**Exhibit10.5**

 

**CROWN MEDIA HOLDINGS, INC.2004 RESTRICTED STOCK UNIT AGREEMENT**

 

THIS RESTRICTEDSTOCK UNIT AGREEMENT (the “Agreement”) is made and entered into as of May 28,2004 (the “Grant Date”), by and between Crown Media Holdings, Inc. a Delawarecorporation (“Crown”) and David Evans (“Executive”) pursuant to the terms andconditions of the Amended and Restated Crown Media Holdings, Inc. 2000 LongTerm Incentive Plan (the “Plan”). Capitalized terms not defined in thisAgreement shall have the meanings set forth in the Plan.

 

1.  Award ofRestricted Stock Units.  Pursuant tothe Plan, Crown awards to Executive 115,000 Restricted Stock Units (“RSUs”).Each unit corresponds to one share of Crown Common Stock (as defined in thePlan) and shall be 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 anunsecured promise of Crown to deliver either a share of Common Stock or cash inan amount equivalent to one share of Common Stock to Executive on the DeliveryDate (as defined below).  As a holder ofRSUs, Executive has only the rights of a general unsecured creditor of Crown.

 

2.  Vesting.  Subject to Section 4 of this Agreement,the RSUs shall vest and become nonforfeitable in equal one-half installments oneach of January 3, 2005 (“First Vesting Date”) and January 2, 2006(“Second Vesting Date”).  In the eventof a Change in Control, subject to the Executive’s continued employment withCrown as of the date of the Change in Control (unless one of the eventsenumerated in Section 4 of this Agreement shall have occurred), allunvested RSUs shall vest.  The FirstVesting Date, the Second Vesting Date, the date immediately prior to that onwhich a Change in Control occurs and the date on which any one of the events inSection 4 occurs shall be a “Vesting Date.”

 

3.  Settlement of RSU Award.

 

(a) Settlement. Crown shall deliver to Executiveon the Delivery Date, at Crown’s sole, absolute and unfettered discretion,either: (1) the number of shares of Common Stock corresponding to such RSUs; or(2) cash in an amount equal to the number of shares of Common Stockcorresponding to such RSUs multiplied by the average of the Fair Market Value(as defined below) of the Common Stock for the immediately preceding 14business 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) unless Executive has otherwise elected to defer receipt of suchaward in accordance with Committee authorization or pursuant to the terms of anonqualified plan adopted by Crown. Crown shall have sole, absolute and unfettereddiscretion in determining whether to deliver shares of Common Stock or cash inan amount equivalent to the number of shares of Common Stock on the VestingDate.

 

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(b) Change in Control Settlement.  Notwithstanding Section 3(a), in theevent of a Change in Control, Section 10(c) of the Plan shall apply toRSUs. RSUs shall be settled under Section 3(a) using the Change in ControlPrice pursuant to Section 10(c) of the Plan applicable to non-IncentiveStock Option holders.

 

(c) Dividend and Stock Split Equivalents. Forso long as Executive holds RSUs, at the time any dividend is paid with respectto a share of Common Stock or any forward stock split occurs, Crown shallcredit to the RSU award of the Executive on the same date (or as soon aspracticable thereafter) in respect of each RSU held by the Executive as of therecord date for such dividend or split an amount at Crown’s sole, absolute andunfettered discretion, in cash, Common Stock, or other property, or in acombination thereof, in each case having a value equal to the dividend orsplit, subject to any deferral election by Executive in accordance withCommittee authorization or pursuant to the terms of a nonqualified plan adoptedby Crown.  Such amounts shall vest andshall be paid on a *pro rata*basisat the same time as the underlying Employment or Performance RSU award withwhich such dividend or stock split is associated is settled.

 

4.  Terminationof RSUs; Accelerated Vesting. Executive’s rights with respect to any outstanding unvested RSUs shallimmediately terminate and no payment shall be made in respect of such RSUs (i)with respect to the First Vesting Date, if prior to such date, Executiveexperiences a Termination of Employment (as defined in the Plan) with Crown,excluding a Normal Retirement or (ii) with respect to the Second Vesting Date,if prior to September 17, 2005, Executive experiences a Termination ofEmployment (as defined in the Plan) with Crown, excluding Normal Retirement.  Notwithstanding the foregoing, alloutstanding unvested RSUs shall vest immediately by reason of: (1) Executive’sinvoluntary Termination of Employment without Cause (2) the death of theExecutive; or (3) the Disability of the Executive resulting in Executive’sTermination of Employment.

 

5.  Definitions.  For purposes of this Agreement:

 

(a)                                  “Changein Control” means Change in Control as defined in the Plan.

 

(b)                                 “DeliveryDate” means the date immediately following a given Vesting Date.

 

(c)                                  “FairMarket Value” means “Fair Market Value” as defined in the Plan; provided,however, that if there is no regular public trading market for such CommonStock, “Fair Market Value” shall mean the value established by the most recentindependent appraisal of Crown conducted prior to the relevant Delivery Date.

 

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(d)                                 “NormalRetirement” means the retirement of Executive from Crown at the “normalretirement age” as defined in the Hallmark Employees Affiliates Savings Plan,or any successor plan.

 

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 suchsettlement.  Unless the Committeeotherwise determines and subject to such rules and procedures as the Committeemay establish, Executive may make an election to have shares of Stock withheldby Crown or to tender any such securities to Crown to pay the amount of taxthat Crown in its discretion determines to be required so to be withheld byCrown upon settlement of RSUs, subject to satisfying any applicablerequirements for compliance with Section 16(b) of the Exchange Act.  Any shares of Stock or other securities sowithheld or tendered will be valued as of the date they are withheld or tendered,provided that Stock shall be valued at Fair Market Value on such date.   Unless otherwise permitted by theCommittee, the value of shares withheld or tendered may not exceed the minimumfederal, state, local and foreign withholding tax obligations as computed byCrown.

 

7.  Non-transferability. No RSUs shall beassignable or otherwise transferable by Executive. During the life of Executiveany elections with respect to RSUs may be made only by Executive or Executive’sguardian or legal representative.

 

8.  Counterparts.  This Agreement may be executed in any numberof counterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument.

 

9.  Governing Law.  This Agreement shall be governed by the lawsof the State of Delaware, without regard to conflict of law principles.

 

 
|   | CROWN MEDIA HOLDINGS,  INC. |
|--------|-----------------------------|
|   |                        |
|   | By:                         | /s/ C. Stanford |   |
|   |                        |
|   | Title:                      | Exec. VP - Leg. &  Bus. Affairs |   |
|   |                        |
|   |                        |
|   | /s/ David Evans             |  July 2, 04 |
|   | DAVID EVANS                 |   |
|        |                             |  |  |  |

 

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