**EXHIBIT 10.4**

 

**FORM OF**

**CROWN MEDIA HOLDINGS,INC.**

**2004 RESTRICTED STOCKUNIT AGREEMENT**

 

THISRESTRICTED STOCK UNIT AGREEMENT (the “Agreement”) is made and entered into asof May 28, 2004 (the “Grant Date”), by and between Crown Media Holdings, Inc. aDelaware corporation (“Crown”) and                               (“Executive”)pursuant to the terms and conditions of the Amended and Restated Crown MediaHoldings, Inc. 2000 Long Term Incentive Plan (the “Plan”).  Capitalized terms not defined in thisAmended Agreement shall have the meanings set forth in the Plan.

 

1.  Award of RestrictedStock Units.

 

(a)           GeneralAward.  Pursuant to the Plan, Crownawards to Executive                        Restricted Stock Units(“RSUs”), each unit corresponding to one share of Crown Common Stock (asdefined in the Plan), subject to the terms and conditions set forth in thisAgreement and the Plan.  A copy of thePlan has been delivered to the Executive. By signing below, the Executiveagrees to be bound by all the provisions of the Plan.  Each RSU constitutes an unsecured promise of Crown to delivereither a share of Common Stock or cash in an amount equivalent to one share ofCommon Stock to Executive on the Delivery Date (as defined below).  As a holder of RSUs, Executive has only therights of a general unsecured creditor of Crown.

 

(b)           Types ofRSUs.  Of the total                                RSUs granted to Executive, 70% (                ) shall be deemed to be EmploymentRSUs and 30% (                        ) shall be deemed to be PerformanceRSUs.  The applicable provisions of thisAgreement shall be specified by type of RSU, and if not so specified, shallapply to all RSUs granted hereunder.

 

2. Vesting 

 

(a)           EmploymentRSUs.  Subject to continuedemployment with Crown and/or its affiliates as of each anniversary of the GrantDate (unless one of the events enumerated in Section 4 of thisAgreement shall have occurred) the Employment RSUs shall vest and becomenonforfeitable in equal one-third installments (or as nearly equal installmentsas practicable) on each of the first, second and third anniversaries of theGrant Date.  In theevent of a Change in Control, subject to the Executive’s continued employmentwith Crown as of the date of the Change in Control (unless one of the eventsenumerated in Section 4 of this Agreement shall have occurred), all unvestedEmployment RSUs shall vest.  Eachanniversary of the Grant Date, the date immediately prior to that on which aChange in Control occurs and the date on which any one of the events in Section4 occurs shall be a “Vesting Date.”

 

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(b)           PerformanceRSUs.

 

(i) *Regular Vesting*.  Subject to continued employmentwith Crown and/or its affiliates, the Performance RSUs shall vest and becomenonforfeitable in their entirety only upon the third anniversary of the GrantDate and only if the average of the Fair Market Value (as defined below) of theCommon Stock for the immediately preceding 60 business days including theVesting Date (or, if such Vesting Date does not fall on a business day, as ofthe business day immediately preceding the Vesting Date) equals or exceeds$14.00 (USD).  Thethird anniversary of the Grant Date shall be a “Vesting Date.”  Section 4 shall not apply to PerformanceRSUs.

 

(ii) *Vesting upon a Change in Control*.  The date on which a Change inControl occurs shall be a “Vesting Date.” In the event of a Change in Control (subject to the Executive’scontinued employment with Crown as of the date of the Change in Control or upon anExecutive’s involuntary Termination of Employment without Cause within 90 daysprior to the date on which a Change in Control occurs), allunvested Performance RSUs shall vest and be settled immediately prior to theChange in Control only if the following shall have occurred:  if the Change in Control occurs prior to thefirst anniversary of the Grant Date, the average of the Fair MarketValue (as defined below) of the Common Stock for the immediately preceding 60business days including the Vesting Date (or, if such Vesting Date does notfall on a business day, as of the business day immediately preceding theVesting Date) equals or exceeds $10.00 (USD). If the Change in Control occurs on or after the firstanniversary of the Grant Date but prior to the second anniversary of the GrantDate, the average of the Fair Market Value (as defined below) of theCommon Stock for the immediately preceding 60 business days including theVesting Date (or, if such Vesting Date does not fall on a business day, as ofthe business day immediately preceding the Vesting Date) equals or exceeds$12.00 (USD).  If the Changein Control occurs on or after the second anniversary of the Grant Date butprior to the third anniversary of the Grant Date, theaverage of the Fair Market Value (as defined below) of the Common Stock for theimmediately preceding 60 business days including the Vesting Date (or, if suchVesting Date does not fall on a business day, as of the business dayimmediately preceding the Vesting Date) equals or exceeds $14.00 (USD).

