**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**Form 10-K/A**

**(Amendment No. 1)**

 

**(Mark One)**

 

| **x**                                                 | ** ** | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF 1934**     |
|-------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------|
| ** **                                            | ** ** |                                                                                               |
| **For the  fiscal year ended December 31, 2009** |
| ** **                                            | ** ** |                                                                                               |
| **or**                                                |
|                                                  |       |                                                                                               |
| **o**                                                 | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934** |

 

**For thetransition period from           to           .**

 

**CommissionFile Number: 000-30700**

 

**Crown MediaHoldings, Inc.**

(Exact Name ofRegistrant as Specified in Its Charter)

 

| **Delaware**                       | ** ** | **84-1524410**       |
|------------------------------------|------------|----------------------|
| (State  or Other Jurisdiction      |       | (I.R.S.  Employer    |
| of  Incorporation or Organization) |       | Identification  No.) |

 

**12700 Ventura Boulevard,**

**Suite 200,**

**StudioCity, California  91604**

(Address of PrincipalExecutive Offices and Zip Code)

 

**(818)755-2400**

(Registrant’s TelephoneNumber, Including Area Code)

 

Securities registeredpursuant to Section 12(b) of the Act:

** **
| ** **                                 | ** ** | **Name of Each Exchange**   |
|--------------------------------------------|------------|-----------------------------|
| **Title of Each Class**                    | ** ** | **on Which Registered**     |
| Class A Common Stock, $0.01 par value |       | The NASDAQ Stock Market LLC |

 

Securities registeredpursuant to Section 12(g) of the Act: **None**

 

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o  No x

 

Indicate by check mark if the registrant is notrequired to file reports pursuant to Section 13 or Section 15(d) ofthe Act.  Yes o  No x

 

Indicate by check mark whetherthe registrant: (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.  Yes x  No o

 

Indicate by check mark whetherthe registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and postedpursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to submit and post such files).  Yes o  No o

 

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K is notcontained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

 

Indicate by check mark whetherthe registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer,”“accelerated filer” and “smaller reporting company” in Rule 12b-2 of theExchange Act. (Check one):

 

| Large  accelerated filer o |   | Accelerated  filer o         |
|----------------------------|--------|------------------------------|
|                       |   |                         |
| Non-accelerated  filer x   |   | Smaller  reporting company o |

 

Indicate by check mark whetherthe registrant is a shell company (as defined in Rule 12 b-2 of theExchange Act).  Yes o   No x

 

Theaggregate market value of the voting and non-voting common equity held bynon-affiliates computed by reference to the price at which the common equitywas last sold as of June 30, 2009, the last business day of the registrant’smost recently completed second fiscal quarter, was $34,774,121.

 

As of February 28, 2010,the number of shares of Class A Common Stock, $.01 par value outstandingwas 74,117,654, and the number ofshares of Class B Common Stock, $.01 par value, outstanding was30,670,422.

 

**DOCUMENTSINCORPORATED BY REFERENCE**

 

None.

 

 

 

----

 

Inthis amendment to our Annual Report on Form 10-K, the terms “Crown Media Holdings” or the “Company,”refer to Crown Media Holdings, Inc. and, unless the context requires otherwise, subsidiaries of Crown MediaHoldings that operate or have operated our businesses, including Crown MediaUnited States, LLC (“Crown Media United States”). The term “common stock”refers to our Class A common stock and Class B common stock, unlessthe context requires otherwise.

 

Thename Hallmark and other product or service names are trademarks or registeredtrademarks of their owners.

 

CrownMedia Holdings hereby amends its Annual Report on Form 10-K for the yearended December 31, 2009, initially filed with the Securities and ExchangeCommission on March 4, 2010, by amending Part III to includeinformation that was previously to have been incorporated by reference to aproxy statement.

 

**PART III**

 

**ITEM 10. Directors, ExecutiveOfficers and Corporate Governance**

 

**BOARDOF DIRECTORS**

 

**General**

 

Ourcurrent directors, consisting of 14 persons, are listed and describedbelow.  The term of the directorscontinues until the next annual meeting of stockholders or until theirsuccessors are duly elected and qualified. Our Board currently has 15 member positions, one of which positions isvacant.  Directors are elected annually.

 

Nominationsto our Board are governed by our bylaws and our Second Amended and RestatedStockholders Agreement, dated August 30, 2001, as amended (“StockholdersAgreement”), by and among the Company, Hallmark Entertainment Investments Co., a subsidiary of Hallmark Cards,Incorporated (“HEIC”), VISN Management Corp. (“VISN”)and The DIRECTVGroup, Inc.  The StockholdersAgreement provides that the Board will consist of not less than 15 directors,with twelve nominated by HEIC, one nominated by VISN and two independentdirectors (who may not be officers, employees or directors of any of theparties to the Stockholders Agreement or their affiliates) to be nominated bythe Board. In addition, pursuant to a separate stockholders agreement whichconcerns HEIC and to which we are not a party, HEIC granted Liberty Crown, Inc.(“Liberty Crown”) and J.P. Morgan Partners (BHCA), L.P. (“JPMorgan”) each theright to designate one of our directors as part of HEIC’s twelve nominees.  In August 2006, JPMorgan surrendered itsnomination right granted under the Stockholders Agreement.  In January 2008 as part of an agreementwith us, VISN also surrendered its nomination right granted under theStockholders Agreement.  The right of anyparty to nominate a director pursuant to the Stockholders Agreement willterminate on the later of when such party (1) ceases to beneficially ownin the aggregate at least 5% of the shares of the Company’s common stock thenissued and outstanding and (2) ceases to beneficially own at least 75% ofthe Company’s common stock that the party (or predecessor holder) ownedimmediately following completion of our initial public offering on May 9,2000.  See Item 13.

 

Ofthe Board members, William J. Abbott, Dwight C. Arn, Robert C. Bloss, WilliamCella, Steve Doyal, Brian E. Gardner, Donald J. Hall, Jr., Irvine O.Hockaday, Jr., A. Drue Jennings, Brad R. Moore and Deanne R. Stedem werenominated by HEIC; Glenn Curtis was nominated by HEIC at the request of  Liberty Crown.  In addition, the Board nominated Peter A.Lund and Herbert Granath as independent directors.  Our Board of Directors also approved thenomination of each of these persons as directors.

 

BecauseHEIC holds Class A Common Stock and all of the Class B Common Stock,representing approximately 94.5% of the voting power of the Company, its votein favor of nominees for directors will be sufficient to elect such nomineesregardless of the vote of any other stockholders.

 

**Directors**

 

*William J. Abbott,* age 48, has been President and ChiefExecutive Officer and a director of the Company since June 1, 2009.  Prior to that, Mr. Abbott was ExecutiveVice President, Advertising Sales, of Crown Media Holdings since January 2000.  Prior to that, he was Senior Vice President,Advertising Sales, of Fox Family Worldwide from January 1997 to January 2000.  Mr. Abbott was selected as a directorbecause he is the President and Chief Executive Officer of the Company and forhis extensive experience in the television industry and advertising sales.

 

2

----

 

*Dwight C. Arn*, age 59, hasbeen a director of Crown Media Holdings since March 2008.  Mr. Arn has been Associate GeneralCounsel of Hallmark Cards, Incorporated since 1989.  Additionally, Mr. Arn has been servingas General Counsel of Hallmark International since 1992 and as General Counselof Crayola LLC since 1995.  Mr. Arnbegan his career at Hallmark Cards, Incorporated in 1976 and has served invarious attorney positions.  Mr. Arnwas selected as a director for his business and legal experience.

 

*Robert C. Bloss,* age 54, has been a director of Crown MediaHoldings since July 2009.  Mr. Bosshas been Senior Vice President - Human Resources of Hallmark Cards since March 2008.  He was human resources director for theHallmark Cards retail business from 2005 to 2008.  Mr. Bloss has been human resourcesdirector for various divisions of Hallmark Cards since 1986, including theproduct development and marketing division. Mr. Bloss is the chairman of the Compensation Committee.  Mr. Bloss was selected as a director forhis experience in the areas of human resources and executive compensation.

 

*William Cella*, age 60, has been a director of Crown MediaHoldings since March 2008.  Mr. Cellais the Chairman and Chief Executive Officer of The Cella Group, a media salesrepresentation company.  Before formingThe Cella Group in 2008, Mr. Cella led MAGNA Global, a Media Negotiation,Research and Programming Unit of the Interpublic Group of Companies.  From 1997 through 2001, Mr. Cella servedas Executive Vice President and Director of Broadcast and Programming forUniversal McCann North America.  From1994 through 1997, Mr. Cella served as Director of National Broadcast andProgramming for McCann-Erickson and, in 1997, was named Executive VicePresident of McCann-Erickson for all of North America.  Mr. Cella was selected as a director forhis extensive experience with media and advertising.

 

*Glenn Curtis*, age 50, has been a director of Crown MediaHoldings since January 2005.  He hasbeen Executive Vice President and Chief Financial Officer of Starz LLC since August 2006.  Prior to that, he was Vice President ofLiberty Media Corporation (a holding company with interests in electronicretailing, media, communications, and entertainment industries) from 2003 to August 2006.  Prior to that, he was Executive VicePresident and Chief Financial Officer of Starz Entertainment Group (asubsidiary of Liberty Media Corporation providing premium movie networks ontelevision) from 1995 to 2002.  Mr. Curtiswas selected as a director for his extensive experience in cable andentertainment companies.

 

*Steve Doyal*, 61, has been a director of Crown Media Holdingssince December 2007.  Mr. Doyalhas been Senior Vice President of Public Affairs and Communications since 1994and a corporate officer at Hallmark Cards****since1995.  In this position, he oversees theoperations of the Hallmark’s communications programs, including internalcommunications and publications, audio-visual communications, media relations,government affairs, and the Hallmark Visitors Center.  Prior to that, he served as Media RelationsDirector from 1993 to 1994 and as Corporate Media Relations Manager from 1988to 1993.  Mr. Doyal was selected asa director for his experience in communications and media management.

 

*Brian E. Gardner*, age 57, has been adirector and Secretary of Crown Media Holdings since January 2004.  He has been Executive Vice President andGeneral Counsel of Hallmark Cards since December 2003.  From 1996 to 2003, Mr. Gardner was aManaging Partner of Stinson Morrison Hecker, LLP (formerly known as Morrison &Hecker, LLP).  Mr. Gardner wasselected as a director for his business, management and legal experience.

 

*Herbert A. Granath*, age 81, is a Co-Chairmanof the Board and has been a director of Crown Media Holdings since December 2004. He has been a consultant for Telenet since 2000 and a consultant for Accenturesince 2006.  He has also been a director of Central European Media since2001.  Mr. Granath was the Chairman of Disney/ABC InternationalTelevision from 1995 to 2000.  Mr. Granathwas selected as a director for his extensive business experience, in particularin the television industry.

 

*Donald J. Hall, Jr.*, age 54, is a Co-Chairmanof the Board and has been a director of Crown Media Holdings since May 2000.  Mr. Hall has been the President andChief Executive Officer of Hallmark Cards since January 2002 and a memberof the board of directors of Hallmark Cards since 1996.  Mr. Hall has served in a variety ofpositions for Hallmark Cards since 1971. Mr. Hall was the Executive Vice President, Strategy and Developmentfrom September 1999 until December 2001.  Prior to that, Mr. Hall was the VicePresident, Product Development, of Hallmark Cards from September 1996until August 1999.  Mr. Hall isa member of the board of directors of Hallmark Entertainment InvestmentCo.   Mr. Hall was selected as adirector for his extensive business and management experience.

 

*Irvine O. Hockaday, Jr.*, age 73, has been adirector of Crown Media Holdings since May 2000. He is a member of theboard of directors of Ford Motor Company and Estee Lauder Companies Inc. andthe chairman of the audit committees of Estee Lauder Companies Inc.  During the last five years, Mr. Hockadaywas also a director of Sprint Corporation. Mr. Hockaday is a trustee of the Hall Family Foundations and theAspen Institute.  He was the Presidentand Chief Executive Officer of Hallmark Cards from January 1986 to December 2001.  Mr. Hockaday was selected as a directorfor his business and management experience and his experience in serving as adirector of other public companies.

 

3

----

 

*A. Drue Jennings*, age 63, has been a director of Crown MediaHoldings since June 2006.  He hasbeen Of Counsel at the law firm of Polsinelli Shughart (formerly known asShughart, Thomson & Kilroy, P.C.) since October 2004.  Mr. Jennings was the interim AthleticDirector at the University of Kansas from April 2003 until July 2003.  Prior to that, Mr. Jennings was theChief Executive Officer of Kansas City Power & Light Company from 1988to 2000 and Chairman of the Board of Kansas City Power & Light Companyfrom 1990 to 2001.  Mr. Jennings isthe chairman of the Audit Committee.  Mr. Jenningswas selected as a director for his business experience, financial expertise andhis ability to lead the Audit Committee.

 

*Peter A. Lund*, age 69, has been adirector of Crown Media Holdingssince May 2000.  He is the former Presidentand Chief Executive Officer of CBS Inc. and President and Chief executiveOfficer of CBS Television and Cable. Additionally, Mr. Lund held numerous positions including Presidentof CBS Broadcasting Group, President of CBS Sports, President of CBS TelevisionStations and President of CBS Television Network.  Mr. Lund has served as a director and amember of the Compensation Committee and Audit Committee of DIRECTV and TheDIRECTV Group, Inc. (DIRECTV became publicly held in November 2009 atwhich time The DIRECTV Group, Inc. became a wholly-owned subsidiary ofDIRECTV).  Mr. Lund also serves as adirector of Emmis Communications Corporation. Mr. Lund was selected as a director for his extensive experience inthe television and cable industry.

