving Lenders of an interest in each then outstanding Revolving Credit Loan and Letter of Credit such that, after giving effect thereto, all exposure under the Revolving Credit Facility is held (directly
or indirectly) ratably by all Lenders holding Revolving Credit Commitments in proportion to their new Revolving Credit Commitments, (b) in connection with the assignments described in clause (a), each New Lender shall for all purposes be a Lender hereunder with respect to its New Commitments and its “Initial Date” for purposes of such New Commitments shall be the Effective Date and shall pay to the Administrative Agent for the account of the existing Lenders holding Revolving Credit Commitments such New Lender’s pro rata portion of the aggregate amount of the Revolving Credit Loans and unreimbursed drafts, if any, under any 

 

 

11

 

outstanding Letters of Credit and (c) any assignments described in clause (a) shall constitute Assignments and Acceptances for all purposes and amendments to the Schedule of Commitments and (ii) the Borrower shall pay any breakage costs associated with the assignments referenced in clause (i). For the avoidance of doubt, the New Commitments shall not become effective unless an IPO Proceeds Shortfall exists, and the amount of the New Commitments shall not exceed the lowest of (x) $50,000,000, (y) the amount of the IPO Proceeds Shortfall and (z) or (3) such lesser amount requested by Borrower in accordance with the provisions of Amendment No. 1.

SECTION 6. Waiver. Upon the Effective Date, the Required Lenders shall be deemed to have waived any Default or Event of Default which may have arisen as a result of (i) the contribution by KRH of its ownership of the Equity Interests of the Borrower to Holdings II and (ii) any action which may be construed as a violation of the provisions of Section 6.23 or Section 7(l) of the Credit Agreement (as such Sections existed prior to the Effective Date) as a result of the contribution described in the preceding clause (a) and from any other action taken by KRH in contemplation of the consummation of the Qualified IPO and the Reorganization.

SECTION 7. Representations and Warranties. Each Credit Party represents and warrants that before and after giving effect to this Amendment, the representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof as if such representations and warranties had been made on and as of the date hereof (except to the extent that any such representations and warranties specifically relate to an earlier date).

SECTION 8. Further Assurances. At any time and from time to time, upon the Administrative Agent’s request and at the sole expense of the Credit Parties, each Credit Party will promptly and duly execute and deliver any and all further instruments and documents and take such further action as the Administrative Agent reasonably deems necessary to effect the purposes of this Amendment.

SECTION 9. Fundamental Documents. This Amendment shall constitute a Fundamental Document.

SECTION 10. Full Force and Effect. Except as expressly set forth herein, this Amendment does not constitute a waiver or a modification of any provision of the Credit Agreement or a waiver of any Event of Default under the Credit Agreement. The Credit Agreement and the other Fundamental Documents shall continue in full force and effect in accordance with the provisions thereof on the date hereof and are hereby ratified and affirmed. As used in the Credit Agreement, the terms “Agreement”, “this Agreement”, “herein”,  “hereafter”, “hereto”, “hereof”, and words of similar import, shall, unless the context otherwise requires, mean the Credit Agreement as amended by this Amendment.

SECTION 11. References. This Amendment shall be limited precisely as written and shall not be deemed (a) to be a consent granted pursuant to, or a waiver or modification of, any other term or condition of the Credit Agreement or any of the instruments or agreements referred to therein or (b) to prejudice any right or rights which the Administrative Agent or the Lenders may now have or have in the future under or in 

 

 

12

 

connection with the Credit Agreement or any of the instruments or agreements referred to therein. Whenever the Credit Agreement is referred to in the Credit Agreement or any of the instruments, agreements or other documents or papers executed or delivered in connection therewith, such reference shall be deemed to mean the Credit Agreement as modified by this Amendment.

SECTION 12. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

SECTION 13. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile transmission or electronic photocopy (i.e., “.pdf”) shall be effective as delivery of a manually executed counterpart hereof.

SECTION 14. Expenses. The Borrower agrees to pay all out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including, but not limited to, the reasonable fees and disbursements of counsel for the Administrative Agent.

SECTION 15. Headings. The headings of this Amendment are for the purposes of reference only and shall not affect the construction of or be taken into consideration in interpreting this Amendment.

[Signature Pages Follow]

 

 

13

 

IN WITNESS WHEREOF, the parties hereby have caused this Amendment to be duly executed as of the date first written above.

 

	
                         
 	
                         
 	
                        BORROWER:
 
	
                         
 	
                         
 	
                        
 RHI ENTERTAINMENT, LLC
 
	
                          
 	
                         
 	

                        By
 	
                          
 
	
                         
 	
                         
 	
                        Name:
 
	
                         
 	
                         
 	
                        Title:
 

 

	
                         
 	
                         
 	
                        GUARANTORS:
 
	
                         
 	
                         
 	
                        
 RHI ENTERTAINMENT DISTRIBUTION, LLC
 
	
                          
 	
                         
 	

                        By
 	
                          
 
	
                         
 	
                         
 	
                        Name:
 
	
                         
 	
                         
 	
                        Title:
 

 

	
                         
 	
                         
 	
                        
 RHI ENTERTAINMENT PRODUCTIONS, LLC
 
	
                         
 	
                         
 	

                        By
 	
                          
 
	
                         
 	
                         
 	
                        Name:
 
	
                         
 	
                         
 	
                        Title:
 

 

	
                         
 	
                         
 	
                        RHI INTERNATIONAL DISTRIBUTION, INC.
 
	
                         
 	
                         
 	

                        By
 	
                          
 
	
                         
 	
                         
 	
                        Name:
 
	
                         
 	
                         
 	
                        Title:
 

[Signature Page to Amendment No. 1 to the Amended and Restated Credit Agreement]

 

 

 

	
                         
 	
                         
 	
                        JPMORGAN CHASE BANK, N.A.,
 
	
                         
 	
                         
 	
                        as Administrative Agent and Issuing Bank on behalf of each of the Lenders
 
	
                         
 	
                         
 	

                        By
 	
                          
 
	
                         
 	
                         
 	
                        Name:
 
	
                         
 	
                         
 	
                        Title:
 

[Signature Page to Amendment No. 1 to the Amended and Restated Credit Agreement]

 

 

SCHEDULE 3.7(a)

TO FIRST LIEN FACILITIES

Ownership of the Capital Stock of the Credit Parties

 

	
      Name of Credit
 Party
 	
       
 	
      Ownership of
 Equity Interests
 	
       
 	
      Jurisdiction of
 Organization
 	
       
 	
      Equity Interests
 Outstanding;
 Authorized
 	
       
 	
      Certificated/
 Uncertificated
 Equity Interests
 	
       
 
	
                        RHI Entertainment, LLC
 	
                         
 	
                        RHI Entertainment Holdings II, LLC
 	
                         
 	
                        Delaware
 	
                         
 	
                        100% of the
 membership
 interests; N/A
 	
                         
 	
                        Uncertificated
 	
                         
 
	RHI Entertainment Productions, LLC
	 
	RHI Entertainment, LLC
	 
	Delaware
	 
	100% of the

           membership

           interests; N/A
	 
	Uncertificated
	 

	RHI Entertainment Distribution, LLC
	 
	RHI Entertainment, LLC
	 
	Delaware
	 
	100% of the

           membership

           interests; N/A
	 
	Uncertificated
	 

	RHI International Distribution, Inc.
	 
	RHI Entertainment, LLC
	 
	Delaware
	 
	100 shares

           No par value;

           200 Shares

           No par value
	 
	Certificated
	 

 

 

SCHEDULE 3.18

TO FIRST LIEN FACILITIES

Filing Offices for UCC-1 Financing Statements, Tax ID and Organizational ID

 

	
      Name of Party
 	
       
 	
      Applicable Filing Offices
 	
       
 	
      Employer/Taxpayer
 Identification Number
 	
       
 	
      Organizational Number
 	
       
 
	
                        RHI Entertainment, LLC
 	
                         
 	
                        Delaware Secretary of State
 	
                         
 	
                        43-1687887
 	
                         
 	
                        3052694
 	
                         
 
	RHI Entertainment Productions, LLC
	 
	Delaware Secretary of State
	 
	43-1856014
	 
	2418188
	 

	RHI Entertainment Distribution, LLC
	 
	Delaware Secretary of State
	 
	43-1856017
	 
	3052691
	 

	RHI International Distribution, Inc.
	 
	Delaware Secretary of State
	 
	20-5047653
	 
	4812491
	 

	RHI Entertainment Holdings II, LLC
	 
	Delaware Secretary of State
	 
	65-1320004
	 
	4418690
	 

 

 

 

EXHIBIT A

TO AMENDMENT NO. 1

TO FIRST LIEN FACILITIES

Form of Amendment to Second Lien Agreement

“2nd Lien Amendment”

AMENDMENT NO. 1 dated as of October 12, 2007 (this “Amendment”) to the Credit, Security, Guaranty and Pledge Agreement, dated as of January 12, 2006, as amended and restated as of April 13, 2007, among RHI Entertainment, LLC (the “Borrower”), the Guarantors referred to therein, the Lenders referred to therein and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders (the “Administrative Agent”) (as the same has been amended, supplemented or otherwise modified from time to time prior to this Amendment, the
“Credit Agreement”).

INTRODUCTORY STATEMENT

WHEREAS, the Lenders have made available to the Borrower a $260,000,000 second lien credit facility pursuant to the terms of the Credit Agreement.

WHEREAS, the Borrower proposes that, in connection with the proposed initial public offering described below, the Parent undertake a reorganization as a result of which (a) the Parent will be renamed KRH Investments LLC, (b) KRH Investments LLC will transfer all of the Equity Interests in the Borrower to RHI Entertainment Holdings II, LLC, a newly formed Delaware limited liability company (“Holdings II”), which will become the sole direct parent of the Borrower, and (c) KRH Investments LLC and RHI Entertainment, Inc., a newly formed Delaware corporation (“RHI Inc.”), will become the sole members of Holdings II, with RHI Inc. acting as the sole managing member of Holdings II.

WHEREAS, the Borrower proposes that (a) RHI Inc. consummate an initial public offering of its common stock (for which a registration statement has been filed with the U.S. Securities and Exchange Commission), substantially all of the proceeds to RHI Inc. of which (after deducting underwriting discounts and commissions, as well as fees and expenses incurred in connection with the proposed reorganization and the initial public offering transactions, including $6.0 million to be paid to the Kelso Group in exchange for the termination of the existing Management Agreement) will be contributed to Holdings II in exchange for membership interests in Holdings II, (b) Holdings II will contribute such net proceeds to the Borrower, and (c) the Borrower will use all or a portion of such net proceeds received from Holdings II (together, at the Borrower’s option, with additional
Indebtedness to be borrowed under the First Lien Facilities upon the effectiveness of this 

 

 

EXHIBIT B TO FIRST LIEN AMENDMENT NO. 1

 

Amendment as further described below) to retire Indebtedness outstanding under the Facility.

WHEREAS, in connection with the foregoing the Borrower is requesting that the Lenders consent to an amendment to the First Lien Agreement to increase the amount of the revolving credit facility thereunder from $275,000,000 to an amount not in excess of $325,000,000 and an increase in the Cap Amount from $450,000,000 plus $45,000,000 for workout/debtor possession financing to $500,000,000 plus $50,000,000 for workout/debtor possession financing.

WHEREAS the Lenders are being asked to consent to the foregoing and an amendment to Intercreditor Agreement in the eventually that the sum of the net proceeds of the initial public offering and the foregoing increase in the First Lien Facilities is not sufficient to repay the Obligations in full;

WHEREAS, the Borrower proposes that the Borrower, the Guarantors, the Lenders, and the Administrative Agent agree to amend the Credit Agreement to (a) make technical amendments to facilitate the reorganization and the initial public offering of the common stock of RHI Inc. and the repayment of the Obligations, (b) consent to an increase in the aggregate revolving credit commitments under the First Lien Agreement, at the option of the Borrower, after the effectiveness of the Registration Statement at the closing of the initial public offering contemplated thereby, in an amount not to exceed $50,000,000 and a parallel increase in the Cap Amount and (c) amend various other provisions described herein.

WHEREAS, the Borrower, the Guarantors and JPMorgan Chase Bank, N.A., in its capacity as the Administrative Agent on behalf of the Lenders have agreed to amend the Credit Agreement, on the terms and subject to the conditions hereinafter set forth.

NOW THEREFORE, the parties hereto hereby agree as follows:

SECTION 1. Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meaning given them in the Credit Agreement (for the avoidance of doubt, as amended by this Amendment).

SECTION 2. Amendments to the Credit Agreement. Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof: 

(A) Section 1.1 of the Credit Agreement is hereby amended by:

(1) inserting the following new definitions in appropriate alphabetical order:

“Amendment No. 1” shall mean that certain Amendment No. 1, dated as of October 12, 2007, to this Credit Agreement.

“Amendment No. 1 Effective Date” shall mean the Effective Date (as defined in Amendment No. 1).

 

 

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“Continuing Director” shall mean, as of any date of determination, each member of the Board of Directors of the Borrower who (a) was a member of such Board of Directors on October 12, 2007 or (b) was nominated for election or elected to such Board of Directors either (x) with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election or (y) by or with the consent of KRH.

