**EXHIBIT 10.98**

 

**DEFERREDCOMPENSATION PLAN**

**SUMMARY**

 

 

**2005**

 

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** **

**MAJORTOPICS**

 
| The  Crown Media Holdings, Inc. Deferred Compensation Plan   |   |
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|                                                         |   |
| Enrollment                                                   |   |
|                                                         |   |
| When You Can Enroll                                          |   |
|                                                         |   |
| What is Eligible for  Deferral?                              |   |
|                                                         |   |
| When  Your Deferrals Are Credited to Your Account            |   |
|                                                         |   |
| Interest Paid on  Account Balance (all non-RSU Compensation) |   |
|                                                         |   |
| Investment of RSU  Compensation                              |   |
|                                                         |   |
| Distribution Alternatives                                    |   |
|                                                         |   |
| Other Issues  Related to Distributions                       |   |
|                                                         |   |
| Taxes  on Deferrals, Investment Returns and Distributions    |   |
|                                                         |   |
| Risks of a  Deferred Compensation Plan                       |   |
|                                                         |   |
| Plan Administration                                          |   |

 

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|       |   | As part of a select  group, you are being presented with a unique opportunity — to take advantage  of the Crown Media Holdings, Inc. Deferred Compensation Plan (Plan). The Plan  provides an avenue to save pre-tax dollars in a tax-deferred investment  program for your personal financial goals. The Plan permits you to defer  portions of your Crown salary, bonus and RSU compensation. You have access to  your account to make changes in your deferral elections or withdrawals while  still employed. You may request a copy of the full Plan document from Gene  Hawkins at (818) 755-2690 or Crown Media Holdings, Inc., 12700 Ventura  Boulevard, Studio City, CA 91604.                                               |
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|       |   | **PLEASE NOTE: AS A RESULT OF RECENT LEGISLATION, SIGNIFICANT  CHANGES MUST BE MADE TO THE PLAN FOR DEFERRALS RELATING THE TO 2005 AND  SUBSEQUENT PLAN YEAR. SOME OF THESE CHANGES ARE HIGHLIGHTED BELOW. THE IRS  INTENDS TO ENACT REGULATIONS, PRIOR TO THE END OF 2004, WHICH WILL FURTHER  CLARIFY THE REQUIREMENTS OF THE NEW LAW AND ITS EFFECT ON DEFERRAL ELECTIONS  AND WITHDRAWALS, PARTICULARLY AS THEY RELATE TO INCENTIVE AWARDS SUCH AS  RSUS. WHEN THIS GUIDANCE IS PROVIDED, YOU MAY BE REQUIRED TO MAKE NEW  ELECTIONS FOR THE 2005 DEFERRALS AND IT IS POSSIBLE, ALTHOUGH UNLIKELY, THAT  THE IRS MAY NOT HONOR ANY 2005 PLAN YEAR DEFERRAL ELECTIONS FOR COMPENSATION  RELATING TO THE RSUS AWARDED IN 2003 AND 2004** |
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| ** ** |   | **The Crown Media Holdings, Inc.  Deferred Compensation Plan**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ** ** |   | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|       |   | Plan Year:.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | January 1 through December  31, 2005 |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|       |   | Open enrollment:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | December 10 through  December 30, 2004 |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|       |   | The Plan is an unfunded  arrangement that is intended to benefit a select group of management or  highly compensated employees and outside directors. It is intended to be a “top  hat” plan that is exempt from the Employee Retirement Income Security Act of  1974, as amended (ERISA), with the exception of limited reporting obligations  and certain administrative and enforcement requirements, including claims  procedures.                                                                                                                                                                                                                                                                                           |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| ** ** |   | **Enrollment**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ** ** |   | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|       |   | To enroll in the Plan,  you may make the following elections by submitting the enrollment forms  included in this kit:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

 

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| Send all completed forms to Gene Hawkins by the deadline  specified.

 

 

If you do not elect to enroll in the Plan at this time, all  of your compensation will be paid in cash. You may enroll during any  future annual open enrollment period. |   | •   Deferral Election – indicate the  percentages of your salary (up to a maximum of 50%), bonus and Restricted  Stock Unit (RSU) compensation that you wish to defer during the January 1 –  December 31, 2005 Plan Year. Your deferral election is irrevocable and cannot  be changed during the Plan Year. Your deferral election is for this Plan Year  only; to defer compensation in subsequent years, you must make a new deferral  election during the future annual open enrollment period for those years.