 

*Brad R. Moore*, age 63, hasbeen a director of Crown Media Holdings since March 2008.  Mr. Moore has been President of HallmarkHall of Fame Productions since 1993 and Hallmark Publishing from 2007 to 2009,both of which are wholly-owned subsidiaries of Hallmark Cards.  Prior to that, Mr. Moore led thedevelopment, production and distribution of the Hallmark Hall of Fame seriessince 1983.  Mr. Moore directedHallmark Cards’ U.S. advertising efforts from 1982 to 1998.  Mr. Moore was selected as a director forhis knowledge of Hallmark television programming and his familiarity with theHallmark brand.

 

*Deanne R.  Stedem*, age 47, has been adirector of Crown Media Holdings since March 2003.  She has been Associate General Counsel forHallmark Cards since 1998, managing legal matters for the various entertainmentdivisions of Hallmark Cards, Incorporated. She served as Senior Attorney for Hallmark Cards from 1989 until1998.  Ms. Stedem was selected as adirector for her experience in managing entertainment legal matters fordivisions of Hallmark Cards.

 

Thereare no family relationships among the executive officers or directors of theCompany.

 

**ExecutiveOfficers**

 

The following lists ourexecutive officers as of the date of this Form 10-K/A and informationregarding their principal occupations during at least the last five years.

 

*WilliamJ. Abbott,* pleasesee information above under “Directors”.

 

*Janice Arouh,* age 48, has been Executive Vice President, NetworkDistribution and Services, for Crown Media Holdings, Inc. since June 2008.  Prior to that, Ms. Arouh was Senior VicePresident, Network Distribution Services for Crown Media Holdings, Inc.from August 2006 to June 2008. Prior to joining Crown Media Holdings, Inc., Ms. Arouh was Senior Vice President, Affiliate Marketing for Fox Cable Networks from 2001to 2003.  Ms. Arouh has resignedfrom the Company, effective May 7, 2010.

 

*Edward Georger*, age 44, has been Executive Vice President,Advertising Sales, for Crown Media Holdings, Inc. since June 2009.  Prior to that, Mr. Georger was SeniorVice President, Advertising Sales, for Crown Media Holdings, Inc. from February 2000to June 2009.  Prior to joiningCrown Media Holdings, Inc., Mr. Georger was Vice President of EasternSales, for Family Channel and Fox Family Channel.  Mr. Georger was also a network buyer atBacker Spielvogel Bates, Inc., managing major accounts, such as MillerBrewing Company, Hyundai Motor and M&M Mars, Inc.

 

*CharlesL. Stanford,*64, has been Executive Vice President, Legal and Business Affairs andGeneral Counsel of Crown Media Holdings since May 2001. Prior to that, hewas Senior Vice President, Business Affairs and General Counsel of Crown MediaHoldings from October 2000 to May 2001. He also served as Senior VicePresident, Legal and Business Affairs of Crown Media International from November 1999through October 2000.

 

*Brian C. Stewart*, 45, has been Executive Vice Presidentand Chief Financial Officer of Crown Media Holdings since November 2006.  Prior to that, Mr. Stewart served asSenior Vice President and Chief Financial Officer of Crown Media United States,LLC since November 2002.  Prior toassuming the position of Chief Financial Officer of Crown Media United States,LLC, Mr. Stewart served as Vice President, Finance, for Crown MediaHoldings.

 

4

----

 

**SECTION 16(a) BENEFICIAL OWNERSHIP REPORTINGCOMPLIANCE**

 

Based on a review of reportsfiled by our directors, executive officers and beneficial holders of 10% ormore of our shares, and upon representations from those persons, all Securitiesand Exchange Commission stock ownership reports required to be filed by thosereporting persons during 2009 were made timely.

 

**CODE OF BUSINESS CONDUCT AND ETHICS**

 

The Company has adopted aCode of Business Conduct and Ethics that reflects long-standing positions ofthe Company and contains additional provisions. The Code applies to all employees, including the Company’s principalexecutive officer, principal financial officer and controller, and to directors.  A shareholder can request a free copy of the Code of Business Conduct andEthics by writing to the Executive Vice President, Legal and Business Affairsand General Counsel of the Company at Crown Media Holdings, Inc., 12700Ventura Boulevard, Studio City, California 91604.

 

**AUDIT COMMITTEE**

 

Themembers of the Audit Committee are Messrs. Jennings, Chairman, Granath andLund, each of whom are believed by the Board to be independent directors asdefined in the listing standards for the Nasdaq Global Market (“Nasdaq ListingStandards”).  The Board has determinedthat each of the members of the Audit Committee is financially literate inaccordance with the Nasdaq Listing Standards. The Board has also determined that Mr. Jennings qualifies as anaudit committee financial expert, as defined under Securities and ExchangeCommission (the “Commission”) rules.

 

Underthe Audit Committee Charter, the primary authority and responsibilities of theAudit Committee are to:

 

·                  oversee the Company’sfinancial reporting processes;

 

·                  provide oversight relating to the Company’sinternal control over financial reporting and internal audit process andactivities;

 

·                  review and approve relatedparty transactions;

 

·                  prepare the report requiredby the Commission to be included in the Company’s annual proxy statement;

 

·                  be directly responsible forthe appointment, compensation, retention, termination and oversight of the workof the independent auditors and ensure compliance with independencerequirements for auditors;

 

·                  pre-approve all audit andnon-audit services;

 

·                  oversee various risks which the Companymay encounter; and

 

·                  establish and oversee theCompany’s whistleblower policy regarding submission of reports of questionableaccounting practices, internal accounting controls or auditing matters and theinvestigation, disposition and retention of such reports.

 

**Item 11.  Executive Compensation**

 

###### **COMPENSATION DISCUSSIONAND ANALYSIS**

###### ** **

**Overview and Objectives of theCompensation Program**

 

TheCompany’s compensation packages to the executive officers, as determined by theCompensation Committee of the Company’s Board, are designed to enable theCompany to recruit, retain and motivate a talented and diverse group of peoplewho contribute to our success.  Thepackages are also intended to synchronize executive compensation with theCompany’s performance, motivate executive officers to achieve our businessobjectives and provide strong performance incentives.  The Company’s Chief Executive Officerprovides input on determining and recommending compensation packages of theexecutive officers other than himself. The goal of the Compensation Committee is that the packages are fair,well-balanced between short term and long term components and reasonable andcompetitive with other companies in the cable and television industry.  To attain this goal, the CompensationCommittee refers to third-party surveys to obtain a general understanding ofcurrent compensation practices in the cable and television industry.  The Compensation Committee also refers tosuch surveys for benchmarking, against the compensation paid to comparableexecutive officers at other cable programmers, each executive officer’s annualbase salary, target bonus, target total cash compensation and target long termincentive awards.   Fox Network, ScrippsNetworks, Discovery Communications, Disney ABC and Lifetime are a few of manycable programmers who participate in such third-party surveys.

 

5

----

 

TheCompensation Committee also focuses on aligning individual incentives with theCompany’s strategic and financial goals. Key incentive-based components in executive compensation packages arethe annual performance-based incentive bonus, which is awarded in recognitionof individual and Company performance each year, and awards granted under ourAmended and Restated 2000 Long Term Incentive Plan (“LTIP”).

 

**Elements of ExecutiveCompensation Packages**

 

Compensation packagesawarded to the Named Executive Officers are comprised of base salary, annualcash bonus awards, awards granted under our LTIP and perquisites and otherbenefits.

 

*Salary Determinations*

 

Salaryranges for the Chief Executive Officer and the Named Executive Officers arebased on an individual’s experience and prior performance, as well as theCompany’s operating performance and the attainment of planned financial andstrategic goals. Annual salaries for the Named Executive Officers (as definedbelow) are subject to the provisions of their respective employment agreementsdescribed below under the heading *“Compensation of ExecutiveOfficers and Directors - Summary of Executive Employment Agreements”.*  In determining whether or not to increaseannual base salaries and the amount of any increase, the Compensation Committeeevaluates each executive’s individual performance, any change in executive’sposition, the Company’s performance and attainment of initiatives, benchmarkeddata and commitments negotiated in the employment agreements.  In 2009, Mr. Abbott’s salary wasincreased by 11%, Ms. Arouh’s salary was increased by 3%, Mr. Georger’ssalary was increased by 13%, Mr. Stanford’s salary was increased by 3% andMr. Stewart’s salary was increased by 4%.

 

*Bonus Determination*

 

The Company pays annualincentive bonuses earned in a calendar year in March of the followingyear.  Employment agreements executed byNamed Executive Officers contain target percentages of base salary that are tobe paid as annual bonuses.  In addition, theCompensation Committee may, in its sole discretion, approve signing anddiscretionary bonuses for executive officers. Annual bonus payments for fiscal year 2009 paid to the Named Executive Officers weredetermined and calculated in accordance with the below formula.  The Compensation Committee has the authorityto modify the below formula for subsequent years.

 

**BonusOpportunity****:    **Target Incentive was 60% of basesalary for the Chief Executive Officer, 50% of base salary for the ExecutiveVice President Advertising Sales (50% of which is conditioned on meeting thetargets set forth below and the remaining 50% is conditioned on the Company’sachievement of revenue goals under the Company’s advertising sales incentiveplan), and 20% of base salary for each of the other Named Executive Officers. Total bonus opportunity was 0% to 135% of the Target Incentive.

 

**PlanMetrics****:****                    **The plan measured performance for January 1through December 31 of the plan year and used the following targets:

 

·                                          **Advertising Revenue -**recognized on an as earned basis.

·                                          **EBITDA -**EBITDA before equity compensation expenseand further adjusted to reflect extraordinary items.

·                                          **Operating Cash Flow** - Cash Flow before cash interestexpense.

·                                          **W 25 -54**- total daily average household delivery forwomen ages 25-54, as determined by Nielsen.

 

**PlanTargets:**

 

Targets are set each yearbased upon the Company’s operating plan. The targets for 2009 were as follows:

** **
| **Target  Incentive********Plan Metrics** | ** ** | **Performance Targets** | ** ** | **Weight** | ** ** | **% Opportunity** | ** ** |
|-------------------------------------------|------------|-------------------------|------------|------------|------------|-------------------|------------|
| Advertising  Revenue (MM)                 |       | $                       | 231.0      |       | 30         | %                 | 6          | % |
| EBITDA  (MM)                              |       | $                       | 86.9       |       | 25         | %                 | 5          | % |
| Operating  Cash Flow (MM)                 |       | $                       | 51.0       |       | 25         | %                 | 5          | % |
| Full  Day W25-54                          |       | 158,000 HHD             |       | 20         | %          | 4                 | %          |

 

**Calculations****:**

 

Thecalculation for payment of the Advertising Revenue Target was as follows:

 

6

----

 
| **$ Performance to Plan (MM’s)** | ** ** | **% Performance to Plan** | ** ** | **Payout %** | ** ** |
|--------------------------------------------|------------|---------------------------|------------|--------------|------------|
| $                                          | 220        |                      | 95         | %            | 62.50      | % |
| $                                          | 226        |                      | 98         | %            | 81.25      | % |
| $                                          | 231        |                      | 100        | %            | 100.00     | % |
| $                                          | 243        |                      | 105        | %            | 117.50     | % |
| $                                          | 254        |                      | 110        | %            | 135.00     | % |

 

Thecalculation for payment of the EBITDA Target was as follows:

 
| **$ Performance to Plan (MM’s)** | ** ** | **% Performance to Plan** | ** ** | **Payout %** | ** ** |
|--------------------------------------------|------------|---------------------------|------------|--------------|------------|
| $                                          | 82.5       |                      | 95         | %            | 25.0       | % |
| $                                          | 84.0       |                      | 97         | %            | 62.5       | % |
| $                                          | 86.9       |                      | 100        | %            | 100.0      | % |
| $                                          | 91.3       |                      | 105        | %            | 117.5      | % |
| $                                          | 95.6       |                      | 110        | %            | 135.0      | % |

 

The calculation for paymentof the Operating Cash Flow was as follows:

 
| **$ Performance to Plan (MM’s)** | ** ** | **%  Performance to Plan** | ** ** | **Payout  %** | ** ** |
|--------------------------------------------|------------|----------------------------|------------|---------------|------------|
| $                                          | 44.9       |                       | 88         | %             | 25.0       | % |
| $                                          | 48.5       |                       | 95         | %             | 62.5       | % |
| $                                          | 51.0       |                       | 100        | %             | 100.0      | % |
| $                                          | 56.1       |                       | 110        | %             | 117.5      | % |
| $                                          | 61.2       |                       | 120        | %             | 135.0      | % |

 

The calculation for paymentof the Demographic Achievement target was as follows:

 
| **Performance  to Plan** | ** ** | **%  Performance to Plan** | ** ** | **Payout  %** | ** ** |
|--------------------------|------------|----------------------------|------------|---------------|------------|
| 151,000                  |       | 96                         | %          | 50.0          | %          |
| 153,950                  |       | 97                         | %          | 75.0          | %          |
| 158,000                  |       | 100                        | %          | 100.0         | %          |
| 169,850                  |       | 108                        | %          | 117.5         | %          |
| 181,700                  |       | 115                        | %          | 135.0         | %          |

 

**BonusAmount**: Actual bonus amount isdependent on the degree to which the Company achieves the objective for eachplan measure against performance ranges established for each metric.  The Compensation Committee has the discretionto adjust the total award and the result for each metric up or down by up to20%.  For fiscal year 2009, the actual bonusthat was paid was 37.2% of base salary for the Chief Executive Officer, whosetarget was 60% pursuant to his employment agreement.  With respect to other Named ExecutiveOfficers serving at year-end of 2009, except for Executive Vice President,Advertising Sales, the actual bonus that was paid in 2009 was 14.9% of basesalary, whose target was 20% of base salary. The actual bonus that was paid for 2009 under this plan to ExecutiveVice President, Advertising Sales, was 18.6% of base salary.