“IPO Net Proceeds” shall mean the gross proceeds of the Qualified IPO (but if there is a contemporaneous secondary offering on behalf of shareholders of Public Co. shall not include any proceeds applicable to the shares being sold by them) minus the aggregate of all underwriting discounts and commissions and fees and expenses incurred in connection with the Reorganization and a Qualified IPO, including without limitation $6.0 million to be paid to the Kelso Group in exchange for the termination of the Management Agreement, fees and expenses of outside accountants and counsel, SEC and NASD filing and registration fees, exchange listing fees and expenses, transfer agent fees and expenses, printing and financial printer service expenses and road show expenses.

“IPO Proceeds Shortfall” shall mean the amount (if any) by which the aggregate Obligations on the Amendment No. 1 Effective Date exceeds the IPO Net Proceeds. 

“KRH” shall mean KRH Investments LLC, a Delaware limited liability company formerly known as RHI Entertainment Holdings, LLC (and which was, prior to the Amendment No. 1 Effective Date, defined under this Credit Agreement as the “Parent”), which upon consummation of a Qualified IPO and the Reorganization will own a portion of the Equity Interests of Parent.

“Parent LLC Agreement” shall mean the limited liability operating agreement of Parent (after giving effect to Amendment No. 1), substantially in the form heretofore delivered to the Administrative Agent, with such modifications as the Administrative Agent shall approve prior to the Amendment No. 1 Effective Date, as the same may be amended, supplemented, replaced, restated or otherwise modified from time to time thereafter, provided that the Administrative Agent may not (without the consent of the Required Lenders) approve changes which would materially increase the Tax Distributions or, materially change the management structure of the Parent or the Borrower.

“Public Co.” shall mean RHI Entertainment, Inc., a Delaware corporation that is initially wholly-owned by Robert Halmi, Jr. and will become owned by Robert Halmi, Jr. and public investors upon consummation of the Qualified IPO and the Reorganization and will 

 

 

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thereafter own a portion of the Equity Interests of Parent.

“Qualified IPO” shall mean an initial public offering of the common stock of Public Co. by Public Co.

“Refinancing IPO Proceeds” means that portion of the IPO Net Proceeds contributed to the Borrower that are used by Borrower to repay the Obligations.

“Registration Statement” shall mean Public Co.’s registration statement on Form S-1 filed with the SEC on September 14, 2007 in connection with a Qualified IPO.

“Reorganization” shall mean the transactions and arrangements concerning the corporate structure and ownership of the Borrower as described in the registration statement on Form S-1 (at the time it is declared effective) under the heading “corporate history and reorganization”, provided that the terms thereof do not differ from those set forth in the Registration Statement in a manner that is materially adverse to the Lenders.

“SEC” shall mean the U.S. Securities and Exchange Commission and any successor agency.

“Tax Distributions” shall mean, with respect to any taxable period, an amount not to exceed the product of (i) the estimated (in the case of a payment on account of quarterly estimated tax payments or extension payments) or actual (in the case of a payment on account of the filing of a tax return) taxable income of the Parent (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754 election), as determined for federal income tax purposes and (ii) the highest combined federal, state and local marginal tax rate applicable to corporations residing in New York City, New York, or, if greater and KRH’s percentage ownership of the outstanding membership interests of Parent is
at least 20%, the highest combined federal, state and local marginal tax rate applicable to individuals residing in New York City, New York, in each case taking into account the deductibility of state and local income taxes for federal income tax purposes, reduced by any tax credits of Parent and its Subsidiaries allocated to its members and in the reasonable judgment of the Borrower would be utilizable by the members or their direct or indirect owners if their allocated income of the Parent (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754 election) was their only taxable income; provided, it is understood and agreed that (a) Tax Distributions with regard to estimated and extension tax payments may be made not earlier than 15 

 

 

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days prior to the date that the quarterly estimated or extension tax payment is due (using the earlier of the corporate or individual due date for such payment), (b) not earlier than 15 days prior to the date that the federal income tax return for Parent is filed, a final Tax Distribution may be made equal to the excess of (1) the product of clause (i) and clause (ii) above with respect to a taxable year over (2) the prior Tax Distributions with respect to estimated and extension tax payments made for such taxable year, (c) if the amount in clause (b) above is negative, such amount shall reduce otherwise permitted future Tax Distributions, (d) in the event that the taxable income of the Parent or its Subsidiaries (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code
Section 754 election) is increased for a taxable period pursuant to a federal income tax audit or challenge by the Internal Revenue Service or the filing of an amended federal income tax return, the calculation of the taxable income of the Parent shall be appropriately increased and the Borrower shall be permitted to distribute a corresponding additional amount pursuant to Section 6.5(b) (reduced by any distribution made pursuant to clause (e) below for such taxable period) in the year during which a settlement occurs, a decision of a court having jurisdiction with respect to such matters becomes final or it files an amended federal income tax return, (e) in the event that the taxable income of the Parent or its Subsidiaries (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754 election, but taking into account any increases described in clause (d) above for such
taxable period) is increased for a taxable period pursuant to an state or local income tax audit or challenge by the state or local taxing authority, the calculation of the taxable income of the Parent shall be appropriately increased and the Borrower shall be permitted to distribute a corresponding additional amount pursuant to Section 6.5(b) in the year during which a settlement occurs or a decision of a court having jurisdiction with respect to such matters becomes final provided that the tax rate used shall be the applicable state or local income tax rate (reduced by the federal tax benefit using the higher of the maximum federal corporate or individual rate) and (f) except as permitted in clauses (d) and (e) above, no Tax Distribution with respect to a taxable year may be made more than 30 days after the date on which the federal income tax return for such year is filed.

(2) replacing the definition of “Applicable Margin” with the following replacement definition:

“Applicable Margin” shall mean (i) in the case of Alternate Base Rate Loans, 5.5% per annum and (ii) in the case of LIBOR Loans 6.5% per 

 

 

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annum.

(3) replacing the definition of “Cap Amount” with the following replacement definition:

“Cap Amount” means as of any date of determination $500 million plus an amount not in excess of $50 million in the aggregate advanced in the context of a workout and/or a debtor-in-possession financing, less an amount equal to the sum, without duplication, of (i) the aggregate amount of all principal payments and prepayments of the term loans under the First Lien Agreement as in effect on April 13, 2007 (other than any principal payments made on account or as a result of a Permitted First Lien Refinancing), (ii) the amount of all Proceeds of Common Collateral
received after April 13, 2007 by the First Lien Agent, which pursuant to the provisions of Section 2.10(f) of the First Lien Agreement as in effect on April 13, 2007, are to be applied to pay First Priority Obligations and which are not so applied and (iii) the aggregate amount of all permanent reductions of the Revolving Credit Commitments (as such term (or any term comparable to such term) is defined in the First Lien Agreement) other than a reduction on account of or as a result of a Permitted First Lien Refinancing.

(4) replacing the definition of the term “Parent” with the following replacement definition: 

“Parent” shall mean RHI Entertainment Holdings II, LLC, a Delaware limited liability company.

(5) replacing the definition of the term “Change in Control” with the following replacement definition:

“Change in Control” shall mean (i) the first day on which a majority of the members of the Board of Directors of the Borrower are not Continuing Directors, (ii) any “person” (as that term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder as in effect from time to time) other than KRH or the Kelso Group or any of their respective beneficial owners shall own, directly or indirectly, beneficially or of record, Equity Interests representing more than 50% of the voting Equity Interests of Public Co. or such person shall own, directly or indirectly, beneficially or of record, Equity Interests representing more than 50% of the voting Equity Interests of the Parent (measured by voting power rather than
number of shares or membership interests), (iii) the Parent shall cease to have both beneficial ownership and control of 100% of the voting Equity Interests of the Borrower or (iv) the Borrower shall cease to have both beneficial ownership and control of 100% of the voting Equity Interests of each of RHI Entertainment Distribution, LLC, RHI Entertainment Productions, LLC and RHI 

 

 

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International Distribution, Inc., except as a result of a disposition permitted under Section 6.6 hereof.

(6) amending the definition of the term “Kelso Group” by deleting the proviso appearing therein; 

(B) Section 5.1 of the Credit Agreement is hereby amended by deleting the word “and” appearing after Section 5.1(j), inserting the word “; and” immediately prior to the period appearing at the end of Section 5.1(k) and inserting the following new Section 5.1(l). 

“(l) Promptly upon receipt thereof, any and all correspondence delivered or received by (whether originating from or to Public Co., Parent or KRH) any Credit Party to the extent that such correspondence relates to any calculation of Tax Distributions.”

(C) Section 6.5 of the Credit Agreement is hereby amended by deleting clause (b) appearing therein and inserting in lieu thereof the following replacement clause (b):

“(b) so long as no Event of Default or Default has occurred and is continuing or would be created thereby, distributions by the Borrower to the Parent (i) in an amount necessary to pay all Tax Distributions (provided that the Borrower shall have certified to the Administrative Agent that all correspondence and other documents described in Section 5.1(l) have been delivered to the Administrative Agent and shall have provided a certificate of either (i) its independent auditor or (ii) its Chief Financial Officer and its Tax Director, confirming the computation thereof), (ii) for any purpose, the proceeds of the issuance of any additional Equity Interests, including Specified Equity Contributions that are used to
cure an Event of Default pursuant to the Coverage Ratio as provided in Section 6.21 hereof, but excluding all other Specified Equity Contributions and (iii) for any purpose, provided that (w) the Leverage Ratio is less than 6.5:1.0 (calculated on a Pro Forma Basis after giving effect to the contemplated dividend), (x) the Liquidity Ratio of the Borrower and the Guarantors (calculated on a Pro Forma Basis after giving effect to the contemplated dividend) is at least 1.25:1 for the ensuing four fiscal quarters, (y) the aggregate amount of all dividends paid under this clause (iii) does not exceed $50,000,000 and (z) no dividends are paid under this clause (iii) until the first anniversary of the Closing Date; provided, however, that such dividends may
not be used for (A) payments of principal of Indebtedness under the Second Lien Agreement, (B) payments of principal of Indebtedness which is subordinate or otherwise junior to the Obligations or (C) payments of principal of Indebtedness incurred in accordance with the provisions of Section 6.1(i) hereof;”

(D) Section 6.5 of the Credit Agreement is hereby amended by 

 

 

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deleting clause (c) appearing therein and inserting in lieu thereof the following replacement clause (c):

“(c) so long as no Event of Default has occurred and is continuing, the payment of dividends in respect of, or the redemption, acquisition, re-acquisition or retirement of, Equity Interests of the Borrower with cash proceeds received from the issuance by the Borrower of Equity Interests after the Closing Date, other than (i) the Specified Equity Contributions, (ii) the Refinancing IPO Proceeds and (iii) to the extent such proceeds have been otherwise utilized consistent with an exception from a negative covenant contained in this Article 6 (i.e., as an Investment permitted under Section 6.4(p) or to fund a Permitted Business Acquisition);”

(E) Section 6.5 of the Credit Agreement is hereby amended by deleting the word “and” appearing at the end of paragraph (j) thereof; deleting the period which appears at the end of paragraph (k) thereof and inserting in its place a semi-colon and the word “and”; and by adding the following additional paragraph (l):

“(l) So long as no Event of Default has occurred and is continuing, distributions by the Borrower to the Parent in an amount necessary to pay corporate overhead expenses and legal, accounting and other professional fees and expenses of Parent, Public Co. and KRH, without duplication in each case incurred in connection with any activity not prohibited by this Credit Agreement, not to exceed $2,000,000 in the aggregate per fiscal year.”

(F) Section 6.10 of the Credit Agreement is hereby amended by (i) deleting clause (ix) appearing therein and inserting in lieu thereof the words “(ix) [intentionally omitted]”, (ii) deleting the words “the Kelso Group” appearing in clause (xi) thereof and inserting in lieu thereof the words “the Parent” and (iii) deleting the word “and” appearing before clause (xi) appearing therein and inserting the following new clause (xii):

“; and (xii) involves the consummation of the Qualified IPO and/or the Reorganization or the performance of any obligations under the Reorganization Agreement (as described in the Registration Statement), the Parent LLC Agreement, the Director Designation Agreement (as described in the Registration Statement), the Registration Rights Agreement (as described in the Registration Statement) or the KRH Value Units (as described in the Registration Statement)”.

(G) Section 6.23 of the Credit Agreement is hereby deleted in its entirety and replaced with the following replacement Section 6.23:

“SECTION 6.23 Activities of Parent and Public Co. 

 

 

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(a) Permit the Parent to (i) own assets other than the membership interests of the Borrower, (ii) engage in any business activities other than such ownership or (iii) incur any lien upon its ownership of membership interests of the Borrower. 

(b) Permit Public Co. to incur any lien upon its ownership of the membership interests of the Parent.

(c) Permit the Parent or Public Co. to engage in any business activities which are currently engaged in by the Borrower or any of its subsidiaries of which may be engaged in by the Borrower and its Subsidiaries pursuant to section 6.11 hereof.”

(H) Schedule 3.7(a) to the Credit Agreement is hereby replaced in its entirety with Schedule 3.7(a) attached to this Amendment.

(I) Schedule 3.18 to the Credit Agreement is hereby replaced in its entirety with Schedule 3.18 attached to this Amendment.