•   Investment of RSU Compensation Deferrals –  indicate in which fund RSU compensation deferrals settled in cash are to be  invested - the interest bearing account or the stock tracking fund (see  discussion on pages 3 and 4)

•    Selection of Form of Distribution –  indicate whether you wish the amounts deferred to be distributed in a lump  sum or in installments over 5 years (see discussion on pages 5 and 6 – note  that the only one distribution alternative may be available, depending on the  amounts involved).

•    Scheduled In-Service Withdrawal  Election – if you want this Plan Year’s deferral, plus earnings thereon,  distributed while employed, specify when and how (see page 4).

•    Beneficiary Designation – establish  who receives your money in the event of your death. If you already have a  Beneficiary Designation on file, you do not need to complete another unless  you are changing your designated beneficiary. |
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| ** **                                                                                                                                                                                                                                                     |   | **When You Can Enroll**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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|                                                                                                                                                                                                                                                           |   | For the 2005 Plan Year,  the enrollment period is from December 10 to December 30, 2004. The  enrollment periods for future Plan Years are scheduled to run from November 1  to November 30 in the year preceding each Plan Year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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| ** **                                                                                                                                                                                                                                                     |   | **What is Eligible for Deferral?**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ** **                                                                                                                                                                                                                                                     |   | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Your deferrals and  their earnings are always 100% vested.

 

 

The minimum annual  deferral amount is $5,000 (prorated for partial years).                                                                                                        |   | You may defer up  to:•   50% of your  annual salary

•   100% of your  incentive compensation (bonus)

•    100% of the  settlement received during the Plan Year of a Restricted Stock Unit

award granted under the Crown Media Holdings, Inc. 2000 Long Term  Incentive 

plan and RSU Agreement, whether the settlement is in cash or stock

 

•   If you are a  director, 100% of your Director fees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
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| ** **                                                                               |   | **When Your Deferrals Are  Credited to Your Account**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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| ** **                                                                               |   | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                     |   | All deferred salary and  bonus amounts are automatically placed in an interest-bearing account. They  cannot be placed in the Stock Tracking Fund described below. Your base salary  deferrals are credited to your account as soon as practicable after they are  withheld from your paycheck. Applicable bonus amounts are credited to your  account as soon as administratively practicable after the date on which the  bonus is payable to employees in general. RSU deferrals are credited to your  account as soon as practicable after the date on which the RSUs are settled.  Director fee deferrals are credited to your account as of the first day of  the Plan Year in which the deferred amount would have been paid in cash.  You are always 100% vested in your Account.                                                                                                                                                                                                                                                               |
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| ** **                                                                               |   | **Interest  Paid on Account Balance**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** **                                                                               |   | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| The Administrator may adjust  the interest rate (including the benchmark) prospectively. |   | For salary, bonus, and  RSU amounts placed in the interest-bearing account, interest will be paid on  your daily account balance at the daily equivalent rate of Prime + 1% (unless  you are notified otherwise). The rate is adjusted monthly.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| ** **                                                                               |   | **Investment  of RSU Compensation**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                     |   | You may elect to have RSU Compensation that is settled by the Company  in cash placed in the interest bearing account described above or in a Stock  Tracking Fund. RSU cash proceeds placed in the Stock Tracking Fund will be  converted into “RSU Cash Units”. The number of RSU Cash Units credited to the  Fund will equal the amount of cash which you have elected to be placed in the  Fund divided by the Crown stock price on the day of conversion. Any  withdrawals or distributions of RSU Cash Units from the Stock Tracking Fund  will be paid in cash in an amount equal to the then-current price of Crown’s  common stock times the number of RSU Cash Units redeemed. Any election you  make between placement of RSU proceeds in the interest-bearing account and  the Stock Tracking Fund must be in 10% increments.  RSU Compensation that is settled by the Company in stock is automatically  placed in the Stock Tracking Fund as an “RSU Stock Unit”. Each RSU Stock Unit  is equivalent in value to |

 