 

*Awards Granted Under Long TermIncentive Plan (“LTIP”)*

 

**General**

 

Under the LTIP, the Boardand the Compensation Committee have the discretion to grant incentive awards toour employees and directors, including, without limitation, Restricted StockUnits (“RSUs”) and cash awards based on a percentage of an employee’s annualbase salary (“LTIP Award”).  Theseawards, which are intended as incentives for future performance, combined withthe executive’s salary and performance bonus, substantially form a totalcompensation package.     The Company hasnot awarded stock options to any of its employees since 2002.  The Company did not grant any RSUs or othertypes of stock-based awards from 2007 to 2009; therefore, no RSUs or othertypes of stock-based awards are outstanding as of the date of this Form 10-K/A.  In January of 2009 and 2010, the Companygranted awards payable in cash to Named Executive Officers, senior vicepresidents and vice presidents under the LTIP.

 

7

----

 

**Restricted Stock Units**

 

The Company granted RSUs to its executives each year from 2003 to2006.  The Compensation Committeedetermined whether or not RSU grants were made, grant eligibility, vesting, thesize of the grant pool and the grant ranges for each executive level.  Within the parameters established by theCompensation Committee, the Chief Executive Officer then determined the size ofthe grant pool for each department within the Company.  Each Executive Vice President then madespecific individual grants for each employee within the department which he orshe oversaw.

 

There were two types of RSUs: Performance RSUs and EmploymentRSUs.  Each RSU represented the right toreceive one share of the Company’s Class A Common Stock or, in thediscretion of the Compensation Committee, the cash equivalent to the fairmarket value of one share of the Company’s Class A Common Stock(calculated by taking the average of the stock price for the immediatelypreceding 14 business days).  If anydividend was paid with respect to a share of Class A Common Stock whilethe RSUs were held, the Company would have paid to each holder at itsdiscretion an amount in cash, Class A Common Stock or other property, ineach case having a value equal to the dividend. Such amounts of dividend would have vested and be paid at the same timeas the underlying RSUs were settled.  AllRSUs were subject to forfeiture until certain conditions, including continuedemployment, were met.

 

In 2009, the last outstanding RSUs, which were Employment RSUs and thesecond tranche of Performance RSUs granted in 2006, vested and were settled incash (see below for vesting criteria). Below is a table summarizing certain key terms of the RSUs granted tothe Company’s executive officers that were outstanding in 2009.

 
|                | ** ** | **Employment RSUs** | ** ** | **Performance RSUs**                                                                |
|----------------|------------|---------------------|------------|-------------------------------------------------------------------------------------|
| **Grant Year** | ** ** | **Percentage**      | ** ** | **Vesting Dates(1)**                                                                | ** ** | **Percentage** | ** ** | **Vesting Dates** | ** ** | **Vesting Criteria** |
|           |       |                |       |                                                                                |   |   |   |   |   |   |
| **2006**       |       | 35                  | %          | Vested entirely on the third anniversary of the grant date  (August 18, 2009). |   | 65 | % | See “Vesting Criteria”(2) |   | First Tranche and Vesting: 65% of the Performance  RSUs were eligible to vest as follows |
|           |       |                |       |                                                                                |   |   |   |   |   | ·   150% of  Performance RSUs if at least 3 of the major distribution agreements were  renewed within 15 months of the grant date and the fourth major distribution  agreement was renewed prior to its expiration date or within 120 days  thereafter. |
|           |       |                |       |                                                                                |   |   |   |   |   | ·   100% of  Performance RSUs if at least three of the major distribution agreements were  renewed within 15 months of the grant date and the fourth major distribution  agreement was renewed but not prior to its expiration date or within 120 days  thereafter. |
|           |       |                |       |                                                                                |   |   |   |   |   | ·   100% of  Performance RSUs if all major distribution agreements were renewed on or  prior to each agreement’s expiration date. |
|           |       |                |       |                                                                                |   |   |   |   |   | ·   65% of  Performance RSUs if all major distribution agreements were renewed within 120  days after expiration. |
|           |       |                |       |                                                                                |   |   |   |   |   | ·   0% of  Performance RSUs if all major distribution agreements were not renewed as  described above.

 

The  Compensation Committee determined that 100% of the first tranche of  Performance RSUs were eligible to vest since all major distribution  agreements were renewed on or prior to each agreement’s expiration date. Such  Performance RSUs were vested and settled in cash in April 2008. |

 

8

----

 
|        |   |   |   |   |   |   |   |   |   | Second  Tranche and Vesting: The remaining Performance RSUs, 35%, were  vested on December 31, 2008 in accordance with the following formula and  settled in cash in February 2009:

 

**Percentage of value of the RSUs paid based on subscriber revenue  achieved (the “Modifier”)** |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |   |   |   |   |   |   |   |                                                                                                                                                                                                                                                                                                             |
|        |   |   |   |   |   |   |   |   |   | Less  than $47.86 million                                                                                                                                                                                                                                                                                        | 65% |
|        |   |   |   |   |   |   |   |   |   | $47.86  mil. to $55.17 mil                                                                                                                                                                                                                                                                                       | 85% |
|        |   |   |   |   |   |   |   |   |   | $55.17  mil. to $61.93 mil                                                                                                                                                                                                                                                                                       | 100% |
|        |   |   |   |   |   |   |   |   |   | $61.93  mil. or more                                                                                                                                                                                                                                                                                             | 135% |

 

----

(1)                                  Employment RSUsvested if the employee was employed with the Company on the vesting date.

(2)                                  The Compensation Committeehad the discretion to increase or decrease the Modifier by 20% and had theauthority to extend the deadlines for satisfaction of the vesting conditions inthe event that a renewal of the major distribution agreements was delayed forfactors beyond the control of the Company.

 

With respect to Henry S.Schleiff, the Company’s former President and Chief Executive Officer, only, (a) 50%of RSUs granted in 2006 were Employment RSUs and the remaining 50% werePerformance RSUs and (b) Employment RSUs would have vested entirely on thefourth anniversary of the date of grant (October 2, 2010).  Mr. Schleiff’s Performance RSUs had thesame terms as set forth in the table above.

 

**Long Term Incentive Plan Awards**

 

In January of 2009 and 2010, the Company granted awards payable incash to Named Executive Officers, senior vice presidents and vice presidentsunder the LTIP pursuant to Long Term Incentive Compensation Agreements (“LTIPAgreement”).  The award amount granted iscalculated by taking a percentage of each employee’s annual base salary, whichranges from 18% to 70%.  Each award iscomprised of 50% Performance Award and 50% Employment Award.  The Performance Award will vest only if theCompany reaches predetermined performance goals based on cash flow and adjustedEBITDA.  A pro rata portion of anyoutstanding unvested Award will vest immediately in the case ofinvoluntary termination of employment without cause on or after January 1,2010 (in the case of 2009 grant) or January 1, 2011 (in the case of 2010grant) or executive’s death or disability. The Compensation Committee also has the ability to increase or decreasethe payout based on an assessment of demographics achieved, relative marketconditions and management of expenses.

 

Below is a table summarizing certain key terms of the LTIP Awardsgranted to the Company’s executive officers in 2009 and 2010.

 
| **Grant Year** | ** ** | **Type of  LTIP Award** | ** ** | **Vesting Date**                        | ** ** | **Vesting Criteria**        |
|----------------|------------|-------------------------|------------|-----------------------------------------|------------|-----------------------------|
| 2009           |       | Employment              |       | 100% will vest on August 31, 2011  |       | Employment on vesting date. |
|           |       |                    |       |                                    |       |                        |
| 2009           |       | Performance             |       | 50% will vest on December 31, 2010 |       |                        |
|           |       |                    |       |                                    | ** ** |                        |   | **2009****(MM’s)** |   | **2010****(MM’s)** |   | **2-Yr  Total  (MM’s)** |
|           |       |                    |       |                                    | ** ** | Adjusted EBITDA(1)          |   | $ | 84.1 |   | $ | 129.4 |   | $ | 213.5 |
|           |       |                    |       |                                    | ** ** | Cash Flow(2)                |   | $ | 39.6 |   | $ | 122.6 |   | $ | 162.2 |
|           |       |                    |       |                                    | ** ** |                        |   |   |   |   |   |   |
|           |       |                    |       | 50% will vest on December 31, 2011 | ** ** |                        |   |   |   |   |   |   |
|           |       |                    |       |                                    | ** ** |                        | **2009****(MM’s)** |   | **2010****(MM’s)** |   | **2011****(MM’s)** |   | **3-Yr  Total  (MM’s)** |
|           |       |                    |       |                                    | ** ** | Adjusted EBITDA(1)          | $ | 84.1 |   | $ | 129.4 |   | $ | 172.6 |   | $ | 386.1 |
|           |       |                    |       |                                    | ** ** | Cash Flow(2)                | $ | 39.6 |   | $ | 122.6 |   | $ | 181.6 |   | $ | 343.8 |
|           |       |                    |       |                                    | ** ** |                        |   |   |   |   |   |   |   |
| 2010           |       | Employment              |       | 100% will vest on August 31, 2012  |       | Employment on vesting date. |

 

9

----

 
|   |   |        |   |                                     | ** ** |               |                    |   |                    |   |                    |   |                         |   |   |   |   |
|--------|--------|-------------|--------|------------------------------------------|------------|--------------------|-------------------------|--------|-------------------------|--------|-------------------------|--------|------------------------------|--------|--------|--------|--------|
| 2010   |   | Performance |   | 100% will vest on December 31, 2012 | ** ** |               | ** **              |   | ** **              |   | ** **              |   |                         |
|   |   |        |   |                                     | ** ** |               | **2010****(MM’s)** |   | **2011****(MM’s)** |   | **2012****(MM’s)** |   | **3-Yr  Total  (MM’s)** |
|   |   |        |   |                                     | ** ** | Adjusted EBITDA(1) | $                       | 85.1   |                    | $      | 115.7                   |   | $                            | 147.2  |   | $      | 348.0  |
|   |   |        |   |                                     | ** ** | Cash Flow(2)       | $                       | 82.0   |                    | $      | 122.9                   |   | $                            | 137.0  |   | $      | 341.9  |

 

----

(1)                                        Before equity compensation.

(2)                                        Excluding interest payments, financingactivities (payment of debt and preferred or redemptions), and equity basedcompensation of $3.5 million in 2009 and $0.5 million in 2010.

 

With respect to Performance Awards, the percentage ofaward payout will vary depending upon achievement of the two targets as follows:

 
| **Target Threshold** | ** ** | **Payout Percentage** | ** ** |
|----------------------|------------|-----------------------|------------|
| Less than 90%        |       | 0                     | %          |
| 90% Achievement      |       | 50                    | %          |
| 100% Achievement     |       | 100                   | %          |
| 110% Achievement     |       | 150                   | %          |

 

On each vestingdate of a Performance Award, the Chief Financial Officer of the Company willconfirm whether or not applicable performance targets have been achieved.  If targets have been achieved, managementwill submit payout calculations to the Compensation Committee for review andfinal determination.

 

All Awards will besettled the later of 30 days following each vesting date or 15 days followingthe issuance of the Company’s audited financial statements of the relevantyear, but by no later than March 15 of the year following the year inwhich the Award is vested.

 

*Perquisitesand Other Benefits*

 

All Company executives arealso entitled, subject to meeting certain eligibility requirements, toparticipate in the Company’s benefit programs, including the Company’s 401(k) planand its medical, dental and other benefits plans.  Certain executive officers are entitled toadditional benefits, such as car allowance, reimbursement for financialconsulting fees and particular travel conditions as agreed to under theirrespective employment agreements.

 

**Deferred Compensation Plan**

 

The Company offers a Deferred Compensation Plan toits executive officers and directors. The Deferred Compensation Plan offers an opportunity for the executiveofficers to defer payment, on a pre-tax basis, of portions of his or hersalary, bonus compensation and such deferred payment will be deposited in aninterest-bearing account until distribution. With respect to the interest rate earned, as of January 1, 2009,the Company applies Moody’s Average Corporate Bond Yield as in effect on thefirst day of each month and no longer prime plus 1%.  RSU compensation may be deposited in aninterest-bearing account or in a stock tracking fund at the option of theparticipant of the Plan.  Under the termsof the Deferred Compensation Plan, an executive officer may elect to defer thefollowing compensation:

 
| **Type of Compensation**                   | ** ** | **Maximum Deferral** | ** ** |
|------------------------------------------------------|------------|---------------------------|------------|
| Base Salary                                          |       | 50                        | %          |
| Incentive Compensation                               |       | 100                       | %          |
| RSU Compensation (whether settled in cash or  stock) |       | 100                       | %          |

 

Theamount of total compensation deferred must be at least $5,000.