SECTION 3. Consents. Upon the satisfaction of the conditions to the “Effective Date” set forth in Section 4 of this Amendment No. 1, the Lenders hereby consent, as follows: 

(A) the transfer of all of the outstanding Equity Interests of the Borrower from KRH to Parent, notwithstanding anything to the contrary contained in the Credit Agreement;

(B) to the extent that Section 2.10(a) of the Credit Agreement and/or the provisions Intercreditor Agreement require the prior written consent of the Lenders under the Credit Agreement for the Borrower to make a voluntary prepayment of Indebtedness outstanding under the Facility prior to the “First Priority Obligations Payment Date” (as defined in the Intercreditor Agreement), including without limitation the payment of all premiums and penalties and fees and expenses incurred in connection therewith, the Lenders hereby provide such consent with respect to the Refinancing IPO Proceeds together with Loans under the First Lien Facilities after giving effect to the incremental New Commitments, if any; and

(C) to the Administrative Agent executing an amendment to the Intercreditor Agreement in the form of Exhibit C hereto.

SECTION 4. Conditions to Effectiveness. The effectiveness of this Amendment is subject to the satisfaction of each of the following conditions prior to February 14, 2008 (the date on which such conditions have been satisfied referred to herein as the “Effective Date”): 

(A) the receipt by the Administrative Agent of counterparts of this Amendment which, when taken together, bear the signatures of the Borrower, the Guarantors (and any entity required to join the Credit Agreement as a Guarantor pursuant

 

 

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to Section 5.21 of the Credit Agreement) and the Administrative Agent;

(B) the receipt by the Administrative Agent of written consents from the Lenders to the Administrative Agent’s execution of this Amendment;

(C) the simultaneous consummation of the Qualified IPO in a manner which generates net proceeds which, together with loans under the First Lien Agreement, is sufficient to retire all or a significant portion of the Indebtedness outstanding under the Facility;

(D) the execution, delivery and effectiveness of (i) an amendment to the First Lien Agreement substantially in the form of Exhibit A hereto and (ii) an amendment to the Intercreditor Agreement, substantially in the form of Exhibit B hereto;

(E) the Administrative Agent shall have received evidence satisfactory to it, including a joinder to Article 10 of the Credit Agreement as a Pledgor and a customary UCC-1 financing statement, that RHI Entertainment Holdings II, LLC shall have delivered a perfected security interest in its Equity Interests in Borrower to Administrative Agent (on behalf of itself and the Lenders);

(F) the Administrative Agent shall have received from the Borrower for the account of the Lenders an amendment fee equal to 0.125% of the outstanding Loans under the Facility held by each existing Lender that executes a consent authorizing this Amendment on or prior to 5:00 p.m. (New York City time) on October 12, 2007, such fees to be distributed pro rata according to such consenting Lenders’ existing Loans;

(G) the Borrower shall have provided the Administrative Agent with no less than three (3) Business Days advance written notice of the intended consummation of the Qualified IPO and the portion of the Facility to be repaid;

(H) the Administrative Agent shall have received, and be satisfied with (in its reasonable discretion) the provisions of an executed copy, certified by Borrower to be true and correct, of the Parent LLC Agreement;

(I) after giving effect to this Amendment, no Event of Default or Default shall have occurred and be continuing; and 

(J) the representations and warranties contained in Section 6 hereof being true and correct.

SECTION 5. Waiver. Upon the Effective Date, the Lenders shall be deemed to have waived any Default or Event of Default which may have arisen as a result of (i) the contribution by KRH of its ownership of the Equity Interests of the Borrower to Holdings II and (ii) any action which may be construed as a violation of the provisions of Section 6.23 or Section 7(l) of the Credit Agreement (as such Sections existed prior to the Effective Date) as a result of the contribution described in the preceding clause (a) and 

 

 

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from any other action taken by KRH in contemplation of the consummation of the Qualified IPO and the Reorganization.

SECTION 6. Representations and Warranties. Each Credit Party represents and warrants that before and after giving effect to this Amendment, the representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof as if such representations and warranties had been made on and as of the date hereof (except to the extent that any such representations and warranties specifically relate to an earlier date).

SECTION 7. Further Assurances. At any time and from time to time, upon the Administrative Agent’s request and at the sole expense of the Credit Parties, each Credit Party will promptly and duly execute and deliver any and all further instruments and documents and take such further action as the Administrative Agent reasonably deems necessary to effect the purposes of this Amendment.

SECTION 8. Fundamental Documents. This Amendment shall constitute a Fundamental Document.

SECTION 9. Full Force and Effect. Except as expressly set forth herein, this Amendment does not constitute a waiver or a modification of any provision of the Credit Agreement or a waiver of any Event of Default under the Credit Agreement. The Credit Agreement and the other Fundamental Documents shall continue in full force and effect in accordance with the provisions thereof on the date hereof and are hereby ratified and affirmed. As used in the Credit Agreement, the terms “Agreement”, “this Agreement”, “herein”, “hereafter”, “hereto”, “hereof”, and words of similar import, shall, unless the context otherwise requires, mean the Credit Agreement as amended by this Amendment.

SECTION 10. References. This Amendment shall be limited precisely as written and shall not be deemed (a) to be a consent granted pursuant to, or a waiver or modification of, any other term or condition of the Credit Agreement or any of the instruments or agreements referred to therein or (b) to prejudice any right or rights which the Administrative Agent or the Lenders may now have or have in the future under or in connection with the Credit Agreement or any of the instruments or agreements referred to therein. Whenever the Credit Agreement is referred to in the Credit Agreement or any of the instruments, agreements or other documents or papers executed or delivered in connection therewith, such reference shall be deemed to mean the Credit Agreement as modified by this Amendment.

SECTION 11. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

SECTION 12. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile transmission or electronic photocopy (i.e.,

 

 

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“.pdf”) shall be effective as delivery of a manually executed counterpart hereof.

SECTION 13. Expenses. The Borrower agrees to pay all out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including, but not limited to, the reasonable fees and disbursements of counsel for the Administrative Agent.

SECTION 14. Headings. The headings of this Amendment are for the purposes of reference only and shall not affect the construction of or be taken into consideration in interpreting this Amendment.

[Signature Pages and Exhibits Omitted from this Exhibit A]

 

 

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EXHIBIT B

TO AMENDMENT NO. 1

TO FIRST LIEN FACILITIES

Form of Amendment to Second Lien Intercreditor Agreement

FIRST AMENDMENT TO AMENDED AND RESTATED INTERCREDITOR AGREEMENT

This First Amendment (this “Amendment”) is entered into as of __________, 2007 to that certain Amended and Restated Intercreditor Agreement, dated as of April 13, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”) among JPMorgan Chase Bank, N.A. in its capacity as administrative agent and collateral agent (the “First Priority Representative”) for the First Priority Secured Parties referred to below and JPMorgan Chase Bank, N.A. in its capacity as administrative and collateral agent (the “Second Priority
Representative”) for the Second Priority Secured Parties referred to below, RHI Entertainment, LLC (the “Borrower”), RHI Entertainment Holdings, LLC (the “Initial Parent”), the Guarantors listed on the signature page (the “Guarantors”) and RHI Entertainment Holdings II, LLC (the “Replacement Parent”).

INTRODUCTORY STATEMENT

WHEREAS, the Borrower, the Guarantors, the First Priority Representative and certain financial institutions (with their respective successors and assigns, the “First Priority Lenders”) are parties to an Amended and Restated Credit, Security, Guaranty and Pledge Agreement dated as of January 12, 2006, as amended and restated as of April 13, 2007 (as amended, supplemented, restated or otherwise modified from time to time, the “First Priority Agreement”), pursuant to which the First Priority Lenders have agreed to make loans and extend other financial accommodations to the Borrower (the “First Priority Loans”); 

WHEREAS, the Credit Parties, the Second Priority Representative and certain financial institutions and other entities (with their respective successors and assigns, the “Second Priority Lenders”) are parties to an Amended and Restated Credit, Security, Guaranty and Pledge Agreement dated as of January 12, 2006, as amended and restated as of April 13, 2007 (as the same may be amended, supplemented, restated or otherwise modified from time to time, (the “Second Priority Agreement”), pursuant to which the Second Priority Lenders made term loans to the Borrower in an aggregate principal amount of $260,000,000 (the “Second Priority Loans”); 

WHEREAS, the Borrower, the Initial Parent and the Replacement Parent have entered into a reorganization more fully described in each of Amendment No. 1 dated as of October 12,

 

 

2007 to the First Priority Agreement and Amendment No. 1 dated as of October 12, 2007, to the Second Priority Agreement pursuant to which, among other things, the Replacement Parent will be substituted for the Initial Parent for all purposes of the Intercreditor Agreement.

WHEREAS, the requisite First Priority Lenders and the requisite Second Priority Lenders have approved the execution of this Amendment by the First Priority Representative and the Second Priority Representative to evidence their respective agreements to increase the “Cap Amount” set forth in the Intercreditor Agreement as more fully set forth in this Amendment. 

NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained and other good and valuable consideration, the existence and sufficiency of which is expressly recognized by all of the parties hereto, the parties agree as follows:

SECTION 1. Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meaning given them in the Intercreditor Agreement.

SECTION 2. Amendments to the Intercreditor Agreement. Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof:

A. Section 1.1 of the Intercreditor Agreement is hereby amended by deleting the definition of “Cap Amount” and substituting the following replacement definition:

“Cap Amount” means as of any date of determination $500 million plus an amount not in excess of $50 million in the aggregate advanced in the context of a workout and/or a debtor-in-possession financing, less an amount equal to the sum, without duplication, of (i) the aggregate amount of all principal payments and prepayments of the Term Loans under the Existing First Priority Agreement as in effect on April 13, 2007 (other than any principal payments made on account or as a result of a Permitted First Lien Refinancing), (ii) the amount of all Proceeds of Common Collateral received after April 13, 2007 by the First Priority
Representative, which pursuant to the provisions of Section 2.10(f) of the Existing First Priority Agreement as in effect on April 13, 2007, are to be applied to pay First Priority Obligations and which are not so applied and (iii) the aggregate amount of all permanent reductions of the Revolving Credit Commitments (as such term (or any term comparable to such term) is defined in the Existing First Priority Agreement) other than a reduction on account of or as a result of a Permitted First Lien Refinancing.

B. Section 1.1 of the Intercreditor Agreement is hereby amended by deleting the definition of “Parent” and substituting the following replacement definition:

“Parent” shall mean RHI Entertainment Holdings II, LLC, a Delaware limited liability company.

 

 

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SECTION 3. Representations and Warranties. 

A. By its signature hereto, each of the Credit Parties represents and warrants that the Credit Parties have not made any repayments of the Term Loans, or otherwise taken any action whatsoever which would have caused a reduction in the “Cap Amount” pursuant to the definition of the Cap Amount. Each of the Credit Parties hereby further represents that, upon the effectiveness of this Amendment, the “Cap Amount” (before giving effect to any increase for workout/debtor-in-possession financing) will therefore be equal to the full $500,000,000, without any deduction therefrom. The Second Priority Representative (a) agrees to be bound by the foregoing representation and warranty, and (b) acknowledges that, as of the effectiveness of this Amendment, the amount of the Cap Amount before giving effect to any increase for workout/debtor-in-possession financing) is $500,000,000. 

B. The First Priority Representative by its signature hereto represents and warrants that the execution of this Amendment has been approved by the requisite First Priority Lenders.

C. The Second Priority Representative by its signature hereto represents and warrants that the execution of this Amendment has been approved by the requisite Second Priority Lenders.

SECTION 4. Conditions to Effectiveness. This Amendment shall become effective upon receipt by each of the First Priority Representative and the Second Priority Representative of executed signature pages hereto from each of the First Priority Representative, the Second Priority Representative and each of the Credit Parties. 

SECTION 5. Further Assurances. At any time and from time to time, upon the request of the First Priority Representative and the Second Priority Representative and at the sole expense of the Credit Parties, each Credit Party will promptly and duly execute and deliver any and all further instruments and documents and take such further action as the First Priority Representative and the Second Priority Representative reasonably deem necessary to effect the purposes of this Amendment.

SECTION 6. Full Force and Effect. Except as expressly set forth herein, this Amendment does not constitute a waiver or a modification of any provision of the Intercreditor Agreement or a waiver of any Event of Default under the Intercreditor Agreement. As used in the Intercreditor Agreement, the terms “Agreement”, “this Agreement”, “herein”, “hereafter”, “hereto”, “hereof”, and words of similar import, shall, unless the context otherwise requires, mean the Intercreditor Agreement as amended by this Amendment.

SECTION 7. References. This Amendment shall be limited precisely as written and shall not be deemed (a) to be a consent granted pursuant to, or a waiver or modification of, any other term or condition of the Intercreditor Agreement or any of the instruments or agreements referred to therein or (b) to prejudice any right or rights which the First Priority Representative and the Second Priority Representative or the Lenders may now have or have in the future under or in connection with the Intercreditor Agreement or any of the instruments or

 

 

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agreements referred to therein. Whenever the Intercreditor Agreement is referred to in the Intercreditor Agreement or any of the instruments, agreements or other documents or papers executed or delivered in connection therewith, such reference shall be deemed to mean the Intercreditor Agreement as modified by this Amendment. 

SECTION 8. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.

SECTION 9. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile transmission or electronic photocopy (i.e., “.pdf”) shall be effective as delivery of a manually executed counterpart hereof.