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|       |       | one share of Crown common stock but has no dividend or voting rights.  Any withdrawals or distributions of RSU Stock Units from the Stock Tracking  Fund will be settled in Crown shares in an amount equal to the number of RSU  Stock Units redeemed.  The number of RSU Cash Units and RSU Stock Units credited to a participant’s  account and invested in the Stock Tracking Fund may be adjusted by the Plan  Administrator in the event of a stock split, change in capitalization or  extraordinary corporation transaction (merger, spin-off, reorganization,  etc.). Upon a de-listing of the stock, a going private transaction or any  other event that eliminates a market for the stock, the Stock Tracking Fund  will be eliminated and the proceeds from the Fund placed in the interest  bearing account.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
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| ** ** |       | **Distribution Alternatives**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ** ** |       | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | The Plan’s distribution  options provide you with flexibility. Your account balance, or a portion of it,  may be distributed to you while employed, and/or after separating from  service. The available distribution options are detailed below.Scheduled In-Service WithdrawalDuring each Plan Year’s open enrollment, you may elect to receive payment  of all or part of that Plan year’s deferral account in a future year that is  at least two years beyond the end of that Plan year. For example, you may  elect to receive your deferrals credited in 2005 and investment returns  therein in 2007 or later.  If your scheduled in-service distribution is more than $25,000, you may  receive it in annual installments over 5 years, if elected in advance. If  your scheduled in-service distribution is $25,000 or less, it must be taken  as a lump sum. All scheduled in-service withdrawals will be paid in January.  If your employment with Crown ends prior to or while receiving scheduled-in  service withdrawals, your scheduled in-service withdrawal will be distributed  to you according to the Termination rule below.  You may postpone or change the distribution method of any scheduled  in-service withdrawal by filing a *Distribution  Election Change Form* at least one year in advance of your  previously-elected distribution date. This form can be obtained from Gene  Hawkins.EFFECTIVE FOR AMOUNTS DEFERRED FROM  THE 2005 AND SUBSEQUENT PLAN YEARS,  each scheduled in-service withdrawal may be postponed a maximum of two  times, and the new date for distribution must be at least FIVE YEARS |

 

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| ** **                                                                                                                                                                                                                                        | ** ** | beyond the previously-scheduled  date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| ** **                                                                                                                                                                                                                                        | ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| You may elect to  receive a distribution from the Plan while you are still employed. Scheduled  in-service withdrawals are available as a manner of accumulating capital for  shorter term needs such as the payment of a child’s education. |       | After Employment Ends  or Following a Change in Control – Termination Distribution   If you terminate employment for any reason (including retirement, long-term  disability or death) or the Company experiences a Change in Control (as  defined in the Crown Media Holdings, Inc. 2000 Long Term Incentive Plan) your  payment options are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                              |       | **Balance  at November 30 of  applicable Plan Year**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **Distribution Method** |   |
|                                                                                                                                                                                                                                              |       | $100,000 or less                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | Lump sum payment |   |
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|                                                                                                                                                                                                                                              |       | $100,001 - $250,000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | You elect to receive a lump sum payment or 5 Annual  Installments |   |
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|                                                                                                                                                                                                                                              |       | more than $250,000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 5 Annual Installments |   |
|                                                                                                                                                                                                                                              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |
|                                                                                                                                                                                                                                              |       | You should complete the  Distribution Election section of the enrollment form at the time you make  your election to defer. Any change to a Distribution Election form must be  filed at least 6 months prior to your termination or the Change in Control to  be effective. If no election is made within the required time period, payment  is made in a single lump sum, if the amount is $250,000 or less, or in installments,  if the amount exceeds $250,000.FOR AMOUNTS DEFERRED FROM THE 2005  AND SUBSEQUENT PLAN YEARS, PENDING IRS REGULATIONS MAY REQUIRE A CHANGE TO A  DISTRIBUTION ELECTION FORM TO BE FILED AT LEAST 12 MONTHS IN ADVANCE AND EVEN  THEN MAY NOT GIVE EFFECT TO THE CHANGE WITHOUT A DELAY OF 12 MONTHS.Payments will be made or, if in installment form, will begin in  the January following the date of termination or Change in Control. FOR AMOUNTS DEFERRED FROM THE 2005 AND  SUBSEQUENT PLAN YEARS, PAYMENTS WILL BE MADE OR WILL BEGIN THE LATER OF THE  JANUARY FOLLOWING THE DATE OF TERMINATION OR CHANGE IN CONTROL OR THE DATE  THAT IS SIX MONTHS AFTER THE DATE OF TERMINATION OR CHANGE IN CONTROL.  Payments will be made in the form of cash unless the amount distributed is  from the portion of your account that contains RSU Stock Units (see  “Investment of RSU Compensation”); in such event, RSU Stock Units will be  distributed in the form of stock. |

 