 

An executive officer may elect to receive payment ofall or part of that Plan year’s deferral amount in a future year that is atleast two years beyond the end of that Plan year.  If such scheduled in-service distribution ismore than $25,000, the distribution may be made in annual installments over 5years.  If such distribution is $25,000or less, it must be taken as a lump sum. All scheduled in-service withdrawals will be paid in January.  In some circumstances, hardship withdrawalsof account balances are allowed without penalty.  Hardship withdrawals are limited tounforeseeable emergencies, such as illness or casualty losses.

 

10

----

 

**ChiefExecutive Officer Compensation**

 

The provisions of our ChiefExecutive Officer’s employment agreement and related agreements which have beenapproved by the Board, determined the salary and stock-based awards granted tohim during fiscal year 2009.  Inapproving the compensation levels contained in Mr. Abbott’s employmentagreements, the Board reviewed and considered the expected value of hisleadership that he would bring to the Company. The Board then set his compensation during the term of his employmentagreement in levels that reflected his potential achievements and quality ofthe Company under his leadership.

 

**Tax Deductibility of Executive Compensation**

 

Under Section 162(m) of the InternalRevenue Code and IRS Notice 2007-49, the Company may not be able to deductcertain forms of compensation in excess of $1,000,000 paid per year to itschief executive officer and its three most highly compensated officers (otherthan its CEO and CFO) who are employed by the Company at year-end.  The Committee believes that it is generallyin the Company’s best interest to satisfy the requirements for deductibilityunder Internal Revenue Code Section 162(m).  Accordingly, the Committee has takenappropriate actions, to the extent it believes feasible, to preserve thedeductibility of annual incentive and long-term performance awards.  However, notwithstanding this general policy,the Committee also believes that there may be circumstances in which theCompany’s interests are best served by maintaining flexibility in the waycompensation is provided, whether or not compensation is fully deductible underInternal Revenue Code Section 162(m).

 

The Internal Revenue Codeexempts qualifying performance-based compensation from the deduction limit ifcertain conditions are met.  One of the conditions is stockholder approvalof the performance-based compensation provisions.  At the 2007 AnnualMeeting of Stockholders of the Company, the stockholders approved (1) theperformance-based cash bonuses payable in 2007 and later years to WilliamAbbott and other executive officers under their then employment agreements and (2) provisionsin their then existing RSU agreements that could be settled in cash or stock in2007 and later years.

 

###### **COMPENSATIONOF EXECUTIVE OFFICERS AND DIRECTORS**

######  

**Summary Compensation Table**

 

The following tablesummarizes the cash and non-cash compensation earned in 2007, 2008 and 2009awarded to or earned by individuals who served as our Chief Executive Officerduring 2009, our Chief Financial Officer during 2009, the three other mosthighly compensated executive officers serving at the end of 2009 and anadditional executive officer who would have been one of these three other mosthighly compensated executive officers but was not serving at the end of 2009(each, a “Named Executive Officer, collectively, the “Named Executive Officers”).

 
| **Name  and Principal Position**                                                           | ** ** | **Year** | ** ** | **Salary($)** | ** ** | **Bonus********($)********(1)** | ** ** | **Stock  Awards($)****(2)** | ** ** | **Option  Awards********($)********(2)** | ** ** | **Non-Equity  Incentive Plan  Compensation********($)** | ** ** | **Changes  in  Pension Value  and  Nonqualified  Deferred  Compensation  Earnings ($)(3)** | ** ** | **All  Other  Compensation  ($)** | ** ** | **Total  ($)** | ** ** |
|--------------------------------------------------------------------------------------------|------------|----------|------------|---------------|------------|---------------------------------|------------|-----------------------------|------------|------------------------------------------|------------|---------------------------------------------------------|------------|--------------------------------------------------------------------------------------------|------------|-----------------------------------|------------|----------------|------------|
| **(a)**                                                                                    | ** ** | **(b)**  | ** ** | **(c)**       | ** ** | **(d)**                         | ** ** | **(e)**                     | ** ** | **(f)**                                  | ** ** | **(g)**                                                 | ** ** | **(h)**                                                                                    | ** ** | **(i)**                           | ** ** | **(j)**        | ** ** |
| **William  Abbott**(4),  President and Chief Executive Officer                             |       | 2009     |       | 666,954       |       | 231,865                         |       | —                      |       | —                                   |       | —                                                  |       | —                                                                                     |       | 12,115                            | (5)        | 910,934        |       |
|                                                                                       | 2008       |     | 578,048    |          | 91,043     |                            | —     |                        | —     |                                     | —     |                                                    | 11,097     |                                                                                       | 10,000     | (5)                               | 690,188    |           |
|                                                                                       | 2007       |     | 546,154    |          | 152,923    |                            | —     |                        | —     |                                     | —     |                                                    | 26,180     |                                                                                       | 10,000     | (5)                               | 735,257    |           |
| **Janice  Arouh**(6),****Executive Vice President, Network Distribution & Service |       | 2009     |       | 422,308       |       | 62,839                          |       | —                      |       | —                                   |       | —                                                  |       | —                                                                                     |       | —                            |       | 485,147        |       |
|                                                                                       | 2008       |     | 386,154    |          | 48,655     |                            | —     |                        | —     |                                     | —     |                                                    | —     |                                                                                       | —     |                              | 434,809    |           |
|                                                                                       | 2007       |     | 357,155    |          | 80,360     |                            | —     |                        | —     |                                     | —     |                                                    | —     |                                                                                       | —     |                              | 437,515    |           |
| **Edward  Georger**(7),****Executive Vice President, Advertising Sales                     |       | 2009     |       | 501,044       |       | 111,578                         | (8)        | —                      |       | —                                   |       | —                                                  |       | —                                                                                     |       | —                            |       | 612,622        |       |
|                                                                                       | 2008       |     | 447,929    |          | 293,480    | (8)                             | —     |                        | —     |                                     | —     |                                                    | —     |                                                                                       | —     |                              | 741,409    |           |
|                                                                                       | 2007       |     | 417,929    |          | 61,620     | (8)                             | —     |                        | —     |                                     | —     |                                                    | —     |                                                                                       | —     |                              | 479,549    |           |
| **David  Kenin**(9),****Former Executive Vice President, Programming                       |       | 2009     |       | 390,865       |       | 14,327                          |       | —                      |       | —                                   |       | —                                                  |       | —                                                                                     |       | 594,366                           | (10)       | 999,558        |       |
|                                                                                       | 2008       |     | 823,251    |          | 103,730    |                            | —     |                        | —     |                                     | —     |                                                    | 13,686     |                                                                                       | 11,400     | (5)                               | 952,067    |           |
|                                                                                       | 2007       |     | 788,111    |          | 177,325    |                            | —     |                        | —     |                                     | —     |                                                    | 18,425     |                                                                                       | 11,400     | (5)                               | 995,261    |           |
| **Henry  Schleiff**(11)****Former President and Chief Executive Officer                    |       | 2009     |       | 507,692       |       | 976,036                         |       | —                      |       | —                                   |       | —                                                  |       | —                                                                                     |       | 1,617,643                         | (12)       | 3,101,371      |       |
|                                                                                       | 2008       |     | 1,064,173  |          | 670,429    |                            | —     |                        | —     |                                     | —     |                                                    | —     |                                                                                       | 20,004     | (5)                               | 1,754,606  |           |
|                                                                                       | 2007       |     | 1,011,212  |          | 1,668,499  |                            | —     |                        | —     |                                     | —     |                                                    | —     |                                                                                       | 20,004     | (5)                               | 2,699,715  |           |
| **Charles  L. Stanford**,****Executive Vice President and General Counsel                  |       | 2009     |       | 526,710       |       | 78,374                          |       | —                      |       | —                                   |       | —                                                  |       | —                                                                                     |       | —                            |       | 605,084        |       |
|                                                                                       | 2008       |     | 491,684    |          | 61,952     |                            | —     |                        | —     |                                     | —     |                                                    | —     |                                                                                       | —     |                              | 553,636    |           |
|                                                                                       | 2007       |     | 457,800    |          | 103,005    |                            | —     |                        | —     |                                     | —     |                                                    | —     |                                                                                       | —     |                              | 560,805    |           |
| **Brian C.  Stewart**,****Executive Vice President and Chief Financial Officer             |       | 2009     |       | 431,200       |       | 64,163                          |       | —                      |       | —                                   |       | —                                                  |       | —                                                                                     |       | —                            |       | 495,363        |       |
|                                                                                       | 2008       |     | 397,885    |          | 50,134     |                            | —     |                        | —     |                                     | —     |                                                    | 23,884     |                                                                                       | —     |                              | 471,903    |           |
|                                                                                       | 2007       |     | 350,000    |          | 78,750     |                            | —     |                        | —     |                                     | —     |                                                    | 30,957     |                                                                                       | —     |                              | 459,707    |           |

 

11

----

 

----

(1)               Represents performance bonusor commission under the terms of employment agreements with the Company and theCompany’s executive bonus terms.  See *“Compensation Discussion and Analysis - Elements of ExecutiveCompensation Package — Bonus Determination.”*

(2)               No stockawards were granted by the Company in 2007 through 2009.

(3)               Represents interest earnedon deferred compensation.

(4)               Mr. Abbott became theCompany’s President and Chief Executive Officer effective June 1, 2009.

(5)               Represents car allowance.

(6)               On April 22, 2010, Ms. Arouhresigned from her position as the Company’s Executive Vice President, NetworkDistribution & Service, effective May 7, 2010.

(7)               Mr. Georger becameExecutive Vice President, Advertising Sales, effective June 15, 2009.

(8)               Represents annual bonus,incentive bonus and/or commission.

(9)               Mr. Kenin resigned from his position as theCompany’s Executive Vice President, Programming, effective May 31, 2009.

(10)         Represents $490,385 of severance payment,$85,470 of unused vacation time pay, $14,711 of unused personal time pay and$3,800 of car allowance.

(11)         Mr. Schleiff resigned from his position as theCompany’s President and Chief Executive Officer and director effective May 31,2009.

(12)         Represents $1,507,468 of severance payment,$80,649 of unused vacation time pay, $19,039 of unused personal time pay and$10,487 of car allowance.

 

**G****rants of Plan-Based Awards**

 

The Company did not grant any stock-based awards to its Named Executive Officers in 2009.

 

**Outstanding Equity Awards at Fiscal Year-End**

 

There were no outstanding equity awards held by any Named Executive Officers on December 31, 2009.

 

**Option Exercises and StockVested**

 

The following table shows the number of stock options or RSUs issued to the Company’s Named Executive Officers that were exercised or vested in fiscal year 2009.

 
| ** **                                                                          | ** ** | **Option Awards**                                 | ** ** | **Stock Awards**                     | ** ** |
|-------------------------------------------------------------------------------------|------------|---------------------------------------------------|------------|--------------------------------------|------------|
| **Name**                                                                            | ** ** | **Number of  Shares  Acquired on  Exercise  (#)** | ** ** | **Value Realized  on Exercise  ($)** | ** ** | **Number of Shares  Acquired on  Vesting  (#)(1)** | ** ** | **Value Realized on  Vesting  ($)(2)** | ** ** |
| **(a)**                                                                             | ** ** | **(b)**                                           | ** ** | **(c)**                              | ** ** | **(d)** | ** ** | **(e)** | ** ** |
| **William Abbott**,President and Chief Executive Officer                            |       | —                                            |       | —                               |       | 46,200 |   | 84,546 |   |
| **Janice Arouh**,Executive Vice President,National  Distribution & Service |       | —                                            |       | —                               |       | 14,000 |   | 25,620 |   |
| **Edward Georger**President and Chief Executive Officer                             |       | —                                            |       | —                               |       | 14,000 |   | 25,620 |   |
| **David Kenin**Former Executive Vice President, Programming                         |       |                                              |       |                                 |       | 30,030 |   | 67,117 |   |
| **Henry Schleiff**,Former President and Chief Executive Officer                     |       |                                              |       |                                 |       | 35,000 |   | 78,225 |   |
| **Charles L. Stanford**,Executive Vice President and General Counsel                |       | —                                            |       | —                               |       | 46,200 |   | 84,546 |   |
| **Brian C. Stewart**,Executive Vice President and Chief Financial Officer           |       | —                                            |       | —                               |       | 46,200 |   | 84,546 |   |

 

----

(1)   Represents the number of RSUsvested in 2009.

(2)          Represents cash amounts paid to settleRSUs vested in 2009.