SECTION 10. Expenses. The Borrower agrees to pay all out-of-pocket expenses incurred by the First Priority Representative and the Second Priority Representative in connection with the preparation, execution and delivery of this Amendment, including, but not limited to, the reasonable fees and disbursements of counsel for the First and Second Priority Representatives.

SECTION 11. Headings. The headings of this Amendment are for the purposes of reference only and shall not affect the construction of or be taken into consideration in interpreting this Amendment.

[Signature Pages and Exhibits Omitted from this Exhibit B]

 

 

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“2nd Lien Amendment”

AMENDMENT NO. 1 dated as of October 12, 2007 (this “Amendment”) to the Credit, Security, Guaranty and Pledge Agreement, dated as of January 12, 2006, as amended and restated as of April 13, 2007, among RHI Entertainment, LLC (the “Borrower”), the Guarantors referred to therein, the Lenders referred to therein and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders (the “Administrative Agent”) (as the same has been amended, supplemented or otherwise modified from time to time prior to this Amendment, the
“Credit Agreement”).

INTRODUCTORY STATEMENT

WHEREAS, the Lenders have made available to the Borrower a $260,000,000 second lien credit facility pursuant to the terms of the Credit Agreement.

WHEREAS, the Borrower proposes that, in connection with the proposed initial public offering described below, the Parent undertake a reorganization as a result of which (a) the Parent will be renamed KRH Investments LLC, (b) KRH Investments LLC will transfer all of the Equity Interests in the Borrower to RHI Entertainment Holdings II, LLC, a newly formed Delaware limited liability company (“Holdings II”), which will become the sole direct parent of the Borrower, and (c) KRH Investments LLC and RHI Entertainment, Inc., a newly formed Delaware corporation (“RHI Inc.”), will become the sole members of Holdings II, with RHI Inc. acting as the sole managing member of Holdings II.

WHEREAS, the Borrower proposes that (a) RHI Inc. consummate an initial public offering of its common stock (for which a registration statement has been filed with the U.S. Securities and Exchange Commission), substantially all of the proceeds to RHI Inc. of which (after deducting underwriting discounts and commissions, as well as fees and expenses incurred in connection with the proposed reorganization and the initial public offering transactions, including $6.0 million to be paid to the Kelso Group in exchange for the termination of the existing Management Agreement) will be contributed to Holdings II in exchange for membership interests in Holdings II, (b) Holdings II will contribute such net proceeds to the Borrower, and (c) the Borrower will use all or a portion of such net proceeds received from Holdings II (together, at the Borrower’s option, with additional
Indebtedness to be borrowed under the First Lien Facilities upon the effectiveness of this Amendment as further described below) to retire Indebtedness outstanding under the Facility.

WHEREAS, in connection with the foregoing the Borrower is requesting that the Lenders consent to an amendment to the First Lien Agreement to increase the amount of the revolving credit facility thereunder from $275,000,000 to an amount not in excess of $325,000,000 and an increase in the Cap Amount from $450,000,000 plus $45,000,000 for 

 

 

workout/debtor possession financing to $500,000,000 plus $50,000,000 for workout/debtor possession financing.

WHEREAS the Lenders are being asked to consent to the foregoing and an amendment to Intercreditor Agreement in the eventually that the sum of the net proceeds of the initial public offering and the foregoing increase in the First Lien Facilities is not sufficient to repay the Obligations in full;

WHEREAS, the Borrower proposes that the Borrower, the Guarantors, the Lenders, and the Administrative Agent agree to amend the Credit Agreement to (a) make technical amendments to facilitate the reorganization and the initial public offering of the common stock of RHI Inc. and the repayment of the Obligations, (b) consent to an increase in the aggregate revolving credit commitments under the First Lien Agreement, at the option of the Borrower, after the effectiveness of the Registration Statement at the closing of the initial public offering contemplated thereby, in an amount not to exceed $50,000,000 and a parallel increase in the Cap Amount and (c) amend various other provisions described herein.

WHEREAS, the Borrower, the Guarantors and JPMorgan Chase Bank, N.A., in its capacity as the Administrative Agent on behalf of the Lenders have agreed to amend the Credit Agreement, on the terms and subject to the conditions hereinafter set forth.

NOW THEREFORE, the parties hereto hereby agree as follows:

SECTION 1. Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meaning given them in the Credit Agreement (for the avoidance of doubt, as amended by this Amendment).

SECTION 2. Amendments to the Credit Agreement. Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof: 

(A) Section 1.1 of the Credit Agreement is hereby amended by:

(1) inserting the following new definitions in appropriate alphabetical order:

“Amendment No. 1” shall mean that certain Amendment No. 1, dated as of October 12, 2007, to this Credit Agreement.

“Amendment No. 1 Effective Date” shall mean the Effective Date (as defined in Amendment No. 1).

“Continuing Director” shall mean, as of any date of determination, each member of the Board of Directors of the Borrower who (a) was a member of such Board of Directors on October 12, 2007 or (b) was nominated for election or elected to such Board of Directors either (x) with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election or (y) by or with the consent of KRH.

 

 

2

 

“IPO Net Proceeds” shall mean the gross proceeds of the Qualified IPO (but if there is a contemporaneous secondary offering on behalf of shareholders of Public Co. shall not include any proceeds applicable to the shares being sold by them) minus the aggregate of all underwriting discounts and commissions and fees and expenses incurred in connection with the Reorganization and a Qualified IPO, including without limitation $6.0 million to be paid to the Kelso Group in exchange for the termination of the Management Agreement, fees and expenses of outside accountants and counsel, SEC and NASD filing and registration fees, exchange listing fees and expenses, transfer agent fees and expenses, printing and financial printer service expenses and road show expenses.

“IPO Proceeds Shortfall” shall mean the amount (if any) by which the aggregate Obligations on the Amendment No. 1 Effective Date exceeds the IPO Net Proceeds. 

“KRH” shall mean KRH Investments LLC, a Delaware limited liability company formerly known as RHI Entertainment Holdings, LLC (and which was, prior to the Amendment No. 1 Effective Date, defined under this Credit Agreement as the “Parent”), which upon consummation of a Qualified IPO and the Reorganization will own a portion of the Equity Interests of Parent.

“Parent LLC Agreement” shall mean the limited liability operating agreement of Parent (after giving effect to Amendment No. 1), substantially in the form heretofore delivered to the Administrative Agent, with such modifications as the Administrative Agent shall approve prior to the Amendment No. 1 Effective Date, as the same may be amended, supplemented, replaced, restated or otherwise modified from time to time thereafter, provided that the Administrative Agent may not (without the consent of the Required Lenders) approve changes which would materially increase the Tax Distributions or, materially change the management structure of the Parent or the Borrower.

“Public Co.” shall mean RHI Entertainment, Inc., a Delaware corporation that is initially wholly-owned by Robert Halmi, Jr. and will become owned by Robert Halmi, Jr. and public investors upon consummation of the Qualified IPO and the Reorganization and will thereafter own a portion of the Equity Interests of Parent.

“Qualified IPO” shall mean an initial public offering of the common stock of Public Co. by Public Co.

“Refinancing IPO Proceeds” means that portion of the IPO Net Proceeds contributed to the Borrower that are used by Borrower to repay the Obligations.

 

 

3

 

“Registration Statement” shall mean Public Co.’s registration statement on Form S-1 filed with the SEC on September 14, 2007 in connection with a Qualified IPO.

“Reorganization” shall mean the transactions and arrangements concerning the corporate structure and ownership of the Borrower as described in the registration statement on Form S-1 (at the time it is declared effective) under the heading “corporate history and reorganization”, provided that the terms thereof do not differ from those set forth in the Registration Statement in a manner that is materially adverse to the Lenders.

“SEC” shall mean the U.S. Securities and Exchange Commission and any successor agency.

“Tax Distributions” shall mean, with respect to any taxable period, an amount not to exceed the product of (i) the estimated (in the case of a payment on account of quarterly estimated tax payments or extension payments) or actual (in the case of a payment on account of the filing of a tax return) taxable income of the Parent (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754 election), as determined for federal income tax purposes and (ii) the highest combined federal, state and local marginal tax rate applicable to corporations residing in New York City, New York, or, if greater and KRH’s percentage ownership of the outstanding membership interests of Parent is
at least 20%, the highest combined federal, state and local marginal tax rate applicable to individuals residing in New York City, New York, in each case taking into account the deductibility of state and local income taxes for federal income tax purposes, reduced by any tax credits of Parent and its Subsidiaries allocated to its members and in the reasonable judgment of the Borrower would be utilizable by the members or their direct or indirect owners if their allocated income of the Parent (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754 election) was their only taxable income; provided, it is understood and agreed that (a) Tax Distributions with regard to estimated and extension tax payments may be made not earlier than 15 days prior to the date that the quarterly estimated or extension tax payment is due (using the earlier of the corporate or individual due
date for such payment), (b) not earlier than 15 days prior to the date that the federal income tax return for Parent is filed, a final Tax Distribution may be made equal to the excess of (1) the product of clause (i) and clause (ii) above with respect to a taxable year over (2) the prior Tax Distributions with respect to estimated and extension tax payments made for such taxable year, (c) if the amount in clause (b) above is negative, such amount shall reduce otherwise permitted future 

 

 

4

 

Tax Distributions, (d) in the event that the taxable income of the Parent or its Subsidiaries (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754 election) is increased for a taxable period pursuant to a federal income tax audit or challenge by the Internal Revenue Service  or the filing of an amended federal income tax return, the calculation of the taxable income of the Parent shall be appropriately increased and the Borrower shall be permitted to distribute a corresponding additional amount pursuant to Section 6.5(b) (reduced by any distribution made pursuant to clause (e) below for such taxable period) in the year during which a settlement occurs, a decision of a court having jurisdiction with respect to such matters becomes final or it files an amended
federal income tax return, (e) in the event that the taxable income of the Parent or its Subsidiaries (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754 election, but taking into account any increases described in clause (d) above for such taxable period) is increased for a taxable period pursuant to an state or local income tax audit or challenge by the state or local taxing authority, the calculation of the taxable income of the Parent shall be appropriately increased and the Borrower shall be permitted to distribute a corresponding additional amount pursuant to Section 6.5(b) in the year during which a settlement occurs or a decision of a court having jurisdiction with respect to such matters becomes final provided that the tax rate used shall be the applicable state or local income tax rate (reduced by the federal tax benefit using the higher of the maximum
federal corporate or individual rate) and (f) except as permitted in clauses (d) and (e) above, no Tax Distribution with respect to a taxable year may be made more than 30 days after the date on which the federal income tax return for such year is filed.

(2) replacing the definition of “Applicable Margin” with the following replacement definition:

“Applicable Margin” shall mean (i) in the case of Alternate Base Rate Loans, 5.5% per annum and (ii) in the case of LIBOR Loans 6.5% per annum.

(3) replacing the definition of “Cap Amount” with the following replacement definition:

“Cap Amount” means as of any date of determination $500 million plus an amount not in excess of $50 million in the aggregate advanced in the context of a workout and/or a debtor-in-possession financing, less an amount equal to the sum, without duplication, of (i) the aggregate amount of all principal payments and prepayments of the term loans under the First Lien Agreement as in effect on April 13, 2007 (other than any principal 

 

 

5

 

payments made on account or as a result of a Permitted First Lien Refinancing), (ii) the amount of all Proceeds of Common Collateral received after April 13, 2007 by the First Lien Agent, which pursuant to the provisions of Section 2.10(f) of the First Lien Agreement as in effect on April 13, 2007, are to be applied to pay First Priority Obligations and which are not so applied and (iii) the aggregate amount of all permanent reductions of the Revolving Credit Commitments (as such term (or any term comparable to such term) is defined in the First Lien Agreement) other than a reduction on account of or as a result of a Permitted First Lien Refinancing.

(4) replacing the definition of the term “Parent” with the following replacement definition: 

“Parent” shall mean RHI Entertainment Holdings II, LLC, a Delaware limited liability company.

(5) replacing the definition of the term “Change in Control” with the following replacement definition:

“Change in Control” shall mean (i) the first day on which a majority of the members of the Board of Directors of the Borrower are not Continuing Directors, (ii) any “person” (as that term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder as in effect from time to time) other than KRH or the Kelso Group or any of their respective beneficial owners shall own, directly or indirectly, beneficially or of record, Equity Interests representing more than 50% of the voting Equity Interests of Public Co. or such person shall own, directly or indirectly, beneficially or of record, Equity Interests representing more than 50% of the voting Equity Interests of the Parent (measured by voting power rather than
number of shares or membership interests), (iii) the Parent shall cease to have both beneficial ownership and control of 100% of the voting Equity Interests of the Borrower or (iv) the Borrower shall cease to have both beneficial ownership and control of 100% of the voting Equity Interests of each of RHI Entertainment Distribution, LLC, RHI Entertainment Productions, LLC and RHI International Distribution, Inc., except as a result of a disposition permitted under Section 6.6 hereof.

(6) amending the definition of the term “Kelso Group” by deleting the proviso appearing therein; 

(B) Section 5.1 of the Credit Agreement is hereby amended by deleting the word “and” appearing after Section 5.1(j), inserting the word “; and” immediately prior to the period appearing at the end of Section 5.1(k) and inserting the following new Section 5.1(l). 

