**Exhibit10.86**

 

**EMPLOYMENTAGREEMENT**

 

Agreement, made as of January 1, 2004,between Crown Media Holdings, Inc., a Delaware corporation with offices at12700 Ventura Boulevard, Los Angeles, California 91604 or its permits assigns (“Employer”)and William Aliber (“Employee”). 

 

**WITNESSETH:**

 

**WHEREAS,** Employerdesires to continue to retain the services of Employee and Employee desires tocontinue to be employed by Employer upon the terms and conditions set forth: 

 

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

 

1.             Employment andDuties.

 

(a)           EffectiveJanuary 1, 2004, Employer hereby employs Employee and Employee herebyagrees to continue to serve as Executive Vice President and Chief FinancialOfficer of Crown Media Holdings, Inc., reporting directly to the ChiefExecutive Officer of Employer. Employee agrees to perform such services, asrequested by Employer, as are consistent with Employee’s position. Employeeshall use Employee’s best efforts to promote the interests of Employer andshall devote Employee’s full business time, energy and skill exclusively to thebusiness and affairs of Employer during the “Term” (as “Term” is defined inParagraph 2 below). 

 

(b)           Duringthe course of Employee’s employment hereunder, Employer may create or utilizesubsidiary companies for the production and distribution of programming or toconduct the other activities and businesses of Employer. Employer shall havethe right, without additional compensation to Employee, to loan or makeEmployee available to any subsidiary of Employer or company in common ownershipwith Employer to perform services for any programming, property or projectowned or controlled by Employer or any such entity, provided that Employee’sservices for any such entity shall be consistent with Employee’s dutieshereunder. Employee further agrees that all the terms of this EmploymentAgreement shall be applicable to Employee’s services for each such entity.

 

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2.             Termof Employment. The term of Employee’s employment under this Agreement (“Term”)with Employer shall commence as of January 1, 2004 and shall end on December 31,2006, unless terminated earlier as is provided in Paragraph 8 of this Agreementor extended by mutual agreement of the parties. 

 

3.             Compensation.

 

(a)           Salary.As compensation for Employee’s services hereunder, Employer shall pay toEmployee a salary at the rate of $495,500per year during the each year of the Term. Such salary shall be paidbiweekly, in arrears. 

 

(b)           Bonuses.Following the end of each calendar year during the Term, Employee will be paidsuch bonus as Employer in its discretion determines. The amount of such bonuseswill be determined by Employer based on achievement of the financial goals setout in Schedule A attached hereto. The bonus will be payable on the datedesignated by Employer. 

 

(c)           Withholding.All payments of salary shall be made in appropriate installments to conformwith the regular payroll dates for salaried personnel of Employer. Employershall be entitled to deduct from each payment of compensation to Employee suchitems as federal, state and local income taxes, FICA, unemployment insuranceand disability contributions, and such other deductions as may be required bylaw. 

 

(d)           Expenses.During the Term, Employer shall pay or reimburse Employee on an accountablebasis for all reasonable and necessary out-of-pocket expenses forentertainment, travel (including business class commercial air travel, or ifbusiness class air travel is not available, on the next best availablecommercial basis), meals, hotel accommodations and other expenditures incurredby Employee in connection with Employee’s services to Employer in accordancewith Employer’s expense account policies. 

 

(e)           FringeBenefits. During the Term, Employee shall be entitled to receive groupmedical, dental, life and disability insurance as per Employer policy and anyother fringe benefits, on terms that are or may become available generally to comparableemployees of Employer. Employee will also be paid an automobile allowance of $975 per month. 

 

4.             Placeof Employment. During the Term, Employee shall be based in Kansas City, butmay be required to perform Employee’s duties at the offices of Employer in LosAngeles, Denver and New York or such other location as may be mutuallyagreeable to Employer and 

 

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Employee. Employee shall undertake all travel required by Employer inconnection with the performance of Employee’s duties hereunder. 

 

5.             Confidentiality, Intellectual Property;Name and Likeness.

 

(a)           Employeeagrees that Employee will not during the Term or thereafter divulge to anyone(other than Employer and its executives, representatives and employees who needto know such information or any persons designated by Employer) any knowledgeor information of any type whatsoever designated or treated as confidential byEmployer relating to the business of Employer or any of its subsidiaries or affiliates,including, without limitation, all types of trade secrets, business strategies,marketing and distribution plans as well as concrete proposals, plans, scripts,treatments and formats described in subparagraph (b) below. Employeefurther agrees that Employee will not disclose, publish or make use of any suchknowledge or information of a confidential nature (other than in theperformance of Employee’s duties hereunder) without the prior written consentof Employer. This provision does not apply to information which becomesavailable publicly without the fault of Employee or information, which Employeediscloses in confidence to Employee’s own privileged representatives or isrequired to disclose in legal proceedings, provided Employee gives advancenotice to the Chief Executive Officer of Employer and an opportunity toEmployer to resist such disclosure in legal proceedings. 