 

12

----

 

**Nonqualifed DeferredCompensation**

 

The Company has aNonqualified Deferred Compensation Plan. Please see above under the headings *“Compensation Discussionand Analysis — Deferred Compensation Plan”* for a description ofmaterial terms of such plan summarized below.

 
| **Name**                                                                           | ** ** | **Executive  Contributions  in Last FY ($)** | ** ** | **Registrant  Contributions in  Last FY ($)** | ** ** | **Aggregate  Earnings in Last  FY ($)** | ** ** | **Aggregate  Withdrawals /  Distributions in  Last FY ($)** | ** ** | **Aggregate  Balance at Last  FYE ($)** | ** ** |
|------------------------------------------------------------------------------------|------------|----------------------------------------------|------------|-----------------------------------------------|------------|-----------------------------------------|------------|-------------------------------------------------------------|------------|-----------------------------------------|------------|
| **(a)**                                                                            | ** ** | **(b)**                                      | ** ** | **(c)**                                       | ** ** | **(d)**                                 | ** ** | **(e)**                                                     | ** ** | **(f)**                                 | ** ** |
| **William Abbott**,President andChief Executive Officer                            |       | 101,898                                      | ** ** | **—**                                    |       | 17,698                                  | ** ** | **—**                                                  |       | 340,906                                 |       |
| **Janice Arouh**,Executive Vice President, Network Distribution & Service | ** ** | **—**                                   | ** ** | **—**                                    |       | —                                  | ** ** | **—**                                                  |       | —                                  |       |
| **Edward Georger**,Executive Vice President, Advertising Sales                     |       | 49,756                                       | ** ** | **—**                                    |       | 10,668                                  | ** ** | **—**                                                  |       | 204,094                                 |       |
| **David Kenin**,Former Executive Vice President, Programming                       | ** ** | **—**                                   | ** ** | **—**                                    | ** ** | **—**                              | ** ** | **—**                                                  | ** ** | **—**                              | ** ** |
| **Henry S. Schleiff**,Former President andChief Executive Officer                  | ** ** | **—**                                   | ** ** | **—**                                    | ** ** | **—**                              | ** ** | **—**                                                  | ** ** | **—**                              | ** ** |
| **Charles L. Stanford**,Executive Vice President and General Counsel               | ** ** | **—**                                   | ** ** | **—**                                    | ** ** | **—**                              | ** ** | **—**                                                  | ** ** | **—**                              | ** ** |
| **Brian Stewart**,Executive Vice President andChief  Financial Officer             |       | 34,496                                       | ** ** | **—**                                    |       | 17,882                                  |       | (164,874                                                    | )          | 299,685                                 |       |

 

**Summary of Employment Agreements with Named Executive Officers**

 

*Employment Agreement with WilliamAbbott*

 

On August 8, 2006, the Company entered into anemployment agreement with William Abbott that provided for his employment asExecutive Vice President, Advertising Sales, which agreement was replaced bythe employment agreement dated May 7, 2009 described below.  Under the employment agreement, Mr. Abbott’sbase salary was at an annual rate of $523,688 for the term of employment,subject to annual increases at the discretion of the Company.   Mr. Abbott was also entitled to receivea bonus each year of up to 25% of his base salary, conditioned on the Company’sachievement of certain EBITDA, advertising revenue and ratings goals. (Seedetails pertaining to performance bonus below under heading *“Compensation Discussion and Analysis - Elements of ExecutiveCompensation Packages — Bonus Determination.”*)  On May 28,2007, the Company amended Mr. Abbott’s employment agreement and extendedthe term of his employment for an additional one year, through August 18,2009.  Additionally, under the amendment,in addition to participating in the bonus plan described above, Mr. Abbottwas also eligible to participate in the Company’s advertising sales year-endcommission plan, although his compensation under the plan would have been atreduced levels.  The amounts payableunder the plan, for achievement of annual advertising sales revenue targets,were based on a percentage of base salary. Mr. Abbott’s percentages were from 2.5% to 15% of his then-currentbase salary.

 

On May 7, 2009, Mr. Abbottentered into an employment agreement that provides his employment as Presidentand Chief Executive Officer effective June 1, 2009 through December 31,2011, provided, that the term will automatically renew for one year periods ifneither party provides notice to the other by June 30 of the last year ofthe term.  Mr. Abbott’s annual basesalary is $670,000 per year and he is eligible to receive an annual performancebonus with a target of 60% of his annualized base salary with a potentialpayout range of 0 to 150%.  Theperformance bonus is based on criteria outlined by the Company’s CompensationCommittee, which criteria shall be the same as that established for the seniormanagement team.

 

Underthe employment agreement, Mr. Abbott may not compete with the Companyduring the term of his employment. Additionally, for the one-year periodfollowing his termination of employment for any reason, Mr. Abbott may notemploy any person who is working for the Company as an officer, policymaker orin a high-level creative development or distribution position at the date oftermination of Mr. Abbott’s employment.

 

13

----

 

*Employment Agreement withJanice Arouh*

 

On August 8, 2006, the Company entered into anemployment agreement with Janice Arouh that provided for her employment asSenior Vice President, Network Distribution and Service, through August 8,2008.  Under the employment agreement, Ms. Arouh’sbase salary was at an annual rate of $350,000 for the first year of the termand $370,000 for the second year of the term. Ms. Arouhis also entitled to receive a bonus each year of up to 20% of her base salary,conditioned on the Company’s achievement of certain EBITDA, advertising revenueand ratings goals. (See details pertaining to performance bonus below underheading *“Compensation Discussion and Analysis - Elements ofExecutive Compensation Packages — Bonus Determination.”*).  On May 30, 2008, theCompany amended Ms. Arouh’s employment agreement to provide for heremployment as Executive Vice President, Network Distribution and Service, andto extend the term of her employment for additional two years, through August 8,2010.  Also under the amendment, Ms. Arouh’ssalary increased to $400,000 effective June 1, 2008, subject to increasesin the Company’s discretion in June of each year of her term.  On April 22, 2010, Ms. Arouhresigned from her position as the Company’s Executive Vice President, NetworkDistribution & Service, effective May 7, 2010.

 

Ms. Arouh’s employment agreement containsidentical non-compete and non-solicitation provisions to those contained in Mr. Abbott’semployment agreement and which are described above.

 

*Employment Agreement with EdwardGeorger*

 

OnJune 15, 2009, the Company entered into an employment agreement withEdward Georger that provided for his employment as Executive Vice President,Advertising Sales, through December 31, 2011.  This employment agreement replaced an earlieremployment agreement for Mr. Georger’s employment as Senior VicePresident, Advertising Sales.  Under thenew employment agreement, Mr. Georger’s base salary is at an annual rateof $510,000 per year and the Company has agreed to consider adjusting hissalary in June of each year during the term.  Mr. Georger is also eligible to receive a bonuseach year of up to 50% of his base salary, 25% of which will be conditioned onthe Company’s achievement of goals under the Company’s Executive BonusPlan and theremaining 25% will be conditioned on the Company’s achievement of revenue goalsunder the Company’s advertising sales incentive plan. (See details pertainingto performance bonus below under heading *“Compensation Discussionand Analysis - Elements of Executive Compensation Packages — BonusDetermination.”*).  Mr. Georger was also paid an incentivebonus of $35,000, 50% of which was paid within 10 days of executing the newemployment agreement and the remaining 50% was paid in December 2009.

 

Mr. Georger’s employment agreement containsidentical non-compete and non-solicitation provisions to those contained in Mr. Abbott’semployment agreement and which are described above.

 

*Employment Agreement with David Kenin*

 

On December 20,2001, the Company entered into an employment agreement with David Kenin thatprovided for his employment as Executive Vice President, Programming.   The Employment Agreement, which was lastamended on June 21, 2007, had a term through December 31, 2009.  Mr. Kenin’s annual base salary duringthe period January 3, 2008 through January 2, 2009 was $825,000 and$850,000 during the period January 3, 2009 through December 31,2009.  Following the end of each calendaryear during the term, Mr. Kenin could have been paid a bonus based on hisperformance during such calendar year if the Company so determined in its solediscretion.  Mr. Kenin’s employmentagreement contained identical non-compete and non-solicitation provisions tothose contained in Mr. Abbott’s employment agreement and which aredescribed above.

 

On May 19, 2009, theCompany entered into a resignation agreement with Mr. Kenin (the “KeninResignation Agreement”) and the employment agreement described above wasterminated effective May 31, 2009 (the “Kenin Resignation Date”), exceptfor the part dealing with non-solicitation of employees and similarmatters.  Pursuant to the KeninResignation Agreement, Mr. Kenin received (i) continued payment ofthe regular installments of his salary through December 31, 2009 (a totalof $523,077), (ii) his salary through May 31, 2010 in one lump sum onJanuary 8, 2010 (a total of $346,538) and (iii) benefits through theKenin Resignation Date.  Additionally, Mr. Keninreceived a pro rated annual bonus, determined by the Company, for the 2009calendar year for the period up to the Kenin Resignation Date and an amountequal to accrued but unused vacation and personal time was paid within 10 daysof the Kenin Resignation Date.

 

*Employment Agreement with Henry S. Schleiff*

 

On October 3,2006, the Company entered in an employment agreement with Henry S. Schleiffunder which Mr. Schleiff had agreed to serve as the Company’s Presidentand Chief Executive Officer.  The term ofthe Employment Agreement was four years, commencing October 3, 2006.  In December 2008, Mr. Schleiff’sEmployment Agreement was amended to comply with Internal Revenue Code Section 409A.  Under the amendment, if any transaction bonuswas payable, it would have been paid on the earlier of 

 

14

----

 

March 15 of the yearfollowing the transaction or 180 days after such transaction.  The Employment Agreement provided for anannual base salary of $1,000,000 with a minimum increase of at least 4% peryear on the anniversary date of employment. Additionally, Mr. Schleiff would have been eligible to receive anannual performance bonus.  The targetannual performance bonus would have been 100% of the then-current base salarywith a potential payout range of 0% to 200% and a minimum guarantee of 50% foreach calendar year of the term.  Thisperformance bonus would have been based on achievement of criteria determinedby the Company’s Compensation Committee in consultation with Mr. Schleiffand would have included such factors as improved EBITDA, demographics,operating cash, renewal progress of contracts with distributors, advertisingrevenue and other appropriate discretionary considerations.

 

Mr. Schleiff couldnot have competed with the Company during the term of his employment and, if Mr. Schleiffwas terminated for cause or resigns other than for “good reason,” for a periodof time ending on the earlier of 12 months from the termination of employmentor the fourth anniversary of the Employment Agreement.

 

On May 4, 2009, theCompany entered into a resignation agreement with Mr. Schleiff (the “SchleiffResignation Agreement”) and the employment agreement described above was terminatedeffective May 31, 2009 (the “Schleiff Resignation Date”), except for thepart dealing with non-solicitation of employees and similar matters.  Pursuant to the Schleiff ResignationAgreement, Mr. Schleiff received continued payment of regular installmentsof his salary and receipt of benefits through the Schleiff ResignationDate.  Mr. Schleiff also received alump sum payment in the amount of $2,483,504 within 10 days after the SchleiffResignation Date, representing the net present value of the salary which wouldhave been payable to Mr. Schleiff through the expiration of his EmploymentAgreement ($1,507,468) and the net present value of 50% of performance bonusdue through the expiration date of the Employment Agreement ($976,036).  Lastly, Mr. Schleiff was paid an amountequal to accrued but unused vacation and personal time within 10 days of theSchleiff Resignation Date.  Thetransaction bonus provision set forth in Mr. Schleiff’s EmploymentAgreement would have been effective if there was a “Change in Control” (asdefined in the Employment Agreement) within (i) 90 days after the SchleiffResignation Date or (ii) within 180 days after the Schleiff ResignationDate if a Change in Control Agreement was signed prior to the SchleiffResignation Date.  No such bonus was paidto Mr. Schleiff.

 

*Employment Agreement withCharles L. Stanford*

 

On August 8, 2006, theCompany entered into a new employment agreement with Charles L. Stanford, forhis services as Executive Vice President, Legal and Business Affairs andGeneral Counsel, which was amended on January 29, 2008.  Thisagreement replaced Mr. Stanford’s previous 3-year employment agreementwhich would have expired on October 24, 2006.  The new agreement, as amended, expires on August 8,2010 and provides for an annual base salary of $485,268, subject to a minimumincrease of 3% in October of each year of his term.  Mr. Stanfordis also entitled to receive a bonus each year of up to 20% of his base salary,conditioned on the Company’s achievement of certain EBITDA, advertising revenueand ratings goals. (See details pertaining to performance bonus below underheading *“Compensation Discussion and Analysis - Elements ofExecutive Compensation Packages — Bonus Determination”*.)

 

Mr. Stanford’s employment agreement containsidentical non-compete and non-solicitation provisions to those contained in Mr. Abbott’semployment agreement and which are described above.

 

*Employment Agreement with BrianC. Stewart*

 

On July 24, 2006, the Company entered into anemployment agreement with Brian C. Stewart, for his services as Senior VicePresident, Finance and interim Chief Financial Officer.  The agreement was for a term of two years,expiring on July 23, 2008, and provided for an annual base salary of$340,000, subject to annual adjustment in the discretion of the Company.  Mr. Stewartis also entitled to receive a bonus each year of up to 20% of his base salary,conditioned on the Company’s achievement of certain EBITDA, advertising revenueand ratings goals (See details pertaining to performance bonus below underheading *“Compensation Discussion and Analysis - Elements ofExecutive Compensation Packages — Bonus Determination”*.)  On November 8, 2006, the parties amendedMr. Stewart’s employment agreement. The amendment provides for his employment as the Company’s ExecutiveVice President, Finance and Chief Financial Officer and an increase of hisannual base salary to $350,000 through the remainder of the term.  On January 29, 2008, the parties furtheramended Mr. Stewart’s employment agreement and extended the term of hisemployment through July 24, 2010 and increased his salary to $400,000effective January 1, 2008, subject to increases in the Company’sdiscretion in January of each year of his term.

 

Mr. Stewart’s employment agreement containsidentical non-compete and non-solicitation provisions to those contained in Mr. Abbott’semployment agreement and which are described above.