 

 

6

 

“(l) Promptly upon receipt thereof, any and all correspondence delivered or received by (whether originating from or to Public Co., Parent or KRH) any Credit Party to the extent that such correspondence relates to any calculation of Tax Distributions.”

(C) Section 6.5 of the Credit Agreement is hereby amended by deleting clause (b) appearing therein and inserting in lieu thereof the following replacement clause (b):

“(b) so long as no Event of Default or Default has occurred and is continuing or would be created thereby, distributions by the Borrower to the Parent (i) in an amount necessary to pay all Tax Distributions (provided that the Borrower shall have certified to the Administrative Agent that all correspondence and other documents described in Section 5.1(l) have been delivered to the Administrative Agent and shall have provided a certificate of either (i) its independent auditor or (ii) its Chief Financial Officer and its Tax Director, confirming the computation thereof), (ii) for any purpose, the proceeds of the issuance of any additional Equity Interests, including Specified Equity Contributions that are used to
cure an Event of Default pursuant to the Coverage Ratio as provided in Section 6.21 hereof, but excluding all other Specified Equity Contributions and (iii) for any purpose, provided that (w) the Leverage Ratio is less than 6.5:1.0 (calculated on a Pro Forma Basis after giving effect to the contemplated dividend), (x) the Liquidity Ratio of the Borrower and the Guarantors (calculated on a Pro Forma Basis after giving effect to the contemplated dividend) is at least 1.25:1 for the ensuing four fiscal quarters, (y) the aggregate amount of all dividends paid under this clause (iii) does not exceed $50,000,000 and (z) no dividends are paid under this clause (iii) until the first anniversary of the Closing Date; provided, however, that such dividends may
not be used for (A) payments of principal of Indebtedness under the Second Lien Agreement, (B) payments of principal of Indebtedness which is subordinate or otherwise junior to the Obligations or (C) payments of principal of Indebtedness incurred in accordance with the provisions of Section 6.1(i) hereof;”

(D) Section 6.5 of the Credit Agreement is hereby amended by deleting clause (c) appearing therein and inserting in lieu thereof the following replacement clause (c):

“(c) so long as no Event of Default has occurred and is continuing, the payment of dividends in respect of, or the redemption, acquisition, re-acquisition or retirement of, Equity Interests of the Borrower with cash proceeds received from the issuance by the Borrower of Equity Interests after the Closing Date, other than (i) the Specified Equity Contributions, (ii) the Refinancing IPO Proceeds and (iii) to the extent such proceeds have been otherwise utilized consistent with an exception from a negative covenant contained in this Article 6 (i.e., as 

 

 

7

 

an Investment permitted under Section 6.4(p) or to fund a Permitted Business Acquisition);”

(E) Section 6.5 of the Credit Agreement is hereby amended by deleting the word “and” appearing at the end of paragraph (j) thereof; deleting the period which appears at the end of paragraph (k) thereof and inserting in its place a semi-colon and the word “and”; and by adding the following additional paragraph (l):

“(l)  So long as no Event of Default has occurred and is continuing, distributions by the Borrower to the Parent in an amount necessary to pay corporate overhead expenses and legal, accounting and other professional fees and expenses of Parent, Public Co. and KRH, without duplication in each case incurred in connection with any activity not prohibited by this Credit Agreement, not to exceed $2,000,000 in the aggregate per fiscal year.”

(F) Section 6.10 of the Credit Agreement is hereby amended by (i) deleting clause (ix) appearing therein and inserting in lieu thereof the words “(ix) [intentionally omitted]”, (ii) deleting the words “the Kelso Group” appearing in clause (xi) thereof and inserting in lieu thereof the words “the Parent” and (iii) deleting the word “and” appearing before clause (xi) appearing therein and inserting the following new clause (xii):

“; and (xii) involves the consummation of the Qualified IPO and/or the Reorganization or the performance of any obligations under the Reorganization Agreement (as described in the Registration Statement), the Parent LLC Agreement, the Director Designation Agreement (as described in the Registration Statement), the Registration Rights Agreement (as described in the Registration Statement) or the KRH Value Units (as described in the Registration Statement)”.

(G) Section 6.23 of the Credit Agreement is hereby deleted in its entirety and replaced with the following replacement Section 6.23:

“SECTION 6.23  Activities of Parent and Public Co. 

(a) Permit the Parent to (i) own assets other than the membership interests of the Borrower, (ii) engage in any business activities other than such ownership or (iii) incur any lien upon its ownership of membership interests of the Borrower. 

(b) Permit Public Co. to incur any lien upon its ownership of the membership interests of the Parent.

(c) Permit the Parent or Public Co. to engage in any business activities which are currently engaged in by the Borrower or any of its subsidiaries of which may be engaged in by the Borrower and its Subsidiaries pursuant to section 6.11 hereof.”

 

 

8

 

(H) Schedule 3.7(a) to the Credit Agreement is hereby replaced in its entirety with Schedule 3.7(a) attached to this Amendment.

(I) Schedule 3.18 to the Credit Agreement is hereby replaced in its entirety with Schedule 3.18 attached to this Amendment.

SECTION 3. Consents. Upon the satisfaction of the conditions to the “Effective Date” set forth in Section 4 of this Amendment No. 1, the Lenders hereby consent, as follows: 

(A) the transfer of all of the outstanding Equity Interests of the Borrower from KRH to Parent, notwithstanding anything to the contrary contained in the Credit Agreement;

(B) to the extent that Section 2.10(a) of the Credit Agreement and/or the provisions Intercreditor Agreement require the prior written consent of the Lenders under the Credit Agreement for the Borrower to make a voluntary prepayment of Indebtedness outstanding under the Facility prior to the “First Priority Obligations Payment Date” (as defined in the Intercreditor Agreement), including without limitation the payment of all premiums and penalties and fees and expenses incurred in connection therewith, the Lenders hereby provide such consent with respect to the Refinancing IPO Proceeds together with Loans under the First Lien Facilities after giving effect to the incremental New Commitments, if any; and

(C) to the Administrative Agent executing an amendment to the Intercreditor Agreement in the form of Exhibit C hereto.

SECTION 4. Conditions to Effectiveness. The effectiveness of this Amendment is subject to the satisfaction of each of the following conditions prior to February 14, 2008 (the date on which such conditions have been satisfied referred to herein as the “Effective Date”): 

(A) the receipt by the Administrative Agent of counterparts of this Amendment which, when taken together, bear the signatures of the Borrower, the Guarantors (and any entity required to join the Credit Agreement as a Guarantor pursuant to Section 5.21 of the Credit Agreement) and the Administrative Agent;

(B) the receipt by the Administrative Agent of written consents from the Lenders to the Administrative Agent’s execution of this Amendment;

(C) the simultaneous consummation of the Qualified IPO in a manner which generates net proceeds which, together with loans under the First Lien Agreement, is sufficient to retire all or a significant portion of the Indebtedness outstanding under the Facility;

(D) the execution, delivery and effectiveness of (i) an amendment to the First Lien Agreement substantially in the form of Exhibit A hereto and (ii) an amendment to the Intercreditor Agreement, substantially in the form of Exhibit B hereto;

 

 

9

 

(E) the Administrative Agent shall have received evidence satisfactory to it, including a joinder to Article 10 of the Credit Agreement as a Pledgor and a customary UCC-1 financing statement, that RHI Entertainment Holdings II, LLC shall have delivered a perfected security interest in its Equity Interests in Borrower to Administrative Agent (on behalf of itself and the Lenders);

(F) the Administrative Agent shall have received from the Borrower for the account of the Lenders an amendment fee equal to 0.125% of the outstanding Loans under the Facility held by each existing Lender that executes a consent authorizing this Amendment on or prior to 5:00 p.m. (New York City time) on October 12, 2007, such fees to be distributed pro rata according to such consenting Lenders’ existing Loans;

(G) the Borrower shall have provided the Administrative Agent with no less than three (3) Business Days advance written notice of the intended consummation of the Qualified IPO and the portion of the Facility to be repaid;

(H) the Administrative Agent shall have received, and be satisfied with (in its reasonable discretion) the provisions of an executed copy, certified by Borrower to be true and correct, of the Parent LLC Agreement;

(I) after giving effect to this Amendment, no Event of Default or Default shall have occurred and be continuing; and 

(J) the representations and warranties contained in Section 6 hereof being true and correct.

SECTION 5. Waiver. Upon the Effective Date, the Lenders shall be deemed to have waived any Default or Event of Default which may have arisen as a result of (i) the contribution by KRH of its ownership of the Equity Interests of the Borrower to Holdings II and (ii) any action which may be construed as a violation of the provisions of Section 6.23 or Section 7(l) of the Credit Agreement (as such Sections existed prior to the Effective Date) as a result of the contribution described in the preceding clause (a) and from any other action taken by KRH in contemplation of the consummation of the Qualified IPO and the Reorganization.

SECTION 6. Representations and Warranties. Each Credit Party represents and warrants that before and after giving effect to this Amendment, the representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof as if such representations and warranties had been made on and as of the date hereof (except to the extent that any such representations and warranties specifically relate to an earlier date).

SECTION 7. Further Assurances. At any time and from time to time, upon the Administrative Agent’s request and at the sole expense of the Credit Parties, each Credit Party will promptly and duly execute and deliver any and all further instruments and documents and take such further action as the Administrative Agent reasonably deems necessary to effect the purposes of this Amendment.

 

 

10

 

SECTION 8. Fundamental Documents. This Amendment shall constitute a Fundamental Document.

SECTION 9. Full Force and Effect. Except as expressly set forth herein, this Amendment does not constitute a waiver or a modification of any provision of the Credit Agreement or a waiver of any Event of Default under the Credit Agreement. The Credit Agreement and the other Fundamental Documents shall continue in full force and effect in accordance with the provisions thereof on the date hereof and are hereby ratified and affirmed. As used in the Credit Agreement, the terms “Agreement”, “this Agreement”, “herein”,  “hereafter”, “hereto”, “hereof”, and words of similar import, shall, unless the context otherwise requires, mean the Credit Agreement as amended by this Amendment.

SECTION 10. References. This Amendment shall be limited precisely as written and shall not be deemed (a) to be a consent granted pursuant to, or a waiver or modification of, any other term or condition of the Credit Agreement or any of the instruments or agreements referred to therein or (b) to prejudice any right or rights which the Administrative Agent or the Lenders may now have or have in the future under or in connection with the Credit Agreement or any of the instruments or agreements referred to therein. Whenever the Credit Agreement is referred to in the Credit Agreement or any of the instruments, agreements or other documents or papers executed or delivered in connection therewith, such reference shall be deemed to mean the Credit Agreement as modified by this Amendment.

SECTION 11. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

SECTION 12. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile transmission or electronic photocopy (i.e., “.pdf”) shall be effective as delivery of a manually executed counterpart hereof.

SECTION 13. Expenses. The Borrower agrees to pay all out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including, but not limited to, the reasonable fees and disbursements of counsel for the Administrative Agent.

SECTION 14. Headings. The headings of this Amendment are for the purposes of reference only and shall not affect the construction of or be taken into consideration in interpreting this Amendment.

[Signature Pages Follow]

 

 

11

 

IN WITNESS WHEREOF, the parties hereby have caused this Amendment to be duly executed as of the date first written above.

 

	
                         
 	
                         
 	
                        BORROWER:
 
	
                         
 	
                         
 	
                        RHI ENTERTAINMENT, LLC
 
	
                          
 	
                         
 	
                        

                        By 
 	
                          
 
	
                         
 	
                         
 	
                        Name:
 	
                         
 
	
                         
 	
                         
 	
                        Title:
 	
                         
 

 

 

	
                         
 	
                         
 	
                        GUARANTORS:
 
	
                         
 	
                         
 	
                        RHI ENTERTAINMENT DISTRIBUTION, LLC 
 
	
                          
 	
                         
 	
                        

                        By 
 	
                          
 
	
                         
 	
                         
 	
                        Name:
 	
                         
 
	
                         
 	
                         
 	
                        Title:
 	
                         
 

 

	
                         
 	
                         
 	
                        RHI ENTERTAINMENT PRODUCTIONS, LLC 
 
	
        
 	
                         
 	
                        

      By
 	
                          
 
	
                         
 	
                         
 	
                        Name:
 	
                         
 
	
                         
 	
                         
 	
                        Title:
 	
                         
 

 

	
                         
 	
                         
 	
                        RHI INTERNATIONAL DISTRIBUTION, INC. 
 