 

(b)           Duringthe Term, Employee will disclose to Employer all concrete proposals, plans,scripts, treatments, and formats invented or developed by Employee during theTerm which relate directly or indirectly to the business of Employer or any ofits subsidiaries or affiliates including, without limitation, any proposals andplans which may be copyrightable, trademarkable, patentable or otherwiseexploitable. Employee agrees that all such proposals, plans, scripts,treatments, and formats are and will be the property of Employer. Employeefurther agrees, at Employer’s request, to do whatever is necessary or desirableto secure for the Employer the rights to said proposals, plans, scripts,treatments, and formats, whether by copyright, trademark, patent or otherwiseand to assign, transfer and convey the rights thereto to Employer at Employer’sexpense. 

 

(c)           Employershall have the right in perpetuity to use Employee’s name in connection withcredits for programming, properties and projects for which Employee 

 

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performs any services pursuant to this Agreement. 

 

6.             Employee’sRepresentations. Employee represents and warrants that: 

 

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

 

(b)           Tothe best of Employee’s knowledge, Employee is not subject to any undisclosedmedical condition which might have a material effect on Employee’s ability toperform satisfactorily Employee’s services hereunder. 

 

7.             Non-Competition;No Raid. 

 

(a)           Duringthe Term, Employee shall not engage directly or indirectly, whether as anemployee, independent contractor, consultant, partner, shareholder orotherwise, in a business or other endeavor which materially interferes with anyof Employee’s duties or obligations hereunder or which is directly competitivewith the business of the Employer or its subsidiaries, including but notlimited to the production, distribution or any other exploitation ofaudiovisual television material (the “Other Business”). 

 

(b)           Employeefurther agrees that during the Term and for a period of one year thereafter,Employee will not employ, or attempt to employ or assist anyone else to employ,any person who is, at the date of termination of Employee’s employment, workingas an officer, policymaker or in high-level creative development ordistribution (including without limitation executive employees) for orrendering substantially full-time services as such to Employer. 

 

8.             Termination.

 

(a)           ThisAgreement may be terminated and the Term ended on five (5) business days’ written notice for any one of thefollowing reasons (except (i) in which case termination shall occur on thedate of death): 

 

(i)            Thedeath of Employee; 

 

(ii)           Thephysical or mental disability of Employee to such an extent that Employee isunable to render services to Employer for a period exceeding an aggregate ofthirty (30) business days during any twelve month period of the Term. Forpurposes of counting the aggregate of thirty (30) business days, days properlydesignated by Employee as vacation days 

 

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shall not be counted; 

 

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

 

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

 

(B)           Employee’sconviction of any act which constitutes a felony under federal, state or locallaws or the law of any foreign country; 

 

(C)           Employee’spersistent failure after written notice to perform, or Employee’s persistentrefusal to perform after written notice, any of Employee’s duties andresponsibilities pursuant to this Agreement; or 

 

(D)          Employee’sdishonesty in financial dealings with or on behalf of Employer, itssubsidiaries, affiliates and parent corporation or in connection withperformance of Employee’s duties hereunder. 

 

(b)           Employershall also have the right to terminate Employee prior to the expiration of theTerm in addition to pursuant to Paragraph 8(a) above by providing Employeewith not less than thirty (30) days’ advance notice in writing. In the event ofa termination pursuant to this Paragraph 8(b): (i) the Employer shall payto the Employee, commencing thirty (30) days after such notice of termination,the remaining amounts described in Paragraph 3(a) above for the balance ofthe Term at such time or times such payments would otherwise be due. Employershall have no further obligations to Employee hereunder. If Employer terminatesEmployee under this Paragraph 8(b), Paragraph 7(a) shall not apply fromthe date of termination. 

 

(c)           Inthe event that Employer terminates this Agreement due to any of the reasons setforth in Paragraphs8(a)(i), 8(a)(ii) or 8(a)(iii)(A-D) above, Employee shall be paid Employee’ssalary through the later of the expiration of the five (5) businessdays period referred to in Paragraph 8(a) or the end of the month in whichthe termination event occurs, after which Employer’s obligation to pay salaryto Employee shall terminate. After making the payments provided for in thissub-paragraph (c), Employer shall have no further obligations to Employeepursuant to this Agreement. 

 

(d)           Upontermination of this Agreement, Employee shall promptly return all of Employer’sproperty to Employer. 

 

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(e)           Upontermination of Employee’s employment for any reason, Employee shall tenderEmployee’s resignation from the Board of Directors of any of Employer’s subsidiariesor affiliates on which Employee is serving, and Employer shall accept suchresignation forthwith. 

 

9.             Breach;Remedies. Both parties recognize that the services to be rendered underthis Agreement by Employee are special, unique and extraordinary in character,and that in the event of the breach by Employee of the terms and conditions ofthis Agreement, Employer shall be entitled, interalia, if it soelects, to institute and prosecute proceedings in any court of competentjurisdiction, either in law or in equity, to obtain damages for any breach ofthis Agreement, and to seek to enforce the specific performance thereof byEmployee, and/or to seek to enjoin Employee from performing services for anyother person, firm or corporation. The parties further stipulate that the lawof California shall apply to any dispute of action regarding this Agreement. 