 

15

----

 

**Potential Payments UponTermination or Change-in-Control**

 

*Employment Agreements*

 

In all of our employment agreements with our NamedExecutive Officers, if his or her employment is terminated other than fordeath, disability or cause prior to the expiration of the employmentagreements, the following will be paid by the Company:

 

·                                except in the case of Messrs. Abbottand Georger, the greater of twelve months base salary or theremaining base salary for the remaining term of the employment agreement, paidin a lump sum and discounted at prime rates to present value at the time of payment;

·                                in the case of Mr. Abbott,twelve months base salary, paid in a lump sum and discounted at prime rate topresent value at the time of payment;

·                                in the case of Mr. Georger,the lesser of twelve months base salary or the remaining base salary for theremaining term of the employment agreement, paid in a lump sum and discountedat prime rates to present value at the time of payment;

·                                pro rata bonusthrough the termination date;

·                                any amountspayable under the LTIP Agreements;

·                                vested ERISAbenefits, such as those under the 401(k) plan; and

·                                benefits thatmay be required by law, such as those under COBRA.

 

In the event of termination for the reason statedabove, the Named Executive Officer has no obligation to seek comparableemployment and, if the executive accepts employment during the severanceperiod, there will be no offset by the Company against the amounts paid fortermination.  Additionally, thenon-competition provision in the employment agreements will not apply from thetermination date.

 

If a Named Executive Officer’s employment isterminated as a result of death, disability or for cause, the following will bepaid by the Company:

 

·                                salary throughthe later of (i) expiration date of the 5 business days after the eventwhich triggered the termination or (ii) end of the month in which thetriggering event occurred;

·                                any amountspayable under the LTIP Agreements;

·                                vested ERISAbenefits, such as those under the 401(k) plan; and

·                                benefits thatmay be required by law, such as those under COBRA.

 

*LTIP Agreements*

 

If anexecutive’s employment is terminated, other than by reason of death, disabilityor involuntary termination without cause, any outstanding unvested LTIP Awardwill terminate immediately and no payment will be made with respect to suchAwards.

 

A prorata percentage of any outstanding unvested LTIP Award will vest immediately and be settled upon termination byreason of involuntary termination without cause, if such termination occurs onor after January 1, 2010 (in the case of 2009 LTIP Agreement) or January 1,2011 (in the case of 2010 LTIP Agreement), death or disability.  The pro rata percentage will be calculated bytaking the number of days an executive was employed by the Company commencingwith the date of LTIP Agreement divided by the total number of days, commencingwith the date of the applicable LTIP Agreement and concluding with theapplicable scheduled vesting dates set forth the applicable LTIP Agreement.

 

16

----

 

*Summary of PotentialTermination or Change-in-Control Payments*

 

The table below reflects thedollar amount of compensation to each Named Executive Officer in the event oftermination of such individual’s employment prior to the expiration of theemployment agreements.  The amounts shownassume that the termination was effective December 31, 2009.

 

**WILLIAM ABBOTT**

** **
| **Benefits and Payments********Upon  Termination** | ** ** | **Voluntary Termination  on********12/31/09($)** | ** ** | **Termination  for Cause on  12/31/09($)** | ** ** | **Involuntary  Termination  without Cause  on********12/31/09($)** | ** ** | **Retirement at  “Normal  Retirement  Age” on  12/31/09($)** | ** ** | **Disability on  12/31/09($)** | ** ** | **Death on  12/31/09($)** | ** ** |
|----------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------|------------|--------------------------------------------------------------------|------------|------------------------------------------------------------------------|------------|--------------------------------|------------|---------------------------|------------|
| Compensation:                                      |       |                                             |       |                                       |       |                                                               |       |                                                                   |       |                           |       |                      |       |
| **Salary**(1)                                      |       | —                                           |       | —                                     |       | 669,999                                                            |       | —                                                                 |       | —                         |       | —                    |       |
| **Bonus**(2)                                       |       | —                                           |       | —                                     |       | 231,865                                                            |       | —                                                                 |       | —                         |       | —                    |       |
| Incentives and Benefits:                           |       |                                             |       |                                       |       |                                                               |       |                                                                   |       |                           |       |                      |       |
| **LTIP**(3)                                        |       | —                                           |       | —                                     |       | —                                                             |       | —                                                                 |       | 87,938                         |       | 87,938                    |       |
| **Deferred Compensation Plan**(4)                  |       | 340,906                                          |       | 340,906                                    |       | 340,906                                                            |       | 340,906                                                                |       | 340,906                        |       | 340,906                   |       |
| **Life Insurance Benefits**(5)                     |       | —                                           |       | —                                     |       | —                                                             |       | —                                                                 |       | —                         |       | 200,000                   |       |
| **Unused Vacation and Personal Time Pay**          |       | 88,905                                           |       | 88,905                                     |       | 88,905                                                             |       | 88,905                                                                 |       | 88,905                         |       | 88,905                    |       |

 

**JANICE AROUH**

** **
| **Benefits and Payments********Upon  Termination** | ** ** | **Voluntary  Termination  on********12/31/09($)** | ** ** | **Termination  for Cause on  12/31/09($)** | ** ** | **Involuntary  Termination  without Cause   on********12/31/09($)** | ** ** | **Retirement at  “Normal  Retirement  Age” on  12/31/09($)** | ** ** | **Disability on  12/31/09($)** | ** ** | **Death on  12/31/09($)** | ** ** |
|----------------------------------------------------|------------|---------------------------------------------------|------------|--------------------------------------------|------------|---------------------------------------------------------------------|------------|------------------------------------------------------------------------|------------|--------------------------------|------------|---------------------------|------------|
| Compensation:                                      |       |                                              |       |                                       |       |                                                                |       |                                                                   |       |                           |       |                      |       |
| **Salary**(1)                                      |       | —                                            |       | —                                     |       | 412,000                                                             |       | —                                                                 |       | —                         |       | —                    |       |
| **Bonus**(2)                                       |       | —                                            |       | —                                     |       | 62,839                                                              |       | —                                                                 |       | —                         |       | —                    |       |
| Incentives and Benefits:                           |       |                                              |       |                                       |       |                                                                |       |                                                                   |       |                           |       |                      |       |
| **LTIP**(3)                                        |       | —                                            |       | —                                     |       | —                                                              |       | —                                                                 |       | 31,500                         |       | 31,500                    |       |
| **Deferred Compensation Plan**(4)                  |       | —                                            |       | —                                     |       | —                                                              |       | —                                                                 |       | —                         |       | —                    |       |
| **Life Insurance Benefits**(5)                     |       | —                                            |       | —                                     |       | —                                                              |       | —                                                                 |       | —                         |       | 200,000                   |       |
| **Unused Vacation and Personal Time Pay**          |       | 54,670                                            |       | 54,670                                     |       | 54,670                                                              |       | 54,670                                                                 |       | 54,670                         |       | 54,670                    |       |

 

**EDWARD GEORGER**

** **
| **Benefits and Payments********Upon  Termination** | ** ** | **Voluntary  Termination  on********12/31/09($)** | ** ** | **Termination  for Cause on  12/31/09($)** | ** ** | **Involuntary  Termination  without Cause  on********12/31/09($)** | ** ** | **Retirement  at “Normal  Retirement  Age” on  12/31/09($)** | ** ** | **Disability on  12/31/09($)** | ** ** | **Death on  12/31/09($)** | ** ** |
|----------------------------------------------------|------------|---------------------------------------------------|------------|--------------------------------------------|------------|--------------------------------------------------------------------|------------|------------------------------------------------------------------------|------------|--------------------------------|------------|---------------------------|------------|
| Compensation:                                      |       |                                              |       |                                       |       |                                                               |       |                                                                   |       |                           |       |                      |       |
| **Salary**(1)                                      |       | —                                            |       | —                                     |       | 510,000                                                            |       | —                                                                 |       | —                         |       | —                    |       |
| **Bonus**(2)                                       |       | —                                            |       | —                                     |       | 94,078                                                             |       | —                                                                 |       | —                         |       | —                    |       |
| Incentives and Benefits:                           |       |                                              |       |                                       |       |                                                               |       |                                                                   |       |                           |       |                      |       |
| **LTIP**(3)                                        |       | —                                            |       | —                                     |       | —                                                             |       | —                                                                 |       | 28,021                         |       | 28,021                    |       |
| **Deferred Compensation Plan**(4)                  |       | 204,094                                           |       | 204,094                                    |       | 204,094                                                            |       | 204,094                                                                |       | 204,094                        |       | 204,094                   |       |
| **Life Insurance Benefits**(5)                     |       | —                                            |       | —                                     |       | —                                                             |       | —                                                                 |       | —                         |       | 200,000                   |       |
| **Unused Vacation and Personal Time Pay**          |       | 66,312                                            |       | 66,312                                     |       | 66,312                                                             |       | 66,312                                                                 |       | 66,312                         |       | 66,312                    |       |

 

**CHARLES L. STANFORD**

 
| **Benefits and Payments********Upon  Termination** | ** ** | **Voluntary  Termination  on********12/31/09($)** | ** ** | **Termination  for Cause on  12/31/09($)** | ** ** | **Involuntary  Termination  without Cause********on********12/31/09($)** | ** ** | **Retirement at  “Normal  Retirement  Age” on  12/31/09($)** | ** ** | **Disability on  12/31/09($)** | ** ** | **Death on  12/31/09($)** | ** ** |
|----------------------------------------------------|------------|---------------------------------------------------|------------|--------------------------------------------|------------|--------------------------------------------------------------------------|------------|------------------------------------------------------------------------|------------|--------------------------------|------------|---------------------------|------------|
| Compensation:                                      |       |                                              |       |                                       |       |                                                                     |       |                                                                   |       |                           |       |                      |       |
| **Salary**(1)                                      |       | —                                            |       | —                                     |       | 519,819                                                                  |       | —                                                                 |       | —                         |       | —                    |       |
| **Bonus**(2)                                       |       | —                                            |       | —                                     |       | 78,374                                                                   |       | —                                                                 |       | —                         |       | —                    |       |
| Incentives and Benefits:                           |       |                                              |       |                                       |       |                                                                     |       |                                                                   |       |                           |       |                      |       |
| **LTIP**(3)                                        |       | —                                            |       | —                                     |       | —                                                                   |       | —                                                                 |       | 39,744                         |       | 39,744                    |       |
| **Deferred Compensation Plan**(4)                  |       | —                                            |       | —                                     |       | —                                                                   |       | —                                                                 |       | —                         |       | —                    |       |
| **Life Insurance Benefits**(5)                     |       | —                                            |       | —                                     |       | —                                                                   |       | —                                                                 |       | —                         |       | 200,000                   |       |
| **Unused Vacation and Personal Time Pay**          |       | 67,728                                            |       | 67,728                                     |       | 67,728                                                                   |       | 67,728                                                                 |       | 67,728                         |       | 67,728                    |       |

 

17

----

 

**BRIAN C. STEWART**

 
| **Benefits and Payments********Upon  Termination** | ** ** | **Voluntary  Termination  on********12/31/09($)** | ** ** | **Termination  for Cause on  12/31/09($)** | ** ** | **Involuntary  Termination  without Cause  on********12/31/09($)** | ** ** | **Retirement at  “Normal  Retirement  Age” on  12/31/09($)** | ** ** | **Disability on  12/31/09($)** | ** ** | **Death on  12/31/09($)** | ** ** |
|----------------------------------------------------|------------|---------------------------------------------------|------------|--------------------------------------------|------------|--------------------------------------------------------------------|------------|------------------------------------------------------------------------|------------|--------------------------------|------------|---------------------------|------------|
| Compensation:                                      |       |                                              |       |                                       |       |                                                               |       |                                                                   |       |                           |       |                      |       |
| **Salary**(1)                                      |       | —                                            |       | —                                     |       | 416,000                                                            |       | —                                                                 |       | —                         |       | —                    |       |
| **Bonus**(2)                                       |       | —                                            |       | —                                     |       | 64,163                                                             |       | —                                                                 |       | —                         |       | —                    |       |
| Incentives and Benefits:                           |       |                                              |       |                                       |       |                                                               |       |                                                                   |       |                           |       |                      |       |
| **LTIP**(3)                                        |       | —                                            |       | —                                     |       | —                                                             |       | —                                                                 |       | 35,100                         |       | 35,100                    |       |
| **Deferred Compensation Plan**(4)                  |       | 299,685                                           |       | 299,685                                    |       | 299,685                                                            |       | 299,685                                                                |       | 299,685                        |       | 299,685                   |       |
| **Life Insurance Benefits**(5)                     |       | —                                            |       | —                                     |       | —                                                             |       | —                                                                 |       | —                         |       | 200,000                   |       |
| **Unused Vacation and Personal Time Pay**          |       | 55,200                                            |       | 55,200                                     |       | 55,200                                                             |       | 55,200                                                                 |       | 55,200                         |       | 55,200                    |       |

 

----

| (1) | Twelve month base salary pursuant to the employment agreements.                          |
|-----|------------------------------------------------------------------------------------------|
| (2) | Actual amount of bonus earned in 2009 and paid in 2010.                                  |
| (3) | LTIP Awards which would have vested and settled pursuant to the 2009  LTIP Agreement.    |
| (4) | Balance of deferred compensation plus accrued interest.                                  |
| (5) | Proceeds payable to Named Executive Officer’s beneficiaries upon his  or her death. |

 

**Director Compensation**

 

We do not compensate directors who are employees ofthe Company or Hallmark Cards or their respective subsidiaries for serving onthe Board or any of its committees. Effective January 1, 2009, directors who are not employees of theCompany or Hallmark Cards or their respective subsidiaries received the followingfor serving on the Company’s Board: (1) annual retainer of $40,000 and$1,000 per meeting for each extraordinary meeting or meeting in excess of thenumber of regularly scheduled meetings; (2)  additional annual retainer of$40,000 for Co-Chairman of the Board; (3) annual grant of RSUs valued at$45,000, which is based on the price of a share of the Company’s Class ACommon Stock on the date of grant; (4) for chairman of the AuditCommittee, an annual retainer $6,000; and (5) for chairman of each committeeother than the Audit Committee, an annual retainer of $4,000.  Subject to continued membership on the Boardof Crown as of each anniversary date of grant date, the RSUs will vest in equalone-third installments on each of the first, second and third anniversaries ofthe grant date.  Each RSU represented theright to receive one share of the Company’s Class A Common Stock or, inthe discretion of the Compensation Committee, the cash equivalent to the fairmarket value of one share of the Company’s Class A Common Stock(calculated by taking the average of the stock price for the immediatelypreceding 14 business days).   Anyoutstanding unvested RSUs will vest immediately upon a director’s terminationof membership on the Board by reason of death, disability or involuntarytermination without cause upon a change in control.