	
        
 	
                         
 	
                        

      By
 	
                          
 
	
                         
 	
                         
 	
                        Name:
 	
                         
 
	
                         
 	
                         
 	
                        Title:
 	
                         
 

 

 

[Signature Page to Amendment No. 1 to the Amended and Restated Credit Agreement]
 
 

 

	
                         
 	
                         
 	
                        JPMORGAN CHASE BANK, N.A., 
 as Administrative Agent on behalf of each of the Lenders
 
	
                          
 	
                         
 	
                        

                        By 
 	
                          
 
	
                         
 	
                         
 	
                        Name:
 	
                         
 
	
                         
 	
                         
 	
                        Title:
 	
                         
 

 

 

[Signature Page to Amendment No. 1 to the Amended and Restated Credit Agreement]
 
 

SCHEDULE 3.7(a)

TO SECOND LIEN FACILITY

 

Ownership of the Capital Stock of the Credit Parties

 

	
                        Name of Credit Party
 	
                         
 	
                        Ownership of
 Equity Interests
 	
                         
 	
                        Jurisdiction of
 Organization
 	
                         
 	
                        Equity Interests
 Outstanding; 
 Authorized
 	
                         
 	
                        Certificated/
 Uncertificated
 Equity Interests
 	
                         
 
	
      RHI Entertainment, LLC
 	
       
 	
      RHI Entertainment 

        Holdings II, LLC
 	
       
 	
      Delaware
 	
       
 	
      100% of the

      membership

      interests; N/A
 	
       
 	
      Uncertificated
 	
       
 
	
      RHI Entertainment Productions, LLC
 	
                         
 	
      RHI Entertainment, LLC
 	
                         
 	
      Delaware
 	
                         
 	
                        100% of the

                        membership

                        interests; N/A
 	
                         
 	
      Uncertificated
 	
                         
 
	
      RHI Entertainment Distribution, LLC
 	
                         
 	
      RHI Entertainment, LLC
 	
                         
 	
      Delaware
 	
                         
 	
                        100% of the

                        membership

                        interests; N/A
 	
                         
 	
      Uncertificated
 	
                         
 
	
      RHI International Distribution, Inc.
 	
                         
 	
      RHI Entertainment, LLC
 	
                         
 	
      Delaware
 	
                         
 	
                        100 shares

                        No par value;

                        200 Shares

                        No par value
 	
                         
 	
      Certificated
 	
   
 

 

 

14

 

SCHEDULE 3.18

TO SECOND LIEN FACILITY

Filing Offices for UCC-1 Financing Statements, Tax ID and Organizational ID

 

	
                        Name of Party
 	
                         
 	
                        Applicable Filing Offices
 	
                         
 	
                        Employer/Taxpayer
 Identification Number
 	
                         
 	
                        Organizational Number
 	
                         
 
	
                        RHI Entertainment, LLC
 	
       
 	
      Delaware Secretary of State
 	
       
 	
      43-1687887
 	
       
 	
      3052694
 	
       
 
	
                        RHI Entertainment Productions, LLC
 	
                         
 	
                        Delaware Secretary of State
 	
                         
 	
                        43-1856014
 	
                         
 	
                        2418188
 	
                         
 
	
                        RHI Entertainment Distribution, LLC
 	
                         
 	
                        Delaware Secretary of State
 	
                         
 	
                        43-1856017
 	
                         
 	
                        3052691
 	
                         
 
	
                        RHI International Distribution, Inc.
 	
                         
 	
                        Delaware Secretary of State
 	
                         
 	
                        20-5047653
 	
                         
 	
                        4812491
 	
                         
 
	
                        RHI Entertainment Holdings II, LLC
 	
                         
 	
                        Delaware Secretary of State
 	
                         
 	
                        65-1320004
 	
                         
 	
                        4418690
 	
   
 

 

 

15

 

EXHIBIT A

TO AMENDMENT NO. 1

TO SECOND LIEN FACILITY

Form of Amendment to First Lien Agreement

“1st Lien Amendment”

AMENDMENT NO. 1 dated as of October 12, 2007 (this “Amendment”) to the Credit, Security, Guaranty and Pledge Agreement, dated as of January 12, 2006, as amended and restated as of April 13, 2007, among RHI Entertainment, LLC (the “Borrower”), the Guarantors referred to therein, the Lenders referred to therein and JPMorgan Chase Bank, N.A., as Issuing Bank and as Administrative Agent for the Lenders (the “Administrative Agent”) (as the same has been amended, supplemented or otherwise modified from time to time prior to this Amendment, the “Credit Agreement”).

INTRODUCTORY STATEMENT

WHEREAS, the Lenders have made available to the Borrower certain credit facilities pursuant to the terms of the Credit Agreement.

WHEREAS, the Borrower proposes that, in connection with the proposed initial public offering described below, the Parent undertake a reorganization as a result of which (a) the Parent will be renamed KRH Investments LLC, (b) KRH Investments LLC will transfer all of the Equity Interests in the Borrower to RHI Entertainment Holdings II, LLC, a newly formed Delaware limited liability company (“Holdings II”), which will become the sole direct parent of the Borrower, and (c) KRH Investments LLC and RHI Entertainment, Inc., a newly formed Delaware corporation (“RHI Inc.”), will become the sole members of Holdings II, with RHI Inc. acting as the sole managing member of Holdings II.

WHEREAS, the Borrower proposes that (a) RHI Inc. consummate an initial public offering of its common stock (for which a registration statement has been filed with the U.S. Securities and Exchange Commission), substantially all of the proceeds to RHI Inc. of which (after deducting underwriting discounts and commissions, as well as fees and expenses incurred in connection with the proposed reorganization and the initial public offering transactions, including $6.0 million to be paid to the Kelso Group in exchange for the termination of the existing Management Agreement) will be contributed to Holdings II in exchange for membership interests in Holdings II, (b) Holdings II will contribute such net proceeds to the Borrower, and (c) the Borrower will use all or a portion of such net proceeds received from Holdings II (together, at the Borrower’s option, with additional 

 

 

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Indebtedness to be borrowed under the Credit Agreement upon the effectiveness of this Amendment as further described below) to retire Indebtedness outstanding under the Second Lien Facility (and, to the extent that the net proceeds from the initial public offering of RHI Inc. exceed the amount required to discharge the Indebtedness outstanding under the Second Lien Facility in full, such excess net proceeds, if any, may be retained by RHI Inc., Holdings II or the Borrower, as the case may be, and used for general corporate purposes).

WHEREAS, the Borrower proposes that the Borrower, the Guarantors, the Lenders, the Issuing Bank and the Administrative Agent agree to amend the Credit Agreement to (a) make technical amendments to facilitate the reorganization and the initial public offering of the common stock of RHI Inc. and the repayment of indebtedness under the “Second Lien Agreement” (as that term is defined in the Credit Agreement), (b) provide for an increase in the aggregate Revolving Credit Commitments under the Revolving Credit Facility, at the option of the Borrower, after the effectiveness of the Registration Statement at the closing of the initial public offering contemplated thereby, in an amount not to exceed $50,000,000 and (c) amend various other provisions described herein.

WHEREAS, the Borrower, the Guarantors and JPMorgan Chase Bank, N.A., in its capacity as the Administrative Agent on behalf of the Required Lenders have agreed to amend the Credit Agreement, on the terms and subject to the conditions hereinafter set forth.

NOW THEREFORE, the parties hereto hereby agree as follows:

SECTION 1. Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meaning given them in the Credit Agreement (for the avoidance of doubt, as amended by this Amendment).

SECTION 2. Amendments to the Credit Agreement. Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof: 

(A) Section 1.1 of the Credit Agreement is hereby amended by:

(1) inserting the following new definitions in appropriate alphabetical order:

“Amendment No. 1” shall mean that certain Amendment No. 1, dated as of October 12, 2007, to this Credit Agreement.

“Amendment No. 1 Effective Date” shall mean the Effective Date (as defined in Amendment No. 1).

“Continuing Director” shall mean, as of any date of determination, each member of the Board of Directors of the Borrower who (a) was a member of such Board of Directors on October 12, 2007 or (b) was 

 

 

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nominated for election or elected to such Board of Directors either (x) with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election or (y) by or with the consent of KRH.

“IPO Net Proceeds” shall mean the gross proceeds of the Qualified IPO (but if there is a contemporaneous secondary offering on behalf of shareholders of Public Co. shall not include any proceeds applicable to the shares being sold by them) minus the aggregate of all underwriting discounts and commissions and fees and expenses incurred in connection with the Reorganization and a Qualified IPO, including without limitation $6.0 million to be paid to the Kelso Group in exchange for the termination of the Management Agreement, fees and expenses of outside accountants and counsel, SEC and NASD filing and registration fees, exchange listing fees and expenses, transfer agent fees and expenses, printing and financial printer service expenses and road show expenses.

“IPO Proceeds Shortfall” shall mean the amount (if any) by which the aggregate “Obligations” (as defined in the Second Lien Agreement) outstanding under the Second Lien Facility on the Amendment No. 1 Effective Date exceeds the IPO Net Proceeds. 

“KRH” shall mean KRH Investments LLC, a Delaware limited liability company formerly known as RHI Entertainment Holdings, LLC (and which was, prior to the Amendment No. 1 Effective Date, defined under this Credit Agreement as the “Parent”), which upon consummation of a Qualified IPO and the Reorganization will own a portion of the Equity Interests of Parent.

“Parent LLC Agreement” shall mean the limited liability operating agreement of Parent (after giving effect to Amendment No. 1), substantially in the form heretofore delivered to the Administrative Agent, with such modifications as the Administrative Agent shall approve prior to the Amendment No. 1 Effective Date, as the same may be amended, supplemented, replaced, restated or otherwise modified from time to time thereafter, provided that the Administrative Agent may not (without the consent of the Required Lenders) approve changes which would materially increase the Tax Distributions or, materially change the management structure of the Parent or the Borrower.

“Public Co.” shall mean RHI Entertainment, Inc., a Delaware corporation that is initially wholly-owned by Robert Halmi, Jr. and will become owned by Robert Halmi, Jr. and public investors upon consummation of the Qualified IPO and the Reorganization and will thereafter own a portion of the Equity Interests of Parent.

 

 

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“Qualified IPO” shall mean an initial public offering of the common stock of Public Co. by Public Co.

“Refinancing IPO Proceeds” means that portion of the IPO Net Proceeds contributed to the Borrower that are used by Borrower to repay “Obligations” (as defined in the Second Lien Agreement) outstanding under the Second Lien Facility.

“Registration Statement” shall mean Public Co.’s registration statement on Form S-1 filed with the SEC on September 14, 2007 in connection with a Qualified IPO.

“Reorganization” shall mean the transactions and arrangements concerning the corporate structure and ownership of the Borrower as described in the registration statement on Form S-1 (at the time it is declared effective) under the heading “corporate history and reorganization”, provided that the terms thereof do not differ from those set forth in the Registration Statement in a manner that is materially adverse to the Lenders.

“SEC” shall mean the U.S. Securities and Exchange Commission and any successor agency.

“Tax Distributions” shall mean, with respect to any taxable period, an amount not to exceed the product of (i) the estimated (in the case of a payment on account of quarterly estimated tax payments or extension payments) or actual (in the case of a payment on account of the filing of a tax return) taxable income of the Parent (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754 election), as determined for federal income tax purposes and (ii) the highest combined federal, state and local marginal tax rate applicable to corporations residing in New York City, New York, or, if greater and KRH’s percentage ownership of the outstanding membership interests of Parent is
at least 20%, the highest combined federal, state and local marginal tax rate applicable to individuals residing in New York City, New York, in each case taking into account the deductibility of state and local income taxes for federal income tax purposes, reduced by any tax credits of Parent and its Subsidiaries allocated to its members and in the reasonable judgment of the Borrower would be utilizable by the members or their direct or indirect owners if their allocated income of the Parent (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754 election) was their only taxable income; provided, it is understood and agreed that (a) Tax Distributions with regard to estimated and extension tax payments may be made not earlier than 15 

 

 

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days prior to the date that the quarterly estimated or extension tax payment is due (using the earlier of the corporate or individual due date for such payment), (b) not earlier than 15 days prior to the date that the federal income tax return for Parent is filed, a final Tax Distribution may be made equal to the excess of (1) the product of clause (i) and clause (ii) above with respect to a taxable year over (2) the prior Tax Distributions with respect to estimated and extension tax payments made for such taxable year, (c) if the amount in clause (b) above is negative, such amount shall reduce otherwise permitted future Tax Distributions, (d) in the event that the taxable income of the Parent or its Subsidiaries (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code
Section 754 election) is increased for a taxable period pursuant to a federal income tax audit or challenge by the Internal Revenue Service  or the filing of an amended federal income tax return, the calculation of the taxable income of the Parent shall be appropriately increased and the Borrower shall be permitted to distribute a corresponding additional amount pursuant to Section 6.5(b) (reduced by any distribution made pursuant to clause (e) below for such taxable period) in the year during which a settlement occurs, a decision of a court having jurisdiction with respect to such matters becomes final or it files an amended federal income tax return, (e) in the event that the taxable income of the Parent or its Subsidiaries (determined without regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code Section 754 election, but taking into account any increases described in clause (d) above for such
taxable period) is increased for a taxable period pursuant to an state or local income tax audit or challenge by the state or local taxing authority, the calculation of the taxable income of the Parent shall be appropriately increased and the Borrower shall be permitted to distribute a corresponding additional amount pursuant to Section 6.5(b) in the year during which a settlement occurs or a decision of a court having jurisdiction with respect to such matters becomes final provided that the tax rate used shall be the applicable state or local income tax rate (reduced by the federal tax benefit using the higher of the maximum federal corporate or individual rate) and (f) except as permitted in clauses (d) and (e) above, no Tax Distribution with respect to a taxable year may be made more than 30 days after the date on which the federal income tax return for such year is filed.

(2) replacing the definition of the term “Parent” with the following replacement definition:

“Parent” shall mean RHI Entertainment Holdings II, LLC, a Delaware limited liability company.