 

10.           Assignment.This Agreement is a personal contract and, except as specifically set forthherein, the rights, interests and obligations of Employee herein may not besold, transferred, assigned, pledged or hypothecated, although Employee mayassign or use as security payments due hereunder from Employer. The rights andobligations of Employer hereunder shall bind in their entirety the successors andassigns of Employer, although Employer shall remain fully liable hereunder. Asused in this Agreement, the term “successor” shall include any person, firm,corporation or other business entity which at the time, whether by merger,purchase or otherwise, acquires all or substantially all of the assets orbusiness of Employer. 

 

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

 

12.           PriorAgreements. This Agreement supersedes and terminates all prior agreementsbetween the parties relating to the subject matter herein addressed, and setsout the full agreement between the parties concerning its subject matter. 

 

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13.           Notices.Any notices or other communications required or permitted hereunder shall be in writing and shall be deemed effectivewhen delivered in person or if mailed, by registered or certified mail, return receiptrequested, in which case the notice shall be deemed effective onthe date of deposit in the mails, postage prepaid, addressed to Employee at theaddress for Employee appearing in Employer’s records end, in the case ofEmployer, addressed to its Chief Executive Officer at the address first writtenabove. Either party may change the address to which notices are to be addressedby notice in writing given to the other in accordance with the terms hereof.

 

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

 

15.           Counterpart.This Agreement may be signed in any number of counterparts, each of which shallbe an original, and all of which, taken together, shell constitute oneinstrument. 

 

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

 

 
| ** ** | **CROWN MEDIA HOLDINGS, INC.** |
|------------|--------------------------------|
|       |                           |
|       |                           |
|       | By                             | /s/  David Evans |   |
|       | Title                          | PRESIDENT & CEO |   |
|            |                                |  |  |  |

 

 
| ** ** | **WILLIAM ALIBER** |
|------------|--------------------|
|       | /s/ William Aliber |   |

 

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Schedule A – Bonus

 

Employee’sbonus will be divided into two categories – a discretionary bonusand a performance based bonus. The benchmark for the total bonus amount will be20% of Employee’s then-current salary, as set out in Paragraph 3(a) if theAgreement. 

 

30%of the bonus will be discretionary, i.e., whether this portion of the bonus isawarded and the amount of the bonus will be in the sole discretion of Employerand the Compensation Committee of the Board of Directors of Crown MediaHoldings, Inc. The maximum amount payable under this discretionary portionof the bonus would be 6% of current salary. 

 

Theremaining 70% of the bonus will be awarded based on Crown Media Holdings, Inc.achievement of “Revenue” and “EBITDA” “Targets” for the year for which thebonus is paid – each will account for half of this portion ofthe bonus. The benchmark for each of the Revenue and EBITDA portions is 7% ofsalary, although a greater amount may be paid if Revenue and/or EBITDA Targetsare exceeded. The formula for payment of this bonus based on percentageachievement of Revenue and EBITDA Targets is as follows:

 
| **Percentage  of Revenue or EBITDA Target  Achieved** | ** ** | **Percentage of Salary Payable as Bonus** |
|------------------------------------------------------------|------------|-------------------------------------------|
| ** **                                                 | ** ** | ** **                                |
| Below 85%                                                  |       | No bonus                                  |
|                                                       |       |                                      |
| 85% or more but  less than 90%                             |       | 5.6%                                      |
|                                                       |       |                                      |
| 90% or more, but less than 95%                             |       | 6.3%                                      |
|                                                       |       |                                      |
| 95% or more, but less than 98%                             |       | 6.65%                                     |
|                                                       |       |                                      |
| 98% or more, but less than 102%                            |       | 7%                                        |
|                                                       |       |                                      |
| 102% or more, but less than 105%                           |       | 7.77%                                     |
|                                                       |       |                                      |
| 105% or more, but less than 110%                           |       | 8.4%                                      |
|                                                       |       |                                      |
| 110% or more                                               |       | 10.5%                                     |

 

By way of example, if 110% of the Revenue Target is achieved for theyear and only 90% of the EBITDA Target is achieved, the total performance basedportion of the bonus would equal

 

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16.8% of salary (i.e. 10.5% for exceeding the Revenue Target and 6.3%for substantial achievement of the EBITDA Target.) 

 

“Revenue” for this purpose will be the sum of gross subscriber revenuesand gross advertising sales revenues (less agency commissions) which arerealized for accounting purposes by Employer in each fiscal year. “EBITDA” willhave the meaning designated by Employer’s outside auditors, consistent with GAAP.The “targets” for each will be those designated in the Employer’s financial “Plan”for each fiscal year, as determined by the CEO of Employer and Board ofDirectors of Crown Media Holdings, Inc. Bonus payments shall be made onthe dates designated by Employer for payment of bonuses to Crown employees ingeneral. 

 

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