 

Eachdirector who serves on the Special Committee of the Board, the committee whichwas formed by the Board with authority to review, negotiate and, in itsdiscretion, recommend to the Board that certain proposal dated May 28,2009 in connection with the recapitalization of the Company, has received (1) aone-time retainer of $50,000; (2) $1,000 per meeting; and (3) $500for each day (other than a day upon which a meeting of the Special Committee isheld) on which such director devotes a significant part of his day to theaffairs of the Special Committee.

 

All directors receive reimbursement of expensesincurred in connection with participation in Board meetings.

 

The table below summarizes the compensation paid bythe Company to its directors who are not employees of the Company or HallmarkCards or its subsidiaries for the fiscal year ended in December 31, 2009:

 

18

----

 
| **Name**                     | ** ** | **Fees  Earned  or Paid  in Cash  ($)** | ** ** | **Stock  Awards($)********(1)** | ** ** | **Option  Awards($)** | ** ** | **Non-Equity  Incentive  Plan Comp.  ($)** | ** ** | **Changes in  Pension Value  and  Nonqualified  Deferred  Compensation  Earnings($)(2)** | ** ** | **All Other  Compensation  ($)** | ** ** | **Total ($)** | ** ** |
|------------------------------|------------|-----------------------------------------|------------|---------------------------------|------------|-----------------------|------------|--------------------------------------------|------------|------------------------------------------------------------------------------------------|------------|----------------------------------|------------|---------------|------------|
| **(a)**                      | ** ** | **(b)**                                 | ** ** | **(c)**                         | ** ** | **(d)**               | ** ** | **(e)**                                    | ** ** | **(f)**                                                                                  | ** ** | **(g)**                          | ** ** | **(h)**       | ** ** |
| William Cella                |       | 50,000                                  |       | 45,000                          |       | —                |       | —                                     |       | —                                                                                   |       | —                           |       | 95,000        |       |
| Glenn Curtis(3)              |       | 48,000                                  |       | 45,000                          |       | —                |       | —                                     |       | —                                                                                   |       | —                           |       | 93,000        |       |
| Herbert A. Granath           |       | 166,000                                 |       | 45,000                          |       | —                |       | —                                     |       | —                                                                                   |       | —                           |       | 211,000       |       |
| Irvine O. Hockaday, Jr. |       | 43,000                                  |       | 45,000                          |       | —                |       | —                                     |       | 7,760                                                                                    |       | —                           |       | 95,760        |       |
| A. Drue Jennings             |       | 133,500                                 |       | 45,000                          |       | —                |       | —                                     |       | —                                                                                   |       | —                           |       | 178,500       |       |
| Peter A. Lund                |       | 123,000                                 |       | 45,000                          |       | —                |       | —                                     |       | 13,701                                                                                   |       | —                           |       | 181,701       |       |

 

----

(1)                                  Represent thevalue of the RSUs granted in 2009, which is based on the price of a share ofthe Company’s Class A Common Stock on the date of grant.

(2)                                  Representsinterest earned on deferred compensation.

(3)                                  Mr. Curtistransferred all of his board compensation to Liberty Media Corporation as aresult of his appointment to the Board by Liberty Media Corporation.

 

**Compensation Policies and Practices which may have Material AdverseEffect on the Company**

 

After reviewing its compensation policies andpractices, the Company has concluded that such policies and practices create aninsignificant amount of risk, if any, that is reasonably likely to have amaterial adverse effect on the Company.

 

**COMPENSATIONCOMMITTEE INTERLOCKS AND INSIDER PARTICIPATION**

 

During 2009, none of our executive officers servedon the board or compensation committee of another company which had one of itsexecutive officers serve as one of our directors or a member of ourCompensation Committee.

 

**COMPENSATION COMMITTEE REPORT**

 

The Compensation Committee has reviewed anddiscussed the above Compensation Discussion and Analysis with the Company’smanagement.  Based on the CompensationCommittee’s review and discussions with management, the Compensation Committeerecommended to the Board of Directors that the Compensation Discussion andAnalysis be included in the Company’s Amendment No.1 to Annual Report on Form 10-K/Afor the year ended December 31, 2009.

 

This report is submitted by the members of theCompensation Committee and the members of the Board for the fiscal year 2009.

 

THE COMPENSATION COMMITTEE:

 

Robert C. Bloss (Chairman)

Herbert Granath

A. DrueJennings

DeanneR. Stedem

 

###### *The preceding information under the caption “CompensationCommittee Report” shall be deemed to be “furnished” but not “filed” with theSecurities and Exchange Commission.*

 

19

----

 

**ITEM 12. Security Ownership of Certain BeneficialOwners and Management and Related Stockholder Matters**

 

# **SECURITIES AUTHORIZED FOR ISSUANCE UNDEREQUITY COMPENSATION PLANS**

#  

Information related to our Amended and Restated 2000Long Term Incentive Plan, our only equity compensation plan, is presented as ofDecember 31, 2009 in the following table.

 

## EquityCompensation Plan Information

 
| **Plan  Category**                                     | ** ** | **Number  of Securities to  be Issued Upon Exercise  of Outstanding Options,  Warrants and Rights** | ** ** | **Weighted-Average  Exercise Price of  Outstanding Options,  Warrants and Rights** | ** ** | **Number  of Securities  Remaining Available for  Future Issuance Under Equity  Compensation Plans  (Excluding the Number of  Securities to be Issued Upon  Exercise of Outstanding  Options)** | ** ** |
|--------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                                             | ** ** | **(In thousands)**                                                                             | ** ** | ** **                                                                         | ** ** | **(In thousands)**                                                                                                                                                                         | ** ** |
| Equity compensation plans approved by security holders |       | 87                                                                                                  |       | $                                                                                  | 13.89      |                                                                                                                                                                                            | 9,913      |   |
|                                                        |            |                                                                                                     |            |                                                                                    |            |                                                                                                                                                                                                 |            |  |

 

# **SECURITY OWNERSHIP OF CERTAIN BENEFICIALOWNERS AND MANAGEMENT**

#  

The following table sets forth certain information,as of April 1, 2010, with respect to beneficial ownership of our Class ACommon Stock and Class B Common Stock, by each of the Named ExecutiveOfficers (defined above) employed by the Company at April 1, 2010, eachdirector, each holder of more than 5% of either Class A or Class BCommon Stock, and all current directors and executive officers as a group.

 

Except as indicated in the footnotes to this table,the persons named each have sole voting and investment power over the sharesshown as owned by them.  The percentageof beneficial ownership is based on 74,117,654 shares of our Class A CommonStock and 30,670,422 shares of our Class B Common Stock outstanding as of April 1,2010.

 

20

----

 

**Amount of Nature ofBeneficial Ownership**(1)

 
| ** **                                                                                                                            | ** ** | **Class A  Common  Stock(2)** | ** ** | **% of  Class** | ** ** | **Class B  Common Stock** | ** ** | **% of  Class** | ** ** | **% of  Total  Voting  Power** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------|------------|-----------------|------------|--------------------------------|------------|-----------------|------------|--------------------------------|------------|
| **Name and Address of Beneficial Owner 5% Stockholders:**                                                                             | ** ** | ** **                         | ** ** | ** **      | ** ** | ** **                     | ** ** | ** **      | ** ** | ** **                     | ** ** |
| H C Crown Corp.(3)(4)   2501 McGee Street, Kansas City, MO 64108                                                                      |       | 83,885,502                         |       | 80.1            | %          | 30,670,422                     |       | 100             | %          | 94.5                           | %          |
| Hallmark Entertainment Investments Co.(3)(4)   2501 McGee Street, Kansas City, MO 64108                                          |       | 83,817,071                         |       | 80.0            | %          | 30,670,422                     |       | 100             | %          | 94.5                           | %          |
| Liberty Media Corporation(3)(4)(5)   9197 South Peoria Street, Englewood, CO 80112                                                    |       | 88,242,568                         |       | 84.2            | %          | 30,670,422                     |       | 100             | %          | 95.7                           | %          |
| National Interfaith Cable Coalition, Inc.(3)(4)(6)   74 Trinity Place, Suite 1550, New York, NY 10006                       |       | 88,242,568                         |       | 84.2            | %          | 30,670,422                     |       | 100             | %          | 95.7                           | %          |
| J.P. Morgan Partners (BHCA), L.P.(3)(4)   390 Madison Avenue, New York, NY 10017                                                 |       | 88,242,568                         |       | 84.2            | %          | 30,670,422                     |       | 100             | %          | 95.7                           | %          |
| The DIRECTV Group, Inc.(7)   (formerly known as Hughes Electronics Corporation)   2230 E. Imperial Highway, El Segundo, CA 90245 |       | 5,360,202                          |       | 7.2             | %          | —                         |       | —          |       | 1.4                            | %          |
| S. Muoio & Co. LLC and Salvatore Muoio(8)   509 Madison Avenue, Suite 406, New York, NY 10022            |       | 4,255,376                          |       | 5.7             | %          | —                         |       | —          |       | 1.1                            | %          |
| **Directors and Named Executive Officers**:                                                                                           |       |                               |       |            |       |                           |       |            |       |                           |       |
| William Abbott                                                                                                                        |       | 0                                  |       | *               |       | —                         |       | —          |       | *                              |       |
| Dwight C. Arn                                                                                                                         |       | 0                                  |       | *               |       | —                         |       | —          |       | *                              |       |
| Janice Arouh                                                                                                                          |       | 0                                  |       | *               |       | —                         |       | —          |       | *                              |       |
| Robert C. Bloss                                                                                                                       |       | 0                                  |       | *               |       | —                         |       | —          |       | *                              |       |
| William Cella                                                                                                                         |       | 5,970                              |       | *               |       | —                         |       | —          |       | *                              |       |
| Glenn Curtis                                                                                                                          |       | 0                                  |       | *               |       | —                         |       | —          |       | *                              |       |
| Steve Doyal                                                                                                                           |       | 1,500                              |       | *               |       | —                         |       | —          |       | *                              |       |
| Brian E. Gardner                                                                                                                      |       | 0                                  |       | *               |       | —                         |       | —          |       | *                              |       |
| Edward Georger                                                                                                                        |       | 3,400                              |       | *               |       | —                         |       | —          |       | *                              |       |
| Herbert A. Granath                                                                                                                    |       | 0                                  |       | *               |       | —                         |       | —          |       | *                              |       |
| Donald J. Hall, Jr.(9)                                                                                                           |       | 83,888,002                         |       | 80.1            | %          | 30,670,422                     |       | 100             | %          | 94.5                           | %          |
| Irvine O. Hockaday, Jr.(10)                                                                                                      |       | 40,795                             |       | *               |       | —                         |       | —          |       | *                              |       |
| A. Drue Jennings                                                                                                                      |       | 0                                  |       | *               |       | —                         |       | —          |       | *                              |       |
| Peter A. Lund(11)                                                                                                                     |       | 6,390                              |       | *               |       | —                         |       | —          |       | *                              |       |
| Brad R. Moore                                                                                                                         |       | 0                                  |       | *               |       | —                         |       | —          |       | *                              |       |
| Charles L. Stanford                                                                                                                   |       | 12,750                             |       | *               |       | —                         |       | —          |       | *                              |       |
| Deanne R. Stedem                                                                                                                      |       | 1,000                              |       | *               |       | —                         |       | —          |       | *                              |       |
| Brian  C. Stewart                                                                                                                     |       | 13,500                             |       | *               |       | —                         |       | —          |       | *                              |       |
| All  directors and executive officers as a group (18 persons)                                                                    |       | 83,973,307                         |       | 80.1            | %          | 30,670,422                     |       | 100             | %          | 94.5                           | %          |

 

----

*                                         The percentage of shares or voting powerbeneficially owned does not exceed 1% of the class.

 

(1)                                 Pursuant to Rule 13d-3 under theExchange Act, a person has beneficial ownership of any securities as to whichsuch person, directly or indirectly, through any contract, arrangement,undertaking, relationship, or otherwise has or shares voting power and/orinvestment power or as to which such person has the right to acquire suchvoting and/or investment power within 60 days from April 1, 2010.  Percentage of beneficial ownership as to anyperson as of a particular date is calculated by dividing the number of sharesbeneficially owned by such person by the sum of the number of shares outstandingas of such date and the number of unissued shares as to which the person hasthe right to acquire voting and/or investment power within 60 days.  The number of shares shown includesoutstanding shares of common stock owned as of April 1, 2010 by the personindicated and shares underlying options owned by such person on April 1,2010 that were exercisable within 60 days of that date.