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|                                                                                          |       | If the Administrator  determines that a total distribution upon a Change in Control will subject  you to an excise tax as an “excess parachute payment,” then your distribution  will be limited to the amount that does not trigger the excise tax and the  remaining amount will be paid as soon as practicable following the one-year  anniversary of the Change in Control or, if later, the date the Administrator  determines that the excise tax will no longer be applied.  The Administrator may make a distribution to a legal guardian in the event of  incompetence or minor status, and may make payments directed by court order.                                                                                                               |
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|                                                                                          |       | **Explanation  of Installment Calculation**    The amount of each installment is equal to the value of your account balance  on November 30 preceding the date of payment divided by the number of  remaining installments (including the installment being paid).*For example, if you choose a 5-year  installment period beginning in January 2007, the first payment is equal to  your November 30, 2006 account balance divided by 5; the second payment  (January 2008) is equal to your November 30, 2007 account balance  divided by 4; and so on until the fifth payment, which is equal to your  remaining account balance. The method will result in a larger installment  every year.*                                              |
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|                                                                                          |       | **Other Issues Related to  Distributions**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| ** **                                                                                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| ** **                                                                                    |       | **Nonscheduled  Early Withdrawals**At any time, you may request an unplanned distribution of  up to 100% of your funded account balance. This nonscheduled, immediate  distribution is subject to a 10% penalty (i.e. 90% of your selected  withdrawal amount, less taxes, will be distributed to you; and you will  forfeit the remaining 10%). Income taxes do not apply to the 10% forfeited  amount. In addition, you will become ineligible to defer base salary to the  Plan for the remainder of that Plan Year and the following Plan Year. The  minimum nonscheduled withdrawal is the lesser of $25,000 or your entire  account balance. **NONSCHEDULED  EARLY WITHDRAWALS ARE NOT AVAILABLE FOR AMOUNTS DEFERRED FROM THE 2005 AND  SUBSEQUENT PLAN YEARS.** |
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| You will need to  complete a written request for a Nonscheduled Early or Hardship Withdrawal. | ** ** | **Hardship  Withdrawals**In some circumstances, hardship withdrawals of your funded  account balances are allowed without penalty. Hardship withdrawals are limited  to “unforeseeable emergencies” such as illness or casualty losses. You must  apply for a hardship withdrawal and your application must be approved by the  Administrator.                                                                                                                                                                                                                                                                                                                                                                                                                |

 

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| When you enroll in the  Plan you will complete a Beneficiary Designation. You should determine  whether or not you need to change your beneficiary any time your personal  circumstances change. | ** ** | **Death**If you die while receiving post-employment installment  distributions, the remaining installments will be paid over the installment  period to your beneficiary(ies) of record. 

 

**When  Distributions Are Paid**Nonscheduled Early Withdrawals (available only for the 2004  and preceding Plan Years) and hardship withdrawals are paid as soon as  feasible after being requested and, where applicable, approved.                                                                                                                                                                                                |
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|                                                                                                                                                                                             | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                             |       | **Taxes on Deferrals, Investment  Returns and Distributions**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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|                                                                                                                                                                                             |       | **Deferrals**The compensation deferred will be subject to current Social  Security, Medicare and other statutory employment taxes in the year of  deferral.**Distributions**All distributions from the Crown Media Holdings, Inc. Deferred  Compensation Plan are treated as “ordinary income” subject to federal, state,  and local (if applicable) income taxation at the time of distribution and the  Company will withhold on these amounts. Account distributions including  investment income will not be included in your Social Security wages or  Medicare wages for the year in which the distributions are made. |
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|                                                                                                                                                                                             |       | **Risks of a Deferred  Compensation Plan**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                             |       | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                             |       | **In the  event of the Company’s bankruptcy or insolvency, Deferred Compensation Plan  assets are treated like all other corporate assets and are subject to the  claims of the general creditors of the Company.  The “unsecured” nature of the Deferred Compensation Plan should be considered  prior to your election to participate in the Plan.**                                                                                                                                                                                                                                                                  |
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|                                                                                                                                                                                             |       | **Plan Administration**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                             |       | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                             |       | This Plan is  administered by the Administrator, which has discretionary authority to  interpret and apply the Plan, and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

 

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|   |   | make the rules  necessary for the day-to-day operation of the Plan. 

The Administrator can  be either an individual or Committee appointed by the Compensation Committee  of the Board of Directors of the Company. If no Administrator is named, the  Compensation Committee serves as the Administrator.

The Company has the  right to amend or terminate the Plan, in whole or in part, at any time. No  amendment or termination of the Plan will retroactively reduce any amounts  allocated to a participant’s account.

If there is a dispute  over benefits under the Plan, the Plan requires binding arbitration through  the American Arbitration Association |
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