 

 

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(3) amending clauses (iv) and (vii) of the term “Borrowing Base” in their entirety to read as follows:

(iv) 90% of Eligible Receivables from Crown Media for which Borrowing Base credit is not provided under clause (iii) above and for which the conditions precedent to payment are met after the Original Closing Date (subject to the proviso appearing in clause (vii)), plus

. . .

(vii) 50% of Eligible Receivables from Crown Media for which Borrowing Base credit is not provided under clause (iii) above and for which the conditions precedent to payment have been met by the Original Closing Date, provided that the Borrowing Base credit at any time pursuant to clause (iv) and this clause (vii) shall at no time in the aggregate exceed $40,000,000, plus

(4) amending the definition of the term “Consolidated Net Worth” by inserting the following proviso immediately prior to the end thereof:

“provided, that Borrower may (other than for purposes of determining the “base” Consolidated Net Worth as of December 31, 2006) add back to Consolidated Net Worth the amount of any deductions therefrom relating to the fees, premiums, penalties, costs and expenses arising out of refinancing or repayment of the Facilities and the Second Lien Facility (including any OID charges) from time to time (including the retirement of all or a portion of the “Obligations” (as defined in the Second Lien Agreement) in connection with a Qualified IPO) but shall not include the fee to be paid to the Kelso Group in exchange for terminating the Management Agreement”;

(5) replacing the definition of the term “Change in Control” with the following replacement definition:

“Change in Control” shall mean (i) the first day on which a majority of the members of the Board of Directors of the Borrower are not Continuing Directors, (ii) any “person” (as that term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder as in effect from time to time) other than KRH or the Kelso Group or any of their respective beneficial owners shall own, directly or indirectly, beneficially or of record, Equity Interests representing more than 50% of the voting Equity Interests of Public Co. or such person shall own, directly or indirectly, beneficially or of record, Equity Interests representing more than 50% of the voting Equity Interests of the Parent (measured by voting power rather than
number of shares or membership interests), (iii) the Parent shall cease to have both beneficial ownership and 

 

 

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control of 100% of the voting Equity Interests of the Borrower or (iv) the Borrower shall cease to have both beneficial ownership and control of 100% of the voting Equity Interests of each of RHI Entertainment Distribution, LLC, RHI Entertainment Productions, LLC and RHI International Distribution, Inc., except as a result of a disposition permitted under Section 6.6 hereof.

(6) amending the definition of the term “Kelso Group” by deleting the proviso appearing therein; 

(B) Section 5.1 of the Credit Agreement is hereby amended by deleting the word “and” appearing after Section 5.1(j), inserting the word “; and” immediately prior to the period appearing at the end of Section 5.1(k) and inserting the following new Section 5.1(l). 

“(l) Promptly upon receipt thereof, any and all correspondence delivered or received by (whether originating from or to Public Co., Parent or KRH) any Credit Party to the extent that such correspondence relates to any calculation of Tax Distributions.”

(C) Section 6.5 of the Credit Agreement is hereby amended by deleting clause (b) appearing therein and inserting in lieu thereof the following replacement clause (b):

“(b) so long as no Event of Default or Default has occurred and is continuing or would be created thereby, distributions by the Borrower to the Parent (i) in an amount necessary to pay all Tax Distributions (provided that the Borrower shall have certified to the Administrative Agent that all correspondence and other documents described in Section 5.1(l) have been delivered to the Administrative Agent and shall have provided a certificate of either (i) its independent auditor or (ii) its Chief Financial Officer and its Tax Director, confirming the computation thereof), (ii) for any purpose, the proceeds of the issuance of any additional Equity Interests, including Specified Equity Contributions that are used to
cure an Event of Default pursuant to the Coverage Ratio as provided in Section 6.21 hereof, but excluding all other Specified Equity Contributions and (iii) for any purpose, provided that (w) the Leverage Ratio is less than 6.5:1.0 (calculated on a Pro Forma Basis after giving effect to the contemplated dividend), (x) the Liquidity Ratio of the Borrower and the Guarantors (calculated on a Pro Forma Basis after giving effect to the contemplated dividend) is at least 1.25:1 for the ensuing four fiscal quarters, (y) the aggregate amount of all dividends paid under this clause (iii) does not exceed $50,000,000 and (z) no dividends are paid under this clause (iii) until the first anniversary of the Closing Date; provided, however, that such dividends may
not be used for (A) payments of principal of Indebtedness under the Second Lien Agreement, (B) payments of 

 

 

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principal of Indebtedness which is subordinate or otherwise junior to the Obligations or (C) payments of principal of Indebtedness incurred in accordance with the provisions of Section 6.1(i) hereof;”

(D) Section 6.5 of the Credit Agreement is hereby amended by deleting clause (d) appearing therein and inserting in lieu thereof the following replacement clause (d):

“(d) so long as no Event of Default has occurred and is continuing, the payment of dividends in respect of, or the redemption, acquisition, re-acquisition or retirement of, Equity Interests of the Borrower with cash proceeds received from the issuance by the Borrower of Equity Interests after the Closing Date, other than (i) the Specified Equity Contributions, (ii) the Refinancing IPO Proceeds and (iii) to the extent such proceeds have been otherwise utilized consistent with an exception from a negative covenant contained in this Article 6 (i.e., as an Investment permitted under Section 6.4(p) or to fund a Permitted Business Acquisition);”

(E) Section 6.5 of the Credit Agreement is hereby amended by deleting the word “and” appearing at the end of paragraph (k) thereof; deleting the period which appears at the end of paragraph (l) thereof and inserting in its place a semi-colon and the word “and”; and by adding the following additional paragraph (m):

“(m) So long as no Event of Default has occurred and is continuing, distributions by the Borrower to the Parent in an amount necessary to pay corporate overhead expenses and legal, accounting and other professional fees and expenses of Parent, Public Co. and KRH, without duplication in each case incurred in connection with any activity not prohibited by this Credit Agreement, not to exceed $2,000,000 in the aggregate per fiscal year.”

(F) Section 6.10 of the Credit Agreement is hereby amended by (i) deleting clause (ix) appearing therein and inserting in lieu thereof the words “(ix) [intentionally omitted]”, (ii) deleting the words “the Kelso Group” appearing in clause (xi) thereof and inserting in lieu thereof the words “the Parent” and (iii) deleting the word “and” appearing before clause (xi) appearing therein and inserting the following new clause (xii):

“; and (xii) involves the consummation of the Qualified IPO and/or the Reorganization or the performance of any obligations under the Reorganization Agreement (as described in the Registration Statement), the Parent LLC Agreement, the Director Designation Agreement (as described in the Registration Statement), the Registration Rights Agreement (as described in the Registration Statement) or the KRH Value Units (as described in the Registration Statement)”.

 

 

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(G) Section 6.23 of the Credit Agreement is hereby deleted in its entirety and replaced with the following replacement Section 6.23:

“SECTION 6.23 Activities of Parent and Public Co. 

(a) Permit the Parent to (i) own assets other than the membership interests of the Borrower, (ii) engage in any business activities other than such ownership or (iii) incur any lien upon its ownership of membership interests of the Borrower. 

(b) Permit Public Co. to incur any lien upon its ownership of the membership interests of the Parent.

(c) Permit the Parent or Public Co. to engage in any business activities which are currently engaged in by the Borrower or any of its subsidiaries of which may be engaged in by the Borrower and its Subsidiaries pursuant to section 6.11 hereof.”

(H) Section 12.1 of the Credit Agreement is hereby amended by deleting clause (b)(viii) and inserting in lieu thereof the following replacement clause (b)(viii):

“(viii) to, in connection with the closing of the Qualified IPO after the effectiveness of the Registration Statement, as amended, (A) accept Revolving Credit Commitments from existing Lenders or additional Lenders in an incremental amount not to exceed the lowest of (1) $50,000,000, (2) the IPO Proceeds Shortfall or (3) such lesser amount requested by Borrower in accordance with the provisions of Amendment No. 1, and (B) make such other technical modifications to the Credit Agreement, including without limitation appropriate modifications to Schedule 1 to the Credit Agreement, as are necessary to accommodate the incremental Revolving Credit Commitments described in the foregoing clause (A).”

(I) Solely to the extent that New Commitments (as defined below) are implemented in accordance with the provisions of this Amendment, the Introductory Statement to the Credit Agreement is hereby amended by inserting the following new paragraph after the third paragraph thereof:

“Pursuant to Amendment No. 1 (as defined herein), among other things, the Revolving Credit Commitment has been increased from $275,000,000 to [appropriate amount to be inserted] in connection with the consummation of the Qualified IPO, which resulted in a commensurate increase in the aggregate amount of the Facilities from $450,000,000 to [appropriate amount to be inserted].”

 

 

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(J) Schedule 3.7(a) to the Credit Agreement is hereby replaced in its entirety with Schedule 3.7(a) attached to this Amendment.

(K) Schedule 3.18 to the Credit Agreement is hereby replaced in its entirety with Schedule 3.18 attached to this Amendment.

SECTION 3. Consents. Upon the satisfaction of the conditions to the “Effective Date” set forth in Section 4 of this Amendment No. 1, the Lenders hereby consent, by act of the Required Lenders, as follows: 

(A) the Required Lenders consent to the transfer of all of the outstanding Equity Interests of the Borrower from KRH to Parent, notwithstanding anything to the contrary contained in the Credit Agreement; and

(B) to the extent that Section 2.10(a) of the Second Lien Credit Agreement and/or the provisions Second Lien Intercreditor Agreement require the prior written consent of the Required Lenders under the Credit Agreement for the Borrower to make a voluntary prepayment of Indebtedness outstanding under the Second Lien Facility prior to the “First Priority Obligations Payment Date” (as defined in the Second Lien Intercreditor Agreement), including without limitation the payment of all premiums and penalties and fees and expenses incurred in connection therewith, the Required Lenders hereby provide such consent with respect to the Refinancing IPO Proceeds together with Loans under the Revolving Credit Facility after giving effect to the incremental New Commitments, if any.

SECTION 4. Conditions to Effectiveness. The effectiveness of this Amendment is subject to the satisfaction of each of the following conditions prior to February 14, 2008 (the date on which such conditions have been satisfied referred to herein as the “Effective Date”): 

(A) the receipt by the Administrative Agent of counterparts of this Amendment which, when taken together, bear the signatures of the Borrower, each New Lender (as defined below), the Guarantors (and any entity required to join the Credit Agreement as a Guarantor pursuant to Section 5.21 of the Credit Agreement) and the Administrative Agent and the Collateral Agent;

(B) the receipt by the Administrative Agent of written consents from the Required Lenders to the Administrative Agent’s execution of this Amendment;

(C) the simultaneous consummation of the Qualified IPO in a manner which generates net proceeds which, together with Loans under the Revolving Credit Facility after giving effect to the New Commitments, is sufficient to retire all or a significant portion of the Indebtedness outstanding under the Second Lien Facility;

(D) to the extent the Second Lien Facility is not repaid in full on the Effective Date, the execution, delivery and effectiveness of (i) (a) an amendment to the Second Lien Agreement, substantially in the form of Exhibit A hereto and (b) an 

 

 

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amendment to the Second Lien Intercreditor Agreement, substantially in the form of Exhibit B hereto or (ii) in lieu of the amendments in the forms of Exhibits A and B, the execution of documentation refinancing the portion of the Second Lien Facility not being repaid and which satisfies the provisions of the definition “Second Lien Agreement” and of the Intercreditor Agreement (after giving effect to the changes that would have been made therein had Exhibits A and B been executed).

(E) to the extent the Second Lien Facility is repaid in full on the Effective Date, the simultaneous retirement of all obligations thereunder (including all Indebtedness thereunder and any prepayment premiums arising thereunder) and termination of the Second Lien Facility, as evidenced by such documentation as the Administrative Agent may reasonably request;

(F) the Administrative Agent shall have received evidence satisfactory to it, including a joinder to Article 10 of the Credit Agreement as a Pledgor and a customary UCC-1 financing statement, that RHI Entertainment Holdings II, LLC shall have delivered a perfected first priority security interest in its Equity Interests in Borrower to Administrative Agent (on behalf of itself, the Issuing Bank and the Lenders);

(G) The Administrative Agent shall have received no later than December 31, 2007, from the Borrower for the account of the Lenders an amendment fee equal to 0.125% of the total Commitments held by each existing Lender that executes a consent authorizing this Amendment on or prior to 5:00 p.m. (New York City time) on October 12, 2007, such fees to be distributed pro rata according to such consenting Lenders’ existing Commitments;

(H) The Borrower shall have provided the Administrative Agent with no less than three (3) Business Days advance written notice of the intended consummation of the Qualified IPO, as well as the amount of the New Commitments (as defined below) which the Borrower desires to implement upon the Amendment No. 1 Effective Date; it being understood that (i) the Borrower is not required to implement any New Commitments, (ii) the Borrower may not implement New Commitments in an amount in excess of the lesser of (x) $50,000,000 and (y) the IPO Proceeds Shortfall and (iii) the implementation of any incremental Revolving Credit Facility pursuant to this Amendment is in all cases subject to the achievement of incremental New Commitments from New Lenders (as defined below) in an amount at least equal to the incremental New Commitments to be implemented;

(I) the Administrative Agent shall have received, and satisfied with (in its reasonable discretion) the provisions of an executed copy, certified by Borrower to be true and correct, of the Parent LLC Agreement;

(J) after giving effect to this Amendment, no Event of Default or Default shall have occurred and be continuing; and 

(K) the representations and warranties contained in Section 7 hereof being true and correct.