 

(2)                                  Included underthe column headed “Class A Common Stock” are the number of shares of Class ACommon Stock that each stockholder would hold if all beneficially owned sharesof Class B Common Stock were converted into shares of Class A CommonStock.

 

(3)                                  Based on aSchedule 13D/A filed on March 1, 2010, jointly by Hallmark, HEIC, HEH, HCCand H.A., Inc., who as of that date shared voting and dispositive powerwith respect to 30,670,422 shares of Class B Common Stock, which areconvertible at the option of the holder into an equivalent number of shares of Class ACommon Stock, and 53,146,649 shares of Class A Common Stock directly ownedby HEIC.  HEIC is a majority ownedsubsidiary of HEH, and HEH and HCC are wholly-owned subsidiaries ofHallmark.  In addition to indirectownership of shares owned by HEIC, HCC owns 68,431 shares of 

 

21

----

 

Class A Common Stock directly.

 

(4)                                  On March 11,2003, HEH, Liberty Crown and J.P. Morgan Partners contributed 100% of theirCompany shares in return for HEIC shares representing the following percentageinterest in HEIC:  HEH, 83.4%; Liberty Crown,11.2%; and J.P. Morgan Partners, 4.6%. In addition, VISN contributed 10% of itsCompany shares in return for HEIC shares representing an 0.8% interest in HEIC.Each of the HEIC stockholders entered into the stockholders agreementconcerning HEIC and Crown shares. As a result, each of the above parties may bedeemed to beneficially own Company shares held by HEIC described in note (3) above.

 

The total number of sharesshown as beneficially owned by HEIC does not include 4,357,066 shares of Class ACommon Stock we believe to be beneficially owned by VISN.  Beneficial ownership of these shares of Class ACommon Stock has been disclaimed by the other HEIC stockholders.

 

Each of HEH and LibertyCrown has the right to nominate directors to the HEIC Board; and VISN isentitled to designate a non-voting observer to HEIC’s Board.  In addition, Liberty Crown has the right tonominate a director to the Company’s Board. J.P. Morgan had the right to nominate a director on the Company’s Boardand on the board of HEIC but has formally surrendered such nominationrights.  VISN also had the right tonominate a director on the Company’s Board but has relinquished such nominationrights.  Under the HEIC stockholdersagreement, HEH directs the voting of the Company shares owned by HEIC.  Pursuant to the HEIC stockholders agreement,HEIC may not sell, pledge, distribute or transfer its Company common stockwithout the consent of Liberty Crown and J.P. Morgan Partners, except formergers and other combinations approved in accordance with the Companystockholders agreement. This requirement terminates on the later of such dateas each party (1) ceases to own beneficially at least 2.5% of theoutstanding HEIC common stock and (2) ceases to own beneficially 75% ofthe HEIC stock owned by the party at March 11, 2003.

 

(5)                                  Based on a Schedule 13D/Afiled on March 12, 2003 by Liberty Media Corporation and Liberty Crown.

 

(6)                                  The NationalInterfaith Cable Coalition, Inc. is a not-for-profit coalition of faithgroups.  To our knowledge, NICC isgoverned by a board of sixteen trustees appointed by the major faith groups whoare members of NICC.

 

(7)                                  Based on aSchedule 13G filed on February 5, 2010 by The DIRECTV Group, Inc.

 

(8)                                  Based on aSchedule 13D/A filed on March 2, 2010 by S. Muoio & Co. LLC.

 

(9)                                  Includes 2,500shares of Class A Common Stock beneficially owned by Donald J. Hall, Jr.  Donald J. Hall, Jr., may also be deemedto be a beneficial owner of the shares beneficially owned by HEIC because Mr. Hallis a co-trustee of a voting trust which controls all of the voting securitiesof Hallmark and he is Vice Chairman of the board of directors, Chief ExecutiveOfficer and President of Hallmark. See note (2).  Mr. Hall disclaims beneficial ownershipof such shares, except to the extent of his pecuniary interest therein.

 

(10)                            Includes 4,098shares of Class A Common Stock underlying options that have vested.

 

(11)                            Consists of6,390 shares of Class A Common Stock underlying options that have vested.

 

22

----

 

### **ITEM 13. CertainRelationships and Related Transactions and Director Independence**

 

**TRANSACTIONS WITH RELATEDPERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS**

 

Theinformation required by this Item 12 is set forth in the Company’s Form 10-KReport previously filed on March 4, 2010 in Item 13 under the heading “CertainRelationships and Related Transactions” and is incorporated by referenceherein.

 

On February 24,2010, the Company executed a Letter of Credit/Guaranty Commitment (the “Guaranty”)with respect that certain Lease Agreement (the “Lease Agreement”) with 12700Investments, Ltd. (“Landlord”) for the office space at 12700 Ventura Boulevard,Studio City, California.   The Landlordrequired that Crown Media United States, LLC (“CMUS”), the entity whichexecuted the Lease Agreement, provide a letter of credit of $1.56 millionsecuring certain obligations of CMUS. Consequently, Hallmark Cards, Incorporated (“Hallmark”) has agreed toguarantee the issuer of such letter of credit against any loss thereon pursuantto the Guaranty.  As an inducement forHallmark to issue the Guaranty, CMUS has agreed to pay Hallmark a fee whichequals 0.75% per month of the outstanding letter of credit obligation.  Additionally, in the event that Hallmark isrequired to pay any amount under the Guaranty, CMUS must reimburse Hallmark forany such amount plus any feesand charges associated with making such payment, any interest applicable tosuch amount and any costs and expenses of Hallmark in connection with protectingits rights under the Guaranty.

 

**DIRECTORINDEPENDENCE**

 

**Board ofDirectors**

 

Based on theNasdaq Listing Standards, the Board has determined that the following directorsare independent and have no relationship with the Company, except as directorsof the Company: William Cella, Herbert A. Granath, A. Drue Jennings and PeterA. Lund.

 

Also based on theNasdaq Listing Standards, the Board has determined that the following directorsare not independent because they are employees of Hallmark Cards, the Company’sparent company: Dwight C. Arn, Robert C. Bloss, Steve Doyal, Brian E. Gardner,Donald J. Hall, Jr., Brad R. Moore and Deanne R. Stedem.  Furthermore, the Board has determined that (1) WilliamAbbott is not independent because he is the President and Chief ExecutiveOfficer of the Company, (2) Glenn Curtis is not independent because he isan executive officer of Starz LLC, a subsidiary of Liberty Media Corporationwhich beneficially owns more than 5% of the Company’s Class A Common Stockand (3) Irvine O. Hockaday, Jr. is not independent because he has afamily member employed by Hallmark Cards as an executive officer and possiblybecause of his positions in the past with Hallmark Cards.

 

The Board determined previously that twoformer directors who served during part of 2009 were not independent.  David E. Hall was not independent because heis an employee of Hallmark Cards, and Henry Schleiff was not independentbecause he was the President and Chief Executive Officer of the Company.

 

**AuditCommittee**

 

Based on the Nasdaq ListingStandards, the Board has determined that all members of the Audit Committee areindependent.

 

**CompensationCommittee**

 

Based on theNasdaq Listing Standards, the Board has determined that the following membersof the Compensation Committee are not independent for the reasons stated above:Robert C. Bloss and Deanne R. Stedem. Other members of the Compensation Committee are Herbert Granath and A.Drue Jennings.  David E. Hall, a formermember of the Compensation Committee, was determined not to be independent forthe reason stated above.

 

**Nominating Committee**

 

Based on theNasdaq Listing Standards, the Board has determined that the following member ofthe Nominating Committee is not independent for the reason stated above: BrianE. Gardner.  Other members of theNominating Committee are William Cella and Peter Lund.

 

**Controlled-Company Exemption**

 

HEIC holds Class A Common Stock and all of the Class BCommon Stock, representing approximately 94.5% of the voting power of theCompany.  Therefore, notwithstanding thedisclosures made herein under*“Director Independence”*,the Board has determined that the Company is a “controlled company”, as thatterm is defined under the Nasdaq Listing Standards.  Consequently, the Company is exempt fromindependent director requirements of the Nasdaq Listing Standards, except forthe requirements 

 

23

----

 

pertainingto the composition of the audit committee and the executive sessions ofindependent directors, with which the Company has been complying.  In 2009, all independent directors have metwithout management present after each regularly scheduled Audit Committeemeeting, which meeting is held quarterly.

 

**ITEM 14.  PrincipalAccountant Fees and Services**

 

**AUDIT FEES**

 

The following table presentsfees for professional audit services rendered by KPMG LLP for the audit of theCompany’s annual financial statements for 2008 and 2009, and fees billed forother services rendered by KPMG LLC, our principal accountant in fiscal years2008 and 2009:

 
| ** **         | ** ** | **Fiscal Year** | ** ** |
|--------------------|------------|-----------------|------------|
| **Type  of Fee**   | ** ** | **2008**        | ** ** | **2009** | ** ** |
| Audit Fees(1)      |       | $               | 1,150,890  |   | $ | 951,469 |   |
| Audit-Related Fees |       | —          |       | — |   |
| Tax Fees           |       | —          |       | — |   |
| All Other Fees     |       | —          |       | — |   |
| Total Fees         |       | $               | 1,150,890  |   | $ | 951,469 |   |

 

----

(1)          *Audit Fees* are principallyfor the audit of our annual financial statements, review of financialstatements included in our Forms 10-Q and services rendered in connection withmanagement’s assessment of internal controls over financial reporting and therelated report in accordance with the requirements of Section 404 of theSarbanes-Oxley Act of 2002.

 

**PRE-APPROVAL POLICY AND PROCEDURES FOR SERVICESOF INDEPENDENT PUBLIC ACCOUNTANTS**

 

Aspart of its duties under the Audit Committee Charter, the Audit Committeeannually pre-approves all audit and non-audit services performed by the Company’sauditors in order to assure that the auditors are independent from theCompany.  If a type of service to beprovided by the auditors has not been pre-approved during this annual process,the Audit Committee pre-approves such service on a case-by-case basis.  The Audit Committee does not delegate tomanagement its responsibilities to pre-approve services performed by theauditors.

 

**PART IV**

 

**ITEM 15. Exhibits, Financial Statement Schedules**

 

(2)                                  Exhibits

 
| **Exhibit Number** | ** ** | **Exhibit Title**                                                                                                              |
|-------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------|
|                    |       |                                                                                                                                |
| 31.1                    |       | Rule 13a-14(a) Certification executed  by the Company’s President and Chief Executive Officer.                       |
| 31.2                    |       | Rule 13a-14(a) Certification executed  by the Company’s Executive Vice President and Chief Financial Officer.        |
| 32.1                    |       | Certification Pursuant to 18 U.S.C.  Section 1350, as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002. |
| 32.2                    |       | Certification Pursuant to 18 U.S.C.  Section 1350, as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002. |

 

24

----

 

**SIGNATURES**

 

Pursuant to the requirementsof Section 13 or 15(d) of the Securities Exchange Act of 1934, theregistrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 
|   | CROWN MEDIA HOLDINGS, INC. |
|--------|----------------------------|
|   |                       |   |
|   | By:                        | /s/  WILLIAM J. ABBOTT |
|   |                       | William  J. Abbott |
|   |                       | *President  and Chief Executive Officer* |

 

April 30, 2010

 

Pursuant to the requirementsof the Securities Exchange Act of 1934, this report has been signed below bythe following persons on behalf of the registrant and in the capacities and onthe dates indicated.

 
| **Signature**                | ** ** | **Title**                                  | ** ** | **Date**            |
|------------------------------|------------|--------------------------------------------|------------|---------------------|
|                         |       |                                       |       |                |
| /s/ WILLIAM J. ABBOTT        |       | Director and Principal Executive Officer   |       | April 30, 2010 |
| William J. Abbott            |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ BRIAN C. STEWART         |       | Principal Financial and Accounting Officer |       | April 30, 2010 |
| Brian C. Stewart             |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ DWIGHT C. ARN            |       | Director                                   |       | April 30, 2010 |
| Dwight C. Arn                |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ ROBERT C. BLOSS          |       | Director                                   |       | April 30, 2010 |
| Robert C. Bloss              |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ WILLIAM CELLA            |       | Director                                   |       | April 30, 2010 |
| William Cella                |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ GLENN CURTIS             |       | Director                                   |       | April 30, 2010 |
| Glenn Curtis                 |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ STEVE DOYAL              |       | Director                                   |       | April 30, 2010 |
| Steve Doyal                  |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ BRIAN GARDNER            |       | Director                                   |       | April 30, 2010 |
| Brian Gardner                |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ HERBERT A. GRANATH       |       | Director                                   |       | April 30, 2010 |
| Herbert A. Granath           |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ DONALD J. HALL, JR.      |       | Director                                   |       | April 30, 2010 |
| Donald J. Hall, Jr.     |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ IRVINE O. HOCKADAY, JR.  |       | Director                                   |       | April 30, 2010 |
| Irvine O. Hockaday, Jr. |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ A. DRUE JENNINGS         |       | Director                                   |       | April 30, 2010 |
| A. Drue Jennings             |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ PETER A. LUND            |       | Director                                   |       | April 30, 2010 |
| Peter A. Lund                |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ BRAD R. MOORE            |       | Director                                   |       | April 30, 2010 |
| Brad R. Moore                |       |                                       |       |                |
|                         |       |                                       |       |                |
| /s/ DEANNE R. STEDEM         |       | Director                                   |       | April 30, 2010 |
| Deanne R. Stedem             |       |                                       |       |                |

 

25

----