 

3. Settlement of RSU Award.

 

(a) Settlement.  Subject to any cancellation of theEmployment RSUs pursuant to Section 4, Crown shall deliver to Executive on theDelivery Date, at Crown’s sole, absolute and unfettered discretion, either:  (1) the number of shares of Common Stockcorresponding to such RSUs; or (2) cash in an amount equal to the number ofshares of Common Stock corresponding to such RSUs multiplied by the average ofthe Fair Market Value (as defined below) of the Common Stock

 

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for the immediately preceding 14 businessdays including the Vesting Date (or, if such Vesting Date does not fall on abusiness day, as of the business day immediately preceding the Vesting Date)unless Executive has otherwise elected to defer receipt of such award in accordancewith Committee authorization or pursuant to the terms of a nonqualified planadopted by Crown.  Crown shall havesole, absolute and unfettered discretion in determining whether to delivershares of Common Stock or cash in an amount equivalent to the number of sharesof Common Stock on the Vesting Date.

 

(b) Change in Control Settlement.  Notwithstanding Section 3(a), in the eventof a Change in Control, Section 10(c) of the Plan shall apply to RSUs.  RSUs shall be settled under Section 3(a)using the Change in Control Price pursuant to Section 10(c) of the Planapplicable to non-Incentive Stock Option holders.

 

(c) Dividend and Stock SplitEquivalents.  For so long asExecutive holds RSUs, at the time any dividend is paid with respect to a shareof Common Stock or any forward stock split occurs, Crown shall credit to theRSU award of the Executive on the same date (or as soon as practicablethereafter) in respect of each RSU held by the Executive as of the record datefor such dividend or split an amount at Crown’s sole, absolute and unfettereddiscretion, in cash, Common Stock, or other property, or in a combinationthereof, in each case having a value equal to the dividend or split, subject toany deferral election by Executive in accordance with Committee authorizationor pursuant to the terms of a nonqualified plan adopted by Crown.  Such amounts shall vest and shall be paid ona *pro rata* basis at the same timeas the underlying Employment or Performance RSU award with which such dividendor stock split is associated is settled.

 

4. Termination of Employment RSUs and Non-Delivery Upon Certain OtherEvents, Acceleration of Vesting.

 

Executive’s rights with respect to anyoutstanding unvested Employment RSUs shall immediately terminate and no paymentshall be made in respect of such RSUs if prior to the Vesting Date Executiveexperiences a Termination of Employment (as defined in the Plan).  Notwithstanding the foregoing, any outstanding unvested EmploymentRSUs shall vest immediately upon an Executive’s Termination of Employment byreason of : (1) the death of the Executive; (2) the Disability of the Executive; (3) the retirement of the Executive from Crown at the “normal retirement age”as defined in the Hallmark Affiliates Employee Savings Plan, or any successorplan; (4) an Executive’s involuntary Termination of Employment without Causewithin 90 days prior to the date on which a Change in Control occurs; or (5) anExecutive’s involuntary Termination of Employment without Cause within 90 daysprior to the date on which any sale, merger, or other dispositionor sale of substantially all of the assets of the Crown subsidiary or affiliatefor which Executive is principally employed occurs

 

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(such determination of principal employment to be madeby Crown in its reasonable discretion).

 

5. Definitions.  For purposesof this Agreement:

 

(a) “Delivery Date” means the dayimmediately following a given Vesting Date.

 

(b) “Fair Market Value” means “Fair Market Value” as defined in the Plan;provided, however, that if there is no regular public trading market for suchCommon Stock, “Fair Market Value” shall mean the value established by the mostrecent independent appraisal of Crown conducted prior to the relevant DeliveryDate.

 

6. Withholding Tax.

 

Executive may be subject to withholdingtaxes as a result of the settlement of RSUs. Unless the Committee permitsotherwise, Executive shall pay to Crown in cash, promptly when the amount ofsuch obligations become determinable, all applicable federal, state, local andforeign withholding taxes that Crown determines result from such settlement.Unless the Committee otherwise determines and subject to such rules andprocedures as the Committee may establish, Executive may make an election tohave shares of Stock withheld by Crown or to tender any such securities toCrown to pay the amount of tax that Crown in its discretion determines to berequired so to be withheld by Crown upon settlement of RSUs, subject tosatisfying any applicable requirements for compliance with Section 16(b) of theExchange Act. Any shares of Stock or other securities so withheld or tenderedwill be valued as of the date they are withheld or tendered, provided thatStock shall be valued at Fair Market Value on such date. Unless otherwise permittedby the Committee, the value of shares withheld or tendered may not exceed theminimum federal, state, local and foreign withholding tax obligations ascomputed by Crown.

 

7. Non-transferability.

 

No RSUs shall be assignable or otherwisetransferable by Executive. During the life of Executive any elections withrespect to RSUs may be made only by Executive or Executive’s guardian or legalrepresentative.

 

8. Counterparts.

 

This Agreement may be executed in anynumber of counterparts, each of which shall be deemed an original, but all ofwhich together shall constitute one and the same instrument.

 

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9. Governing Law.

 

This Agreement shall be governed by thelaws of the State of Delaware, without regard to conflict of law principles.

 
|   | CROWN MEDIA  HOLDINGS, INC. |
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|   | By:                         |   |   |
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|   | Name:                       |   |   |
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|   | Title:                      |   |   |
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|   | EXECUTIVE                   |
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