 

 

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The fee provided for in paragraph (G) above shall be earned on October 12, 2007 and shall be payable no later than December 31, 2007 whether or not the Effective Date has theretofore occurred. In addition, notwithstanding the preceding provisions of this Section 4, the amendments contemplated by Sections 2(A)(3) and 2(A)(4) above shall become effective immediately upon the satisfaction of the condition contained in Sections 4(A), (B), (J) and (K) whether or not the Effective Date ever occurs.

SECTION 5. Effect of Amendment. Upon the Effective Date, each financial institution (whether or not an existing Lender, a “New Lender”) holding a portion of the new Revolving Credit Commitments, if any (“New Commitments”), being extended upon the Effective Date shall (a) by their execution of this Amendment or such other instrument as may be satisfactory to the Administrative Agent accept an assignment from the existing Revolving Lenders of an interest in each then outstanding Revolving Credit Loan and Letter of Credit such that, after giving effect thereto, all exposure under the Revolving Credit Facility is held (directly
or indirectly) ratably by all Lenders holding Revolving Credit Commitments in proportion to their new Revolving Credit Commitments, (b) in connection with the assignments described in clause (a), each New Lender shall for all purposes be a Lender hereunder with respect to its New Commitments and its “Initial Date” for purposes of such New Commitments shall be the Effective Date and shall pay to the Administrative Agent for the account of the existing Lenders holding Revolving Credit Commitments such New Lender’s pro rata portion of the aggregate amount of the Revolving Credit Loans and unreimbursed drafts, if any, under any outstanding Letters of Credit and (c) any assignments described in clause (a) shall constitute Assignments and Acceptances for all purposes and amendments to the Schedule of Commitments and (ii) the Borrower shall pay any breakage costs associated with the assignments referenced in clause (i). For the avoidance of doubt, the New Commitments shall not
become effective unless an IPO Proceeds Shortfall exists, and the amount of the New Commitments shall not exceed the lowest of (x) $50,000,000, (y) the amount of the IPO Proceeds Shortfall and (z) or (3) such lesser amount requested by Borrower in accordance with the provisions of Amendment No. 1.

SECTION 6. Waiver. Upon the Effective Date, the Required Lenders shall be deemed to have waived any Default or Event of Default which may have arisen as a result of (i) the contribution by KRH of its ownership of the Equity Interests of the Borrower to Holdings II and (ii) any action which may be construed as a violation of the provisions of Section 6.23 or Section 7(l) of the Credit Agreement (as such Sections existed prior to the Effective Date) as a result of the contribution described in the preceding clause (a) and from any other action taken by KRH in contemplation of the consummation of the Qualified IPO and the Reorganization.

SECTION 7. Representations and Warranties. Each Credit Party represents and warrants that before and after giving effect to this Amendment, the representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof as if such representations and warranties had been made on and as of the date hereof (except to the extent that any such representations and warranties specifically relate to an earlier date).

 

 

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SECTION 8. Further Assurances. At any time and from time to time, upon the Administrative Agent’s request and at the sole expense of the Credit Parties, each Credit Party will promptly and duly execute and deliver any and all further instruments and documents and take such further action as the Administrative Agent reasonably deems necessary to effect the purposes of this Amendment.

SECTION 9. Fundamental Documents. This Amendment shall constitute a Fundamental Document.

SECTION 10. Full Force and Effect. Except as expressly set forth herein, this Amendment does not constitute a waiver or a modification of any provision of the Credit Agreement or a waiver of any Event of Default under the Credit Agreement. The Credit Agreement and the other Fundamental Documents shall continue in full force and effect in accordance with the provisions thereof on the date hereof and are hereby ratified and affirmed. As used in the Credit Agreement, the terms “Agreement”, “this Agreement”, “herein”,  “hereafter”, “hereto”, “hereof”, and words of similar import, shall, unless the context otherwise requires, mean the Credit Agreement as amended by this Amendment.

SECTION 11. References. This Amendment shall be limited precisely as written and shall not be deemed (a) to be a consent granted pursuant to, or a waiver or modification of, any other term or condition of the Credit Agreement or any of the instruments or agreements referred to therein or (b) to prejudice any right or rights which the Administrative Agent or the Lenders may now have or have in the future under or in connection with the Credit Agreement or any of the instruments or agreements referred to therein. Whenever the Credit Agreement is referred to in the Credit Agreement or any of the instruments, agreements or other documents or papers executed or delivered in connection therewith, such reference shall be deemed to mean the Credit Agreement as modified by this Amendment.

SECTION 12. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

SECTION 13. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile transmission or electronic photocopy (i.e., “.pdf”) shall be effective as delivery of a manually executed counterpart hereof.

SECTION 14. Expenses. The Borrower agrees to pay all out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including, but not limited to, the reasonable fees and disbursements of counsel for the Administrative Agent.

SECTION 15. Headings. The headings of this Amendment are for the purposes of reference only and shall not affect the construction of or be taken into consideration in interpreting this Amendment.

 

 

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[Signature Pages and Exhibits Omitted from this Exhibit A]

 

 

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EXHIBIT B

TO AMENDMENT NO. 1

TO SECOND LIEN FACILITY

Form of Amendment to Intercreditor Agreement

FIRST AMENDMENT TO AMENDED AND RESTATED INTERCREDITOR 

AGREEMENT

 This First Amendment (this “Amendment”) is entered into as of                , 2007 to that certain Amended and Restated Intercreditor Agreement, dated as of April 13, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”) among JPMorgan Chase Bank, N.A. in its capacity as administrative agent and collateral agent (the “First Priority Representative”) for the First Priority Secured Parties referred to below and
JPMorgan Chase Bank, N.A. in its capacity as administrative and collateral agent (the “Second Priority Representative”) for the Second Priority Secured Parties referred to below, RHI Entertainment, LLC (the “Borrower”), RHI Entertainment Holdings, LLC (the “Initial Parent”), the Guarantors listed on the signature page (the “Guarantors”) and RHI Entertainment Holdings II, LLC (the “Replacement Parent”).

INTRODUCTORY STATEMENT

WHEREAS, the Borrower, the Guarantors, the First Priority Representative and certain financial institutions (with their respective successors and assigns, the “First Priority Lenders”) are parties to an Amended and Restated Credit, Security, Guaranty and Pledge Agreement dated as of January 12, 2006, as amended and restated as of April 13, 2007 (as amended, supplemented, restated or otherwise modified from time to time, the “First Priority Agreement”), pursuant to which the First Priority Lenders have agreed to make loans and extend other financial accommodations to the Borrower (the “First Priority Loans”); 

WHEREAS, the Credit Parties, the Second Priority Representative and certain financial institutions and other entities (with their respective successors and assigns, the “Second Priority Lenders”) are parties to an Amended and Restated Credit, Security, Guaranty and Pledge Agreement dated as of January 12, 2006, as amended and restated as of April 13, 2007 (as the same may be amended, supplemented, restated or otherwise modified from time to time, (the “Second Priority Agreement”), pursuant to which the Second Priority Lenders made term loans to the Borrower in an aggregate principal amount of $260,000,000 (the “Second Priority Loans”); 

 

 

EXHIBIT B TO SECOND LIEN AMENDMENT NO. 1

 

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WHEREAS, the Borrower, the Initial Parent and the Replacement Parent have entered into a reorganization more fully described in each of Amendment No. 1 dated as of October 12, 2007 to the First Priority Agreement and Amendment No. 1 dated as of October 12, 2007, to the Second Priority Agreement pursuant to which, among other things, the Replacement Parent will be substituted for the Initial Parent for all purposes of the Intercreditor Agreement.

WHEREAS, the requisite First Priority Lenders and the requisite Second Priority Lenders have approved the execution of this Amendment by the First Priority Representative and the Second Priority Representative to evidence their respective agreements to increase the “Cap Amount” set forth in the Intercreditor Agreement as more fully set forth in this Amendment. 

NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained and other good and valuable consideration, the existence and sufficiency of which is expressly recognized by all of the parties hereto, the parties agree as follows:

SECTION 1. Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meaning given them in the Intercreditor Agreement.

SECTION 2. Amendments to the Intercreditor Agreement. Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof:

A. Section 1.1 of the Intercreditor Agreement is hereby amended by deleting the definition of “Cap Amount” and substituting the following replacement definition:

“Cap Amount” means as of any date of determination $500 million plus an amount not in excess of $50 million in the aggregate advanced in the context of a workout and/or a debtor-in-possession financing, less an amount equal to the sum, without duplication, of (i) the aggregate amount of all principal payments and prepayments of the Term Loans under the Existing First Priority Agreement as in effect on April 13, 2007 (other than any principal payments made on account or as a result of a Permitted First Lien Refinancing), (ii) the amount of all Proceeds of Common Collateral received after April 13, 2007 by the First Priority
Representative, which pursuant to the provisions of Section 2.10(f) of the Existing First Priority Agreement as in effect on April 13, 2007, are to be applied to pay First Priority Obligations and which are not so applied and (iii) the aggregate amount of all permanent reductions of the Revolving Credit Commitments (as such term (or any term comparable to such term) is defined in the Existing First Priority Agreement) other than a reduction on account of or as a result of a Permitted First Lien Refinancing.

 

 

EXHIBIT B TO SECOND LIEN AMENDMENT NO. 1

 

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B. Section 1.1 of the Intercreditor Agreement is hereby amended by deleting the definition of “Parent” and substituting the following replacement definition:

“Parent” shall mean RHI Entertainment Holdings II, LLC, a Delaware limited liability company.

SECTION 3. Representations and Warranties. 

A. By its signature hereto, each of the Credit Parties represents and warrants that the Credit Parties have not made any repayments of the Term Loans, or otherwise taken any action whatsoever which would have caused a reduction in the “Cap Amount” pursuant to the definition of the Cap Amount. Each of the Credit Parties hereby further represents that, upon the effectiveness of this Amendment, the “Cap Amount” (before giving effect to any increase for workout/debtor-in-possession financing) will therefore be equal to the full $500,000,000, without any deduction therefrom. The Second Priority Representative (a) agrees to be bound by the foregoing representation and warranty, and (b) acknowledges that, as of the effectiveness of this Amendment, the amount of the Cap Amount before giving effect to any increase for workout/debtor-in-possession financing) is $500,000,000. 

B. The First Priority Representative by its signature hereto represents and warrants that the execution of this Amendment has been approved by the requisite First Priority Lenders.

C. The Second Priority Representative by its signature hereto represents and warrants that the execution of this Amendment has been approved by the requisite Second Priority Lenders.

SECTION 4. Conditions to Effectiveness. This Amendment shall become effective upon receipt by each of the First Priority Representative and the Second Priority Representative of executed signature pages hereto from each of the First Priority Representative, the Second Priority Representative and each of the Credit Parties. 

SECTION 5. Further Assurances. At any time and from time to time, upon the request of the First Priority Representative and the Second Priority Representative and at the sole expense of the Credit Parties, each Credit Party will promptly and duly execute and deliver any and all further instruments and documents and take such further action as the First Priority Representative and the Second Priority Representative reasonably deem necessary to effect the purposes of this Amendment.

SECTION 6. Full Force and Effect. Except as expressly set forth herein, this Amendment does not constitute a waiver or a modification of any provision of the Intercreditor Agreement or a waiver of any Event of Default under the Intercreditor Agreement. As used in the Intercreditor Agreement, the terms “Agreement”, “this Agreement”, “herein”, “hereafter”, “hereto”, “hereof”, and words of similar import, shall, unless the context otherwise requires, mean the Intercreditor Agreement as amended by this Amendment.

 

 

EXHIBIT B TO SECOND LIEN AMENDMENT NO. 1

 

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SECTION 7. References. This Amendment shall be limited precisely as written and shall not be deemed (a) to be a consent granted pursuant to, or a waiver or modification of, any other term or condition of the Intercreditor Agreement or any of the instruments or agreements referred to therein or (b) to prejudice any right or rights which the First Priority Representative and the Second Priority Representative or the Lenders may now have or have in the future under or in connection with the Intercreditor Agreement or any of the instruments or agreements referred to therein. Whenever the Intercreditor Agreement is referred to in the Intercreditor Agreement or any of the instruments, agreements or other documents or papers executed or delivered in connection therewith, such reference shall be deemed to
mean the Intercreditor Agreement as modified by this Amendment. 

SECTION 8. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.

SECTION 9. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile transmission or electronic photocopy (i.e., “.pdf”) shall be effective as delivery of a manually executed counterpart hereof.

SECTION 10. Expenses. The Borrower agrees to pay all out-of-pocket expenses incurred by the First Priority Representative and the Second Priority Representative in connection with the preparation, execution and delivery of this Amendment, including, but not limited to, the reasonable fees and disbursements of counsel for the First and Second Priority Representatives.

SECTION 11. Headings. The headings of this Amendment are for the purposes of reference only and shall not affect the construction of or be taken into consideration in interpreting this Amendment.

[Signature Pages and Exhibits Omitted from this Exhibit B]

 

EXHIBIT B TO SECOND LIEN AMENDMENT NO. 1

 

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